Green Purchasing Projects and Activities relevant for joint procurement

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1 GREEN PURCHASING PROJECTS AND ACTIVITIES RELEVANT FOR JOINT PROCUREMENT 1 Introduction 1 Review of EU projects on sustainable procurement 2 ZEUS Project ( ) 2 "Check it!" Austrian Criteria Catalogue ( ) 4 RELIEF ( ) 4 European Survey of the State of Play of Green Purchasing in Europe 6 Other EU Green Purchasing Initiatives 6 Green Purchasing Projects and Activities relevant for joint procurement Introduction Greener Public Purchasing, or sustainable procurement, has already contributed a great deal towards European environmental improvement but a huge potential still remains to be exploited. A number of specific issues have been identified that need to be addressed for sustainable procurement to have the widespread application required and thus achieve the potential environmental benefits: Lack of co-ordination Though a number of pioneer public authorities across Europe practice sustainable procurement in some measure, too often these activities happen in isolation from each other, using greatly varying environmental criteria, and sending a very fragmented message to the market. It is vital that authorities are able to draw on each others experiences, and that activities are co-ordinated to ensure maximum market impact. Inappropriate prioritisation Again it is often the case that the products selected for sustainable procurement are not necessarily those which would provide the highest environmental relief potential. It is important that public authorities, with limited resources, concentrate their efforts on the most appropriate products. For this, of course, information on potential impacts per product group is required. Lack of internal co-ordination Effective sustainable procurement requires the involvement of many different people and departments within a public administration, including the environmental department, purchasers (often these are spread across a number of departments), planning and transport officials, politicians. It is important that effective internal procedures are in place to manage this involvement and systemise implementation The potential of sustainable procurement is increasingly recognised by many institutions around Europe, including the European Commission, and a number of projects have been carried out in recent years on the topic, culminating in the European Commission publication: Buying green! A handbook on environmental public procurement (2004).

2 The EU-funded LEAP project (Local Authority EMAS and Procurement) 1, which started in 2003, aims to build on these initiatives and address some of the concerns outlined above. The project will focus on two separate, though linked, areas. The first will explore how sustainable procurement can be effectively integrated into environmental management systems that exist within local authorities, to provide the basis for systematic implementation across the authority. A number of specific tools will be developed to assist this process. The second strand of project activities will explore the possibilities for European joint procurement. Such activities offer a number of potential advantages: providing an attractive opportunity for suppliers of environmentally friendly products through aggregating demand; lowering prices for such products through bulk buying; allowing authorities to access suppliers on different markets who may potentially be supplying such products at lower prices. In order to profit from already existing projects in the field of sustainable procurement and to avoid duplication of work, research has been undertaken on specific issues connected to the LEAP project. This report will review existing EU projects in the field of sustainable procurement that provide input specifically into the development of joint procurement activities. In particular it will focus on those projects which provide information on: joint procurement network structures and contract models; identifying priority product groups for sustainable procurement; the legal framework for sustainable procurement and joint procurement in particular; important differences in national conditions and experiences within Europe; the provision of sample criteria and evaluation models for sustainable procurement. Review of EU projects on sustainable procurement ZEUS Project ( ) Description of project The four-year ZEUS project was aimed at increasing the market penetration of zero or low emission vehicles through co-ordinating the procurement activities of several European city administrations. For electric vehicles the ZEUS Purchasing Consortium (ZPC) was established through which several cities entered into framework purchasing contracts with suppliers. Twelve European Cities 2 participated, including LEAP partners Southwark and Amaroussion as well as the co-ordination partner G2L. As a direct result of the project 424 CNG, 278 electric, 247 LPG, 223 biogas vehicles were procured. Relevance for LEAP The ZEUS project provides perhaps the only example of a joint public procurement initiative in Europe involving authorities from different countries, and as such was a key inspiration for the development of the LEAP joint procurement activities. The ZPC was established to access several perceived advantages of joint procurement: Larger purchasing volume, resulting in lower prices 1 The LEAP project is co-ordinated by Leicester City Council. The project has a further 10 local authority partners: Lewisham, Sandwell, Sutton, Southwark, Eastern Shires Purchasing Organisation (ESPO) (all UK), Amaroussion, Holargos, Kalithea (all Greece), Province of Barcelona (Spain), and Almada (Portugal). Three experienced European partners are also contributing: ICLEI, Global to Local, and the Swedish Council for Environmental Management (SEMCO). 2 Participation in the project: Stockholm (Co-ordinator), Athens, Amaroussion, Bremen, Coventry, Copenhagen, Helsinki, Luxembourg, Palermo and the London Boroughs of Camden, Merton, Southwark and Sutton.

