Navigating the standards

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Benchmarking against the Flexible Framework
Following the principles of sustainable
procurement
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Todays Agenda
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Todays Agenda

• Navigating the Standards An introduction to
  the benchmarking standards out there, including
  The Flexible Framework and the new British
  Standard for sustainable procurement- BS8903.
• Leaders and Learners   Tell us about the
  sustainable procurement practices that you are
  doing well and those areas that youre struggling
  with.   An opportunity to learn about the
  experiences of other delegates.
• Beyond Gold The Progress Review tool used to
  benchmark achievements in the Mayor of Londons
  Green Procurement Code, measures performance up
  to level 3 of the Flexible Framework.  Are you
  ready to meet levels 4 and 5?
• Ask the Expert Delegates will have the
  opportunity to put questions to the Mayor of
  Londons Green Procurement Code team.

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Sustainable procurement Navigating the
principles and standards

• Graham Randles
• Principal Consultant

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Standards of Best Practice

• Procuring the Future and National Action Plans
• The Flexible Framework
• EU Green Public Procurement (GPP)
• UK Government Buying Standards
• BS8903 The new British Standard for Sustainable
  Procurement
• Marrakesh Task Force

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Procuring the future

• UK Governments 2005 Sustainable Development
  Strategy set out the ambitious goal to make the
  UK a leader in the EU in sustainable procurement
  by 2009
• The strategy suggested the scale of the public
  sector spend on goods, services, works and
  utilities was capable of stimulating the market
  for more sustainable goods and services and that
  government leadership could shift consumption
  patterns of business and consumers
• A task force was set up, led by Sir Neville Sims
  to devise a National Action Plan to deliver the
  UK objective

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Sustainable Procurement Task Force 2006
Concluded that for the UK to become a leader in
sustainable procurement an effort was required to
mainstream sustainable procurement
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UK Public Sector Initiatives
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The National Action Plan

• Key recommendations for Government
• Lead by example
• Set clear priorities
• Raise the bar minimum and forward looking
  standards should be developed for priority spend
  areas
• Build capacity by developing its capabilities
  to deliver sustainable procurement
• Remove barriers to sustainable procurement (real
  and perceived)
• Capture opportunities for innovation and social
  benefits

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The building blocks

• The Task Force stated that the Action Plan should
  be supported by 3 building blocks
• The Flexible Framework outlines the actions
  required to make sustainable procurement happen.
  Enables organisations to assess the quality of
  its procurement activity and gives a clear route
  map to better performance.
• Prioritisation of spend a method developed to
  identify areas of spend to focus attention. 10
  priority areas identified.
• Toolkits to be produced by a sustainable
  procurement delivery team

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The Flexible Framework

• A self assessment mechanism developed by the
  Sustainable Procurement Task Force
• Defines an overarching approach to help
  organisations understand and take steps to
  improve procurement practice and make sustainable
  procurement happen
• The tool allows organisations to measure and
  monitor their progress on sustainable procurement
  over time

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The Flexible Framework
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Mayor of Londons Green Procurement Code
Progress review part one Management

• Gold
• 16 signatories
• Silver
• 28 signatories
• Bronze
• 24 signatories

Progress review part two Purchases
www.greenprocurementcode.co.uk
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Green Public Procurement (GPP) View from the EU

• Commissioner Stavros Dimas
• 'The Greening of Public Procurement is a major
  challenge for Europe's public administrations,
  but also a major opportunity to boost Europe's
  competitiveness and stimulate the market for
  environmental technologies.'
• http//ec.europa.eu/environment/gpp

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European political targets

• EC proposes that
• By 2010, 50 of all tendering procedures should
  be green
• Green means compliant with endorsed common
  core GPP criteria
• Percentage expressed in both number and value of
  green contracts as compared to the overall number
  and value of contracts in sectors where core
  GPP criteria have been identified

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Green Public Procurement

• EU definition
•  a process whereby public authorities seek to
  procure goods, services and works with a reduced
  environmental impact throughout their life cycle
  when compared to goods, services and works with
  the same primary function that would otherwise be
  procured 
• Environmental criteria can be included in
• Technical specifications
• Selection criteria
• Award criteria
• Contract performance clauses

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GPP Survey EU Green 7
Indicator 1 Green contracts by value
Indicator 2 Number of green contracts
Source Collection of statistical information on
Green Public Procurement in the
EU PricewaterhouseCoopers, Significant and
Ecofys, January 2009
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EC Priority Sectors

• Construction
• 2. Food and catering services
• 3. Transport and transport services
• 4. Energy
• 5. Office machinery and computers
• 6. Clothing, uniforms and other textiles
• 7. Paper and printing services
• 8. Furniture
• 9. Cleaning products and services
• 10. Equipment used in the health sector

