SUSTAINABLE PROCUREMENT AND SOCIAL CLAUSES

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SUSTAINABLE PROCUREMENTAND SOCIAL CLAUSES

• Tony Wiltshire
• Director
• Yorkshire and the Humber Centre of Excellence
• United Kingdom

Seminar on Green Public ProcurementBucharest,
30-31 October 2007
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Sustainable Procurement

• Dont say green say sustainable.
• This agenda is about much more than
• buying recycled paper.
• Corporate Social Responsibility.

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Sustainable Procurement

• Using public procurement to achieve wider policy
  objectives
• promotion and maintenance of competitive and
  contestable markets
• innovation
• local economy and regeneration
• environmental or green issues
• race and gender equality
• overseas development issues such as fair
  trade
• promotion of skills and training

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Sustainable Procurement

• The issues must always be relevant to
• the specific contract.
• You need to consider each contract on its
• own merits and requirements.
• Consider telling suppliers rather than asking.

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Sustainable Procurement

• We will introduce an explicit policy for
  schools, hospitals and government offices to
  consider local sourcing of fresh produce (UK
  Government statement 2005)
• But how to achieve this?

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Sustainable Procurement

• As a major stimulant Government will work with
  these social enterprises wherever possible.
  When services can be provided by such
  organisations to the required standards of
  quality and value for money they should be
  positively encouraged to develop and be included
  in procurement policies. (UK Government
  statement 2005)
• But how to achieve this?

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Sustainable Procurement

• We will continue to deliver efficiency savings
  and improvements to local services through joint
  procurement, shared services, and promoting
  decision making at the level that will make a
  difference. We will continue to strengthen the
  community leadership role of local authorities
  (UK Government statement 2005)
• But how to achieve this?

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Sustainable Procurement

• Treaty rules and general principles of European
  law - not constraints but key to success
• non discrimination
• equal treatment
• proportionality/relevance
• Directives
• thresholds
• below thresholds
• read the recitals for perspective
• Guidance Audit Commission Achieving Community
  Benefits through Contracts
• OGC

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Sustainable Procurement

• Strategic steps
• Adopt a sustainable procurement policy
• Adopt a small business friendly concordat
• Integrate with strategic procurement framework
• Embed within risk management strategy
• Develop a marketing strategy
• Develop sourcing strategies
• Dialogue with suppliers
• Check for sustainability throughout
  procurement cycle

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Sustainable Procurement

• Environmental issues
• Finlandia Business Case (02)
• OGC Guidance Environmental Issues in
  Purchasing (2003)
• Social issues
• Beentjes 87/C31)
• Nord Pas de Calais (98/C225)
• EU Interpretative Communication (10/01)
• OGC Social Issues in Purchasing (02/06)

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Sustainable ProcurementGuiding principle of EU

• Fair, open, transparent and non-discriminatory
  competition.
• All other issues are up for consideration.

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Sustainable ProcurementGuiding principle of EU

• EU part A more easily deliverable from within
  EU
• eg financial services
• EU part B less easily deliverable from within
  EU
• eg hotel and restaurant services

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Sustainable ProcurementGreen stuff

• Stages of a whole-life costing assessment
• Whole life costing
• Design
• Raw Material (sustainability, recycled
  materials)
• Sourcing (sustainable sourcing)
• Manufacture/production (emissions, packaging)
• Delivery (Food miles, transport costs/distance)
• Use (equal opportunities, access, best value)
• Disposal/reuse (recycling, landfill)

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Sustainable Procurement
SME Case Study Activity
To which tenderer would you award this contract?
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Sustainable Procurement

• Key questions to be asked include
• Can the need be met in another way?
• Is a suitable product available elsewhere in
  the organisation?
• Can renting or sharing, rather than purchasing
  meet the requirement?
• Is the quality requested essential?
• Is the specification currently used the correct
  one for the purpose?

