Technical neutrality in procurement, life cycle costs and environmental considerations: the acceptability of supplying reused or repared goods (in Spain)

In times of crisis, the opportunity to achieve (short-term) savings by procuring reused or repared goods (such as refilled ink and tonner cartridges for printers and photocopiers, for instance) may have a particular appeal to public buyers facing significant budgetary constraints.

At first look, such a procurement strategy may also seem to support environmental goals (as there could be some environmental savings implied in 'reusing'), but such a claim may require further scrutiny from a life cycle costing perspective (since refilling could be conducted in more polluting conditions than the manufacturing of new products, or 'refillers' may not recycle the used cartridges once they have been used up, whereas 'original producers' may have implemented an environmental quality control system that guaranteed full collection and recycling of used cartridges). The impact of the reused products on the maintenance cost or durability of equipment (if any) should also be taken into consideration.

Also, from the perspective of drafting the technical specifications, public buyers should be careful to respect the mandate of 'technical neutrality' in the current EU rules, which would prevent them to restrict the supply to either only new or only reused supplies (cartridges, in our example) on the exclusive basis of product performance (as long as there is no clearly identifiable performance-related difference between the two types of products).

Therefore, desigining a strategy to buy reused or repared goods deserves some careful consideration on the part of the responsible procurer. The same care should be exercised if, for some reason (hopefully not only lobby efforts by 'original producers'), the public buyer decides to resort to the supply of 'original' or 'new' products only.

In that regard, I find interesting (and worrying) the Spanish Central Administrative Tribunal of Contractual Appeals (Tribunal Administrativo Central de Recursos Contractuales, ‘SCATCA’) Resolution No. 83/2012 of 30 March 2012 in case Caro Informática, S.A. v FREMAP (Supply of IT consumables). In that case, the contracting authority had excluded in the tender specifications the possibility to be supplied reused or repared IT consumables (more specifically, refilled tonner cartridges). Caro Informática (a 'refiller') challenged the tender documents on the basis that they violated the mandate of technical neutrality and ran contrary to the requirements of competition laws (for which it found support in the Spanish National Competition Commission's 'Guide on Competition and Procurement'), and that they were at odds with stated public austerity goals.

Following a very formalistic reasoning (and expressly disregarding the recommendations of the NCC's Guide as 'irrelevant to decide on the merits of the case'), SCATCA found that the contracting entity had not abused its administrative discretion in determining that only 'original' or 'new' supplies (or equivalent, sic) could be offered. It did not scrutinise the reasons behind the decision, or whether technical, life cycle or environmental considerations supported it--but rather adopted an economic reasoning that sounds protectionist of 'original manufacturers' and, actually, restrictive of competition.

In this regard, it is worth emphasising the counterintuitive logic followed by SCATCA (which seems to put itself in the position of a court faced with unfair competition rather than public procurement claims):
[... accepting the supply of reused or repared goods where the tender documents do not expressly allow for them] "would be a contradiction to the basic principles of public procurement under free competition and non-discrimination, and would place some bidders at a disadvantage, since the use of used parts for the production of goods clearly influences the cost structure thereof, which allows [reusers] to submit lower offers. Accordingly, the acceptance of tenders for goods incorporating used parts must be expressly stated in the contract documents. (SCATCA Res. No. 83/2012 at para. 6).
In my opinion, this is a bad decision in an hot area where contracting authorities must adopt difficult decisions that may have a significant impact in the market and in the environment. Therefore, it would be desirable to depart from this type of formalistic (and protectionist) analysis and to encourage public buyers to make more in-depth impact assessments of the opportunity to acquire reused or repared supplies, since that would in many cases be appropriate, and could make an important contribution to reducing the impact of the economic crisis on the actual levels of public services and administrative activity--as well as contributing to the implementation of effective green procurement goals.