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Navigate Change: How new approaches to public procurement will create new markets


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NAVIGATE CHANGE presents new global approaches to public procurement. This guidebook provides guidance to business leaders in small- or medium-sized companies to understand some of the major changes taking place in international public sector markets. These New Approaches have changed the way regulations and procedures are applied by public authorities and are grouped into four themes:
- Green Public Procurement;
- Socially Responsible Public Procurement;
- Procurement for Innovation;
- Electronic Public Procurement.

The GOOD PRACTICES GUIDE is designed to be practical and easy to access. It should be seen as a tool for Business Support Organisations generating the desire to enter to the European and International Public Procurement world and show that, with some methodology, public procurement becomes a full development potential for SMEs. It describes in detail the 17 Good Practices led by Regional/National public authorities on procurement instruments for SMEs

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Navigate Change: How new approaches to public procurement will create new markets

  1. 1. 7% 16,5 % 5% 20 % 60,5 % 16,5 % 16,5 % 4,5 %NavigateSaScha haSelmayer | Jakob h raSmuSSen 57,3 % 19 % 17,2 % 5,1 % 15,8 % 5,4 % 4,9 %chaNge 15,5 % a guide book 15,9 % 4,5 % 16,5 % 15,8 % 3,8 %how new approacheS to public procurementwill create new marketS
  2. 2. AcknowledgementsThis book has been the result of a collaborative projectbetween ACC1Ó and Living Labs Global.Strong support was provided by the members of Living LabsGlobal, a non-profit association to promote service innovationin cities; the team at ACC1Ó, Catalonia CompetitivenessAgency, and the euroPROC consortium. In particularLucy Ratcliffe, Anna Domingo, Nicolas Espitalier and IsidreSala provided valuable critical and editorial support; andAlejandro Masferrer and Marc Panero turning complex ideasinto accessible visualisations.Without the generosity of the more than 25 contributorsinvolved this book would have not become such a richresource of experiences and perspectives, allowing it to givea high-level yet realistic insight into current markets.eU dIsclAImeREUROPROC project has been funded with support from theEuropean Commission (ERDF).This publication reflects the views only of the author, and theCommission cannot be held responsible for any use which maybe made of the information contained therein.© Government of CataloniaMinistry of Enterprise and LabourCatalonia Competitiveness Agency, ACC1ÓACC1ÓPasseig de Gràcia, 12908008 BarcelonaTel. +34 93 476 72 00www.acc10.catAuthors: Sascha Haselmayer and Jakob H RasmussenCoordination: Nicolas EspitalierPublished by: ACC1ÓDesign: BaseDesignFirst edition: April 2011Printer: Gráficas Rey S.L.Issues in English: 1.500 Ex.Legal deposit: B17911-2011ISBN: 978-84-694-3301-0
  3. 3. Printed in extra-white 100% FSC® certified paper,100% post-consumer fibres and PCF (Process Chlorine Free).EU Ecolabel (n°FR/011/003) - ISO 14001 - OHSAS 18001
  4. 4. contents Page 4PReFAce 6 gReen PUblIc socIAllY ResPonsIble PRocURement 10 PUblIc PRocURement 30IntRodUctIon 8 Fifty percent of public procurement Policies for social compliance are in Europe will be greened in the spreading across markets. Public buyersWhat is your dividend from the new near future. Variations persist, but can consider social impacts in tendersapproaches to public procurement? certifications can guide businesses. and require evidence. Policies areThis book helps small- and medium- Governments work to increase interpreted differently across markets;sized businesses navigate the dynamic opportunities for smaller businesses. yet growth in ethical consumer marketschanges taking place in public provides a measure of opportunities toprocurement. We introduce new IntRodUctIon 11 come.trends, the different ways policies areimplemented, the opportunities that PolIcY In ActIon 12 IntRodUctIon 31arise and experiences to-date to helpyou identify opportunities and risks. InteRVIew 14 PolIcY In ActIon 34 John conway, deFRA oPPoRtUnItIes 36 oPPoRtUnItIes 16 cAse stUdIes 38 cAse stUdIes 18 solution for the visually impaired stretching limits of green air-handling in stockholm IV Produkt helped a municipality Technologies provided by Astando achieve ambitious energy targets under help the city provide a solution that a negotiated procedure, opening new transforms the lives of thousands of markets. visually impaired citizens. satellite technology monitors Playgrounds for all ages: buying a water quality social vision Starlab inspired Barcelona with an Lappset redefined the impact of unsolicited offer to replace coastal playgrounds to cover also senior water monitoring sensors with citizens, striking a note with the social maintenance-free satellite data. agenda of local governments. energy savings at the czech business risk & value in responsible national theatre procurement ENESA upgraded installations at Instrumenta supplied surgical gloves the theatre, with a good return on under Stockholm’s Code of Conduct, investments through sharing cost- learning what compliance means to its savings on energy efficiency. global supply chain. nordic procurement of green hotel services RecommendAtIons 44 Five Nordic countries are developing a joint procurement standard for hotel services to provide clearer guidance to operators. Piloting intelligent waste management systems Urbiotica pilots its intelligent waste management system to reduce a twenty percent municipal waste budget. RecommendAtIons 28
  5. 5. contents Page 5PUblIc PRocURement electRonIc PUblIc conclUsIons 88FoR InnoVAtIon 46 PRocURement 70Innovation is a growing agenda Competitive companies can grow their The new approaches to procurementfor governments to respond to sales through e-procurement whilst provide support to smaller businesses,sustainability, quality and technology public buyers can gain efficiencies of and aim to move on from measuringchallenges. A set of exceptional some fifty billion Euros in Europe alone. benefits to transforming public services.procedures allows authorities to buy the Implementations and uptake varies Your strategy will determine how youdevelopment of new solutions. greatly, yet a short-term, cross-border navigate the transition and whether push will open new markets. you will lead, follow or lag in the newIntRodUctIon 47 markets. IntRodUctIon 71PolIcY In ActIon 50 PolIcY In ActIon 72 eURoPRoc 90InteRVIew 52Jakob edler, University of manchester oPPoRtUnItIes 74some chAllenges 54 cAse stUdIes 76 broader online reachmAnY oPPoRtUnItIes 55 of Us procurement Federal Business Opportunities isInteRVIew 56 a website to assure accessibility ofJuan F Rada, oracle corporation procurements above USD 25,000 for all businesses.cAse stUdIes 58 opening up public contracts to smesmarket for innovations in cities New initiatives by the UK GovernmentLiving Labs Global helps forty allow SMEs better access to publicgovernments to collect market procurement opportunities and reduceintelligence and launch innovative bureaucracy.projects. dividend in cross-borderentering the market with e-procurementa killer-application Alfa1lab is a pioneer in e-procurementTrip Convergence found market barriers working closely with new Europeanin launching a new transport solution standards, resulting in significantand innovative methods to make business returns.headway. borderless european e-procurementcreating the market for energy- standardefficient windows Twelve European markets work togetherMarkets were lagging in energy savings, to establish PEPPOL, an open Europeancausing the Swedish Government to procurement exchange across buyers and procure a major extending danish e-procurementproduct advance. A nationwide platform for publishingthe first city to use mobile parking tenders and approving suppliers offersTallinn used a radical innovation in open registration.its parking system, enabling NOW!Innovations to provide solutions to RecommendAtIons 86twenty global cities.Reinventing the public bicycleModular successfully uses commonsense to compete against multi-nationals spreading public bicyclesystems globally.RecommendAtIons 68