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Sustainable Procurement

• Key questions to be asked include
• Is the purchase necessary to the organisation?
• (e.g. Is the purchase essential and really
  necessary on a functional assessment?)
• Would recovery costs be high?
• (e.g. If the supply chain ended would a
  replacement be difficult to obtain?)
• Is there a limited number of suppliers?
• (e.g. There is a limited number of companies
  that supply mobile telecommunication network
  services)
• Will the organisation suffer negative PR if
  supply fails?
• (e.g. If an organisation uses products produced
  by child labour)
• Is the procurement EU compliant and otherwise
  lawful?
• (e.g. If an organisation wishes to pursue a
  buy local policy this may not comply with the
  EU directives)

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Sustainable Procurement

• Examples of municipal procurement
• PPP for hospital
• new road
• paper
• computers
• food
• fuel
• light bulbs for airport landing strip
• electricity

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Traditional Procurement

• Procurement position model

Supply Market Complexity/ risk
Expenditure
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Traditional Procurement

• Procurement position model

Light bulbs for airport
PPP hospital Road
Supply Market Complexity /risk
Computers Electricity Fuel
Food Paper
Expenditure
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Sustainable Procurement

• Now take into account environmental issues

Computers Paper
Electricity Fuel
Paper
Road Food
Environmental Risk
PPP hospital

Bulbs
Profile Risk
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Sustainable Procurement

• Category strategy
• Map future procurements
• Adopt a risk based approach identify most
  important categories
• Plan to reduce adverse impacts/maximise positive
  impacts
• Discuss with supply market to minimise/maximise

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Environmental Impact Assessment

• Register format
• Record aspects, impacts and significance of each
  specific activity of the procurement
• Step 1 List all relevant activities
• Step 2 Record aspects and associated impacts
• Step 3 Assess significance of each aspect
• Step 4 Make recommendations for mitigating
  impacts

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Environmental Impact Assessment
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Environmental Impact Assessment

• Assessment of significance non-scientific
  evaluation
• ISO14001 suggests following factors considered

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Environmental Impact Assessment
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Sustainable Procurement

• Environmental risks
• Analyzing which is the most energy-consuming
  equipment and products that contain hazardous
  materials it may be advisable to carry out this
  assessment in collaboration with environmental
  specialists
• Risks to the organisations reputation or
  profile this may focus upon issues such as
  contracting with someone who dumps waste
  illegally.
• Risk to security and longevity of supply, i.e.
  sole reliance upon fossil fuels, long-term
  unemployment in a particular area.

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Sustainable Procurement

• Social risks
• Failure to comply with relevant discrimination
  or equal rights legislation, i.e. failure to
  provide disabled access to buildings or
  services.
• Risks to the organisations reputation or
  profile from failing to consider social
  factors such as child labour, free trade or
  local problems.
• Allowing existing social problems to continue
  in areas and potentially exacerbating existing
  problems.

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Sustainable Procurement

• Issues to consider when writing contract
  specifications. Key points include
• Include clear criteria to identify
  environmentally preferable products and
  services
• Take account of measurable environmental and
  social performance indicators.
• Take account of stakeholders, including any
  departmental environmental managers, potential
  suppliers and consultants who can advise on
  objectives, constraints and new thinking
  applicable to the procurement.
• Require bidders as part of their plans, to
  explain how they will comply with the
  environmental and social requirements. This
  might involve preparation of any environmental
  and/or social impact assessment by bidders of
  their proposed work.

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Sustainable Procurement

• Constructive dialogue with market
• Develop procurement plans
• - past/current contracts?
• - when?
• - who to contact?
• Dialogue to ensure innovation
• Dialogue to ensure open up to
• - SMEs
• - Social Enterprises
• - Promote equalities

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Sustainable Procurement
challenge
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Sustainable Procurement

• Collaboration amongst municipalities
• Common strategy
• Common selling to
• Common requirements/thresholds

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Sustainable Procurement

• Collaboration
• Agree the benefits and costs for each of the
  participants individually and collectively.
• Agree a governance structure.
• Agree exit strategies and what happens if one
  body wants to opt out.
• Agree priorities.
• Agree performance management approach.

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Sustainable Procurement

• Collaboration
• Have you fully explored and exploited the
  soft options e.g. use of consortia?
• What are the no go areas for each
  organisation?
• What are the limits of what each organisation
  will contribute to making the collaboration a
  success?

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Sustainable Procurement

• Collaboration
• How do we get to common specifications?
• How do we get to common terms and conditions
  of contracts?
• How do we get to common contract management?
• Whats the best way to manage the market?
• Have we identified the risks and developed a
  risk management plan?
• How do we develop ad agree collaboration
  sourcing strategies?
• - Who, what, where, when, why and how issues?
• - We need to map the spend?
• - Map the existing contracts and which ones are
  greenest?
• - Map the contract termination dates?
• - Develop migration strategies to common
  contracts?

