MODULE 4.2: PROCUREMENT
Strengthen your action plan with more ambitious measures
Setting more ambitious targets
- Towards 99% GPP: Yes, you can set procurement targets! Public authorities can start and continuously expand the focus of GPP.
- How would you be able to reach a goal to include 99% of green criteria when looking at energy efficiency and climate change mitigation in purchases, services and works? A few good practise cases will illustrate different options and approaches, using the example of Kolding in Denmark:
- Adoption of a municipal GPP policy: In Kolding, the municipality has 8,000 employees and is the largest single business enterprise in the Region of Southern Denmark. Its GPP activities started with the adoption of a municipal GPP policy (1998). Today, GPP is integrated in the procurement of goods, services and construction – virtually 100% of tenders - ensuring compliance with environmental requirements, as well as applying environmental award criteria. Kolding is regarded as one of the local government pioneers in GPP internationally.
- Joint purchasing: Kolding’s energy and climate policy includes a goal to reduce the carbon dioxide equivalent (CO2e) emissions by 75% until 2020 (compared to 1990). This substantial reduction can only be achieved using latest technologies and solutions. Public procurement is leading the way towards innovation at the municipality. Led by the city’s Environment Department, a call for tender was published at the end of January 2011 for the supply of highly energy efficient replacement light bulbs (such as light emitting diodes - LEDs). The tender was presented in cooperation with the Danish 12-City Purchasing Group. The 12- City Purchasing Group is comprised of the cities Esbjerg, Fredericia, Herning, Holstebro, Ikast-Brande, Kolding, Middelfart, Odense, Randers, Silkeborg, Svendborg, Sønderborg, Vejle and Århus. Apart from fulfilling local lighting needs, the procurement action aimed also to encourage sustainable product innovation for energy efficient lighting technologies.
- Major success factors behind Kolding’s success include:
- The Environmental Department is regularly training all staff working in procurement on GPP.
- All major tenders need to include GPP criteria. Procurement staff has ready to use GPP criteria and tenders are regularly checked by the Environmental Department.
- Kolding organises for every product group mostly annual market dialogues. By this way key suppliers have been involved and informed timely in advance of the new requirements to sustainability.
- Kolding is a “team-worker” and works together nationally (purchasing group) and internationally (Procura+ Campaign) staying informed about latest developments and approaches towards GPP and copying best practice done across Europe.
Explore new action options
- Ambitious action includes the mainstreaming of the concepts of life-cycle costing (LCC) and early market engagement in all procurement actions. LGs can save energy and money with GPP, especially using a life-cycle costing (LCC) approach, and drive innovation in the market by demanding improvements (interesting to companies as LGs are large purchasers).
- What is the LCC approach?
- Life-cycle costing or LCC is a tool which evaluates the costs of an asset throughout its life-cycle. Under the EU procurement rules a contract can be awarded based on the most economically advantageous tender. Here, the associated costs may be calculated on the basis of the whole life-cycle of the products, services or works, which means calculating the costs associated with the use, maintenance and end-of-life.
- Networking and knowledge exchange are essential.
- “The main recommendation I would give to fellow procurers is the need to establish a multidisciplinary team. When procuring innovative, sustainable, cutting edge solutions input is required from engineers, sustainability experts, the actual users of the service and procurers. And it is only by working together as a whole can the life-cycle costs be established and the most environmentally advantageous option chosen.” (Kevan Twohy, Procurement Manager, London Borough of Bromley, United Kingdom)
Is a politician personally involved in the process?
Take a look at what local leaders say about their role …
- Recommendation: Establish a permanent working group on GPP that encompasses participants from all relevant departments such as central and major decentralised procurement offices, legal departments involved in procurement, energy, environment and social departments, as well as selected requisitioners of key products, services and works groups.
- Good practice example of Vienna (Austria): The City of Vienna's programme for sustainable public procurement, ÖkoKauf Wien, has been commended by the EU commission as one of the most effective projects to promote resource efficiency. Thanks to its sustainable procurement system, the City of Vienna has managed to cut carbon dioxide emissions by 30,000 tons per year.
- Green electricity proves to be highly effective: Public procurement of green electricity should be a high priority product – as it can reduce the local government’s (LG’s) CO2 emissions up to 30% in many services, from road lighting, to building services and information and communications technology (ICT) equipment which all consume electricity. The aim for the advanced GPP procurer should be to buy electricity that is generated from 100% renewable energy sources.
- There is also huge potential in the built environment. A Guide on Procuring Innovative and Sustainable Construction Solutions offers a useful insight into recent issues addressed in this field. A collection of best practice "Snapshots" has also been produced to accompany the Guide, which provides concrete examples from across Europe to illustrate the recommendations given in the Guide.
- An important aspect here relates also to the additionality principle. Procurers would aim to award contracts that clearly show that the purchased electricity comes from renewable sources (certificates), asking the suppliers to prove that the providers actively increase the build up of renewable energy plants. Further information and specific criteria and verification schemes can be found in the Procura+ Manual section 6c.
- A few good practice cases will illustrate different options and approaches, using the example of Bremen in Germany:
- Green procurement of electricity by Bremen was done for the first time in July 2008 in accordance with the policy and concept provided by the German Federal Environment Agency (UBA). Bremen adopted this practice to provide benefits for the environment in terms of reduced CO2 emissions, foster the development of renewable energies, and allow the public sector to act as a model for other purchasers.
- The approach to sustainable procurement used by the City of Bremen seeks to provide incentives for further investment in new (or additional) renewable energy (RE) facilities. Sustainability criteria were used as follows in the tendering process:
- Pre-Procurement: Market research was carried out prior to publishing the tender. Discussions were held with potential bidders and procurement strategies exchanged with other governmental agencies in order to define the terms of the tender.