  6. 6. Preface Page 6PReFAceNowadays there is a general consensus that the questionis no longer whether or not the public sector shouldincorporate ecological, social and innovative aspects in theirprocurement decision-making processes but how to do it.The debate has broadened and the efforts towards enhancingthe global coherence in public policies have intensified.Public procurement policies could obviously not escape thedebate as the consequences of the acquisition of goods andservices and the implementation of public works can not beunderestimated. Sixteen percent of European GDP comesfrom public contracts issued by local, sub-national, nationalor European public bodies. Their effect on the global figure isimportant in itself and also as good practice to mark the pathto be followed by other agents. The question therefore is notif or why but rather how, and as this is a dynamic processwhere there’s always room for improvement, all those involvedshould work together as driving forces to lead the evolution ofpublic procurement processes to higher standards.Public authorities are committed to providing the best value The willingness to make public purchases as green asfor money in their purchases as well as taking responsibility possible is probably the bestknown new approach in publicfor the effects of these decisions. Ways of incorporating procurement policies. In recent decades, environmentalthe broad range of consequences of purchase decisions are tensions have continued to transform the mentality of bothbecoming more sophisticated. Public decision makers have to public buyers and citizens. Everybody agrees that the greenerincreasingly consider not only the mere solution to the main the product purchased the better. Recurrent public sectorneed but also to analyse other types of considerations involved suppliers, among them many SMEs, have already investedin the supplier selection. European institutions aim to lead the to make their goods more eco-friendly, trying successfully toprocess towards making public procurement processes not catch the attention of public buyers. Projects exist that takeonly more transparent but also more consistent. Introducing into account the complete life-cycle of a product or servicecertain aspects that were probably not considered in the past including their carbon or water footprint, for public purchaseinto the decision-making processes is driving all stakeholders decisions. So, very soon, in European public purchases it willto a win-win situation. This becomes even more relevant when also be important for the product or service purchased to bepublic institutions have to restrict their budgets due to the environmentally sound beyond the period of their life thatcurrent financial crisis and public sector accountancy has to serves the public authority. It is clear to everyone that morestruggle with performance indicators. advanced technologies are at a strong competitive advantage.
  7. 7. Preface Page 7The need to turn public tendering processes into fullyelectronic processes is also no longer a topic of discussion.The advantages are obvious in terms of transparency,simplicity, speed, equal opportunities and minimising error ,to name but a few. However, there’s still some work to be donebefore all public procurement in Europe can be undertaken viasafe and easy-to-use electronic platforms.Therefore, it was relatively easy for the EuroPROC partnersto choose the above mentioned topics to be included in thepresent guide. But, we felt that we should also cover other thenew approaches that were drawing our attention and growingin importance.Finding ways to improve undesired social situations viapublic procurement processes is under close considerationby a growing number of public authorities. In current timeswith severe financial crises affecting public purses in manyEuropean countries, social budgets are being dramaticallyreduced. There is little room for economic optimism inthe short term and therefore public bodies are extremelyinterested in exploring new ways to fulfil their commitmentsto their citizens. More than ever before, public allocationshave to be as efficient as possible and this goal can be tackledby considering the provision of goods and services that notonly meet their immediate needs but also address other socialchallenges. Public organisations are eager to know how theycan implement interesting solutions in this sense.Even more challenging could be coupling innovation euroPRoc partners have already been working for more thanpromotion and public procurement. Innovation Union is one of two years promoting the access of SMEs to public procurementthe seven flagship initiatives of the Europe 2020 strategy for a markets and so would like to contribute to this, sustainable and inclusive economy. Public procurement We are convinced this guidebook “Navigate Change –policies therefore are also clearly targeted by this strategy How New Approaches to Public Procurement will create newsince both have a relevant quantitative and demonstrative Markets” will be one of the most interesting outputseffect. Proper public procurement policies could leverage the of the project. The guide is not an internal document for theinnovation efforts of the private sector to the public benefit, consortium members but for all the stakeholders in publicas illustrated by successful experiences of pre-commercial procurement and it aims to encourage SMEs to lead thepublic procurement , and European policy is promoting the process to turn public procurement greener, more innovativetransfer of innovative knowledge from public to private agents and socially responsible and to benefit from electronicand vice versa. platforms. We hope the reader will find interesting and useful insights in the guide that will lead to improvements in public procurement processes from which we, as citizens, will all profit. Isidre sala euroPRoc project coordinator
  8. 8. Introduction Page 8IntRo—-dUctIonwhAt Is YoUR dIVIdendFRom the new tRends InPUblIc PRocURement?Public procurement constitutes around sixteen percent of Lastly, governments are under pressure to innovate. Majorworld GDP. It is an immense and diverse market in which societal challenges such as ageing, climate change orglobalisation and increased transparency are changing accessibility require solutions that do not yet exist, or may notthe competitive environment. This guidebook is intended fit into traditional delivery systems. As a result, governmentsfor small- and medium-sized companies with an interest begin to accept that they need to share risks in finding newin international markets and the impact of new public approaches with companies large and small.procurement policies on their business prospects. Resulting from these conditions, four major new approaches to public procurement have emerged that have changed the wayA dYnAmIc mARket, not Yet settled public procurement regulations and procedures are applied: green and socially responsible public procurement, publicThe new approaches public procurement presented in this procurement for innovation and electronic follow developments that have affected the majority ofpublic authorities.Firstly, governments need to respond to competitive pressuresto provide better services at lower costs, but also seek to useglobal markets offering ever more effective solutions. Publicvigilance on spending can be expected to grow with risinggovernment transparency.Secondly, the definition of value for money is changing. Valueis measured not just in purchasing price but the sustainabilityof investment, including life-cycle costs and environmentaland social impacts.Thirdly, technology is changing the way governments solvemajor challenges, but also how they interact with providersusing electronic procurement, open data and marketintelligence to cut costs of EUR 50 billion in Europe alone, bemore accountable and find better solutions.