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UK Government Buying Standards (GBS)

• Designed to make it easier for government buyers
  to buy sustainable options. They include
• Official specifications that all government
  buyers must follow when procuring a range of
  products
• Information about sustainable procurement and how
  to apply it when buying
• Direct links to websites with lists of products
  that meet the standards
• http//sd.defra.gov.uk/advice/public/buying/

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UK Government Buying Standards (GBS)

• Government Buying Standards simplify sustainable
  procurement by
• Provide minimum and best practice standards for
  around 50 different products
• Straightforward specifications that can be
  inserted directly into tenders
• Suppliers asked to prove their compliance with
  these standards
• Enable more suppliers to develop products that
  meet the standards so increasing
  competitiveness
• http//sd.defra.gov.uk/advice/public/buying/

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UK Government Buying Standards (GBS)

• Government Buying Standards have been endorsed by
  the Coalition Government
• All central government departments and their
  related organisations must ensure that they meet
  these minimum mandatory specifications when
  buying products and services
• The standards have been developed so that
  products which meet the criteria save more money
  over their whole life than products that do not
• http//sd.defra.gov.uk/advice/public/buying/

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Government Buying Standards Statement from Lord
Henley

• Government Buying Standards have been developed
  in consultation with procurement officials across
  Whitehall as well as industry experts and other
  stakeholders, and rigorously assessed in terms of
  costs and scientific evidence.
• I believe that buying sustainably is buying well
  and I encourage you all to use these Government
  Buying Standards developed to help you understand
  the life cycle impacts of a wide range of
  products.
• http//sd.defra.gov.uk/advice/public/buying/

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BS 8903 2010 Principles and framework for
procuring sustainably. Guide

• British Standard with recommendations and
  guidance on how to adopt and embed sustainable
  procurement principles and practices across an
  organization and its supply chains.
• Provides practical information to help
  implementation. It also includes guidance on
  measurement to help organizations assess the
  extent and effectiveness of their sustainable
  procurement activity.

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Procuring sustainably using BS 8903

• The principles set out in BS 8903 are applicable
  to both public and private sector organizations.
  However, public sector buyers comply with EU
  Procurement Directives (and the Regulations that
  implement them in the UK).
• The EU has requirements with regard to public
  procurement and what can be considered throughout
  the qualification, tender and contracting
  process. It is advisable that proper legal advice
  always be sought. This guide provides information
  which is likely to be useful to public
  procurement but it ought to be read in
  conjunction with the latest Directives,
  Regulations and government policy.

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Procuring sustainably using BS 8903

• British Standard gives detailed guidance across
  all stages of the procurement process and is
  applicable
• to individuals and small and large organizations
  responsible for commissioning or procuring any
  form of goods, works or services regardless of
  sector, for own use, resale or to support service
  provision
• across the public sector, private sector and
  third sector
• across the whole procurement cycle including
  one-time purchases to ongoing contracts with
  long-term supplier partners
• to individuals and organizations with sole
  responsibility for their purchasing needs and
  third parties contracted to provide outsourced
  procurement solutions.

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Procuring sustainably using BS 8903
Ref BS8903 Principles and Framework for
Procuring Sustainably
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Enablers - risk and opportunity assessment

• Category level prioritization mapping risk and
  spend

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Enablers - risk and opportunity assessment

• Buyer approach mapping risk and scope

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Enablers - risk and opportunity assessment

• Market engagement strategy scope and influence

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Analysis and action planning

• Develop detailed risk/impact assessment
• Execute action plans
• Capture results and share learning

Source BS8903 (2010)
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Source United Nations, UNEPThe Marrakech
Process is a global process to support the
elaboration of a 10-Year Framework of Programmes
(10YFP) on sustainable consumption and
production, as called for by the WSSD
Johannesburg Plan of Action (2002)
Sustainable Public Procurement UNEP Marrakech
Process
Objective To promote and support the
implementation of public procurement programmes
that encourage the uptake of sustainable products
and services
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Sustainable Public Procurement UNEP Marrakech
Process

• Key Activities
• to develop practical guidance and toolkits for
  sustainable public procurement
• to carry out research and prepare policy papers
  on SPP
• to facilitate dialogue and work amongst
  stakeholders and countries on SPP
• to promote SPP through training and assistance
• http//esa.un.org/marrakechprocess/tfsuspubproc.sh
  tml

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Leaders and Learners Facilitated workshop
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Beyond Gold
Graham Randles Principal Consultant
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The Flexible Framework
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The Flexible Framework
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The Flexible Framework
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The Flexible Framework
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Life Cycle Costing (LCC) Achieving win-win
outcomes
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Life Cycle Costing (LCC)

