Dispute over procurement of railway cleaning services

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A dispute between the Italian State Railways (FS) and the trade unions broke out at the beginning of September 2001, when the company issued calls for tenders to contract out cleaning services. According to the unions, the calls for tenders guarantee neither the application of the sectoral collective agreement for outsourced services in the railway sector, nor the employment of the present 12,000 cleaning workers. FS responded to criticism by stressing that EU rules on procurement in the transport sector require the issuing of a call for competitive tenders. The dispute has led to strikes and demonstrations, including a two-day stoppage on 5-6 November.

At the beginning of September 2001, Italian State Railways (Ferrovie dello Stato, FS) issued calls for tenders to provide contracted-out cleaning services for trains, stations, workshops and offices. The whole procedure had previously been halted for some months, in order to avoid a conflict and strikes threatened by FS workers during the summer period.

Through these calls for tenders, FS intends to replace the cleaning deals which were signed in 1992, after direct negotiations with the contractors, and which are due to expire in December 2001. The railway company aims to reduce the overall cost of cleaning services and redefine the articulation between contracts. The calls for tenders envisage a total cost of almost EUR 245 million, compared with about EUR 270 million for the existing deals. The criterion for the award of the contracts will be the lowest price.

At present, cleaning services for trains and stations are provided by four coordinating territorial consortia (Consorzio Nord-Est, Consorzio Nord-Ovest, Società consortile gestione servizi ferroviari and Consorzio nazionale cooperativa portabagagli), which group around 100 firms and 65 cooperatives. There are currently around 12,000 railway cleaning employees.

The latest FS initiative has been firmly criticised by both the current contractors and the trade unions. The former question the legitimacy of the step taken by the the company, whereas the latter are against the form and the contents of the calls for tenders. According to the sectoral unions, the way in which the calls have been devised will drive firms to try to save considerably on labour costs (which represent around 80% of all contractors' operating costs), leading to significant reductions in sectoral employment levels, as well as a worsening of service quality standards.

FS responded to criticism by emphasising that it is actually current legislation which requires that all contracts above a certain threshold (EUR 400,000) must be allocated through competitive tenders, and that this is notably provided for by the European Union rules on procurement procedures in the transport sector (Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors). Moreover, according to FS, the expiry of the current contracts represents an important opportunity to reorganise the structure of contracts, with the aim of increasing efficiency and improving the quality of service. The public Competition and Market Guarantee Authority (Autorità garante della concorrenza e del mercato) has taken part in the debate and expressed the opinion that the decision to issue calls for tenders is coherent with the principles of competition.

Trade unions' positions and initiatives

Trade unions harshly criticised the FS initiative and have been organising protests against the form and the content of the calls for tenders since the beginning of September 2001. Between September and November 2001, trade unions have called strikes and held demonstrations, at both local and national levels. The latest move has been a national 48-hour strike held on 5 and 6 November 2001, which was called by Filt-Cgil, Fit-Cisl, Uiltrasporti- the transport sector federations affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - plus the independent Salpas-Fisafs and General Union of Labour (Unione Generale de Lavoro, Ugl)

The unions' protests focus on the following points:

• the calls for tenders do not require the application of the sectoral collective agreement for contractors of outsourced services in the railway sector, which was signed less than one year ago, on 24 April 2001. The wording of the calls for tenders, in fact, state generically that the contractor must assure 'normative and wage conditions which are not below those stated in the applicable industry-wide agreements'. The unions state that the new contractors may opt to apply collective agreements which provide for lower levels of protection than those granted by the accord of 24 April 2001 and, for this reason, they request the mandatory application of the latter;

• according to the unions, the new contracts will be awarded without any guarantee of employment levels, as the calls for tenders envisage that the contractors will decide 'their staffing levels according to their organisational autonomy, in order to assure the exact and regular performance of services'. The unions demand, instead, the explicit introduction of a 'social clause' (as provided for in article 17 of the April 2001 sectoral agreement for outsourced services in the railway sector), which would guarantee the recruitment by the new contractors of all present employees; and

• the adoption of the criterion of 'the lowest price' to award the contracts would, it is claimed, force firms to reduce labour costs as much as possible, with negative consequences on collective protection, employment levels and the quality of services. The unions believe that such a criterion is not in line with the existing legislation, which would instead indicate, as a general criterion, the choice of the 'most economically advantageous tender'. This would allow FS to consider, in the selection process, different aspects of the tenders and not only the price.

Furthermore, the unions consider that, as far as these two latter points are concerned, FS is breaching the 'pact on concertation policies and new rules on industrial relations in the transport sector' of 23 December 1998, which introduced a social concertation system and conflict-regulation mechanisms in the industry (IT9901240F). The situation is made even worse by a lack of specific information disclosure and prior consultation, the unions claim.