  9. 9. Introduction Page 9oPPoRtUnItIes And the RIsk oFcomPlAcencYFor companies, the new approaches constitute a dynamicenvironment in which few common criteria or procedures arein place to help decision-making in the short-term.Companies face the challenging question of what strategy tofollow in the light of these trends.How can you tap into the EUR 436 billion in green fundspledged by global governments as part of their economicrecovery measures?Are you going to be a pioneer breaking new ground anddefining future demand?Are you an early follower, specialising in taking the pioneers’achievements to mass markets?Or are you a laggard, competitive at delivering cost effective stRAtegY consIdeRAtIons to gUIdesolutions to the mass-markets that are seeking the minimum YoUR ActIonsin compliance with the new trends? Taken together, this guidebook should provide guidance to aWhatever answer you choose, there are no shortage of business leader in understanding how public sector marketsopportunities, especially if you are proactive. Complacency are changing and the critical transition phase that is likely tomay come at a high price with more agile competitors dominate developments in the short-term.using the growing transparency and shift in criteria to offersustainable solutions at competitive costs. Public procurement is, and remains complex and multi- faceted, and it is outside of the scope of a short guidebook to cover international markets, regulations and policies in detail.A gUIdebook to nAVIgAte chAnge In this transitional phase, few reliable indicators provide quantitative insights and the new approaches bear differentlyUnlike large companies which benefit from a strong presence on whether you are selling medical devices, cleaning servicesin many markets and the resources to weather transition or energy to public authorities.times, smaller companies need to focus, prioritise andallocate limited resources carefully. Hence, this guidebook should help you to question the impact of these trends on your market, to consider different outcomesFour chapters introduce each of the often interrelated of the current transition period, and whether your business isapproaches, focusing strictly on the perspective of smaller ready to turn the new trends into dividends.companies. Insights into the variations in how these trends areimplemented at national, regional or local levels are illustratedas a reminder of how fragmented markets often remain.Similarly, specific opportunities are illustrated as trends inwhich new openings are created for smaller businesses.Case studies focus on concrete experiences within the newapproaches, presenting successes and difficulties thatemerged along the way.
  10. 10. green Public Procurement Page 10GreenPublicProcure—ment1. IntRodUctIon2. PolIcY In ActIon3. InteRVIew4. oPPoRtUnItIes5. cAse stUdIes6. RecommendAtIonscontRIbUtoRs: IRENE COMPTE, JOHN CONWAY, ARECELI PIFIGUEROA, VANESSA HÜBNER, CHONG-WEY LIN, ANASTASIAO’ROURKE, IVO SLAVOTINEK, MANUEL SWäRD
  11. 11. green Public Procurement Page 11IntRodUctIongreen procurement policies Governments around the world aim to show leadership through green public procurement by implementing newwill affect about fifty percent regulatory requirements, life-cycle costing models, preferred practices and business cases. The overall aim is to addressof european public tenders concerns about climate change, sustainable use of resources, health & safety, and waste the near future. Variations Another motivation for green public procurement is to shapepersist, but standards trends in product development, production and consumption and thereby help to transform established markets. In recentand certifications are years public purchasing has been a strong factor in creating major markets for green stationery and hospital supplies,available to guide businesses electric or hydrogen fleets, fair-trade and organic foods.and best practices show New products, standards and business models may emerge as a result. With major public customers ordering greenthat greening products and solutions, businesses should find it easier to invest in making their existing products and services greener or in developingservices can add significant innovative new green solutions.value to buyers as well as In the procurement process, the contracting authority can include environmental standards in both the functional andproviders. performance requirements of products or services, as well as in the contract conditions. The total cost of ownership or life-cycle costing principles can be applied to evaluate the environmental impact of the goods and services together with the material costs. Hence, a product that is pricier may be more cost effective over its ten-year life-cycle by, for example, using less energy. What green procurement means to the supplier varies greatly from one service or product group to another. Criteria are evolving but there are still few established and commonly recognised standards in place. This is partly due to the different ideological perspectives brought to standards that may be driven by consumers, environmental organisations, science or corporate interests. Furthermore, environmental impact is multi-dimensional and trade-offs are acceptable to some in order to achieve an overall environmental improvement. Companies interested in responding to green procurement opportunities should therefore investigate thoroughly what standards apply in their markets of interest, or in which markets their products and services meet recognised standards and certifications.
  12. 12. green Public Procurement Page 12PolIcY In ActIonPolitical unity on the principle of green procurement has not In 2008, the UK adopted the Climate Change Act, whichyet delivered common European or global standards and calls for a reduction in carbon emissions of 80% by 2050practices. But a wave of investments into green solutions is (measured against 1990 levels), and calls for centralevident, providing diverse opportunities across all levels of government emissions alone to be cut by 10% within thegovernment. 2010–11 period2.Since 2002, several global organizations such as the Policies on opening government data and encouraging greaterOECD, have adopted recommendations for green public transparency have coincided with industry initiatives suchprocurement. In 2003, the European Commission as the Carbon Disclosure Project, which has grown into acommunication on integrated product policy recommended major resource for investor and supplier intelligence in whichmember states to adopt green public procurement policies by some 3050 (2010) companies disclose their greenhouse-gas2006, which at least 21 member states had adopted (six more emission data. UK government procurement agencies areunder way) by 2010. A leading group, called the Green-71, was thereby enabled to gain insight into suppliers and the impactcommended by the EU as having the highest volume of green of their supply chains.public procurement. Globally, many national governmentsincluding the USA, Japan, Canada, South Korea, Australia, At regional and local government levels similar greenChina, Thailand and the Philippines have adopted sustainable procurement policies can be found, often exceeding EU oror green public procurement policies. national performance criteria by, for example, aiming for zero emission cities (e.g. Copenhagen CO2 neutral objective) or reaching a 100% renewable energy goal to be produced within city boundaries (Eindhoven 2035 energy neutral objective). In all these cases procurement patterns have changed, opening new opportunities.europeaN priorities for greeN procuremeNt3In Europe, a number of prioritysectors for green procurementhave been recommended bythe European Commission3: clothing, uniFormS and conStruction energy other textileScleaning productSand ServiceS Food and catering ServiceS paper and printing ServiceS health Sector eQuipmentFurniture tranSport and tranSport ServiceS oFFice machinery and computerS1. Green-7: Austria, 2. cutting central 3. “Public procurement forDenmark, Finland, Germany, government emissions by ten a better environment”, COMNetherlands, Sweden and UK percent in twelve months; (2008) 400/2 cms/news/pn10_059/ pn10_059.aspx