- Technical specifications:
- 100 percent of the supplied electricity from renewable energy sources
- Bids were required to deliver a minimum of 30 percent reduction in the amount of CO2 emissions associated with the supply of the required electricity, as compared with the average national electricity mix recorded in the GEMIS database
- Variant bids were permitted
- Award criteria:
- Price (90 percent)
- Reduction in CO2 emissions (10 percent)
- The additional costs associated with the green requirements included in the tender were calculated at about 0.1 cent/kWh, or approximately 69,000 euro per annum. Bremen’s political mandate for green procurement enables it to absorb certain higher costs from switching to green electricity. The CO2 savings associated with Bremen’s purchase are estimated at 75 percent, compared to a supply from non-green sources and therefore strongly contributing to achieving Bremen’s climate change mitigation targets.
Procurement and vehicles
In order to receive a good overview on the success factors, challenges and approaches towards the procurement of clean vehicles, we have compiled the following assessments of 2011 of sample countries such as Germany, United Kingdom, The Netherlands, Sweden (all Green-7, i.e. European leaders in GPP), Croatia, Bulgaria and Romania. This analysis serves to highlight the importance of a tailored approach suitable for the region. Further guidance and tools on clean vehicles can be obtained from the Clean Vehicle Portal and the Sustainable Procurement Resource Centre (search “All topics” => Transport).
- Further examples from cities around Europe can be found here.
Procurement and events
A sustainable event is one designed, organised and implemented in a way that minimises potential negative impacts and leaves a beneficial legacy for the host community and all involved. When issuing calls for tender for a large event, it is advisable to clearly state right from the beginning and identify in the subject matter that you want to organise a “sustainable event”. All subsequent tender phases and criteria need to relate to the subject matter. To make the process more manageable, a possibility is to divide one tender into various lots for specific services and products; but the “sustainable event” specification must always be there. Examples of relevant requirements:
- Specify minimum percentages (e.g., at least 50%) and/or award points for the use of fruits and vegetables, sustainably harvested items (e.g. marine products), or resources that must be seasonal and organically produced (technical specification/award criteria)
- Food waste and/or waste from food packaging must be minimised (contract performance clauses)
- Caterers must describe their experience applying appropriate environmental management measures, such as training for staff, or donation of edible leftover food (selection criteria for suppliers)
- Paper is made from 100% recovered paper fibres (recycled) or sourced from sustainably harvested forests
- All or a certain percentage of IT products (PCs, notebooks, monitors, multifunctional devices) meet the latest ENERGY STAR standards for energy performance, available at www.energystar.org. (technical specifications)
- All cleaning products are accredited, or equivalent, to be environmentally friendly without toxic or hazardous substances (technical specifications)
- Electricity (or a proportion of the electricity) must be generated from renewable energy sources. Request Renewable Energy Certificates and trusted labels (technical specifications).
- Additional points are awarded for complementary energy saving activities offered by the venue organiser, such as an energy audit of the existing consumption patterns (award criteria). Further information can be found in the Sustainable Events Guide (2012).
Procurement, food and catering
When addressing GPP for food and catering services one needs to take into account the sustainable consumption and production patterns of each region. The EU project POPP (Policies to Promote Sustainable Consumption Patterns) highlights the need of political commitment supporting sustainable food, making the topic high on the national and local government’s agenda. Furthermore, issues and challenges remain:
- Communication and unclear strategies: There are problems with understanding the aims of GPP by addressees, for example, municipal procurers, and final target groups, such as, kitchen man.
- Price: Too much weight has been given in the past to price as a criterion for awarding contracts using the public procurement process. Changing award procedures to include other issues, such as quality may contribute to the uptake sustainable consumption patterns. Deciding on what value should be given to quality is a major issue.
For food, the procurement criteria address organic production methods, regional products and suppliers, low carbon transport and packaging waste. More comprehensive criteria also address other aspects, such as the procurement of food produced according to Integrated Production standards and animal welfare.
For catering services, the procurement criteria focus on organic food, and waste minimisation and selective collection; the comprehensive criteria focus in addition on environmental selection criteria, the use of paper and cleaning products, kitchen equipment, and nutrition. Advanced users may want to use the criteria outlined in this GPP publication.
When public authorities want to give concessions the procurement directive clearly state that those do not fall under the directives (see EC 2004/18 Art. 1 and 3). The procurer has the influence to provide concessions to the bidder that shows that the products and services offered have a minimum impact on the environment and more particularly on the CO2 emissions created via the production and delivery of food products and services.
- Procurers would have the possibility to include in the technical specifications a reference to this, e.g. “The bidder needs to present a comprehensive report on the expected CO2 emissions that would be generated during the operation of the services as outlined in the contract of the concession. The report shall encompass an analysis of CO2 emissions for all energy-using appliances and the embedded CO2 emissions of the food and drinks to be offered.
The report must also include a list of measures and time plan of activities to be undertaken by the bidder to decrease the CO2 emissions in case the bidder would be awarded the contract of the concession.” This measure ensures the bidders responsibility of working towards decreasing CO2 emissions and offering products that have a minimum ecological and climate footprint.
A good practice example: The City of Malmö, Sweden has the goal to serve 100% organic food in all of its public catering services by 2020. €36 million was spent on school restaurants in the last four years. Switching to more organic produce and redesigning menus is expected to reduce greenhouse gas emissions from food supply by 40% by 2020, based on 2002 levels.