Benchmarking against the Flexible Framework: Following the principles of sustainable procurement.

Benchmarking against the Flexible Framework:

Following the principles of sustainable procurement

9:20-9:30 Welcome and Introduction

9:30-10:00 ‘Navigating the Standards’

10:00-10:45 ‘Leaders and Learners’

10:45-11:00 Coffee Break

11:00-11:30 ‘Beyond Gold’

11:30-12:00 The future of MGPC and Q&A session

Today’s Agenda

Today’s Agenda

• ‘Navigating the Standards’ – An introduction to the benchmarking standards out there, including; The Flexible Framework and the new British Standard for sustainable procurement- BS8903.

• ‘Leaders’ and ‘Learners’ – Tell us about the sustainable procurement practices that you are doing well and those areas that you’re struggling with. An opportunity to learn about the experiences of other delegates.

• ‘Beyond Gold’ – The Progress Review tool used to benchmark achievements in the Mayor of London’s Green Procurement Code, measures performance up to level 3 of the Flexible Framework. Are you ready to meet levels 4 and 5?

• ‘Ask the Expert’ – Delegates will have the opportunity to put questions to the Mayor of London’s Green Procurement Code team.

Sustainable procurement: ‘Navigating the principles and

standards’

Graham Randles

Principal Consultant

Standards of Best Practice

• Procuring the Future and National Action Plans

• The Flexible Framework

• EU Green Public Procurement (GPP)

• UK Government Buying Standards

• BS8903 – The new British Standard for Sustainable Procurement

• Marrakesh Task Force

Procuring the future

• UK Government’s 2005 Sustainable Development Strategy set out the ambitious goal to make the UK a leader in the EU in sustainable procurement by 2009

• The strategy suggested the scale of the public sector spend on goods, services, works and utilities was capable of stimulating the market for more sustainable goods and services and that government leadership could shift consumption patterns of business and consumers

• A task force was set up, led by Sir Neville Sims to devise a National Action Plan to deliver the UK objective

Sustainable Procurement Task Force 2006

Concluded that for the UK to become a leader in sustainable procurement an effort was required to mainstream sustainable procurement

UK Public Sector Initiatives

The National Action Plan

Key recommendations for Government:

1) Lead by example

2) Set clear priorities

3) Raise the bar – minimum and forward looking standards should be developed for priority spend areas

4) Build capacity – by developing it’s capabilities to deliver sustainable procurement

5) Remove barriers to sustainable procurement (real and perceived)

6) Capture opportunities for innovation and social benefits

The building blocks

The Task Force stated that the Action Plan should be supported by 3 building blocks:

1) The Flexible Framework – outlines the actions required to make sustainable procurement happen. Enables organisations to assess the quality of its procurement activity and gives a clear route map to better performance.

2) Prioritisation of spend – a method developed to identify areas of spend to focus attention. 10 priority areas identified.

3) Toolkits – to be produced by a ‘sustainable procurement delivery team’

The Flexible Framework

• A self assessment mechanism developed by the Sustainable Procurement Task Force

• Defines an overarching approach to help organisations understand and take steps to improve procurement practice and make sustainable procurement happen

• The tool allows organisations to measure and monitor their progress on sustainable procurement over time


Mayor of London’s Green Procurement Code

Gold – 16 signatoriesSilver – 28 signatoriesBronze – 24 signatories

Progress review part one: Management

Progress review part two: Purchases

www.greenprocurementcode.co.uk

Green Public Procurement (GPP) View from the EU

Commissioner Stavros Dimas:

'The Greening of Public Procurement is a major challenge for Europe's public administrations, but also a major opportunity to boost Europe's competitiveness and stimulate the market for environmental technologies.'

http://ec.europa.eu/environment/gpp



European political targets

• EC proposes that:

• By 2010, 50 % of all tendering procedures should be “green”

• Green means “compliant with endorsed common ‘core’ GPP criteria”

• Percentage expressed in both number and value of green contracts as compared to the overall number and value of contracts in sectors where ‘core’ GPP criteria have been identified

Green Public Procurement

• EU definition:« a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured »

• Environmental criteria can be included in:

• Technical specifications

• Selection criteria

• Award criteria

• Contract performance clauses

GPP Survey – EU “Green 7”

Source: Collection of statistical information on Green Public Procurement in the EUPricewaterhouseCoopers, Significant and Ecofys, January 2009

Indicator 1: Green contracts by value

Indicator 2: Number of green contracts

EC Priority Sectors

1. Construction

2. Food and catering services

3. Transport and transport services

4. Energy

5. Office machinery and computers

6. Clothing, uniforms and other textiles

7. Paper and printing services

8. Furniture

9. Cleaning products and services

10. Equipment used in the health sector

UK Government Buying Standards (GBS)

Designed to make it easier for government buyers to buy sustainable options. They include:

• Official specifications that all government buyers must follow when procuring a range of products

• Information about sustainable procurement and how to apply it when buying

• Direct links to websites with lists of products that meet the standards

http://sd.defra.gov.uk/advice/public/buying/





Government Buying Standards simplify sustainable procurement by:

• Provide minimum and best practice standards for around 50 different products

• Straightforward specifications that can be inserted directly into tenders

• Suppliers asked to prove their compliance with these standards

• Enable more suppliers to develop products that meet the standards – so increasing competitiveness






• Government Buying Standards have been endorsed by the Coalition Government

• All central government departments and their related organisations must ensure that they meet these minimum mandatory specifications when buying products and services

• The standards have been developed so that products which meet the criteria save more money over their whole life than products that do not





Government Buying Standards Statement from Lord Henley

• Government Buying Standards have been developed in consultation with procurement officials across Whitehall as well as industry experts and other stakeholders, and rigorously assessed in terms of costs and scientific evidence.”

