Green procurement in Europe – municipal authorities take the lead

On 22-23 October, the City of Zurich hosted representatives from more than 15 European nations at the international Procura+ Seminar, organised by ICLEI – Local Governments for Sustainability.
 
The success of European efforts to mitigate and adapt to climate change depends on municipal authorities and regional purchasing bodies. Public authorities in Europe have a purchasing power equivalent to 16% of the EU's gross domestic product.  Setting the agenda for the seminar, Mark Hidson, Director for Sustainable Procurement at ICLEI said “If cities leveraged their spending power and purchased environmentally friendly goods and services, this would make a significant contribution to climate-friendly markets”.
 
Using market leverage municipal authorities can also have a major influence on suppliers, stimulating innovation and the production of more sustainable goods and services.
 
Heide Rühle, Member of the European Parliament, stressed the importance of public sector action but also highlighted the complex issues that arise when public procurement enters territory governed by European competition law and rules on State Aid. “The European procurement guidelines clearly allow for the consideration of ecological and social standards in the tendering process of public contracts as long as the rules of the internal market are abided by”.
 
Using practical case studies, ranging from shirts for the Zurich police force to new hospital buildings, presenters from across Europe pooled experience and shared examples of best practice to meet that challenge.
 
Performance based specifications
Pekka Sauri, Deputy Mayor of Helsinki, argued that contracting authorities can encourage better results and protect themselves against legal challenge by specifying the outcome or result they wish to achieve, rather than by narrowly prescribing methods or processes that must be used. Writing technical specifications in terms of performance or functional requirements allows bidders to come up with new and innovative solutions. A tender for an environmentally friendly heating system for a building may specify a constant day-time temperature or threshold temperatures rather than setting detailed and complex technical specifications. This allows suppliers to come up with a range of different options.
 
The criteria must be appropriate for defining the characteristics of the product, and any eco-label criteria must have been established through stakeholder consultation and on the basis of scientific information. The criteria must be non-discriminatory and accessible to all potential bidders. When evaluating bids, the contracting authority must adopt an objective approach, calling on expert technical or legal advice when appropriate.
 
Evaluating bids – weighted criteria and scoring
Where a contracting authority decides to award a contract on the basis of  the ‘most economically advantageous offer' it may apply a series of award criteria to identify the bid offering best value for money.  In this context ‘best value’ includes the price, but is not limited to the lowest bid. This allows contracting authorities to integrate environmental aspects even in the later stages of the procurement process.
 
A move towards ‘performance based’ or ‘outcome’ specification shifts the emphasis (and the risk of challenge) from the project specification to the evaluation of bids. Laura Carpineti, a procurement specialist from the Regional government of Lombardy in Italy presented a scoring model using weighted criteria to justify a move away from lowest price to ‘most economically advantageous tender’, while signalling compliance with EU rules.
 
Award criteria must be clear and objectively verifiable so that bidders can present balanced offers. For example, a contracting authority purchasing electricity may award extra points to a bidder who is able to prove that 20% of the electricity supplied is from renewable energy sources.
 
Where the Competitive Dialogue procurement process is used, the contracting authority may address environmental issues by requiring bidders to conduct the appropriate risk assessment and to recommend appropriate measures as part of the ‘most economically advantageous tender’. In those cases, the most difficult task facing the contracting authority, and the most likely grounds for challenge, would arise from the evaluation of bidders’ recommendations and proposals, in particular if those recommendations produce a significant difference between the projected costs of each tender. The contracting authority’s best defence is always to base its decisions explicitly on the strongest available scientific evidence together with expert technical and legal advice.
 
New technologies – shifting language
Locating the appropriate technical advice and information is itself, a major challenge. Kate Shaw of the UK public purchasing body ESPO outlined key lessons learned when putting together a tender for equipment designed to improve energy performance. A key initial challenge was to identify the appropriate language and terminology. For some suppliers, the key concept was ‘voltage reduction’. For others, it was ‘voltage optimisation’. Because of specific UK issues, local suppliers tended to refer to ‘voltage stablisation’. Although all clearly related to ‘voltage’, suppliers drew on very different technologies and approaches to the underlying issue. To avoid legal challenge, and to ensure a range of viable bids, project specifications and scoring had to recognise and accommodate that diversity. In the absence of tailored and reliable knowledge management tools the initial survey of technology and experts depended on some very basic web searches.
 
Networking for best practice
Both at EU and member state levels, public procurement is regarded as the key to delivering sustainability and improved environmental performance. For many involved in procurement at municipal or regional level the language, concepts and technologies are unfamiliar and complex. Without help, uncertainty might easily prompt a retreat into the safety of ‘lowest price’. Building on previous ICLEI events, the Procura+ seminar demonstrated the need for, and the power of, networking for municipal authorities. 
 
Malcolm Dowden, Solicitor, Lexis Legal Intelligence (UK)