• What is Life Cycle Costing?
• Also called Whole Life Costing (WLC)
• Technique to establish the total cost of
  ownership
• Structured approach that addresses all the
  elements of cost
• Can be used to produce a spend profile of the
  product or service over its anticipated life-span
  
• Results can be used to assist management in the
  decision-making process where there is a choice
  of options
• Accuracy of analysis diminishes as it projects
  further into future
• most valuable when long term assumptions apply
• to all options and have the same impact

Source OGC http//www.ogc.gov.uk/implementing_pla
ns_introduction_life_cycle_costing_.asp
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Principles of Life Cycle Costing
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Principles of Life Cycle Costing

• Acquisition costs - incurred between the decision
  to proceed with the procurement and the entry of
  the goods or services to operational use
• Operational costs - incurred during the
  operational life of the asset or service
• End of life costs - associated with the disposal,
  termination or replacement of the asset or
  service. In the case of assets, disposal cost can
  be negative because the asset has a resale value.
  
• A purchasing decision normally commits the user
  to over 95 per cent of the through-life costs.
  There is very little scope to change the cost of
  ownership after the item has been delivered.

Source OGC http//www.ogc.gov.uk/implementing_pla
ns_introduction_life_cycle_costing_.asp
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Benefits of LCC analysis

• Evaluation of competing options in purchasing
• Improved awareness of total costs - visible costs
  of any purchase represent only a small proportion
  of the total cost of ownership
• More accurate forecasting of cost profiles
• Performance trade-off against cost
• Sustainability benefits reduced waste and CO2
  emissions

Source OGC http//www.ogc.gov.uk/implementing_pla
ns_introduction_life_cycle_costing_.asp
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Engaging Suppliers Private sector supply chain
initiatives
Wal-Mart Will Make Suppliers Say How Much They
Pollute Business Insider, 15 July 2009
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Sustainability Product Index

• 15 Questions for Suppliers
• Energy and Climate Reducing Energy Costs and
  Greenhouse Gas Emissions
• Material Efficiency Reducing Waste and Enhancing
  Quality
• Natural Resources Producing High Quality,
  Responsibly Sourced Raw Materials
• People and Community
• Ensuring Responsible and Ethical Production

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The Flexible FrameworkMeasurement Results
Level 4 Balanced Scorecard approach reflecting
input and output Comparison with peer
organisations Eg. Green Procurement Code Level
5 Measures used to drive organisational
sustainable development strategy Independent
audit reports in the public domain Eg. Green
Procurement Code
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GLA Group Responsible Procurement Benchmarking
Project June 2010

• Research conducted by
• Barbara Morton, Sustainable Procurement Ltd
• Graham Randles, LRS Consultancy Ltd

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Project objectives

• Understand how leading organisations approach
  responsible / sustainable procurement
• Understand how they measure report progress
• Determine what lies beyond Level 5 of Flexible
  Framework
• Establish an RP benchmarking network / community
  of practice

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Organisations interviewed

• GLA Group
• LDA
• London Fire Brigade
• Metropolitan Police
• TfL
• Central Government
• Dept for Transport
• Dept of Health
• DWP

• Arup
• City of Wakefield MDC
• Durham County Council
• IBM
• Leeds City Council
• London Borough of Greenwich
• Skanska
• Value Wales

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Risk management -Good practice

• GLA Group focus on Mayoral priorities results in
  strong performance on eg. equality and diversity
• Robust risk-based methodologies used by leading
  organisations. eg. DWP focus on high risk
  contracts
• DfT prioritisation of categories led to strategy,
  guidance notes, training in those categories
  first
• Wide range of environmental and socio-economic
  issues considered and tools developed
• eg. Leeds toolkit, Skanskas balanced scorecard,
• MoD scenario planning for future materials
  scarcity

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Capability-building measuring outcomes Good
practice

• GLA Group is generally strong on
  capability-building but, like other
  organisations, finds it hard to measure impact
  on the ground of capability-building actions
• Developing consistent metrics across a diverse
  organisation is a challenge for many interviewed.
  eg. Skanska, Arup, MoD
• DfT annual external health check of FFW
  progress
• Skanska focus on Key Performance Indicators
• Were a business of KPIs

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Life cycle costing Good practice

• Most organisations interviewed do some LCC
• Most commonly used for fleet eg. LFB and
  buildings eg. Skanska sometimes IT
• Clean Vehicles Directive public sector must
  monetise incorporate costs of emissions in
  purchase decisions
• Skanskas light-bulb moment - realising we
  would never dare go to the industry and say you
  can have a safe project but it will cost you
  more
• GLA has started to investigate existing tools and
  tools
• in development. eg. ICLEI LCC tool

