PUBLIC PROCUREMENT AND SUSTAINABLE DEVELOPMENT
Guidelines for Purchasers
CONTENTS
1.1 This paper provides guidance on how to take account of sustainable development issues in the context of public procurement. It applies directly to the Scottish Executive including its Executive Agencies and associated departments. It is hoped that the broad principles set out in the guidelines will form a useful framework which the wider Scottish public sector will also wish to follow.
1.2 It is, of course, essential that when the Executive buys goods and services it secures best value for the taxpayers' money. However, public purchasers and consumers ("end-users") can make a significant contribution towards meeting the Executive's wider objectives on sustainable development. The following guidelines provide details of the Executive's underlying policy on value for money in procurement and set out the various ways in which public purchasers and end-users should support the sustainable development agenda.
1.3 The guidelines should be read in conjunction with "Public procurement and sustainable development: A message to suppliers" which provides guidance for those wishing to sell to the Executive and the Executive's "Greening Government Operations" policy statement (see the references section below
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2.1 Taxpayers have a right to expect that public funds are used wisely and fairly. The Scottish Ministers therefore take the view that all public procurement of goods and services, including works, should be on the basis of "value for money" (or "best value" as it is sometimes known), having due regard to propriety and regularity. Value for money in procurement is generally defined as
" the optimum combination of whole life cost and quality (or fitness for purpose) to meet the customer's requirement".
2.2 Of course, in many if not most cases, value for money and environmental considerations go hand in hand, for example in focussing on whole life costs and the reduction of consumption and was
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3.1 Whole life costing is a central requirement of the Scottish Executive's procurement policy. Only by taking account of all aspects of cost, including running and disposal costs, as well as the initial purchase price, can genuine value for money can be achieved.
3.2 Examples of the factors which need to be considered in assessing whole life costs include:
- running costs such as the energy or water consumed by the product over its lifetime;
- indirect costs, e.g. less energy efficient IT equipment will produce more heat causing the plant in air conditioned buildings to work harder to remove it so adding to the electricity bill;
- administrative costs, e.g. the use of a more expensive product which is less harmful to the environment may reduce the time spent by staff in complying with the Control of Substances Hazardous to Health (COSHH) Regulations;
- investing to save revenue costs ("spend to save" measures) e.g. specifying higher levels of insulation where the extra expenditure can be recouped from lower energy costs;
- not insisting on new items when refurbished parts or products could be used; not insisting on new items when refurbished parts or products could be used;
- recyclability, e.g. purchasers can create markets for their own waste such as paper, toner cartridges etc by buying products containing recycled materials;
- furthermore, a recycled product e.g. a refurbished toner cartridge, may cost less than a new one. Purchasers should, however, look to waste reduction and re-use as well as recycling; and recyclability, e.g. purchasers can create markets for their own waste such as paper, toner cartridges etc by buying products containing recycled materials
- the cost of disposal arrangements, e.g. it may be worth paying a premium to a supplier giving an undertaking to remove the product or a hazardous substance at the end of its useful life. the cost of disposal arrangements, e.g. it may be worth paying a premium to a supplier giving an undertaking to remove the product or a hazardous substance at the end of its useful life.
3.3:Risk factors must also be considered, for example:
- the advantages of reducing their risks under COSHH and the Duty of Care on Waste Management (under section 4 of the Environment Protection Act 1990) e.g. by choosing benign rather than hazardous materials; and - the risk of investing in redundant plant and equipment as increasingly stringent environmental standards are imposed through EU and national legislation, allied with increasingly vigilant enforcement.
3.4 At the tender evaluation stage the costs and benefits of the competing bids should be evaluated in the normal way to establish which of the bids meeting the specification offers the best value for money. The contract should be awarded accordingly.
3.5 The award of contracts should not be made subject to criteria or conditions which are not directly relevant to the product or service which is being procured. However, purchasers and end-users will need to ensure that they discharge their statutory obligations - for example under the "Duty of Care" -see paragraph 12.3 below.
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4.1 As explained above, the fundamental aim of public procurement is the achievement of value for money. However, purchasers and end-users can play an important part in meeting sustainable development objectives and can in assisting the development and use of goods and services which are environmentally preferable. It is essential that purchasers and end-users are familiar with, and take full account of, relevant sustainable development objectives when buying goods and services. Key objectives are;
· Conserving resources (e.g. energy, water, wood, paper) resources, particularly those which are scarce or non-renewable - while still providing a safe and comfortable working environment;
· Reducing (and avoiding wherever possible) waste through re-use and recycling and by using refurbished and recycled products and materials where such alternatives are available;
· Phasing out of ozone-depleting substances and minimising the release of greenhouse gases, volatile organic compounds, vehicle emissions and other substances damaging to health and the environment;
· Encouraging manufacturers, suppliers and contractors through specifications to develop environmentally preferable goods and services at competitive prices;
· Ensuring that any products derived from wildlife such as timber, plants and leather goods are from sustainable sources, and comply with EC and international trading rules such as CITES (the Convention in International Trade in Endangered Species);
· Encouraging contractors to improve environmental performance; and
· Meeting all relevant current and foreseen statutory regulations and official codes of practice and specifying contractors to do the same when working on departmental premises.
