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This report has been developed to assist government departments to improve their sustainable procurement practices. It provides an overview of the Sustainable Government Procurement Project as well as guidance on what core Public Service departments must consider when purchasing goods and services in the following categories: paper, timber and wood products, travel and light fittings.

The document draws together all existing sustainable procurement policies and makes it mandatory for core government departments to implement them.

Departments will find it a useful reference tool for integrating sustainable procurement into existing procurement policy.

Sustainable procurement

By harnessing the collective purchasing power of government departments, government procurement can contribute to wider economic transformation goals and help to establish New Zealand's credentials internationally as a world-leading sustainable economy and producer.

Government can drive demand, encourage supply of innovative, environmentally-friendly products and services, encourage use of cleaner production methods, and ensure improved consideration of cost-effectiveness over the whole of life cycle of goods and services. Procurement's role in acting as a ‘gatekeeper' in the process will also serve to raise the profile of the profession, and encourage practitioners to recognise the important role that procurement plays.

The Sustainable Government Procurement Project

The Sustainable Government Procurement Project was launched in February 2006 by Prime Minister Helen Clark in conjunction with five other sustainability initiatives: Business Partnerships for Sustainability, Enhanced Eco-verification, Towards a Carbon Neutral Public Service, Towards Zero Waste, and the Household Sustainability Programme.

The purpose of the Sustainable Government Procurement Project is to make sustainability a core component of government procurement policy and practice. Through sustainable procurement practice, government departments will be encouraged to purchase goods and services that are more water and energy efficient, emit less carbon, produce less waste, and are accredited or environmentally certified where possible.

The working definition of ‘sustainable procurement' that this project will use is:

" …a process whereby organisations meet their needs for goods, works and utilities in a way that achieves value for money on a whole of 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."¹

The Sustainable Government Procurement Project comprises a package of initiatives focused on setting clear expectations, targets and minimum standards of practice through the broader Government Procurement Policy framework, and providing participants in the government market with access to tools, templates and training to ensure these can be met.

The Project is led by the Ministry for Economic Development's Government Procurement Development Group (GPDG).

Sustainable procurement initiatives will be supported by the GPDG's ongoing efforts to lift the quality of procurement practice across the public sector as a whole, which has been identified as variable at present.

Objectives of the Project

The project is designed to:

• Support government leadership in sustainability through government procurement
• Raise awareness and increase knowledge of sustainability issues in the government market
• Develop a common understanding and consistent approach to sustainable procurement across the wider Public Sector
• Accelerate the adoption of more sustainable procurement practice by purchasing agencies
• Focus purchasing agencies' sustainable procurement efforts on areas of greatest collective impact.

Benefits

Expected benefits of the Sustainable Government Procurement Project include²:

• Government procurement market activity producing less carbon and waste³
• Improved value for money over whole of life outcomes from departmental spend, and operational cost savings through better demand and waste management, and the use of more energy, water and resource efficient goods and services
• Knowledge and methods for incorporating sustainability considerations into procurement decisions being widely disseminated both within and beyond the public sector through good practice government procurement arrangements (eg, syndicated procurement contracts; standard tender and contract clauses)
• Improved availability of sustainable and innovative goods and services in New Zealand due to increased demand in the government market
• Increased supply opportunities for innovative and sustainable New Zealand firms
• New Zealand firms gaining competitive advantage by adopting sustainable practices and credentials.

What the Project will achieve

The Sustainable Government Procurement Project has a number of deliverables associated with it. These work streams are outlined below.

Policy

Single government procurement policy incorporating sustainability

A new ‘single procurement policy' will be developed that incorporates sustainability principles and criteria. Other existing policies (eg, Timber and Wood Products Procurement Policy) will also be integrated into this single policy in order to create a less complicated, more cohesive policy framework that is capable of effective implementation by state services agencies, and consistent with the promotion of efficient government procurement markets in New Zealand and internationally.