  13. 13. green Public Procurement Page 13As this market is by no means coherent or standardised, A central theme of green procurement is to establish themethods of evaluation also differ. In defining their life-cycle cost / benefit calculation. However, there are oftenrequirements, purchasers often rely on existing standards and difficulties in evaluating existing products for comparativecertification systems such as ecolabels. Worldwide there are assessment. In the contracting authority this may lead toover 400 ecolabels providing certification to companies (in insecurity about benefits being achieved. There can also be2011)4, applying different methods, geographies and degrees uncertainty about the legal basis for including environmentalof rigor in compliance to items ranging from food to finanical performance criteria and therefore an aversion to seriouslyservices. There are also a broad array of industry standards, implement green procurement or take related practice and guidelines that the purchasers draw fromincluding tools such as life-cycle assesment and productcarbon footprints.greeN fuNd for ecoNomic recovery5Funding (in billion EUR) allocated by global economies to greeninvestments as part of economic recovery measures. uNited kiNgdom JapaN caNada 2009/12 2009 2009/13 2.1 12.4 2.6 fraNce 2009/10 7.1 spaiN usa 2009 2009/19 0.8 112.3 chiNa italy 2009/10 2009 australia 221.3 2009/12 1.3 2.5europeaN other total germaNyuNioN eu states south korea2009/10 2009 2009/19 2009/10 200922.8 6.2 435.9 13.8 30.74. 5. “A Climate for recovery: The colour of stimulus goes green”, HBSC Global Research (2009)
  14. 14. green Public Procurement Page 14InteRVIew wIthJohn Policy Advisor Department for Environment, John Conway is closely Food and Rural Affairs involved in the developmentconway (DEFRA), United Kingdom of sustainability standards for a range of priority products purchased in the public sector, including transport and ICT. He is also responsible for promoting the acceptance and uptake of the standards across the public sector. whole life cycle of a product or a service. They can enable innovative tenders that support the development of a green economy in the market place as well as the public sector. They also deliver long term cost savings. Examples of these include the furniture GBS which is estimated to deliver an overall net benefit of £40 million through greater use of recycling and reuse; and the transport GBS which is estimated to deliver an overall net benefit of over £7 million through the use of more efficient vehicles. Any company which could supply to the GBS specifications would be free to apply for the contract. We are increasingly looking at how green public procurement can go beyond setting specifications for contract tenders andmr conway, could you explain how you would define what achieve further environmental benefits in the supply chain bygreen Public Procurement means in the Uk today? actively building relations with suppliers. Initial data indicatesIn the UK green public procurement means achieving true that over 70% of Government carbon emissions are in thecost effectiveness through procurement of goods and services supply chain.which reduce the environmental impact of Governmentactivity. Therefore costs are assessed across the whole what kind of opportunities does your green Procurementlifecycle to take into account the real cost of manufacture, policy offer to european smes? do they stand asupply, usage and disposal of a product or service. Our view competitive advantage by offering green solutions to Ukis that, properly implemented, green public procurement public authorities?should support fair and sustainable economic growth and the The coalition government has committed all departmentsdevelopment of a green economy. to publish a set of specific, targeted actions to achieve 25%Government Buying Standards (GBS)6 are an important of their business with SMEs. GBS are developed through amechanism for green procurement in the UK. They are linked robust system that involves consultation with SME suppliersto the criteria in the EU’s Green Public Procurement (GPP) and impact assessments of proposed criteria have a specificinitiative. GBS now set sustainability specifications for the section to evaluate the effect on SMEs.procurement of around 60 goods and services. The key challenge is now to mainstream SME procurementThe specifications cover the environmental impact across the across the public sector to increase business opportunities6. 7. about/how/procurement/buying/index.htm policy.htm
  15. 15. green Public Procurement Page 15for them and to enable the public sector to benefit from their how does your agency deal with unsolicited offers frominnovation and flexibility. This requires that procurement companies that have innovative, or even ground-breakingopportunities should be transparent, the procurement process solutions that could have a transformative environmentalmade as simple as possible, and that a strategic approach impact? who can a company turn to, to present theirto procurement gives SMEs a fair deal when they are sub- solutions?contractors. The details of these companies are collected on an innovationUK procurement is advertised externally to attract bids database. This is currently being developed to be madefrom a diverse range of suppliers. Actions taken to facilitate available to all UK public authorities online. They may also bemore opportunities for SMEs include Defra’s Sustainable used to inform the development of more challenging GBS inProcurement Policy Statement which promotes business the future. We would expect a SME with an innovative serviceopportunities through supply chains for SMEs7 and a would begin by engaging with procurers in the organisationmove towards greater standardisation of contracts. This is they were hoping to do business. They could also use thesupported by: opportunities for suppliers’ service offered by purchasing1. Pre-Qualification Questionnaires amended to ensure that it organisations such as Buying Solutions. is not just public sector but other relevant experience that is considered in awarding contracts.2. Electronically issuing contract tenders. Using the “OJEU notice of contract template” to flag up tendering opportunities thought suitable for SMEs. the key challenge is3. Publicising more widely forthcoming contracts, e.g. through a new Defra e-tendering portal, Supply2Gov (now Business to increase business Link Contract Finder), CompeteFor.84. Encouraging prime contractors to open up their supply opportunities for them chains to SMEs.5. Encouraging prime contractors to publish sub-contracting [smes] and enable the public opportunities on websites such as Compete For that may be particularly suited to SMEs. sector to benefit from their6. Making wider use of outcome-based specifications to drive innovation – this is an area where SMEs tend to have an innovation and flexibility. advantage.7. Seeking to ensure that SMEs and other firms acting as sub- contractors are paid promptly.Is there a consolidated green Procurement process across many smes are looking to find the ideal early market forUk agencies, and are there other international markets their green solutions. would you recommend the Uk asfollowing the same rules? such a market?In line with other member states the UK agreed to a voluntary Cabinet Office has launched a package of measures to maketarget that by 2010 50% of all public procurement would be sure that SMEs are in a good position to compete for This means compliance with the core criteria of the EU’s The key measures include the launch of a contracts finderGPP criteria. database which will become the place to find public sectorThe wider UK public sector is not bound by central government opportunities over £10,000.commitments on sustainable procurement as part of a This approach is complemented by longer standing innovativeconsolidated process. However the environmental benefits procurement methods that go beyond GBS, such as the Smalland costs savings offered by GBS means that they are used by Business Research Initiative. This runs open competitionsmany organisations. Defra co-ordinates a national approach to develop ground-breaking solutions to challenging policyto sustainable public purchasing by developing training and procurement problems9 and the Forward Commitmentfor organisations with an interest or role in sustainable Procurement, which seeks similar outcomes but by means of aprocurement including local authorities and the NHS. long-term dialogue with possible market suppliers.10 Defra has put in place a suppliers’ engagement programme that among other things arranges events for suppliers at which there are opportunities for SMEs to interact with procurement staff11.8. 9. 10. 11. innovation/small businessre- tion/procurement/forward- about/how/procurement/ac-ders.htm searchinitiative.ashx commitment tivities.htm
