TOPICS

Government procurement policy

"... the Government will give a clear lead in its application of sustainability and environmental principles to its own operations." [Summary para.96]

"Departments and their executive agencies are also major purchasers of supplies. Treasury guidance has been provided to all Departments which recognises that specifications for goods and services should reflect the requirements of Departments' environmental strategies, seeking best value for money in the usual way." [para.29.15]

Extract from Government White Paper, Sustainable Development: The UK Strategy. (Cm 2426). January 1994.

5. Public purchasing is a major feature of the nation's economy. According to the Government's strategy for procurement³ , central Government expenditure other than pay-related spending and transfer payments is about £40 billion a year, most of which is spent on procurement. In addition, purchasing authorities in the NHS internal market spend more than £20 billion a year.
6. Inevitably Government purchasing decisions have a big impact on the use of resources and on the environment. In the past procurement decisions seem to have been unduly influenced by short-term profitability. The Government's strategy now emphasizes the importance of adopting an integrated procurement process, "... covering the whole cycle of acquisition and use from start to finish, to ensure quality and economy over time, not short term lowest price".
7. In its response to the Round Table's first annual report⁴ the Government stated that "... Departments are free to specify their requirements in a way which meets their operational and policy objectives, including environmental factors wherever relevant, and they are expected to take account of 'whole life costs', which often involve environmental factors like energy consumption and waste disposal costs". Yet Departments do not specify the 'green credentials' expected of their suppliers; nor are suppliers expected to comply with environmental management schemes. The Government intends to issue Departments with new guidance on green procurement.
8. The Panel is disappointed that the Government has not adopted a more pro-active policy in this area despite its commitment "... to make sustainable development the touchstone of its policies⁵" . Purchasing is an important means to promote and be seen to promote the policy objectives of an organization. In the private sector, many leading companies now operate on the basis that environmental awareness and good practice are good for business. Business in the Environment and others have been promoting the importance of supply chain management which can lead to increased efficiency, cost savings and improved risk management. As customers demand higher standards throughout the supply chain, environmental performance will increasingly become an important qualification by which suppliers are selected. Last year, the Advisory Committee on Business and the Environment issued for consultation a draft report on integrating the environment into business decisions⁶ . Draft guidelines for action advise that "beyond observance of laws and regulations, consideration should be given to many factors, such as the risk of adverse effects on humans and on the environment across the whole life-cycle of the product, service or process including supplied goods and services, work done "in-house" and through to the ultimate, after-use disposal of any wastes". Application of these guidelines could become a major factor in the selection of suppliers.
9. By giving full weight to environmental factors in its purchasing decisions, the Government could have a significant influence on its suppliers, their pricing policies and on product design. It could thereby raise environmental standards and reduce pollution and waste in line with its commitment to sustainable development. The Panel therefore recommends that the Government should actively promote sustainable development through its procurement policies and practices and require other public bodies to do likewise. The Government should also monitor its success at integrating environmental factors into its purchasing decisions and publish relevant information annually.
10. The Panel believes that, following best practice in the private sector, the management systems of a potential supplier, including any environmental management system, should become a relevant factor in assessing tenders. Accreditation under recognised standards, such as BS7750, EMAS and ISO14001, may be a suitable way of meeting this requirement particularly for larger companies. Smaller companies may benefit from simpler, low-cost alternative schemes which need to be brought along. The Panel recommends that the Government should announce a target date by which the environmental policy and practice of firms competing for public contracts will become an essential element in the assessment of all bids. New Government contracts should require suppliers to develop and maintain an environmental policy during the life of the contract.
11. For the Government to recognise and support the now well-established trends in world markets by judicious use of its purchasing power would make good economic and environmental sense and be an effective means of contributing to sustainable development. The Panel recommends that the Government should join with other countries in the European Union and the OECD to promote initiatives on green procurement.

⁴Government Response to the First Annual Report of The UK Round Table on Sustainable Development. Department of the Environment. June 1996.

⁵Sustainable Development: The UK Strategy. Introduction by the Secretary of State for the Environment.

⁶Integrating the Environment into Business Decisions: The Consensus Approach. Advisory Committee on Business and the Environment. October 1996.