Sustainable Award Criteria are a widely employed tool to achieve sustainability goals, rewarding practices that align with resource efficiency, social responsibility, and long-term impact during the contract award stage. While the use of this tool has been growing steadily over the past decade, not enough quantitative evidence exists regarding its effects.

Enrique’s study targets this gap in the literature and examines how sustainable award criteria affect public procurement contracts’ economic performance.

The main focus of this working paper is to analyse the relationships that exists between the use of this tool, how successful the tender is at attracting bids, and addressing any extra-cost impacts it may be associated with. 

Abstract

Securing a government contract is commonly seen as a growth driver for firms. In recent years, considering sustainability to award the winning firm in public auctions has gained popularity. However, the role that this practice plays on how a contract award impacts firms’ decisions and ultimately growth is not clear. This paper makes use of a dataset that combines public contracts and firm data for Spain to address this question. Our findings are consistent with an overall positive short-term impact of winning a government contract on firm growth, mainly driven by firms of smaller size and for which the government contracts are most relevant. Moreover, utilizing a staggered differences in differences approach, we find that this positive impact is not hindered by the inclusion of a sustainable award criteria. Moreover, evidence suggests that in the case of socially responsible award criteria, the positive impacts associated with winning a public contract may be exacerbated.