Public Authority Review - April 2007
Welcome to the latest edition of our Public Authority Review.
“Global warming shock: Skegness to be warmer than Spain!“
How green is your procurement?
…Social and Environmental Benefits in contracts
A sustainable future?
What a load of rubbish
“Global warming shock: Skegness to be warmer than Spain!“
- The latest IPCC report on climate change, followed by the recent draft Climate Change Bill have only confirmed how green issues are very much mainstream and immediate. In this “green” edition of our Public Authority Review (with only a limited hard copy circulation - and of course on recycled paper!) we focus on the part public authorities can play by engaging in green procurement, which is not as straightforward as you might think, or hope.
- The Office of Government Commerce is leading the way by collaborating with a leading sustainable charity to work on long-term implementation of sustainable solutions and local authorities may want to follow central government’s lead on this.
- Finally, recent research may provide encouragement for authorities who want to do their bit to save the planet without it costing the earth. Please read on…
How green is your procurement?
Legal Perspectives on Environmentally Conscious Purchasing Decisions
As sea levels rise and politicians try and show how much ‘greener’ they are than the opposition, there is a big push on what has been called ‘Green’ procurement, ie reducing the environmental impact from the production, use and disposal of goods and services procured by local authorities.
The EU has created a new Green Public Procurement Website (http://ec.europa.eu/environment/gpp/index_en.htm), which stresses the ability of public sector organisations to use their 16% share of European GDP in influencing environmental suppliers to operate ‘in the most environmentally beneficial way’ - this can even have the effect of bringing new technologies on to the market. The UK has created a ‘Sustainable Procurement Taskforce’, and DEFRA give advice on environmentally conscious buying within over 40 product categories. Some local authorities are already requiring, through the planning system, that a proportion of their new house building (for example 10%) be ‘carbon neutral’. But how far can local authorities go in insisting that procurement is ‘green’ and in seeking to improve the ‘green credentials’ of suppliers? The legal answer is not as far as you might think!
The European Commission and the European Courts of Justice have on a number of occasions taken the view that seeking to reflect social and environmental considerations within procurement is only acceptable where, in general terms, it relates to the procurement itself. By way of example, if an authority is procuring the purchase of recycled paper or low energy light bulbs, it may impose a strict compliance obligation. A key point is with regard to the ability to exclude bidders. At the stage of rejecting unqualified bidders, the only valid grounds under procurement law are the absence of technical capacity or ability, inadequate financial standing and certain other limited grounds. Not being a sufficiently environmentally conscious company is not a lawful ground on which to exclude a bidder. Commission guidance, eg within the European Commission ‘Communication on Environmental Considerations’ has indicated that it is appropriate to exclude an organisation where the provider cannot meet environmental requirements which affect the product itself. For example, if a specification requires a provider to package goods in a certain way, to recycle waste from the goods, or for example only to source timber for the project from appropriately managed forests this would seem to be acceptable. It is also acceptable to require providers to comply with requirements set out in so called ‘eco labels’ ie which impose standard requirements for recycling. Arguably meeting ‘ISO’ standards would also be valid.
…Social and Environmental Benefits in contracts
Article 26 of the EU Public Sector Directive states that contracting authorities may lay down special conditions on such things as social and environmental considerations ‘provided that these are compatible with community law and are indicated in the Contract Notice or in the Specifications’.
Accordingly, such matters may be taken into account within award criteria - for example in the well-known Concordia Buses Case, the European Court of Justice did confirm that a procurer could take into account the pollution and noise level from buses to be procured used in providing a public transport service. In the ‘EVN’ case the Court held that it was lawful to give a 45% weighting to an environmental criteria concerning use of renewable energy. However (and this is a big ‘BUT’), it is not acceptable to use procurement to promote what are called ‘secondary policies’. Accordingly, in the EVN case an Austrian Local Authority said that they would give, as an award criteria, preference to energy suppliers who could supply from renewable sources, but also sought to impose a requirement for the supplier to produce substantially more than the Authority’s requirement from renewable sources, even though this energy was being supplied to third parties. It was held in this case that it is not acceptable for an Authority to seek to impose policies that go beyond the scope of what is required for satisfaction of the contract itself.
The above leads to some quite interesting possibilities. What if a tender is submitted by an organisation that can show exemplary green credentials in terms of its supplies under the contract being tendered for, but has a ‘bad name’ in terms of its other activities - for example a major oil company may be able to show appropriate policies for supplying in the UK, but also have a bad record in terms of causing environmental pollution in other parts of the world, perhaps even being prosecuted in different jurisdictions? Will it be acceptable in terms of procuring building developments to reject a builder who can satisfy a certain level of ‘BREEAM’ assessment, because that same organisation is building other buildings which have a poor pollution record?
Perhaps the biggest question is whether a supplier who suffers as a result of such an evaluation is really going to risk the publicity of challenging a local authority or other procuring organisation for being treated ‘unfairly’ where the authority have taken the general ‘track record’ of that bidder into account. Only time will tell.
At the time of going to press a court has just decided, in a judicial review application by West London Waste Authority against the Mayor of London, that Ken Livingstone exceeded his statutory powers when he issued directions to the Authority requiring new incinerator contracts to include state-of-the-art emissions-limiting equipment, combined heat and power generation and pre-treatment of waste to remove recyclable elements before incineration.
The court decided that the Mayor could only give a direction if he considered it necessary for the purposes of the implementation of his waste management strategy when read as a whole. The Mayor did not have the power to exclude an option that might accord with his overall strategy. The requirements in his directions for new incinerators to have ‘state-of-the-art’ equipment were aspirational and ignored issues of practicability and cost - it would be difficult to find a tenderer willing to commit to providing such an incinerator.
So, in this case the message has clearly been - don’t overstep the mark with your requirements, however laudable.
For further information on procurement issues please contact Stephen Pearson at Freeth Cartwright LLP on 0115 985 3206 or e-mail stephen.pearson@freethcartwright.co.uk
Earlier this year OGC Buying Solutions entered a three-year partnership agreement with Forum For The Future which is the UK’s leading sustainable development charity and aims to show that a sustainable future is both possible and desirable.
Buying Solutions will be working with Forum For The Future to integrate sustainability into its procurement processes.
The charity also runs partnership schemes for local authorities and regional organisations as well so if you are interested in working upon long-term implementation of sustainable solutions you can check out their website (www.forumforthefuture.org.uk) or contact them on government@forumforthefuture.org.uk.
Hard-pressed waste authorities may take comfort from a recent Whitehall-funded study which has found no evidence of adverse health consequences flowing from alternate-week rubbish collections compared to weekly collections.
Apparently, about one-third of the 300 waste authorities in England are already carrying out reduced collections. While this report has provoked controversy with members of the public (judging by blog comments) who have questioned where taxpayers’ money goes, in this ever-legalistic and regulated world it is perhaps comforting that using commonsense by wrapping up rubbish and keeping bin lids closed all helps to reduce the frequency of waste collection and, perhaps, focus our minds on how much we consume.
The report can be accessed at: http://www.defra.gov.uk/environment/waste/index.htm