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Embedding Sustainability into the Procurement Process Forum for the Future. Stuart Williams. Why sustainability matters: living within environmental limits. Clean air & water, Stable climate Viable forests & fisheries, Biodiversity. Population increase from 6 to 9 bn

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why sustainability matters living within environmental limits
Why sustainability matters: living within environmental limits

Clean air & water, Stable climate

Viable forests & fisheries, Biodiversity

Population increase from 6 to 9 bn

Consumption per head increases 4 - 6x

Source: The Natural Step

beyond the environment the triple bottom line
Beyond the environment: the triple bottom line

Living within environmental limits:

Ensure natural resources to support life remain unimpaired

BIODIVERSITY

& RESOURCES

CLIMATE

EMPLOYMENT

Ensuring a strong, healthy & just society:

Meet diverse needs of all; promote wellbeing, inclusion & equal opportunity

LABOUR

RIGHTS

WATER

SHORTAGES

WASTE

Achieving a sustainable economy:

Strong, stable, efficient & fair

GROWTH &

REGENERATION

POLLUTION

HEALTH

what is sustainable procurement
What is Sustainable Procurement?

UK Public Sector Spend

£150 bn

Acquiring goods & services that:

  • Meet users needs
  • Deliver long term Value for Money
  • Maximise social and economic benefits
  • Minimise damage to the environment and health
some general principles
Some general principles

MORE

  • Energy & resource
  • efficiency
  • Renewable energy
  • Recycled & reusable
  • items
  • Local supply
  • Sustainably managed
  • resources
  • Fossil fuel usage
  • Water consumption
  • Transport
  • Excess packaging
  • Disposable items
  • Hazardous materials
  • Sweatshop labour

LESS

why buy sustainably 1 whole life cost savings
Increasing costs

In 2004, NHS gas bills rose 57%; Council energy bills rose £100m

Landfill tax will continue to rise to £35/tonne

EPC “Cap and Trade” will place cost on CO2 emissions

Domestic water bills rise 19% over 5 years

Sustainable Products

Use less energy, water, emissions and consumables

Create less waste and easier to recycle

Are less hazardous to use and dispose of

Have a longer life (reusable vs disposable)

Why buy sustainably?1. Whole life cost savings

Use collaborative procurement to raise standards and leverage prices

why buy sustainably 2 reduces risk and protects reputation
Risk

Anticipate potential new legislation and costs

eg WEEE and ROHS directives

Avoid supply shortages by reducing dependence on scarce resources

eg Use of sustainably managed timber

Anticipates changing environmental constraints

eg Buildings designed to operate in hotter, dryer summers

Reputation

Many examples of organisations tainted by poor procurement decisions

Government offices using illegal tropical hardwood

Electronics and clothing firms using sweatshop labour

Contaminated battery eggs causing health scares

Why buy sustainably?2. Reduces risk and protects reputation
why buy sustainably 3 government expectations
Procuring the Future: UK Action Plan

all Chief Executives held accountable

mandatory minimum environmental standards

performance measured against the Flexible Framework

investments and auditing based on sustainable Long Term Value for Money rather than short term cost cutting

Why buy sustainably?3. Government expectations
why buy sustainably 4 central government targets
All Central Government departments must:

Be Carbon Neutral by 2012

By 2020

Recycle 75% of the waste

Reduce waste by 25%

Reduce water consumption by 25%

Increase energy efficiency by 30 % per square metre

Why buy sustainably?4. Central Government targets

Councils should aim to meet or exceed these targets

why buy sustainably 5 delivering long term value for money
Spending public money in the long term public interest

Without undermining health, environment and opportunities

Delivering pan-public sector savings

Kick starting innovation and new technologies

Why buy sustainably?5. Delivering long term Value for Money

Sustainable procurement = Good procurement

think upstream
Think upstream

Tender Process

Reduce demand

Specify

sustainability

Favour sustainability

Improve

suppliers

Shortlist

responsible

suppliers

Specifications

Evaluation

Supplier

development

Demand review

Prequalification

Influence

Time

Indesign and procurement, the ability to influence cost and performance declines with time

consider the whole life cycle
Consider the whole life cycle

Recycling & Reuse

Raw materials extraction & processing

Manufacturing

Transportation

Usage

Disposal

Minerals, timber, oil, water, electricity, fossil fuels,

pesticides, labour, £

Heavy metals, greenhouse gases, agrochemicals, dioxins, landfill waste, traffic congestion & accidents, £

use the sp tool to help plan your tenders
Use the SP Tool to help plan your tenders

