Have you thought about: Procurement
The public sector is one of the largest buyers of goods and services in the economy – and its order books are therefore a major factor in tackling the climate emergency.
In local government, the procurement bill for most authorities amounts to hundreds of millions of pounds annually. According to the Local Government Association (‘LGA’), authorities spend more than three-quarters of a billion pounds on energy alone.
Their collective spending power, therefore, has the potential to significantly reduce carbon emissions, increase sustainability in communities and places and maximise other co benefits, whether environmental, social or economic, including the development of more innovative and energy-efficient products.
Matters to consider
- Procurement policy can be used to establish principles and processes within an authority so that climate change objectives are integrated into wider decision-making. This fundamental change of perspective can help achieve an authority’s climate change objectives. Tasking a senior officer or member to change policy and champion sustainability across the authority will also assist in embedding procurement strategies across a broad range of contracts and negotiations.
- This can help ensure that climate emergency implications are being considered at all stages of the procurement process, from stakeholder consultation pre-launch, through to the drafting of contracts, specifications and performance outcomes, and the design of selection and evaluation criteria.
- Climate change objectives need not be limited to obvious energy and waste type contracts. Outcomes on a much broader range of contracts could be achieved, for example consultants being required to minimise travel through video conferencing, while services involving transportation could be required to provide assurances on vehicle emission levels.
- Buying locally, engaging local supply chains and investing in local economies has the benefit of reduced transport costs, creating new jobs, and improved community well-being. Food for schools, care homes and other facilities are often available to be sourced locally but the authorities will need to develop procurement strategies in order to achieve those outcomes. Authorities may also have the ability to procure electricity from suppliers specialising in renewable energy sources using long-term contracts including Power Purchase Agreements (‘PPAs’). There is already an over-riding policy requirement that all public procurement must be based on value for money and encourage free and open competition. The Public Contracts Regulations 2015 also allow for environmental standards to be taken into account in the procurement process, including in the contract, specification and evaluation criteria, subject to certain requirements.
- Any environmental standards that are required or evaluated through a procurement process must be linked to the subject matter of the contract. For example, on a waste collection contract, it would be permissible to evaluate emissions levels of the waste collection vehicles being used on that contract, but the authority would need to be careful about evaluating a bidder’s more general corporate environmental policies and standards as these are likely to go beyond issues that relate to the subject matter of the contract.
- It is also possible for the authority to take into account environmental factors on whole-life costings in the evaluation of price. This could allow the price evaluation to account for costs in the consumption of energy, end of life costs (such as recycling) and climate change mitigation costs.
- Existing contracts can be reviewed to impose new green targets and requirements. For example, maintenance and lifecycle replacement obligations in a facilities management contract could be updated to adopt new energy efficiency standards. Potential opportunities include the application of existing continuous improvement obligations or through implementing a variation to the contract.
- For any contract variation the procurement regulations set out whether this amounts to a ‘substantial modification’ and, if so, whether this is permitted. One way of implementing a ‘substantial modification’ in a procurement-compliant way is through a ‘clear precise and unequivocal review clause’ in the contract. Careful consideration will be required as whether or not provisions in the existing contract meet this test.
- Authorities should also consider how, when procuring new contracts, compliant variation clauses can be included to enable climate-related revisions throughout the contract’s life. It is particularly important to build-in this flexibility for long term contracts when it is very likely that the authority’s sustainability targets and obligations will evolve in line with new laws and technology.
What questions to ask?
- How are new contracts to be assessed and appraised in line with the climate emergency?
- Could your existing contracts be reviewed and improved to impose new green targets and requirements?
- What do you need to do internally to re-shape your policies – would the appointment of a ‘procurement champion’ help with decision making?
Three points to think about
- Have you reviewed and updated your commissioning and procurement strategy to reflect your desired climate emergency objectives?
- Are your power suppliers providing their energy from renewable sources?
- What questions and evaluation criteria can you build into procurement processes to encourage or require climate emergency objectives?
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