In this text, the role of socially adapted public procurement as a policy tool for promoting social objectives within the European Union and especially Finland is examined. The argument is that procurement can contribute to social goals, such as employment opportunities, social inclusion, and fair working conditions, while still operating within the legal framework of EU procurement law. First, the concept and historical development of socially adapted procurement is outlined, then the legal framework governing social considerations in public procurement, with particular reference to Directive 2014/24/EU and Finnish Act on Public Procurement and Concession Contracts. Examples of relevant case law from Finland is also given. Finally, practical challenges associated with implementing social criteria in procurement procedures are shortly discussed.

Socially adapted procurement encompasses procurement activities that take into account one or several of the following social aspects: employment opportunities, decent work, compliance with social rights and workers’ rights, social integration (including persons with disabilities), equal opportunities, equal opportunity and accessibility for all, the consideration of sustainability criteria, issues of ethical trade, and a broader voluntary observance of corporate social responsibility (CSR). Such procurement can be a powerful tool both for promoting sustainable development and for achieving the social objectives of the EU and its Member States.

The possibilities to set requirements concerning social considerations in public procurement already existed in accordance with the procurement legislation from 2007, but the intention with the 2014 directive, 2014/24/EU, was to make it easier, among other things, to take social aspects into account when awarding contracts. The economically most advantageous tender is to be chosen instead of merely the lowest price.

The use of state or municipal contracts to realize social policy measures has a long history. Efforts to include matters of social justice in public procurement began in 19th-century England, the United States, and France. In 1840, U.S. President Martin Van Buren issued a regulation requiring a 10-hour working day for workers under certain state labor contracts, and in 1891, a decision on fair wages was taken in the United Kingdom House of Commons. After the First World War, government contracts also began to be viewed as an important mechanism for securing the needs of more marginalized groups, such as people with disabilities and various minority groups. In the United Kingdom, for example, the government introduced a public contracting program for the employment of disabled former soldiers. After the Second World War, this program was expanded to also apply to other disabled workers.( Alfred Streng: BEAKTANDE AV SOCIALA OCH MILJÖMÄSSIGA HÄNSYN VID OFFENT-LIG UPPHANDLING)

A popular method has also been to establish sheltered workshops for people with disabilities, where various types of goods are manufactured. These goods have then been given priority in procurement. Many similar state programs have continued to the present day. Procurement continues to be used, for example, to address unemployment. Among other things, in the Netherlands, in several of the larger cities, public procurement has been used as a method to increase the participation of the long-term unemployed in working life.

It can be noted that Finland has been among the Nordic countries the one that has made greater use of the opportunity to integrate social and ethical requirements into public procurement. However, Directive 2014/24/EU permits the introduction of user-choice systems, or the reservation of procurements within the welfare sector for non-profit organizations or certain operating models whose primary objective is social and occupational integration. Finland and Sweden, however, have not safeguarded the role of third-sector organizations or associations as providers of services.

Legislation and case law

The rules on public procurement do not form part of the competition rules of the Treaty on the Functioning of the European Union (TFEU). Still, they are regarded as part of the internal market and freedom of establishment. The TFEU lacks specific rules for public procurement, but, for example, discrimination based on nationality against companies in another Member State is contrary to the prohibition of discrimination in Article 18(1) TFEU, the prohibition of quantitative restrictions in Articles 34 and 35, the right of establishment in Article 49, and the free movement of services in Article 56.

For example, in the CJEU case C-243/89 Storebælt, it was established that requirements concerning the use of domestic labor and domestic products conflicted with the principle of non-discrimination, which is one of the central principles in public procurement, alongside the principle of equal treatment, the principle of transparency, and the principle of proportionality.

The implementation of Directive 2014/24/EU in Finland was associated with certain challenges. Most notably, the national procurement legislation was adopted later than the deadline set by the European Union, as the Finnish Act on Public Procurement and Concession Contracts (1397/2016) entered into force on 1 January 2017, while Member States were required to implement the directive by 18 April 2016. During this interim period, some provisions of the directive could potentially have direct effect in national legal practice. In addition, the new regulatory framework introduced more complex procurement rules, which created practical challenges for contracting authorities in interpreting and applying the legislation. Despite these issues, the implementation did not involve any fundamental conflict between Finnish law and the objectives of the directive.