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5.1 Perhaps the most significant contribution that public purchasers and consumers ("end-users") can make, alongside the reduction of consumption and waste, is by ensuring that specifications for goods and services take full account of sustainable development objectives. For example, in specifying the use of recycled materials or materials from renewable or sustainably managed sources wherever possible.
5.2 The procurement process will normally start with the definition of the business need by the end user. From this a specification will be drawn up. In preparing the specification the end user should decide the extent to which it should cover environmental requirements taking account of:
· the Executive's environmental policies and strategy for greening its operations (including any current guidance on environmentally preferable options); the Executive's environmental policies and strategy for greening its operations (including any current guidance on environmentally preferable options);
· the resources available (ie affordability); c. the requirement to achieve value for money; the resources available (ie affordability); c. the requirement to achieve value for money;
· and the EC procurement directives and the Treaty as appropriate
5.3 In considering end-users' specifications, purchasers should check that all of the above factors have been properly addressed.
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6.1 In some cases, in order to meet the executive's objectives on sustainable development, it may be necessary to specify requirements in a way which will result in higher whole life costs (an "environmental premium"). In such cases, the environmental benefits must be clearly quantified and must be sufficient to justify the additional cost.
6.2 In certain cases, as a matter of environmental policy and where affordable and consistent with any legal obligations, the Executive may decide that all specifications must contain certain provisions or be framed in a particular manner. For example, to require that paper or other products/materials come from recycled or renewable sources. Details of such decisions will be maintained on the Executive's procurement website (see references below).
6.3 While the Executive may, for example, decide to specify paper made out of recycled materials, the field of selection should not be limited to providers who only supply recycled paper. The unwarranted rejection of suppliers capable of meeting the specification could lead to both a loss of value for money and a breach of the EU rules.
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7.1 Public bodies, including the Executive are required to comply with the EC procurement directives and the UK Regulations which implement them. These apply to most contracts whose estimated value equals or exceeds specified thresholds . They are also required to comply with the Treaty of Amsterdam (formerly Treaty of Rome), for example, on the free movement of goods and services and non-discrimination on grounds of nationality. The main ways in which these rules affect environmental considerations within the procurement process are:
(a) specifications - public bodies are, in general, free under the rules to specify their requirements in green terms. For example, they may specify that a product should be made out of materials which are or could be recycled or that particular materials, such as ozone depleting substances, should not be used in the product. This is subject to the general rule that specifications must be drawn up in a manner which does not discriminate against products or providers from other Member States and which is, where applicable, consistent with the provisions in the directives on technical specifications and the use of standards.
(b) selection of tenderers - the EC directives and implementing regulations set out detailed criteria for the selection of tenderers based on evidence of their personal position, their economic and financial standing, their technical capacity and, for services, also their ability. The nature of the evidence that may be requested with regard to technical capacity is exhaustive, so evidence on other factors may not be taken into account. In particular, questions about providers' general policies (e.g. on environmental issues) are not permitted unless they are directly relevant to performance of the contract. Purchasers are allowed to reject candidates who have been convicted of a criminal offence or who have committed an act of grave misconduct in the course of their business where they consider rejection to be justified. This may include infringement of environmental legislation/regulations. However care should be taken to ensure that decisions to reject providers are proportionate to the offence and that the provider is given an opportunity to describe any steps they might have taken to prevent recurrence. Care should also be taken to ensure that providers are treated equally.
(c) award of contract - only two criteria are permitted - either various criteria including whole life costs for determining which offer is "the most economically advantageous" to the purchaser (i.e. best value for money) or "lowest price" alone;- public bodies are, in general, free under the rules to specify their requirements in green terms. For example, they may specify that a product should be made out of materials which are or could be recycled or that particular materials, such as ozone depleting substances, should not be used in the product. This is subject to the general rule that specifications must be drawn up in a manner which does not discriminate against products or providers from other Member States and which is, where applicable, consistent with the provisions in the directives on technical specifications and the use of standards.
(d) contract conditions - as a matter of Community law, purchasers can attach conditions to the award of contracts provided these conditions are compatible with the Treaty of Amsterdam. In brief, this means that the conditions must be equally capable of being met by providers in all Member States. However, unless such conditions are directly related to the subject of the contract they can be expected to result in unnecessary and hidden costs and would be an inappropriate use of public spending. As such they should be avoided. An example of an acceptable contract condition might be, "While working on the department's premises the contractor will comply as far as possible with the department's green strategy.". An example of an unacceptable contract condition might be "the contractor must have, or introduce, a policy of only using recycled paper in the conduct of its own business".