  16. 16. green Public Procurement Page 16oPPoRtUnItIesFifty percent of all public procurement will be greened inthe near future, making green procurement a reality foralmost all types of products and services. Providers with alife-cycle approach, incorporating green considerations intoall aspects of their solutions are likely to not only emerge aswinners but also as better-run businesses.coNvergiNg greeN groWth treNds12 Number of shared public bikes 4000 Number of cities with bike sharing Number of corporate carbon disclosures Number of EU-ecolabel holders 3500 Number of ecolabels 3000 2500 2000 1500 1000 500 0 1960 1970 1980 1990 2000 201012. “Free city bike of Public Transportationschemes”, Søren B. Jensen, (2009);;City of Copenhagen Carbon Disclosure Project;(2000);“Bikesharing: Peter Midgley, gTKP;history, impacts, models ecolabelindex.comof provision and future”,De Maio, Paul, USF Journal
  17. 17. green Public Procurement Page 17It is estimated that, in the short term, green procurement can This model is increasingly applied also to cars and motorbikes,affect at least 50% of all public procurement expenditure, or shaping an entirely new industry of shared transportation andan annual EUR 3,200 billion in the world economy or EUR 1,250 the supporting healthy and sustainable lifestyles.billion in the EU. These are staggering sums making up about7.5% of world GDP. Similarly, developments in electric vehicles, LED lighting and provision of renewable energy through fragmented ratherAs a result, it may no longer be viable to consider the design than centralised power stations and utilities companies areand development of greener services and products for beginning to explore new business and service models. Thesepublic procurement as a optional consideration, but rather a may equally prove transformative to established industrynecessity in which many players, both new and established, sectors that are dependent on public procurement.are actively promoting new solutions.What may be more important are the trends in which the IntegRAted PRodUctsevaluation of products and services against green (and other And whole-lIFe ImPActssustainability criteria) are combined with new technologicaldevelopments and business models that lead to the creation In its Life-Cycle Initiative, the United Nations Environmentof entirely new markets and service areas. Programme points to several practices that businesses can adopt to successfully create value out of life-cycleOne of the most visible such developments is the rapid management, such as (eco-) design approaches, life-cyclegrowth of public bicycle systems around the world, which analysis (LCA), life-cycle costing (LCC), eco- and energyfor 40 years saw no major impact, but in 2005 was unlocked labelling, environmental product declarations, ecologicalby developments in RFID and mobile technologies to add a and carbon footprint analyses, environmental performancenew mode of transport to more than 200 global cities with indicators, and social sustainability assessments – in additionhundreds of millions of rides carried out each year. to capability development approaches that are essential for actual phoNe cycle14 3. carrierS/ 5. Service1. manuFacture 2. wholeSale retail 4. conSumerS & repair 7.1 battery 7.2 handSet 6. collection 7.3 acceSSorieS For recycling 7.4 landFill13, 14. “Life-CycleManagement: How businessuses it to decrease footprint,create opportunities andmake value chains moresustainable”, UNEP/SETAC(2009)
  18. 18. green Public Procurement Page 18stRetchIngthe lImIts oF gReenAIR-hAndlIng IV Produkt Ab helped aWhen Hyresbostäder, a public real estate company in Växjö, municipality reach ambitiousplanned to build two passive-energy houses, a central issueconcerned air handling units. energy targets for passiveThe mandatory criteria for the air handling units was a houses. strict performanceplate heat exchanger with at least 85% heat exchange rate,compared to the conventional 65%. At the time of the tender, criteria in a negotiatedthere was no air handling unit with the requested specificationon the market. IV Produkt AB, a medium-sized Swedish procurement procedurecompany producing air-handling units, developed a newproduct for this project according to the high performance created an opportunity forlevels demanded that significantly advanced the state-of-artin the field. the company to show itsFor IV Produkt AB, this procurement was both interesting ability to break new groundand challenging, since Hyresbostäder and their owners,the Municipality of Växjö, chose to conduct an entirely new in air-handling, openingprocurement and project development model as compared toprevious practices. international markets.
  19. 19. green Public Procurement Page 19Hyresbostäder applied the rarely used Negotiated Procedure15 Hyresbostäder, repeatedly emphasized that this project was tomodel for two reasons. Firstly, the project contained technical contribute to the development of a new, more incentive-basedrisks impossible to evaluate beforehand. Secondly, there and risk/profit-sharing approach taking new technologieswas no technical solution available on the market. Thirdly, from previous practice of small scale pilot projects, andthe customer wanted to make sure that they would be able extrapolating them into a new full scale demonstration projectto have an extensive dialogue with the different tenderers and starting to build a new industry standard. IV Produkt ABbefore making any decisions, without breaking the strict legal considers that this result was also achieved in their businessframework of The Public Procurement Act. and market development.To establish the performance objectives the customer putthe final energy performance into a so-called Building Energy meAsURAble gReen bUsInessSpecification Table (BEST), which served as a joint basis for all gRowthtenderers. Whilst the first level of tendering primarily focusedon the insulation of the building, highly efficient air handling As a market leader in energy efficiency performance, IVwas early identified as a direct prerequisite to meet the energy Produkt understood that the demands of this project would setperformance stipulated in the BEST tables. an example to be followed by others.As IV Produkt have developed its entire air handling product This turned out to be true, and the project itself got Europe-range with a strong Life Cycle Cost (LCC) focus ever since wide recognition resulting in many international study-visits.1991, the company was well placed to deliver the advance By developing this solution, IV Produkt advanced its controlrequired. Almost all construction companies that were bidding solutions one step further in terms of freeze protection,for the project contacted IV Produkt AB to partner early on something that the company is now capitalizing on across itsin the process. In the final selection of contractors chosen by portfolio.Hyrsebostäder, the design ideas of IV Produkt were part of thewinning concept. Whilst the company has not directly replicated the solutions from Hyresbostäder, IV Produkt AB have been able to sellIn the detailed planning of the project, IV Produkt acted as several similar solutions and several of IV Produkt’s Europeanexperts on energy efficient air handling units, going beyond export partners use this project as an effective Showcase.its conventional role as suppliers. Senior R&D personnel were Finally, the company gained an industry reputation for “makinginvolved in developing the final solution and meeting the it possible”, gaining a positive profile as a project partner.project’s strict energy demands. 1 2 3 4Negotiatedprocedure hyreSboStÄder hyreSboStÄder SetS air-handling unit not negotiated procedure identitieS need beSt criteria on market launched5 6 7 8 9 SpeciFicationSiv produkt SupportS incorporate iv procured product proJect iS a SucceSS upgrade oF portFolioFirSt Stage tendering produkt deSign + expertiSe Story + market leaderShip15. Directive 2004/18/EC of public supply contracts andthe European Parliament and public service contractsof the Council of 31 March2004 on the coordination ofprocedures for the award ofpublic works contracts,
