Green Public Procurement Comes of Age
The term “sustainable development” has become a bit of a turn-off as a result of recent abuses. When over-used (like a naughty child endlessly repeating a newly-learned swear word) it loses all impact, and becomes meaningless jargon. Of the 200 or so “definitions” on the go, most are simply spurious attempts to reject ideas, projects and proposals on the grounds that they’re not “green” enough. This, though, is an unfortunate diversion, since “proper” sustainability is here to stay: the law says so.
Making the correct “sustainability” calculation is an extremely tricky task, since the notion does not – contrary to popular belief – involve simply choosing the green option. Rather, judging what’s sustainable involves striking a difficult balance among three considerations: economic, social and environmental. Some commentators feel that the sustainability concept does no more than point out the obvious - that there’s an inevitable conflict in ever managing to balance those three considerations - without providing any help as to how that balance is to be achieved. True as that is, at the very least the notion highlights the fact that environmental considerations now have a seat at the top table.
One of the ways in which this is going to trickle-down into the property sector is through the increasing “greening” of the public procurement process. Although a certain Scottish construction project may have brought that process into disrepute of late, the fact remains that across the EU, 15% of all spending is done by public authorities, all of whom are subject to the rules on public procurement (designed to ensure that hard-earned taxpayers’ money secures best value for money, in a fair and open way.)
The question of whether public authorities may consider environmental benefits at the expense of lowest cost has been controversial in the past, but the answer is now clear, and about to get clearer still.
The issue was first raised in September 2002 in the “Finnish Buses” case. There, Helsinki City Council put the city bus network out to tender, aiming to accept the economically most advantageous tender. Crucially, they stipulated that one of the award criteria would be the quality of the bus fleet, including considerations of low nitrogen oxide emissions, and low noise. The contract was awarded to the company with the lowest emissions (but slightly higher price), and its disappointed (and slightly cheaper) rival raised a court challenge. It ended up in the European Court of Justice, who ruled that environmental benefits COULD be given extra weight, so long as they formed part of the specification, were linked to the subject matter of the contract, and were objectively quantifiable (so as not to confer a completely unrestricted discretion on the public authority).
Yet despite GPP being perfectly legal, it hasn’t really caught on, partly through ignorance. Across the UK, only around 20% of public tenders stipulate pro-environmental requirements, whereas in Scandinavia the figure is over 50%.
But this is all set to change, for two reasons.
First, the entire system of public procurement is about to be revamped. New laws – to clarify, simplify and modernise the law – will apply from the end of next January, placing GPP on a statutory footing, and requiring public authorities to factor in environmental elements.
Secondly (and coincidentally) we have the new Local Government in Scotland Act 2003, which creates a duty on local authorities to secure “best value”. But in this context best value doesn’t mean cheapest. Instead, local authorities have to achieve best value “in a way which contributes to achieving sustainable development”.
From now on, it’s all about “integration”. Sustainable development is to be integrated into all public authority decision-making, and environmental considerations are to be integrated into the sustainability mix, along with social and economic considerations. We have to think “life-cycle” and avoid just shunting the negative environmental impact further down the line.
The result will be that “green” creeps in at all stages of the procurement process - in the technical specification, in the selection and award process, and even in the actual performance of the contract.
Thus, we’re likely to see any or all of the following being demanded:
Compulsory environmental performance standards, environmental friendly production methods, Eco-labels, proof of EMAS or similar environmental management measures, disclosure of the bidder's turnover in the area of similar "green" contracts, and even exclusion of tenderers who can’t show compliance with environmental legislation.
Contracts where environmental technical competence could be particularly relevant include waste management contracts, construction, building maintenance and renovation contracts. As well as requirements for energy-efficient computers, recyclable paper, environmentally-friendly public transport, and organic food, we can expect to see energy-efficient buildings, low-energy lighting, the use of environmentally-sustainable timber, renewable-sourced electricity, air conditioning systems complying with state-of-the-art environmental solutions, recyclable building materials, and a general demonstration of environmental technical competence, in avoiding any spillage of polluting products and minimising noise emissions and waste creation.
If you can’t flash your green credentials, you could find yourself undercut – by a higher offer! And if you’re already greened up and ready for action, but feeling frustrated at the lack of pro-environmental tenders, it’s maybe time to remind the authorities of their duties….
FOR FURTHER INFORMATION PLEASE CONTACT: VINCENT BROWN