Download - Embedding Sustainability into the Procurement Process Forum for the Future Stuart Williams
Embedding Sustainability into the Procurement Process
Forum for the Future
Stuart Williams
Why sustainability matters: living within environmental limits
Population increase from 6 to 9 bn
Consumption per head increases 4 - 6x
Clean air & water, Stable climate
Viable forests & fisheries, Biodiversity
Source: The Natural Step
Beyond the environment: the triple bottom line
CLIMATE
BIODIVERSITY
& RESOURCES
WASTEWATER
SHORTAGES
POLLUTION
Living within environmental
limits:Ensure natural
resources to support life remain unimpairedEMPLOYMENT
LABOUR
RIGHTS
HEALTH
Ensuring a strong, healthy & just society:Meet diverse needs of all; promote wellbeing, inclusion & equal opportunity
GROWTH &
REGENERATION
Achieving a sustainable economy:Strong, stable, efficient & fair
What is Sustainable Procurement?
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
UK Public Sector Spend£150 bn
Some general principles
• Fossil fuel usage• Water consumption• Transport• Excess packaging• Disposable items• Hazardous materials• Sweatshop labour
LESS
• Energy & resource efficiency • Renewable energy• Recycled & reusable items• Local supply• Sustainably managed resources
MORE
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)
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?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?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
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
Sustainable procurement = Good procurement
Think upstream
Improvesuppliers
Demand review Specifications Evaluation Supplier development
Tender Process
Infl
ue
nce
TimeIn design and procurement, the ability to influence cost and performance declines with time
Prequalification
Favour sustainability
Specifysustainability
Shortlistresponsiblesuppliers
Reduce demand
Raw materials extraction & processing
Manufacturing Transportation Usage Disposal
Consider the whole life cycle
Minerals, timber, oil, water, electricity, fossil fuels, pesticides, labour, £
Heavy metals, greenhouse gases, agrochemicals, dioxins, landfill waste, traffic congestion & accidents, £
Recycling & Reuse
Source PlanSource Plan
Use the SP Tool to help plan your tenders
Ease of ImplementationEasyHard
Low
? Medical consumables
? IT equipment
? Printing &stationery
? Waste contracts
? Electricity
1 2 3
1
2
3
“Quickwins”
Long term objectives Top Priorities
Ease of ImplementationEasyHard
Low
? Medical consumables
? IT equipment
? Printing &stationery
? Waste contracts
? Electricity
1 2 3
1
2
3
“Quickwins”
Long term objectives Top Priorities
PrioritisedCategories
Sustainable Procurement ToolPrioritisation Matrix
ContractsDatabase
ProcurementPlan
Demand Review Action Planning Whole Life Costing
The outputs from the SP Tool should direct the tender process
Prioritise the best opportunitiesIm
pac
t
High
Ease of ImplementationEasyHard
Low
1 2 3
1
2
3
Quickwins
Long term objectives
Top Priorities
⊚ Building contracts
⊚ Medical consumables ⊚ IT equipment
⊚ Printing & stationery
⊚ Waste contracts
⊚ Transport
⊚ Medical implants
Reduce or eliminate demand
Purchase avoidance reduces health and environmental impacts and saves money
Identify impacts, opportunities and procurement interventions
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
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
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
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
Ts&Cs should support your specifications and be defined from the start of the Tender Process
What you can’t achieve through tendering:Target through Supplier Development
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
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
Stuart WilliamsProcurement LeadForum for the [email protected]
tel: 07779 600 692