• Date: May 2016

Procurers are often reluctant to include sustainability features in tenders because environmentally and socially-preferable goods and services often cost more to purchase than their less sustainable alternatives.  Procurers and policy makers are also challenged by tight budgets, and ever-growing demands to deliver better services in critical areas such as education, health, water and sanitation, electricity, public transportation, and nutrition. In these circumstances, spending more on ‘expensive greener alternatives’ can be perceived to be an unnecessary luxury.

Procurers can however employ a number of strategies to reduce the purchasing costs of sustainable alternatives:

  1. Buying in bulk: aggregating demand of several procurement agencies can help increase the volume of demand and hence enable the negotiation of volume discounts;

  2. Establishing central procurement platforms that will continuously negotiate volume discounts, stock (or warehouse) and will deliver to public entities on requisition;

  3. Establishing framework agreements under which guaranteed demand can be associated with discounted prices;

  4. Providing suppliers with lead-time: informing suppliers that future tenders will include environmental and social criteria. Formal and facilitated consultation with suppliers is also instructive for suppliers to understand the expectations around GPP and for policymakers and procurers to appreciate the challenges in scaling up environmental and social performance;

  5. Employing reversed auctions: in jurisdictions where e-procurement is practiced, procurers can use reversed auctions to realize efficient price discovery. The State of Sao Paulo (Brazil) operates reverse auctions in the procurement of ‘green’ goods and services;

  6. Seeking to purchase services as opposed to goods: attempt to reduce to total cost of ownership and hence seek to buy services rather than own goods. Can procurers not use service contracts for facilities management, catering, landscaping, use of office IT services, use of cloud computing services and even use of office furniture? In China, procurers have suspended the purchasing of vehicles to lease them from manufactures with the condition that they are replaced with more fuel-efficient models as they become commercially available;

  7. Focusing on products that have been already been earmarked as priorities for foreign direct investment, domestic industrial development or for addressing domestic environmental and social challenges. Procurers are more likely to be able to negotiate volume discounts on these products given that they have been already targeted by ancillary policies. If through GPP, procurers were able to increase the demand for these products, the political-buy in for GPP will be greatly enhanced. For example, in Ecuador a 2009 decree required Ecuadorian state agencies to use hybrid or other fuel-efficient vehicles. The government placed the focus on vehicles through this decree and hence, the implementation of GPP was piloted on tenders for public vehicle fleets.

 

**This article is an excerpt from “Procuring Green: A Handbook for Policymakers and Public Procurers Vol. 1 Goods and Services”. Page 24.

Category: 

Related Work

Bhutanese Delegates learn from Thailand about Implementing GPP

November 7, 2016

At the request of Ministr

Green Services: Sustainability in the Hospitality Sector

On 29th June, 2016 GPP Bhutan presented to the