The legislative amendments introduced through the implementation of Directive 2014/24/EU into Finnish national legislation brought though several new provisions and opportunities to take social considerations into account. However, the provisions concerning social considerations are not mandatory but merely enabling.

1) In the description of the subject matter of the procurement

According to Section 71 of the Finnish Act on Public Procurement and Concession Contracts (1397/2016), it is possible, when defining the characteristics of the subject matter of the procurement, to refer to the specific process or method for providing the construction works, goods, or services in question, or to a specific process/phase in their life cycle. The condition is that they are linked to the subject matter of the procurement and are proportionate to the value and objectives of the contract.

2) In the special contract performance conditions

Special contract conditions are conditions that must be fulfilled during the execution of the contract. According to Article 70 of Directive 2014/24/EU, and in Finnish law Section 98, the contracting authority may impose special requirements on how the contract is to be carried out, if they are linked to the subject matter of the contract. These may include social considerations and may relate, for example, to the employment of people with disabilities, unemployed people, the promotion of gender equality, or similar matters. A requirement that the goods being procured are produced according to fair-trade principles associated with the subject matter of the contract may also constitute such a condition.

3) In the technical specifications

The technical specifications constitute mandatory requirements for the goods or services, which may be formulated as references to standards or as functional or performance requirements. According to Article 42 of Directive 2014/24/EU, and in Finnish law Section 71, it is possible to use technical specifications to take account of social considerations. The basic prerequisite is that the procurement principles are followed, such as the principle of equal treatment and the principle of non-discrimination. The technical specifications must also be clear, precisely defined, and connected to the object of the procurement. Technical specifications requiring, for example, that staff must be recruited only from a certain group cannot be accepted. The requirement regarding accessibility for products to be used by people with physical disabilities is now explicitly emphasized.

4) In the award and evaluation criteria

These criteria are used to determine which tender is to be awarded the contract when the economically most advantageous tender (MEAT) is used. The question of these criteria has attracted the most attention in debates on the possibility of considering social aspects. In the earlier directive 2004/18/EC, the overarching concept of the economically most advantageous tender was used alongside the three different bases: price, cost, and the best price-quality ratio. Under Directive 2014/24/EU, the cost criterion must be assessed through an analysis of cost-effectiveness, e.g., life-cycle costs. The best price-quality ratio must be assessed on the basis of award criteria linked to the subject matter, such as social aspects. These criteria may concern the working conditions of those participating in the production process or service provision, for example conditions implying that the supplier must execute the contract in a manner that promotes gender equality or diversity in ethnic origin.

5) In the qualification and exclusion of suppliers

Under Article 18(2) of Directive 2014/24/EU, Member States shall take appropriate measures to ensure that suppliers observe applicable environmental, social, and labor law obligations established in EU law. In Finnish law, Section 2(2) does not include the obligation to consider labor law obligations, but it does include environmental and social obligations. The provision has the nature of a recommendation. Section 81 of the Act contains optional exclusion grounds (Article 57(4) of the Directive 2014/24/EU). For example, a supplier may be excluded if it has been found guilty of an offence relating to professional ethics by a final judgment or has otherwise committed serious professional misconduct. The issue of requirements relating to collective agreements has also been relevant in some court cases, e.g., in the Finnish Market Court case 138/14 it was found to violate the principle of proportionality and the principle of non-discrimination to require a tenderer to comply with a specific collective agreement.

According to the Finnish Government Bill RP 2/2026, the wording of the current Section 2(1) was to be clarified by adding an objective of cost-effectiveness. Under the revised subsection, contracting entities shall seek to organize their procurement activities and plan their procurements so that they can be carried out as cost-effectively and with as high quality as possible, utilizing prevailing market conditions and taking environmental and social aspects into account.