  20. 20. green Public Procurement Page 20PIlotIng: eVAlUAtIngIntellIgent wAste-mAnAgement sYstemsUrbiotica is a technology start-up, created out of the visionthat cities could be managed more efficiently through theuse of technology and real-time information. Urbioticadevelops sensors specifically designed for cities’ needs togather real-time information of parameters such as mobility,to significantly improve the efficiency and quality of urbanservices.Waste management costs cities around 20% of their totalspending. A major inefficiency is the collection of containers, waste managementa process that would benefit from real-time information ontheir fill level, so that collection routes could be optimized constitutes twenty percentto save resources and improve the overall service. In 2009,Urbiotica launched its urban waste sensor solution. of municipal spending. Urbiotica applied latest sensor technologies to the challenge and won barcelona’s global call for urban solutions, leading to a six-month pilot as a step towards procurement. The City of Barcelona operates the 22@ Urban Lab to enable innovative companies to pilot their solutions in partnership with relevant city agencies, such as the Waste Management Agency. The goal of the Urban Lab is to a) help companies in their solution development, b) provide a pre-procurement dialogue and piloting stage to evaluate innovative solutions, c) allow companies to present unsolicited solutions, and d) provide an accountable and transparent process. In 2009, 22@ Urban Lab joined forces with eight other global cities to launch a global call for solutions (Living Labs Global Award) that could help the city select the best solutions to be offered piloting opportunities. An international panel of experts and key decision-makers from the city evaluated the 150 entries from 38 countries, selecting Urbiotica’s Intelligent Urban Waste Management Solution as the winner. In 2011, Urbiotica signed a Memorandum of Understanding
  21. 21. green Public Procurement Page 21with the City of Barcelona, to pilot and evaluate their solutionin the city. The Agreement consists of the following terms: Urbiotica will implement a pilot installation of its waste management sensors in cooperation with the respective agencies. Urbiotica will carry their own expenses for this pilot; no financial transactions will take place. the city of barcelona will provide executive support to implement this pilot, and assure a detailed evaluation of the system and its impact. exPRess need, cAll, PIlot, eVAlUAte, And PRocURe the city of barcelona will publicise the pilot, its results and impact. Urbiotica has benefited from Barcelona’s innovative approach to invite companies to present their solutions through its the duration of the pilot is 6 months. published challenge. This offers an important channel for companies to proactively present their solutions through a structured process, and help influence the procurements planned in the future. It can be estimated, that for a company like Urbiotica to present their solution to a city in such a proactive way would represent a significant cost averaging about EUR 8,000 to make a cold-call. The process offered by Barcelona reduced this cost to about EUR 250 in time invested to present the solution through the 22@ Urban Lab call for pilots. This freed- up resources to help a lead customer evaluate the solution through an extensive pilot. In addition, Urbiotica gained international recognition as a solution provider which has been awarded by one of the world’s prominent cities, contributing significantly to the credibility of a small start-up company.idea to pilot iN Waste maNagemeNt1. 2. 3. 4.2009urbiotica inventSintelligent waStemanagement SyStem 2009 22@ urban lab callS For pilotS to meet ‘automation oF urban ServiceS’ challenge 2010 SubmiSSionS From 150 SolutionS From 30 countrieS are evaluated by city oF barcelona 2011 agreement For pilot barcelona, 22@ urban lab
  22. 22. green Public Procurement Page 22PRoFItIng FRom eneRgYsAVIngs At the czechnAtIonAl theAtReenesA won the investment contract to upgradethe installations at the national theatre, recuperatingprofits on investments through sharing the resultingenergy cost-savings over a ten year period. Built in the nineteenth century, the last refurbishment of the Czech National Theatre’s four buildings took place in the 1980s. Starting in 2005, the theatre started its energy efficiency improvement programme and tendered a long-term Energy Services Agreement won and concluded with ENESA, a Czech privately held energy services company, in 2006. Energy Performance Contracting16 principles form the basis of the 10-year services contract representing a turnkey solution including all design, engineering, auditing and business modelling services. Financial guarantees for energy savings form an essential part of the service agreement, guaranteeing that entire project costs (initial investment, financial cost and service fees) will be paid from savings achieved over the contract term. Savings are monitored on a monthly basis and verified according to contract procedures.16.“Introduction to EnergyPerformance Contracting”,U.S. EnvironmentalProtection Agency andEnergy Star Buildings (2007)
  23. 23. green Public Procurement Page 23Upgrades to the energy and utility systems have been Since ENESA is refinancing investments through a percentageimplemented in phases. Improvements include the of costs saved, it is evident how the business model canmodernisation of heating, cooling (air-conditioning), deliver both an environmental and cost-saving benefit toventilation, lighting- and energy control systems. Photo the theatre, as well as generate an achievable profit marginvoltaic panels were installed on the roofs of two buildings and for ENESA. The illustration below shows a basic calculationintegrated into the energy system of the theatre. indicating that when investment is spread evenly over 10 years as an annual cost, a cost-saving of around EUR 237,000 (compared to EUR 118,000 in investment) is achieved, of whichAn eFFIcIencY dIVIdend FoR All a percentage is awarded to ENESA. By allowing for a reward based on the costs saved, an incentive remains throughout theAlready in the first year, the energy savings constituted EUR contract duration to improve performance.230,000 annually, or about a third of the Phase 1 investmentsof EUR 920,000. This high rate of savings is expected to grow Energy Performance Contracting enabled the procurer towith Phase 2 investments of EUR 260,000 into photo voltaic open an opportunity for private finance into the upgrade ofpanels still to come. the theatre, whilst at the same time giving the contractor sufficient flexibility to adjust investment priorities againstSignificant potentials have further been identified in using new expected results. As the case showed, the investment returnedtechnologies to fine-tune the system by improving the building revenue early on in the project enabling ENESA to seek outoperations and energy consumption behaviour to further further efficiencies, rewarded under the contract, over thereduce energy and operational costs, and thereby increase the remainder of the contracting period. This model of turnkeyreturn on investment for ENESA. energy contracting and facilities upgrade emerged in the 1970s and has since grown into a major global industry with the US, Japan, Germany and Austria considered pioneers.the JoiNt eNergy divideNd Before ENESA Guarantee gas driNkiNg solar iNvestmeNt Water poWervolumeeNergy -4,426,674 kWh/y -29,323 m3/y +18,500 kWh/y 0,00 eurdivideNdcostcost reductioNs -190,789 eur -38,119 eur -8,417 eur +118,000 eur
  24. 24. green Public Procurement Page 24PRocURement oF gReenhotel seRVIces thRoUghnoRdIc goVeRnmentsgovernments in the five nordic countries are jointlydeveloping a procurement standard for hotel services that isset to provide clearer guidance to the market and become atemplate for europe-wide criteria.The Nordic Region covers Iceland, Norway, Finland, Sweden ImPActs mItIgAtIng APPRoAchesand Denmark and has a long tradition of close collaborationin policy, regulation and market developments. The 2009–12 Climate change impacts due Decreasing energy useEnvironmental Action Plan outlines the key measures that will to energy use for heating and electricalhelp the region reach its sustainability goals, with particular appliances, favouring renewableattention paid to the role of Green Public Procurement17. energy sources, promoting environmental communicationA programme was set up to build on the national action plans and education by environmentalin place in each of the Nordic countries to guide green aspects management system.of public procurement, and establish common criteria to beadopted. These are then presented to the European Union as Climate change due to Reducing and better sorting/recommended criteria to be adopted across the 27 Member methane emissions from food recycling/composting of foodStates. waste disposed to landfills wasteFor companies providing services to the Nordic governments,this means that early on they adopt high standards of Shortage of non-renewable Decreasing energy usecompliance that are likely to set European standards, opening energy sources for heating and electricalnew markets for them. appliances, favour renewable energy sources, promoteEurope’s hospitality industry delivers one billion overnight environmental communicationstays at European hotels, representing a significant industry and education by environmentalat an average cost of EUR 100 per room / night. Using public management system.procurement to trigger a reduction in the environmentalimpact of hotel services is therefore seen as a high priority Shortage of non-renewable Reducing the amount of waste,area. resources and environmental better sorting and recycling of burden from the production waste, promoting environmentalTourism accommodation and services already represent 37% of both non-renewable and communication and educationof the EU Ecolabel licenses with 392 certified hotels and 252 renewable resources by environmental managementhotels certified by the separate Nordic Ecolabel18. With 44 system.Tourism Ecolabels19 in place globally according to EcolabelIndex, it is clear that hotel service providers face a challenge in Pollution of surface waters, Proper waste water treatmentchoosing the right certification partners. ground waters and soil and separate collection of hazardous waste fractions.17. Environmental Action 18. 19. ecolabelindex.comPlan 2009-2012. ANP2008:736, Nordic Council ofMinisters, Copenhagen