3 Greater negotiating strength Less need for work by individual purchasers in the preparation of tender documents, evaluation of tenders, and contract negotiations An opportunity to share the experience of other purchasers The price advantages obtained through joint procurement were felt to be of particular importance for a young industry with high R&D costs (as is the case for electric vehicles), as market prices were relatively high in relation to standard vehicles, with suppliers requiring large volumes to present competitive bids. The selected model for joint procurement was that the participating cities would let a joint tender through the Official Journal of the European Union (OJEU), resulting in the signing of a single framework agreement between the winning supplier and all cities. Each individual city then set up direct supply contracts with the supplier on the basis of the conditions (price, product specifications etc.) of the framework contract. An additional, rather innovative feature of the procedure was the option right transfer mechanism, through which each city obtains the rights to purchase vehicles in addition to those initially ordered under the same conditions, and that these rights could be transferred to third parties. Essentially this provides the opportunity for authorities not included in the original framework agreement to "piggy-back" on the contract - purchasing vehicles with the same conditions after the contract has been agreed. The results of the ZPC activities indicated that the joint procurement approach does indeed result in competitive prices being obtained, and substantially increases the negotiating position of the purchasers. However a potential concern was identified in that given the number of authorities involved there can be problems with co-ordination and ensuring that all partners keep to the agreed time schedule. A further conclusion from the project was that such joint procurement activities were most suited to products characterised by some of the following factors: New or emerging technology Immature market Low purchasing volume per individual purchaser Essentially the same performance requirements for all prospective participants Lack of prior experience with the product on the part of the purchasers Insufficient negotiating power of individual purchasers Whereas individual procurement is likely to be more cost-effective where: Products are readily available on the local market Mature market Unique performance requirements Need to standardise choice of equipment as a means to simplify maintenance For the LEAP project the model developed seemed to be ideal for the joint procurement activities to take place, and the conclusions concerning appropriate product types for such initiatives were also a valuable contribution to the decision on where to focus efforts within LEAP. The project furthermore emphasised the potential of joint purchasing to drive the market for innovative environmentally friendly products.

4 However, during the initial stages of the LEAP project the legality of this model within the existing EU Directives was questioned, including at a meeting with representatives from Directorates General Internal Market and Environment. It was concluded that too many legal uncertainties existed (for example on an authority from one member state signing a contract under the law of another member state) for this exact model to be used within LEAP. 3 The LEAP project consortium was however inspired by the option right transfer mechanism, and is currently consider using a similar system in the project. "Check it!" Austrian Criteria Catalogue ( ) Description of project The EU-Life funded project Check it!, co-ordinated by the Austrian Ministry of Environment and Procurement Service Austria, was aimed at developing a comprehensive compilation of green criteria for relevant product groups, which could be directly transferred into public tender specifications. Originally produced in German for the Austrian context, the catalogue was subsequently translated into English with the criteria revised to fit the wider European market. Additionally the catalogue contains an analysis of the legal framework for green purchasing in Europe, and provides a number of good practice case studies from European local authorities. Relevance for LEAP "Check it!" was among the first attempts to provide comprehensive product-based guidelines for procurers to use in the application of green purchasing. On the basis of extensive research and consultation with a range of stakeholders, including procurers themselves and industry representatives, extensive purchasing criteria were produced for a number of product groups representing a significant proportion of public purchases and offering environmental alternatives. The criteria developed were further presented in such a way to enable direct use in public tendering documents. Two specific issues often raised by local authorities when considering green purchasing are: "is this legal?", and "has it been done successfully elsewhere?" The legal survey and good practice case studies were provided to address these needs. The work carried out within "Check it!" provides a number of specific inputs into the project, further complemented by the RELIEF project (see below) - an indication of important product groups to focus on for green purchasing activities in general; ready-prepared criteria for tendering to draw on in the preparation of purchasing criteria for the joint procurement activities; clarification on the legal opportunities for green purchasing within EU legislation. Together with RELIEF, it therefore provided a useful basis for the selection of products for joint procurement and the criteria to apply within the LEAP project. 4 3 For more information on the project please helmut.lusser@globaltolocal.com 4 For more information please visit the web site at: or oehme@ifz.tugraz.ac.at