6) In the awarding of contracts

There are two types of award criteria: the lowest price and the economically most advantageous tender. According to Section 93(1) of the Finnish Act, the contracting entity shall choose the tender that has the lowest price, is most economically advantageous in terms of cost, or has the best price-quality ratio (Article 67 of Directive 2014/24/EU). Social considerations can, above all be used to determine which of the tenders is the economically most advantageous, provided that they entail an economic benefit for the contracting entity and relate to the good or service that is the subject matter of the procurement or to the way the contract is to be performed. If the contracting entity chooses the best price-quality ratio as the criterion for the economically most advantageous tender, it may use comparative criteria relating to social aspects, under Section 93(2).

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Examples of case law in Finland on social considerations in public procurement:

1. Market Court (MAO:138/14 – Markkinaoikeus)

The contracting authority required tenderers to comply with a specific collective agreement when performing the contract. The Market Court held that such a requirement violated the principles of proportionality and non-discrimination in public procurement.

The court reasoned that while contracting authorities may consider labour conditions, requiring compliance with a specific collective agreement could unjustifiably restrict competition by excluding operators who otherwise comply with statutory labour law. The case demonstrates that social requirements are permissible only if they are proportionate and do not limit market access unnecessarily.

2. Market Court MAO:279/18 – Markkinaoikeus

The case concerned procurement conditions related to personnel requirements in a service contract, including qualifications and organisational capacity of the service provider. The Market Court examined whether these requirements were objectively justified and proportionate in relation to the subject-matter of the procurement.

The judgment illustrates that criteria relating to staff conditions or workforce organisation may be accepted if they are directly connected to the performance of the contract. However, contracting authorities must ensure that such conditions do not create unnecessary barriers to competition. The case reflects the broader principle in EU procurement law that social considerations must remain linked to the contract’s subject-matter.

3. Supreme Administrative Court KHO:2015:17 – Korkein hallinto-oikeus

The case concerned the legality and proportionality of requirements imposed on tenderers in a public procurement procedure. The Supreme Administrative Court emphasised that procurement requirements must respect the general principles of public procurement law, including equal treatment, transparency, and proportionality.

Although the case did not concern social criteria exclusively, it is often cited in Finnish procurement law discussions because it clarifies that any additional requirements imposed by contracting authorities, whether social, environmental, or technical, must be justified and proportionate. The decision therefore provides an important interpretative framework for assessing the legality of social criteria in procurement.

Finnish case law concerning social considerations in public procurement remains relatively limited. However, the Market Court has addressed related issues in several cases. For example, in MAO 138/14 (2014) the court held that requiring tenderers to comply with a specific collective agreement violated the principles of proportionality and non-discrimination. Later cases, such as MAO 279/18 (2018), demonstrate that personnel-related requirements may nevertheless be accepted when they are clearly linked to the subject-matter of the contract. The Supreme Administrative Court (KHO 2015:17) has also emphasized that procurement requirements must always comply with the general principles of equal treatment, transparency, and proportionality.

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Comment on legislation and practice concerning social considerations

The contracting authority should, in each case, based on the subject matter of the contract, assess which social considerations are relevant for that procurement and clearly determine what it aims to achieve.

A problem with the social criteria is that they mainly concern the production process itself. They cannot be evaluated solely based on the final product, and they are difficult to monitor in globalized production with complex supply chains. Contract terms in procurement should therefore be associated with requirements that enable genuine verification of the accuracy of the information provided in tenders. One may also question whether it is appropriate to use public procurement to achieve social policy goals, such as social considerations, or whether such considerations are better addressed through other legislation and in other areas.

Summary:

Socially adapted public procurement refers to using public purchasing to promote social goals such as decent working conditions, social inclusion, equal opportunities, ethical trade, and corporate social responsibility. Historically and in modern EU law, public contracts can include social requirements at various stages, technical specifications, award criteria, contract conditions, and supplier qualification. While such measures can support employment, integration, and fair labor standards, they must respect EU principles like non-discrimination and transparency. Case law shows that social criteria are allowed when linked to the subject of the contract and proportionate, but not when they unjustifiably restrict free movement or favor specific groups. A key challenge remains verifying social conditions within complex global supply chains, raising the question of how far procurement should be used to pursue broader social policy goals.

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