Developing a national framework for sustainable government procurement

The Ministry of Economic Development has been working closely with the Australian Procurement and Construction Council (APCC), which had developed a draft framework for Australian jurisdictions (informed by international examples). The collaborative efforts of MED and APCC have reached the stage where it is now possible to issue a joint Australian and New Zealand Government Framework for Sustainable Procurement.

The purpose of the framework is to develop a common understanding of what sustainable procurement is, outline benefits, and provide a set of national principles to assist government departments and agencies across the state services to implement sustainable procurement. This document will be available on www.procurement.govt.nz from 14 September 2007.

Setting standards, guidance and targets

Category Review Teams

Category Review Teams have been established to determine minimum sustainability standards and clear, measurable targets for compliance for government procurement in sectors and product categories where these will have greatest impact. A two-stage approach to implementation is planned:

• Stage 1: To develop for each category, a set of minimum standards and targets for government departments to work towards. These will be based on the most important sustainability attribute or impact for that category and, where appropriate, criteria or guidance that has been developed by other departments (eg, Govt3/Ministry for the Environment, Energy Efficiency and Conservation Authority, Ministry of Transport, and Ministry of Agriculture and Forestry).
• Stage 2: To produce guidance material for government departments to understand what is expected and how to comprehensively integrate sustainability considerations into procurement practice as a whole (including tenders, contracts, service level agreements, monitoring and reporting).

A number of categories have already been identified for priority action on the basis that:

• Specific standards and criteria have already been developed by other departments such as Govt3 (a number of departments have already adopted these)
• They represent areas of significant spend for many departments. The objective is to maximise the number of government departments engaged in sustainable procurement activity and leverage combined purchasing power or influence
• There are obvious and significant improvements that can be made and these can be easily specified in tender documents and contracts (usually products rather than services)
• Any higher up-front purchase costs should balance out over the longer term through increasing supply in a competitive market (eg, recycled paper) and whole-of-life savings (eg, energy-efficient lightbulbs)
• They support other projects within the wider programme (eg, Govt3, "Towards a Carbon Neutral Public Service" and Waste Minimisation and Management⁴)
• There is frequent turnover, which in turn requires frequent procurement activity.

New standards, guidelines and targets

As required by the Project, the Category Review Teams have developed new mandated standards, guidelines and targets for core government departments. These were announced in August 2007.

According to the standards, guidelines and targets, government departments must now consider the environmental credentials of goods and services they purchase.

This will help ensure government departments purchase goods and services that are more water and energy efficient, emit less carbon, produce less waste, and are accredited or environmentally certified where possible.

The standards will provide impetus for government departments to improve their sustainable business practice, and, in procuring more environmentally-friendly products, help to drive the market for production of goods with better environmental credentials.

To enable progress to be made in the short term, Category Review Teams have focused on the following categories where standards have already been developed:

• Paper (recycled content, duplexing etc)
• Timber and wood products (legally sourced and sustainably produced)
• Travel (motor vehicles, airtravel/video conferencing)
• Light fittings.

Over time a wider range of sustainability standards and criteria will be developed, targeting areas of greatest impact. These will take into consideration cost-benefit analyses; level of spend; potential to use syndicated procurement contracts to leverage spend and maximise departmental coverage; departments' ability to influence the market; capability of the market to meet demand; experience to date; international evidence; and fit with the wider sustainability programme.

The standards, guidelines and targets apply to core Public Service departments as listed in the First Schedule to the State Sector Act 1988. Other agencies are also encouraged to follow suit.

In addition, as part of their written membership commitment, Govt3 member agencies have undertaken to implement Ministerial directives on sustainable procurement such as the Timber and Wood Products Procurement Policy.

The following sections outline the standards, guidelines and targets established by the Category Review Teams for paper, timber and wood products, travel and light fittings. Departments will find them a useful tool for integrating sustainable procurement into their existing procurement policy.