5 RELIEF ( ) Description of project The three-year research project RELIEF, supported by EC-DG Research under the Fifth Framework Programme was directed at quantifying the potential environmental benefits of green purchasing in Europe the relief potential. The assumption was that concrete figures would both encourage the engagement of public authorities toward green purchasing and indicate priority product groups. Beyond this, the project aimed to provide practical guidance for local authorities across Europe in applying sustainable procurement. This resulted in the publication of The Procura+ Manual - A guide to cost-effective sustainable public procurement, which provides key purchasing criteria for six high-priority groups, and a simple Milestone Process for implementation. This manual also forms the basis for Procura +, the Sustainable Procurement Campaign, launched in ICLEI co-ordinated an research group consisting of the Technical University of Wien (Austria), dk-teknik Energy & Environment (Denmark) and the Technical University of Dresden (Germany). For this initiative, six experienced European cities were used as models: Stuttgart and Hamburg in Germany, Zürich in Switzerland, Kolding in Denmark, Malmö in Sweden, and Miskolc in Hungary. Relevance for LEAP A number of the activities and results of the RELIEF project are of direct relevance for the LEAP project. A list of product groups offering a useful potential for green purchasing activities was prepared based on a number of considerations: the significance of the product groups in public procurement budgets, the market share of the public sector for the product, the environmental impact of the product, the existence of more environmentally responsible alternatives at competitive cost. The final product groups selected were: buses, construction, electricity, cleaning products and services, food, IT equipment. For several of these (electricity, food, buses, IT equipment. Also construction in Germany) detailed calculations were also carried out to quantify the potential environmental benefit if all public authorities in Europe were to purchase green alternatives. Results demonstrate, for example that switching public demand away from the conventional EU mix of electricity to green electricity would alone save some 60 million tonnes of greenhouse gases (CO 2 -equivalents), equating to 18% of the EU Kyoto commitments. The other product groups also demonstrate powerful potential benefits. The project also developed a set of purchasing criteria for these six product groups, prepared in such a way that they can be directly inserted into public tender documents. The decision was taken to include only a small number of criteria for each product group rather than focusing on every possible environmental impact. There were two reasons behind this. Firstly, procurers are generally working with significant time and resource constraints and so appreciate as simple an approach as possible. Secondly, in for each product there tends to be one or two overriding environmental concerns which hugely outweigh all others - for example for construction and the IT sector this is energy consumption and the resulting CO 2 emissions. Providing few but ambitious criteria is therefore an effective way to prioritise, and target sustainable procurement activities in an efficient manner. For LEAP these criteria may well provide a useful starting point in preparing the criteria for joint purchasing if some of these product groups are selected. The criteria essentially guide procurement towards: Electricity from renewable sources

6 Food from organic agriculture Buses with clean motor technology Computers with low energy use Cleaning detergents without harmful substances Buildings with high insulation standards In addition a survey carried out on existing green purchasing experience, including detailed status reports on the partner cities, and discussions within the project helped to identify the specific issues noted in the introduction, and consequently informed the original development of the concept for LEAP. 5 European Survey of the State of Play of Green Purchasing in Europe Description of project The European Survey was commissioned by the European Commission with the aim of providing a clear picture of local authorities active in green purchasing. This document has offered an indispensable basis for understanding the need and the difficulties of cities on implementing this tool. The initiative was co-ordinated by ICLEI using the experiences and contacts gained during the RELIEF project. Relevance for LEAP Two specific conclusions resulting from the survey are of relevance to the LEAP project. The first is confirmation that green purchasing is applied very unevenly across Europe (though there is widespread interest in the topic), with Denmark, Sweden, Germany, Austria and the UK considerably more active than other countries - particularly those in the South. This indicates the need for co-operation at a European level to share experiences between the more and less active regions. This conclusion informed the selection of partner cities for LEAP Furthermore the key hurdle identified to the introduction of green procurement was the lack of environmental knowledge and access to criteria - particularly within smaller authorities. Again this points towards the need for building co-operative networks and allowing experience sharing. It can be hoped that the local authority partners within LEAP will benefit from the large pool of environmental know-how and specific green purchasing experience within the project. It is also apparent that the opportunity for benefiting from others' know-how should be a key selling point for joint procurement with certain less experienced authorities. 6 5 For more information on RELIEF or Procura+, the Sustainable Procurement Campaign please visit the web site at: or procurement@iclei-europe.org 6 For more information please visit ICLEI's web site at: or procurement@iclei-europe.org