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8.1 The purchaser's primary role is to respond to end users' needs. The purchaser must, however:
a. be fully aware of the Executive's environmental strategy;
b. be able to challenge a specification to ensure that full account is taken of the purchaser's knowledge of the market and professional skills and experience; be able to challenge a specification to ensure that full account is taken of the purchaser's knowledge of the market and professional skills and experience;
c. ensure that where the EC procurement directives apply, they are followed appropriately - e.g. in framing the specification, in selecting tenders and in awarding contracts; and ensure that where the EC procurement directives apply, they are followed appropriately - e.g. in framing the specification, in selecting tenders and in awarding contracts; and
d. ensure that the requirements of the Treaty of Amsterdam are complied with. To ensure that the requirements of the Treaty of Amsterdam are complied with.
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9.1 Purchasers should be wary of unsubstantiated claims and environmental marks which have no formal recognition. Some typical phrases are:
"environmentally friendly" - meaningless if unexplained
"comes from managed forests" - virtually all forests used for paper-making are managed, but some are managed in ways that are strongly criticised by environmentalists
"kinder to wildlife" - again, meaningless if unexplained.
9.2 Further guidance on these issues is given in the Department of the Environment Transport and the Regions' "Green Claims Code" (available from DEFRA's website, see references section below).
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10.1 Formal standards for environmental management systems are now in place which assure purchasers that suppliers are operating to control their environmental impacts. Companies can obtain certification for their environmental management systems under ISO 14001 or the Eco-Management and Audit Scheme (EMAS). More information on both schemes but particularly on ISO 14001 is given in DEFRA's guide to "Implementing Environmental Management Systems in Government
10.2 EMAS and ISO 14001 are voluntary schemes. As such, it is not the Executive's policy to require its suppliers to comply with them as a condition of selection to tender or award of contract. Given the voluntary nature of the schemes, it would be unreasonable, and possibly open to legal challenge, to expect suppliers to comply as a pre-condition of bidding for public contracts. Such conditions could also lead to higher prices by, unreasonably, restricting those eligible to compete for orders and contracts and could conflict with the EC rules on selecting providers. It is however permissible to ask suppliers to provide evidence that they are able to operate an environmental management scheme where it is directly relevant to the contract, e.g. for the provision of a facilities management service in an organisation accredited to or seeking accreditation to ISO 14001.
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11.1 Few organisations can afford to conduct detailed life-cycle (or whole life) assessments on all their products because of the technical expertise and resources required to produce meaningful results. This is where the EC ecolabelling scheme can help. It provides rigorous standards for certain product groups which are based on a full analysis of life cycle impacts and agreed at European level. However, the scheme is voluntary and therefore it does not follow that ecolabelled products necessarily perform better in environmental terms than non-ecolabelled products. Accordingly, invitations to tender and contract documents should not require products to carry the label or any other non mandatory label. However, the ecolabel criteria may be used to identify environmentally preferable products and to improve the specification for products and services.
11.2 Purchasers who wish to identify products in the most energy efficient categories should use the European Union's mandatory energy labelling scheme.
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12.1 Purchasers and end users should, of course, aim to reduce the amount of waste produced. Failing that, value should be recovered from the waste and only if that is not an efficient solution should the waste be disposed of by means which minimise risk to the environment and to human health. The options for waste management are ranked by merit of their relative benefits:
a. reduce;
b. re-use;
c. recover (ie recycling, composting and energy recovery);
and
d. dispose.
12.2 Purchasers should focus their attention on the top of the hierarchy when making their purchasing decisions. For example, which products are likely to cause the least waste? Which can be re-used? Or, which can be recycled? Making the right decision - taking into account VFM - can help meet targets for reducing waste.
12.3 Care should be taken to comply with the requirements of Section 34 of Part II of the Environmental Protection Act 1990, which places a Duty of Care on anyone who produces or holds controlled waste (see Appendix D).
12.4 Purchasers should buy recycled products in support of this initiative wherever they provide VFM. The initiative is designed to put an increased share of responsibility on suppliers to make productive use of the materials in their products (and the packaging around them) once they have served their original purpose. The aim is to reduce packaging, and create markets for recycled materials by making greater use of them in packaging and products.
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13.1 Further information may be obtained on-line from the following web sites:Further information may be obtained on-line from the following web sites:
www.sustainable.scotland.gov.uk
www.scotland.gov.uk/climatechange
www.energy-efficiency.org
and DEFRA's website
www.defra.gov.uk
Inquiries should be addressed:
On procurement related matters; To Dave Cook, Scottish Procurement Directorate, telephone 0141 242 5598 or Email: Dave.Cook@scotland.gsi.gov.uk