  25. 25. green Public Procurement Page 25whAt cRIteRIA do hotel seRVIce comPARAtIVe cost oFPRoVIdeRs need to FUlFIl to wIn eco-lAbellIng hotelsnoRdIc PRocURement?With different standards and varying requirements of noRdIc eU ecolAbel VIAbonocertification bodies, an effort has been launched to set ecolAbel (geRmAnY)demand-side common expectations for procuring hotelservices by Nordic governments. Application EUR 2,000 EUR 2–660 EUR 3–950 feeBased on the different criteria promoted by the nationalprocurement guidelines for hotels, the Nordic and European Annual fee EUR 1,400– EUR 750 EUR 10 / roomEco-Labels, and the green procurement action plans the 6,500Nordic Council of Ministers in 2009 presented a common setof public procurement criteria for hotel services. The subjectmatter for the procurement should be ‘Environmentallyfriendly hotel services’, presenting the following criteria: tYPe cRIteRIA PoInts Core Criteria Lighting is demand-controlled in > 80 % of the guest rooms 1 Additional EU Ecolabel: >80% energy efficient light bulbs Dispensers for soap and shampoo installed in > 90 % of guest rooms 1 Guests have an opportunity to recycle their waste in their rooms into at least three 1 fractions, which are then collected and handled appropriately Hotel fulfils the criteria of EU eco-label for tourist accommodation service or the 5 criteria of Nordic eco-label for hotels Technical Specification > 22 % (50% EU Ecolabel) of the electricity comes from renewable energy sources, as defined in Directive 2001/77/EC The water flow of the taps and showers excluding bath taps < 12 l/m (EU Ecolabel 9 l/m) All waste water is treated. Hazardous wastes must be collected and handled separately as listed in Commission Decision 2000/532/EC of 3 May 2000. Waste is recycled into the categories that can be handled separately by the local waste management facilities. Demonstrate capacity to carry out the service in an environmentally sound manner and include evidence of regular training for staff. Contract Conditions Supplier must within two years show evidence that attention has been paid to increasing energy efficiency and decreasing climate change impacts.
  26. 26. green Public Procurement Page 26bARcelonA bUYs cUttIng-edge sAtellIte technologYto monItoR wAteR qUAlItYstarlab inspired the city maintenance-free and has noof barcelona with an environmental impact. thisunsolicited offer to replace opened new markets in otherits existing coastal water- international coastal cities.monitoring sensors withsatellite data that is
  27. 27. green Public Procurement Page 27Starlab, a small, young high technology company based in Once the solution was described in sufficient detail, it tookBarcelona, had the idea of developing a solution to monitor around 4 months to conclude the procurement processthe quality of coastal waters using satellite data. Emerging funding and the customisation stage. Since implementationout of a research programme on monitoring coastal waters began, Barcelona City Council has started using the waterfunded by the European Space Agency20, the team of business- quality service based on satellite data to monitor its coastaloriented scientists approached the Barcelona City Council with waters as part of its Integral Management Programme for thethe idea to help the city monitor contamination and water- Coastal Area. The general public has access to the most up-to-quality in a revolutionary way. date information of the environmental coastal conditions by looking at the satellite maps.Starlab is an R&D company specialising in Earth observation,aiming to develop new and alternative methods for remotesensing applications. Starlab provides services based on A VeRsAtIle gReen AlteRnAtIVesatellite data to offer customized solutions to their clients. oPens new mARketsStarlab’s solution provides an online service presenting coastal With the City of Barcelona, Starlab was able to take cutting-water quality indicators based on satellite data. At any time, edge research to the market. The procurement processthe most up-to-date data, updated every hour, 24 hours a day enabled the company to develop and deploy the firstand seven days a week would be accessible to city experts and commercial application of its solution, which is now beingthe general public. Data is delivered in the form of maps that marketed with the help of technology export programmes tooffer qualitative information on the relevant environmental coastal cities in Europe and South America in particular.parameters. The service includes an alert system to warnabout potential dangers. Starlab’s solution is easily exportable to other cities as they can acquire satellite images all over the world.Starlab approached Barcelona’s environmental management A customization process in close contact with the clientteam with the idea for this coastal water quality monitoring remains essential to understand and match them with theservice. The city’s team had never used services based on technical solution and Starlab benefited from initially workingsatellite images and were excited to explore the opportunity with a local client to to refine the solution and gain marketand have a first experience. The solution could lead to major intelligence about the real value of the solution.cost-savings in comparison with in-situ measurements andmaintenance of instruments, reducing also the enviromentalimpact of monitoring activities.remote seNsiNg of Water coNditioNs water Quality tranSparency SuSpended matter20. MarCoast
  28. 28. green Public Procurement Page 28RecommendAtIonsdesign green value forboth the governmentand its customersGovernments are becoming more sophisticated and customer-focused service providers using new models to provide moreindividualized service experiences to their constituents. Howcan green solutions help improve both the economics and Find the marketsqualities of those experiences, and provide end-users with anotable upside? To achieve this, you can refer to best practices that best meet yourin related fields, study the strategy in services and excellenceby your customers, and use expertise by research centres, standardsexpert consultancies or partner companies. You may already fulfil a number of certifications or standards and may find that in some markets, these already give youYour big green a competitive advantage. Start by evaluating the greenness of your own products and supply-chain using commonstrategy choice: methodologies and compare the results to different standards. As a second step, review risks and easy advances to move uplead, follow or lag the compliance ladder and secure a step-wise entry into more sophisticated markets.Not everyone can be a green pioneer, yet being a leader mayhave strategic advantages in an environment where standardsare changing rapidly and variations persist. Typically, pioneers Follow relevantsetting new standards can demand a premium price. Yet,you may also choose to identify the pioneers and follow them technology trendsclosely, letting them break new ground and rather specialisein supplying the markets they create. Lagging, appears to closely to prepare forbe a risky option linked closely to your ability to competeon lowest cost for customers that themselves are lagging in break-throughsimplementing green policies. Environmental performance will see radical changes through new technologies such as electric vehicles, bio-degradable products, sensors or management systems. By tracking such developments carefully you can protect your portfolio and invest timely in necessary partnerships and adaptations to avoid being surprised by sudden advances.