7 Other EU Green Purchasing Initiatives There are a number of other Green Purchasing Initiatives in the EU, some of which are listed below. Since the purpose of this report was to compile useful information for the LEAP project, it has a focus on those activities that were considered being the most important for LEAP. Therefore, the below mentioned projects are not presented in detail, but merely mentioned as useful background information for LEAP. EKU Guidelines In 2003 the Swedish Environmental Management Council (SEMCO - involved in the LEAP project) took on the responsibility for running EKU - the Swedish Instrument for Ecologically Sustainable Procurement. This Swedish government-funded instrument provides a huge range of specific guidelines and methods for introducing environmental criteria into public procurement for approximately 75 product groups - including technical specifications, award criteria and contract clauses. Criteria proposed, need to receive approval from the "Decision Committee" (representing different stakeholders including industry), thus ensuring a credible and transparent process. Currently available in Swedish at the web site below, SEMCO is now in the process of translating these guidelines into English. 7 Danish EPA - Environmental Guidelines for Public Purchasers Following the introduction of legislation in Denmark making the consideration of environmental and energy aspects in public procurement compulsory, a series of green purchasing guidelines have been developed by the Danish EPA (Environmental Protection Agency), to inform and assist Danish procurers. Four-page "Guidelines Documents" have been prepared for 50 product groups containing advice on what to consider when purchasing the product. Currently only one of these documents has been translated into English (desks and tables). "According to Danish legislation, all public authorities shall take environment and energy aspects into account - at the same level as i.e. quality and price - in their purchase and consumption of goods and services. An agreement between counties and municipalities and the Danish Minister for Environment and Energy of taking into account environmental and energy aspects when purchasing was set up on November 3, European Green Procurement Database An online database for green procurement has been established by the Directorate General for the Environment of the European Commission for a 12-month trial period. The aim of the database is to provide public purchasers with objective and scientifically accurate information on potential environmental criteria for their calls for tender. This database informs users about existing eco-labels for the product groups they are interested 7 For more information please visit the web site at: or peter@miljostyrning.se 8 For more information please visit the web site at: or mst@mst.dk

8 in, the main environmental issues, potential questions they can ask suppliers, and links to other information sources. The current database covers about 100 product or service groups of most relevance to corporate and public purchasers. 9 GreenMed (ongoing) The GreenMed project, co-ordinated by EPTA in Greece, aims to explore the best approach for the implementation of green purchasing in countries in Mediterranean European countries - specifically Greece and Portugal. This work includes a review of national legal frameworks, and the provision of green purchasing guidelines. The findings of this project, particularly on the legal questions, will feed into LEAP through the involvement of the project co-ordinator in LEAP. 10 GPP-Net ( ) The EU-Life funded Green Public Procurement Network (GPP-Net) was co-ordinated by the Provincial Adminstration of Cremona in Italy and involving a group of municipalities in the region. The ultimate objective is the creation of an eco-procurement district in the provincial area of Cremona. The project culminated in the publication of the GPP Handbook providing guidance on the application of green procurement and comprehensive lists of potential purchasing criteria for a large range of products. 11 National initiatives A variety of further initiatives have taken place at the national level in, for example, the UK, France, the Netherlands, Germany and Switzerland, though it is beyond the scope of this current report to analyse these comprehensively. 9 The database is available at: For more information env-products-database@cec.eu.int 10 For more information please iskoula@epta.gr 11 For more information please visit the web site at: or l.mazza@ecosistemi-srl.it