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Sustainable Procurement
Buying Real Best Value

• A number of initiatives following on from
  Regional Seminar
• Innovation surgery
• Best practice Resource
• Measuring Economic Impact using LM3
• Designing a framework for socially responsible
  procurement

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Sustainable Procurement

• Social Clauses
• Open a dialogue with market
• Involve contract/service manager
• Develop skills and capacity
• Have a strategy!

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Sustainable Procurement

• Social Clauses
• Does the specification have measurable
  outcomes?
• Can you evaluate the responses?
• Do the evaluation criteria match the
  specification requirements?
• Does the specification include continuous
  improvement and how do you measure it?
• Can you manage the contract?

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Sustainable Procurement

• Regional Supplier Contract Management System
• Approved supplier database
• Contract management module
• E-tendering module
• Open to all Authorities free of charge
• Easily accessible by suppliers via web

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Sustainable Procurement

• Benefits of a regional approach
• Saves administrative time and costs
• Saves supplier time and costs
• Greater transparency of process and contract
  opportunities
• Easier for collaborative tendering and
  contracts

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Sustainable Procurement

• Social Clauses
• Grants or tenders?
• State aid issue
• Competitively neutral
• Supply chain
• Training
• VENs

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Sustainable Procurement

• Task
• Your municipality wants its contractor for a
  major project to be more socially responsible.
  What would you include in the tender documents to
  test whether a potential contractor would be
  socially responsible?

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Sustainable Procurement

• Employment training and education
• Procurement and the supply chain
• Community consultation and engagement
• Customers/clients
• Benchmarking
• Economic development
• Environmental improvement
• Innovation

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Sustainable Procurement

• Socially responsible procurement
• 1 Employment, Training and Education
  (construction sector only)
• I have read and will abide by the Organisations
  Code of Practice
• for Employment and Training. Yes
  No
• I completed and returned the questionnaire.
  Yes No
• My Implementation Plan (Appendix 2) in the Code
  is
• enclosed as part of this tender. Yes
  No
• I will submit the weekly returns identified in
  the Code.
• Yes No

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Sustainable Procurement

• Socially responsible procurement
• 2 Procurement and Supply Chain Management
• Provide
• (i) a schedule of proposed sub contractors and
  their addresses to be employed on the contract
• (ii) include within that schedule details of any
  social enterprises or voluntary sector
  organisations and their addresses to bee
  employed on the contract
• (iii) details of the goods or services to be
  provided at (i)
• and (ii).
• Enclosed Yes No

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Sustainable Procurement

• Socially responsible procurement
• 3 Community Consultation and Engagement
• Provide a method statement on (i) how and when
  you would propose to consult and engage with the
  local community and (ii) how you would ensure
  long-term ownership and representation.
• 
  Enclosed Yes No

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Sustainable Procurement

• Socially responsible procurement
• 4 Customers/Clients
• Provide a Customer Service Plan to include the
  following details
• What methods will you employ to gather end user
  feedback?
• How frequently will you gather end user feedback?
• What reports do you intend to provide to the
  client and at what frequency?
• What strategies will you use to ensure continuous
  improvement for the service?
• What other customer service orientated proposals
  do you have that will enhance your bid?
• Enclosed Yes No

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Sustainable Procurement

• Socially responsible procurement
• 5 Benchmarking
• Provide details of what you consider to be
  appropriate performance measures and benchmarks.
• Enclosed Yes No

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Sustainable Procurement

• Socially responsible procurement
• 6 Economic Development
• (i) Describe how through this project your
  organisation will contribute to the economic
  development of the municipality.
• (ii) Provide details of your local office and/or
  head office and any networking facilities which
  you believe may support your ability to perform
  the contract at a high level.
• (iii) Describe how your company contributes to
  the growth in number and type of local
  companies and in particular the social
  enterprise culture.
• Enclosed Yes No

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Sustainable Procurement

• Socially responsible procurement
• 7 Environmental Improvement
• Describe
• (i) any environmental accreditations which your
  company has achieved
• (ii) what steps your company has taken to reduce
  environmental impacts.
• Enclosed Yes No

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Sustainable Procurement

• Socially responsible procurement
• 8 Innovation
• (i) State your involvement in activities which
  involve the use of leading technologies and best
  practice. Demonstrate your creativity in
  performing similar job.
• (ii) Provide details of any on-line systems that
  can provide e-commerce solutions to local
  government. Outline how these systems relate
  and might be integrated to the organisations
  e-procurement systems and strategy.
• Enclosed Yes No

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Sustainable Procurement
And finally If you follow this path you must
be resourced to monitor performance.
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Questions?
tony.wiltshire_at_yhcoe.org.uk