  29. 29. green Public Procurement Page 29why not be bold andinvent a ground-breaking new businessand service model that Partner withsets its own standard? pioneering buyers if you want to makeConsider if a bold innovation in the combined business and sure to be aheadservice model might not allow you to create new markets withtheir own standards of evaluation, as achieved by outdoor of the gameadvertisers or bike-sharing companies in the past. Make sureyou bring the target buyer along for the ride, and clearlyexplain the benefits to be achieved. Pick out the pioneers in your market, those that tend to procure according to higher standards and try to partner with them on pushing the commonly perceived limits. By advancing your products with them you can have a strong platform togather market market achievements to other customers that may be inspired to follow their models of evaluation and procurement.intelligence on mostcommonly used criteriain your product area Review different standards offeredIdentify the most common evaluation criteria for your product through certificationand service range used by contracting authorities, possibly bysending out questionnaires, carefully reviewing their policies frameworks carefullyand contract specifications, or using other forms of gatheringmarket intelligence. Invest in dialogue with contractingauthorities to develop a common trajectory of developmentand evaluation. Tell your customers how green you are, and Consider certification frameworks available in the market,where you are going. Focusing on your strengths you should such as the European Eco-label, and how they can be usedbuild your brand as a green provider, gain peer recognition to your advantage. Review carefully how these certificatesand public awareness. Awards, certifications and thought are maintained and how their evidence helps yourleadership are good tools that can be promoted customers maintain trust in what you have to offer and whatthrough media, direct communication and conferences. environmental benefits will be created.
  30. 30. Sociallysocially Responsible Public Procurement Page 30ReSpon—SiblepublicpRocuRe—ment1. IntRodUctIon2. PolIcY In ActIon3. oPPoRtUnItIes4. cAse stUdIes5. RecommendAtIonscontRIbUtoRs: KRISTINA BJURLING, ALBERT FONTANILLES,NINA JURETzKA, IRMA KUUKASJäRVI, TORBJORN LAHRIN,CHONG-WEY LIN, ANNA LIPKIN, COLLAN MURRAY
  31. 31. socially Responsible Public Procurement Page 31IntRodUctIonPolicies to encourage social and ethical compliance haveemerged in a growing number of markets. Regulationsgenerally allow public buyers to consider social impactsin tenders and require evidence of performance, creatingopportunities for compliant suppliers.Increasingly governments in Europe and beyond are tryingto use public procurement to directly achieve social policyobjectives. Whilst social responsibility falls under the widelyadopted definition of sustainable development (the threecomponents are economic and social development andenvironmental protection1), it has lagged the innovation andmore regulated implementation of environmental protectionmeasures.Like large companies, procuring authorities are under growing Multilateral international agreements, such as thepressure to act in a socially responsible manner, in line with International Labour Organisation (ILO) Conventionemerging consumer preferences for sustainable products such Declaration on decent work conditions and labour rights,as fair-trade products, green energy or organic food. Scandals and the UN Convention on the Rights of Persons within upstream supply chains (such as child-labour in coffee Disabilities2 provide reference points and standards for socialproduction) also constitute a direct political risk. The growing responsibility.pressure from mass NGOs, media and social networks hasemerged as an important activist force monitoring conditions. More recently, the EU has identified public procurement as a tool to promote the social agenda of Europe. In its guide to taking account of social considerations in public procurement3 the EU outlines its vision and legal basis on which contracting authorities and policy makers should more actively seek to achieve social objectives through public spending. At times heated debates have been conducted to establish whether European procurement directives are compatible with activism in areas such as fair trade or decent work – since the substance of public procurement is tied to the cost-effectiveness of a tendered offer. It is considered an established legal fact that regulations do allow for socially responsible procurement, meaning that companies that adhere to high social standards and integrated product and service designs respectful of their social impact may gain a competitive advantage in a growing number of tenders with social considerations.1. United Nations General 2. Adopted by the General 3. “Buying Social – A guideAssembly (2005). World Assembly in resolution A/ to taking account of socialSummit Outcome, Resolution RES/61/106 on 13 December considerations in publicA/60/1, adopted by the 2006 procurement”, EuropeanGeneral Assembly on 15 Commission (2010)September 2005
  32. 32. socially Responsible Public Procurement Page 32social obJetivesEach of the objectives presented here is anchored in European policy, global conventions ordeclarations that seek to protect and establish specific social frameworks. They are based onthe non-exhaustive list of objectives published by the European Commission4.employment youth employment long-term unemployed, older workerSopportunitieS perSonS From diSadvantaged groupS people with diSabilitieSdecent work core labour StandardS decent pay occupational health and SaFety Social dialogue training baSic Social protectionSocial and comply with national lawS, collective agreementS principle oF eQual treatment For women and menlabour rightS occupational health and SaFety Fighting diScrimination on other groundS eQual opportunitieSSocial incluSion FirmS owned by minority groupS FirmS employing perSonS From minority groupS cooperativeS, Social enterpriSeS, non-proFit organiSationS employment oF people with diSabilitieS4. “Buying Social -A guide to taking accountof social considerationsin public procurement”,European Commission(2010)
  33. 33. socially Responsible Public Procurement Page 33Special emphasis is given to the applications of these objectives across the supply chain – withinor outside the economy within which the procurement takes place. This means that companiesmay need to provide evidence of compliance even by sub-contractors and their suppliers.Governments may pick and match objectives according to their policy preferences and socialpriorities, leading to a high degree of variation in application.acceSSibility acceSS For people with diSabilitieS to all productS and ServiceSand deSignFor allethical trade complying technical SpeciFicationS complying perFormance criteria corporate Social reSponSibility voluntary commitment to Social valueS and StandardShuman rightS protect againSt human rightS abuSeSupport For allow SuFFicient time to prepare bidS enSure payment on timeSmaller SimpliFy QualiFication reQuirementS announce Subcontracting opportunitieS divide tenderS into lotSbuSineSSeS