Contracts

Database

Prioritisation Matrix

Sustainable Procurement Tool

Prioritised

Categories

Demand Review

Action Planning

Whole Life Costing

Procurement

Plan

Source Plan

Source Plan

The outputs from the SP Tool should direct the tender process

prioritise the best opportunities
Prioritise the best opportunities

High

⊚ Waste contracts

⊚ Building contracts

3

Top Priorities

Long term objectives

⊚ Transport

⊚ Medical consumables

⊚ IT equipment

⊚ Printing & stationery

Impact

2

⊚ Medical implants

1

Quickwins

Low

1

2

3

Hard

Easy

Ease of Implementation

reduce or eliminate demand
Reduce or eliminate demand

Purchase avoidance reduces health and environmental impacts and saves money

supplier pre qualification limited opportunities
Shortlist most responsible suppliers:

Exclude those with recent prosecutions

Demand EMS for on site services

Demand proof of fair pay and working conditions

Encourage local SMEs and Social Enterprises

As a minimum:

Advertise locally

Minimise red tape

Consider:

Local lotting to break down contracts

Ring-fencing a pilot contract

Encouraging collaboration and subcontracting

Briefing suppliers prior to ITT

Supplier Pre-qualification: limited opportunities
use specifications to design in sustainability
Use specifications as minimum standards

Specify out undesirable features; specify in positive aspects

Always market test your specifications

They must be challenging but deliverable and affordable

Process / Production

Organic / free range

Sustainably managed timber

Renewable energy

Attributes

Recycled content

Mercury free

Hybrid engines

Functional / Performance

Energy / fuel efficiency

Carbon emissions

Water efficiency

Use specifications to design-in sustainability
evaluation beware the last minute half hearted approach
DON’T

Use evaluation criteria as a substitute for robust specifications

Give sustainability a 10% weighting then forget about it

Evaluate on “purchase price” alone

DO

State sustainability as a criteria in the OJEU notice

Reward performance above and beyond specifications

Reward strong “method statements” and credentials

Ensure products durable & “fit for purpose”

Evaluate on Whole Life Costs

Evaluation:Beware the last minute, half-hearted approach
contract award and monitoring are you getting what you paid for
Ensure the delivered products & services continue to meet your original specification

Monitor quality, performance and durability

Use incentives / penalties / caps to encourage good performance:

Gainshare energy savings with building contractors or energy firms

Cap waste costs to encourage waste contractors to minimise waste

Contract award and monitoring:Are you getting what you paid for?

Ts&Cs should support your specifications and be defined from the start of the Tender Process

example nhs contracts
Example NHS contracts
  • Laptops and Desktops
  • Energy saving, recyclable, upgradeable, low hazardous content, recyclable packaging
  • Over 30% saving for some Trusts
  • Waste minimisation
  • Gainshare incentives, new recycling schemes, non-incineration technology
  • Cost neutral with future savings expected
  • Surgical gowns and drapes
  • Switch from disposable to reusable
  • Purchasing and clinical waste savings
  • Multi-functional Devices
  • Printer replacement and smart software
  • Up to 40% savings anticipated
the challenge for the public sector
Barriers

Perceived:

Too expensive / poor VFM

Against EU procurement directives

The challenge for the public sector

Solutions

  • Whole life costing
  • Economies of scale reduce prices & raise standards
  • Tools, training & awareness

Genuine:

  • Fragmented procurement
    • Poor governance
    • Duplication of contracting effort
    • Suppliers divide and conquer
    • Under-resourced supply teams
  • Lack of SP leadership
  • Promote collaborative procurement & spend hierarchy
    • Reduces duplication
    • Introduces best practice category management
    • Frees up local resource
  • Reflect in new CPA framework
questions answers and further information
Questions, Answers and Further Information

Stuart Williams

Procurement Lead

Forum for the Future

s.williams@forumforthefuture.org.uk

tel: 07779 600 692