Delivering Sustainable Procurement

Barbara MortonDirector – Action Sustainability

National Sustainable Procurement Conference 26 March 2008

Outline

1. Sustainable procurement in the public sector

- Does the public sector have a right to procure unsustainably?

2. Business case for sustainable procurement

3. Priorities and building blocks4. What’s happening – and what’s not?

Who – Action Sustainability…?

• Social Enterprise - to lead and inspire sustainable procurement

• Support and facilitate - Strategic Supply Chain Group

• Provide leading edge commentary and thinking - on sustainable procurement

• Support organisations wishing to procure more responsibly

- with training, awareness, benchmarking, consultancy

www.actionsustainability.com

What – Sustainable Procurement…?“Sustainable Procurement is a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment”.Footnote:Sustainable Procurement should consider the environmental, social and economic consequences of:Design; non-renewable material use; manufacture and production methods; logistics; service delivery; use; operation; maintenance; reuse; recycling options; disposal; and suppliers' capabilities to address these consequences throughout the supply chain.”

Procuring the Future – June 2006

What – Sustainable Procurement…?

Who is interested and why?

• Sustainable Development Commission in ‘watchdog’ role

• National Audit Office, Audit Commission and Healthcare Commission

• Permanent Secretaries• Sustainable Procurement & Operations

Board• Monitoring, measuring, benchmarking

Business Case for Sustainable Procurement

• Delivering on government SD objectives• £150 billion per annum• Against background of:

- Transforming Government Procurement- Capability reviews

• Sustainable Procurement is good procurement

• Efficiency and sustainability in same package

UK Sustainable Procurement Action Plan

• Central government March 2007• Clear priorities:

• Climate change mitigation• Carbon neutral by 2012

• Natural resource protection• Biodiversity• Illegal logging and sustainable timber

• Consult on need for ‘centre of sustainable procurement excellence’

UK Sustainable Procurement Action Plan

• Government supply chains and public services that are increasingly:- Low carbon- Low waste- Water efficient- Which respect biodiversity and deliver our

sustainable development objectives

• Defra-sponsored SP workshops for OGDs now being delivered

What? Sustainable Operations Targets

Carbon• Government office estate

carbon neutral by 2012.• Carbon emissions down

12.5% by 2010 (30% by 2020).• Carbon emissions from

vehicles down 15% by 2010/11

Energy• Energy efficiency/m2 up 15%

by 2010 (30% by 2020).• 10% of electricity from

renewables by 31 March 2008• 15% of electricity from CHP by

2010

Water• Water consumption down

25% by 2020.

Waste• Waste arisings down 5% by

2010 (25% by 2020).• Waste recycled up 40% by

2010 (75% by 2020).

Local Government & Health Care responses

• Local Government Sustainable Procurement Strategy – November 2007

• Audit Commission role

• Health and social care sector response: Procuring for health and sustainability 2012 – sustainable procurement action plan

Business Case for Sustainable Procurement

• Local government - £40 billion per annum - Sustainable Community Strategies- Commissioning- Comprehensive Area Assessment- Valuing socio-economic benefits- Local economic regeneration- Third sector, SMEs and local suppliers

How? Delivering sustainability through procurement

• 2 Building Blocks of SPTF• Flexible Framework• Prioritisation Methodology

- Risk-based- Helps focus resources

• Integrating sustainability throughout the procurement process

Flexible Framework

Time

Am

bit

ion

Foundation

Embed

Practice

Enhance

Lead

Flexible Framework

• People• Policy, strategy and communications• Procurement process• Engaging suppliers• Measurement and results

National Priority Spend Areas

0

5

10

15

20

25

Construction - Building and refit

Health and Social Work

Construction - Highways and local roads

Food

Uniforms/clothing and other textiles

Waste

Pulp, paper and printing

Construction - Operations and Maintenance

Energy

Consumables - Office machinery and computers

Furniture

Transport - Business TravelTransport - Motor Vehicles

IT Services/ Computer servicesConsumables - White goods

Pharmaceuticals

Telecommunictions, radio, TV

Chemicals

Scores as a % of Totals

Infuence

Scope

Risk

Priority areas

• Construction• Health and Social Work• Food• Uniforms, clothing and other textiles• Waste• Pulp, paper and printing• Energy• Consumables – office machinery and computers• Furniture• Transport

Prioritise Action - Risk and Spend

Risk

Spend >0.5%

Secure

Cost DrivenAcquisition

Critical

Buyer Approach - Scope and Risk

Scope

Risk

Quick Win

CampaignMarginal

Transform

Market Engagement Strategy - Scope and influence

Scope

Influence

Challenge

Research &

Development

Encourage

Pioneer

The Procurement Process

Specification

Supplier qualification and

appraisalIdentification of

need

Contract managementand review

Tendering andtender evaluation

Accounting:whole life costing

Environmental Purchasing in Practice CIPS/IEMA/CIPS 2002

How? Challenging the need

• Influencing behaviours of internal customers- Budget-holders, users, ‘front line’

• Demand management: – influencing the £150 billion per annum at start of process

• New capabilities required = challenging• Informed dialogue with key markets

The procurement process

Specification

Supplier qualification and

appraisalIdentification of

need

Contract managementand review

Tendering andtender evaluation

Accounting:whole life costing

Accounting and budgeting practice

• Engaging finance directors and senior management

• Whole life costing - To what extent is it applied in practice?

• Westminster Sustainable Business Forum – Whole Life Costing and Sustainable Procurement study- Call for evidence

• High upfront capital costs- see UK SPAP ‘invitation’

Page 21 paragraph 6.7

• “…sponsoring Departments will review budgeting arrangements and performance frameworks to ensure any barriers to choosing sustainable solutions are resolved.

• In addition, where Departments believe an upfront cost constraint prevents them from choosing the most sustainable option, they may raise this with HMT.”

What’s happening - and what’s not?

• Building capacity –- SP training for other government departments –

sponsored by Defra

• Local Government Learning Networks- Wakefield & Sefton

• Websites and ‘cupboards’• National Improvement and Efficiency Strategy

- Role of RIEPs?- On their agenda?

What’s happening - and what’s not?

• Re-defining value for money- Wider interpretation- Valuing socio-economic benefits

• Emerging agenda for scrutiny bodies- NAO reports demonstrate lack of progress

• Sustainability embedded into procurement practice?

• Opportunity for procurement to be recognised • Delivering corporate objectives

Thank you for your attention

Barbara MortonAction Sustainability

www.actionsustainability.com

barbm110@aol.com

Mobile: 07766 023560