A further criticism refers to what the unions regard as an excessive fragmentation of contracts: around 70 instead of the current 32. On the contrary, the unions have proposed that FS set up a specific company to take on cleaning services directly, so as to acquire better control over both costs and the quality of service.

During September and October, several meetings between the unions, FS and the government took place, but they did not lead to positive results. Now, the unions are requesting a strong government intervention to help find a solution to the dispute. On this issue, at the beginning of November 2001, the Transport Commission of the Chamber of Deputies passed a resolution which asks the government to commit itself to a concertation effort. Such an effort, while guaranteeing competition and supporting the quality of service, should safeguard the employment of workers, the quality of work and adequate wage levels, including through the application of clauses and bargaining models which would allow these goals to be achieved effectively.

Current contractors' initiatives

The present cleaning services contractors have taken FS to court, since they maintain that the decision to issue the calls for tenders was illegitimate. According to the contractors, FS had made a commitment to extend the duration of existing contracts for another three-year period, up to 2004, in the framework of an agreement to reduce the costs of cleaning services which was reached in 1997. The final court ruling will be issued in January 2001, but meanwhile the Lazio Regional Administrative Court (Tribunale amministrativo regionale, Tar) rejected, at the beginning of November 2001, a request put forward by the four consortia of contractors to suspend the procurement procedures.

In any case, immediately after the publication of the calls for tenders and in consideration of the expiry of existing contracts, due on 20 December 2001, the present cleaning services contractors have sent out letters of dismissals to all of their 12,000 or so employees. The Federation of Service Firms (Federazione imprese di servizi, Fise), the sectoral employers' association affiliated to Confindustria, has criticised the steps taken by FS on similar grounds as the unions, both for fixing the lowest price as the criterion for the award of the contracts and for the lack of reference to the sectoral agreement for for outsourced services in the railway sector. Moreover, according to the general director of Fise, Francesco Triolo, in order to maintain the present level of services, contracts for a total value of at least EUR 355 million would be necessary, instead of the EUR 245 million indicated in the calls for tenders.

Commentary

The dispute over the new contracts for cleaning services adds to an already heated confrontation between management and unions at Italian State Railways, which focuses especially on the long-running negotiations over a new industry-wide agreement (IT9912349F). Even on this latter front, the parties have not yet succeeded in finding an agreement. On 9-10 November 2001, there was another strike to support the unions' demands for the agreement and on 9 November regional demonstrations were held, in which both railway workers and the employees of the cleaning services contractors participated. Subsequently, the unions and the company have reached agreements on specific issues (such as performance-related payments for 2000 and 2001) and this could signal the possible conclusion of the new sectoral agreement in the near future. No similar signs are present in the case of the procurement of cleaning services, however.

In particular, the issue of the contracts for the outsourced cleaning services in the railway sector highlights two contrasting goals: on the one hand, the need to guarantee competition in the management of railway outsourcing contracts, as well as FS's autonomy in choosing how to reorganise the structure of contracts; on the other hand, the necessity to guarantee employment levels and the outcomes of sectoral collective bargaining.

In this respect, it is interesting to note the substantial convergence of contractors and trade unions in defending the industry-wide agreement signed in April 2001 for outsourced services in the railway sector. This agreement was not signed by Agens, the organisation which represents FS in collective bargaining. Agens participated in all the stages which led to the definition of the agreement, including the signing of a preliminary accord at the Ministry of Labour in September 2001. Nevertheless, it eventually decided not to sign the final agreement which was concluded in April 2001, in order to avoid the risk of exposing FS to further costs.

This is a particularly sensitive issue, in view of an overall effort to increase the scope of competition and liberalisation in the whole railway sector, and it questions the sustainability of bargaining demarcations which are not based on substantial differences in the services provided. In practice, it raises the question of possible competition between different bargaining systems and collective agreements which cover the same kind of services, in this case cleaning services. On this point, the Lazio Regional Administrative Court, in the abovementioned decision, has stated that the sectoral agreement of April 2001 is binding only for the signatories.

The risk that firms may compete on the basis of collective bargaining rules and protections (and in a sector where the workers do not generally benefit from the 'protection' granted by high skills and professional levels) is explicitly stressed and opposed by the unions. However, a solution does not seem to be easy and it can come only through bargaining itself, most likely with the crucial help of the government. If the parties do not reach an agreement, the new arrangements will be determined by the outcomes of the procurement procedures, and this may lead to further and intense conflict and to 'destructuring' effects on the collective bargaining system in the sector of outsourced railway services. (Roberto Pedersini, Fondazione Regionale Pietro Seveso)