August 14, 2013
Environmental impacts on the procurement landscape
Procurement Perspectives | Stephen Bauld
The environment and government procurement documents present a new issue for contractors and municipal staff to deal with.
Most municipalities direct their staff to have “due regard to the preservation of the natural environment” in discharging their purchasing responsibilities.
Given the political popularity of environmentalism, the direction is not surprising.
However, unless further instruction is given, such declarations afford little direction to staff to how best to pay “due regard” to the environment.
If the most environmentally friendly product on offer is the cheapest, then the direction is presumably superfluous.
On the other hand, if the most environmentally friendly product is more expensive than that offered by other bidders, a bare direction instructing staff to pay “due regard” gives them no idea of what kind of premium to place on the environmentally friendly product.
Should the price of that product be discounted in some way to reflect the environmental benefit? If so in what way and by how much?
Unfortunately, most municipal bylaws do not provide any guidance as to how the cost analysis is to be conducted.
How exactly does one compare a one per cent reduction in fossil fuel emissions to a five per cent differential in price?
There are other critical questions unanswered by provisions such as those considered above.
First, how does the municipality verify the environmental claims that are made with respect to competing products?
The term “green-washing” describes the advertising practice of misleading consumers about a product’s environmental benefits.
With growing sensitivity to environmental concerns — particularly within the public sector — suppliers around the world have been tailoring their marketing materials to present their products in the most favorable environmental light.
Some of these efforts are so ludicrous as to be laughable, such was the case of a Japanese sport utility vehicle which was advertised as having been “conceived and developed in the homeland of the Kyoto Accords.”
Other claims are far harder to evaluate, particularly when they are backed up by what purport to be legitimate government testing and independent scientific studies.
The crucial point to note is that putting municipal staff in a position where they are forced to undertake the evaluation of scientific claims, with neither the training, the equipment nor expertise to do so, is fundamentally unrealistic.
Even if the guidelines given by the municipal council were clear as to how to price and environmental considerations are to be balanced against each other (and they never are), it is only possible to factor environmental factors into a decision if precise information is available.
In view of the environmental misinformation that passes these days for science, that is simply not the case.
Nor is the municipal council in any better position to make such an assessment.
The second critical question has been left unanswered by virtually all municipal by-laws. It touches on such matters as the comparative environmental impact of the products offered by suppliers: By whom and on what basis are environmental trade-offs to be made?
Very often, environmental improvements of one kind result in environmental cost of some other kind.
For instance, in the 1990s, oil companies began to use methyl tertiary-butyl ether (MTBE) as a fuel oxygenate that is used in gasoline to reduce the atmospheric pollution associated with automobile emissions, in order to meet strict clean air standards imposed in New York City and Southern California.
Although the use of MTBE was credited with contributing to significant reductions in carbon monoxide and ozone levels, its use proved problematic, as it readily dissolves in water and can move rapidly through soils and aquifers.
Using this one simple example, it is almost impossible to reconcile any such approach with the use of the tender system.
Stephen Bauld, Canada's leading expert on government procurement. He can be reached at email@example.com.
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