Sustainability is the balance between the environment, equity, and economy. In 1987 the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” This definition is over one generation old and remains unchanged. The question for sustainable procurement, in practical terms is what aspects to consider for the evaluation of sustainability and what percentages to give environment, equity and economy in the evaluation.
Works and Services can be provided in-house, by local authority organisations, or by private sector contractors. Contracting authorities need to determine which will provide the most sustainable Works and Services and then procure accordingly. The Contracting authority needs to assess what comprises sustainable provision and what the Works and Services risks are when deciding what procurement route to choose. The lower risk option in some respects could be to pass Works and Services to the private sector. However, whilst the private sector should have better economies of scale than the public sector, the private sector will price their risks and add adequate costs to make a reasonable profit. The uncertainty of future sustainability legislation (net zero carbon emissions; Environmental Regulations; equality levelling up) could make in-house or local authority Works and Services more attractive unless this can be covered by a change mechanism in public sector contracts.
The provision of sustainable Works and Services should be assessed on the Most Economically Advantageous Tender to the contracting authority. Traditionally, this has been assessed somewhere in the ranges of: 40-60% price against 40-60% quality (including carbon emissions and social value) for Services contracts. However, if we are to provide a more sustainable future for our children and grandchildren then we need to evaluate carbon and social issues more equitably against price. For example, carbon should as a minimum be assessed on the Scope 1 (direct) and Scope 2 (indirect) emissions. This could be enhanced by including carbon pricing in the economic evaluation according to a defined mechanism. Carbon challenges at present include what is the social cost of carbon and how should this be included in the evaluation, and how can/should Scope 3 (indirect supply chain emissions) be evaluated? We do not consider that off-setting (such as tree planting or third party carbon offsets) should be allowed for in the calculation of carbon emissions, due to uncertainties in delivery and other variables, but it could be considered in the qualitative evaluation of Added Value. Aspects such as the installation of solar panels on infrastructure, however, should be incentivised through procurement, as direct carbon benefits to works and services provided.
The Public Services (Social Value) Act which came into force on 31 January 2013 states that authorities should apply a minimum 10% weighting to social value in the provision of Services. The 10% minimum has not been applied to all local authority Services to date, as authority costs have been given a greater weighting following the impact of austerity, since 2013.
How can sustainable Works and Services contracts be procured? We encounter numerous different approaches to sustainable procurement in the support we have given to authorities - we have worked with around 60 local authorities regarding environmental services to date. From this we can provide assistance to authorities at all stages of procurement and in reviewing current internal and external Services.
Frith Resource Management are specialists in local government environmental services, for more information see www.frithrm.com or call 01746 552423 or email Cherie at cherie@frithrm.com