December 2005
Progress Towards Sustainable Public Procurement?
The market for technologies with environmental benefits is growing and responsive UK suppliers can anticipate opportunities with greater sustainable public procurement. What is the Government's "Forward Commitment"?
In the last two years, the number employed in UK environmental industries has more than doubled to around 400,000. Worldwide environmental markets are now a similar size to pharmaceuticals or aerospace, forecast to grow by around 30% to $688bn, by 2010.
Responding to environmental issues represents a major business opportunity for the UK, although there is stiff competition from those overseas who also see the potential in environmental technology.
To stimulate the UK’s ability to turn ideas and emerging technologies into more innovative and high value products, processes and services, Environment Minister, Elliot Morley, refocused the joint DTI/Defra Environmental Industries Unit in July to promote the sector and improve competitiveness. Working alongside the business-led Environmental Innovations Advisory Group (EIAG), it’s task is to improve the UK's ability to bring environmental innovations to the market.
Forward Commitment to Sustainable Public Procurement
One of the key actions of the EIAG is making better use of the Government's purchasing power to improve market conditions for environmental technologies through the Forward Commitment project.
Government procurement is a powerful tool which, according to Elliot Morley, is not always used to its full potential. The UK Government buys £13bn worth of goods and services each year, and the wider public sector £125bn. Through influencing this buying power, the EIAG hopes to transform markets for environmental innovation and help deliver wider sustainable development objectives.
By acting as an intelligent customer, open to new approaches, the Government can require suppliers to compete on the basis of criteria that emphasise the innovative features of goods and services. This in turn stimulates producers to offer more effective and sustainable options for all purchasers. Moreover, by acting as an "early adopter", the public sector can give business enough of a market to get over the hurdle of scaling-up innovative, sustainable products.
In return, innovative products could help the Government achieve better value for money by improving the quality of public services and reducing whole-life costs.
The Forward Commitment project uses two approaches. The first is to identify environmental innovations just coming to the market and establish performance benchmarks against which public sector procurers can develop specifications – knowing what innovation can deliver.
This addresses the struggle some innovative technologies face breaking into a market which is defined by old established products. Unless their performance is considered comparable, they could otherwise be unable to compete and justify the investment to break out of the prototype stage.
The second approach encourages policy makers to announce unmet needs in a "forward commitment procurement call". This is intended to attract new and unidentified technologies that can deliver more effectively, in preference to less ambitious provision based solely on currently available technologies.
"It is about how we can enable policy makers to capture the creativity of innovative suppliers," said Morley.
Sustainable Procurement Task Force
The prominence of sustainable procurement is continuously increasing as the Government’s Sustainable Procurement Task Force met for the third time earlier this month. The Task Force is preparing a national Action Plan on sustainable public procurement by April 2006, aiming to establish the UK among the leaders in Europe by 2009.
Implementing the plan would also demonstrate to business and the public, that Government and the wider public sector is serious about sustainable development through such things as more efficient use of public resources, through reduced energy consumption and reduced packaging.
Considering the Value for Money policy and Efficiency Review used in public procurement, Elliot Morley said in December, these "need not present a barrier to sustainable procurement. Sustainable procurement and efficient procurement should be mutually re-inforcing, particularly when the more sustainable option can be shown to offer the best value for money over the lifetime of the contract."
So far there are few examples of this happening on the ground, but we can expect environmental criteria to be taken into account in all Government procurement strategies. It is already mandatory for Government departments to meet minimum environmental standards in purchasing a range of everyday products. Involvement from regional and local public authorities is also required, so that all public sector purchasers award contracts on the basis of whole life costing and quality.
Arguably, all the spending undertaken on the public’s behalf should be delivering more long term, environmental and social benefits.
If you are interested in discussing enhancing quality with environmental performance, contact Nersi Salehi on 024 7632 3260.
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