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Engaging suppliers and procuring innovation
Good practice

• Proactive approach to identifying requirements as
  sustainable / responsible in the contract title.
  eg. Ultra-efficient rather than sustainable
• Forward Commitment Procurement. eg. Wakefields 3
  FCP procurements current or in the pipeline
  (ultra-efficient heating and lighting systems
  for swimming pools, street lighting and playing
  pitches)
• Incorporating sustainability at the design stage
• eg. Skanska (buildings), MoD (ships)

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Internal communications and leadership /
accountability Good practice

• GLA Group senior management commitment is
  generally very strong
• Leading organisations ensure leadership is
  embedded at all levels and responsibilities are
  well understood. eg. Skanskas deep ecological
  building strategy
• Clear guidance and accountability. eg. Skanskas
  5 zeros, Leeds 5 freedoms
• Some organisations, including Metropolitan Police
  and
• LFB are providing sector level leadership

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Recommendations Innovation

• Investigate, potentially through market survey or
  dialogue
• Opportunities to convey the responsible
  procurement requirements through the title /
  subject matter of the contract
• Opportunities for Forward Commitment Procurement
• Earliest possible engagement in the procurement
  process eg. Design stage

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Recommendations Risk management

• Tactical
• Can learn from others and make rapid progress.
• eg. carbon footprint of NHS in England
• Strategic
• Review environmental and socio-economic criteria
  used in risk assessment to focus resources on
  areas of maximum risk
• Apply across all procurement spend, category and
  sub-category levels

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Recommendations Capacity building and
measurement

• Give attention to capability-building at senior
  management level so that everyone fully
  understands their roles and responsibilities
• Work to associate capability building to
  individual procurement actions and then to
  responsible outcomes. eg. Progress against carbon
  target
• Expand on the work done through MGPC to measure
  outcomes
• Work with Defra, WRAP and others to test new
  methodologies (developing leading practice)

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Recommendations Life cycle costing

• Further develop LCC approaches and toolkits
• Identify where LCC approaches are best applied
• Bid evaluation options appraisal business case
• Work to investigate which categories of spend
  might lend themselves to quantification and
  monetisation of emissions
• Data could be used to inform resource allocation
  (budgeting) and procurement decisions (ie.
  choosing between competing product/service
  options)

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Thank you!
Graham Randles LRS Consultancy graham.randles_at_lr
sconsultancy.com tel [phone] Mayor of
Londons Green Procurement Code www.greenprocureme
ntcode.co.uk
60
Ask the Expert Q A
Graham Randles Sarah Griffiths LRS Consultancy
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Government Buying Standards Statement from Lord
Henley

• We are facing tough times in the UK as we define
  and follow the path to recovery. And now more
  than ever we need to be thinking about balancing
  environmental, social and economic needs.
• What we buy in the public sector is absolutely
  vital as it affects product markets as well as
  local economies. Whilst finding cash savings is
  important in the short term, it also is
  imperative that what we buy now is cost effective
  during its lifetime. There is no point buying the
  cheapest computer on the market if it is not
  energy efficient. Todays savings must not be
  tomorrows costs.
• http//sd.defra.gov.uk/advice/public/buying/

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The business case for sustainability

• Prepare for the long game - All the things you
  currently rely on energy, supply chain,
  consumers, investors, regulation are going to
  change as a result of increased sustainability
  risks and concerns
• Plan to explore how to make sustainability
  commercially beneficial for your business -
  innovation
• KPMG International survey of 378 large and
  medium-sized companies spread across 61 countries
  show that 62 percent already have an active
  sustainability program in place, and 11 percent
  are currently developing one (Dec 2010)
• 72 of those with sustainability programs found
  that,
• despite some increase in investment, the
  benefits
• clearly outweighed the drawbacks

63
The Green Procurement Code the future

• Proposed elements of the new service for large
  business members
• Benchmarking using Part 1 of the existing
  Progress Review (up to level 3 of the flexible
  framework)
• Bespoke action plan detailing how you can improve
  your performance
• Consultancy support time (1 day) to assist with
  implementing your action plan
• Networking and Events (3 to 4 per year)
• Indicative cost - 1,775 (exc VAT)
• New certification system (soon to be announced!)
• What do you think?

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The Green Procurement Code the future

• Proposed elements of the new service for SME
  members
• Benchmarking using the existing Progress Review
  (up to level 3 of the flexible framework)
• Bespoke action plan detailing how you can improve
  your performance
• Evidence based audit and certification to Bronze,
  Silver Gold level
• Workshops (3 to 4 per year)
• Indicative cost - 370 (exc VAT)
• What do you think?