• I believe that buying sustainably is buying well and I encourage you all to use these Government Buying Standards developed to help you understand the life cycle impacts of a wide range of products.”

• http://sd.defra.gov.uk/advice/public/buying/




BS 8903: 2010 Principles and framework for procuring sustainably. Guide

• British Standard with recommendations and guidance on how to adopt and embed sustainable procurement principles and practices across an organization and its supply chains.

• Provides practical information to help implementation. It also includes guidance on measurement to help organizations assess the extent and effectiveness of their sustainable procurement activity.

Procuring sustainably using BS 8903

• The principles set out in BS 8903 are applicable to both public and private sector organizations. However, public sector buyers comply with EU Procurement Directives (and the Regulations that implement them in the UK).

• The EU has requirements with regard to public procurement and what can be considered throughout the qualification, tender and contracting process. It is advisable that proper legal advice always be sought. This guide provides information which is likely to be useful to public procurement but it ought to be read in conjunction with the latest Directives, Regulations and government policy.

Procuring sustainably using BS 8903• British Standard gives detailed guidance across all stages of the

procurement process and is applicable:– to individuals and small and large organizations responsible for

commissioning or procuring any form of goods, works or services regardless of sector, for own use, resale or to support service provision

– across the public sector, private sector and third sector– across the whole procurement cycle including one‑time

purchases to ongoing contracts with long‑term supplier partners– to individuals and organizations with sole responsibility for their

purchasing needs and third parties contracted to provide outsourced procurement solutions.

Procuring sustainably using BS 8903

Ref BS8903: Principles and Framework for Procuring Sustainably

Category level prioritization: mapping risk and spend

“Enablers” - risk and opportunity assessment

Buyer approach: mapping risk and scope


Market engagement strategy: scope and influence


• Develop detailed risk/impact assessment

• Execute action plans

• Capture results and share learning

Analysis and action planning

Source: BS8903 (2010)

Source: United Nations, UNEPThe Marrakech Process is a global process to support the elaboration

of a 10-Year Framework of Programmes (10YFP) on

sustainable consumption and production, as called for by the WSSD Johannesburg Plan of

Action (2002)

Sustainable Public Procurement UNEP – Marrakech Process

ObjectiveTo promote and support the implementation of public procurement programmes that encourage the uptake of sustainable products and services

Sustainable Public Procurement UNEP – Marrakech Process

Key Activities

• to develop practical guidance and toolkits for sustainable public procurement

• to carry out research and prepare policy papers on SPP

• to facilitate dialogue and work amongst stakeholders and countries on SPP

• to promote SPP through training and assistance

http://esa.un.org/marrakechprocess/tfsuspubproc.shtml



‘Leaders and Learners’

Facilitated workshop

‘Beyond Gold’

Graham Randles

Principal Consultant





Life Cycle Costing (LCC) Achieving win-win outcomes

Life Cycle Costing (LCC)

What is Life Cycle Costing?

• Also called Whole Life Costing (WLC)• Technique to establish the total cost of ownership• Structured approach that addresses all the elements of cost • Can be used to produce a spend profile of the product or service

over its anticipated life-span • Results can be used to assist management in the decision-making

process where there is a choice of options• Accuracy of analysis diminishes as it projects further into future

– most valuable when long term assumptions apply

to all options and have the same impact

Source: OGChttp://www.ogc.gov.uk/implementing_plans_introduction_life_cycle_costing_.asp

Principles of Life Cycle Costing

Principles of Life Cycle Costing

• Acquisition costs - incurred between the decision to proceed with the procurement and the entry of the goods or services to operational use

• • Operational costs - incurred during the operational life of the asset or

service

• End of life costs - associated with the disposal, termination or replacement of the asset or service. In the case of assets, disposal cost can be negative because the asset has a resale value.

• A purchasing decision normally commits the user to over 95 per cent of the through-life costs. There is very little scope to change the cost of ownership after the item has been delivered.


Benefits of LCC analysis

• Evaluation of competing options in purchasing

• Improved awareness of total costs - visible costs of any purchase represent only a small proportion of the total cost of ownership

• More accurate forecasting of cost profiles

• Performance trade-off against cost

• Sustainability benefits – reduced waste and CO2 emissions


Engaging SuppliersPrivate sector supply chain initiatives

Wal-Mart Will Make Suppliers Say How Much They Pollute

Business Insider, 15 July 2009

Sustainability Product Index15 Questions for Suppliers

• Energy and Climate: Reducing Energy Costs and Greenhouse Gas Emissions

• Material Efficiency: Reducing Waste and Enhancing Quality

• Natural Resources: Producing High Quality, Responsibly Sourced Raw Materials

• People and Community:

Ensuring Responsible and Ethical Production

The Flexible FrameworkMeasurement & Results

Level 4Balanced Scorecard approach reflecting input and outputComparison with peer organisationsEg. Green Procurement Code

Level 5Measures used to drive organisational sustainable development strategyIndependent audit reports in the public domainEg. Green Procurement Code

GLA Group Responsible Procurement Benchmarking Project – June 2010

Research conducted by Barbara Morton, Sustainable Procurement Ltd & Graham Randles, LRS Consultancy Ltd

Project objectives

• Understand how leading organisations approach responsible / sustainable procurement

• Understand how they measure & report progress

• Determine what lies ‘beyond Level 5’ of Flexible Framework

• Establish an RP benchmarking network / community of practice

Organisations interviewed

• GLA Group:

– LDA

– London Fire Brigade

– Metropolitan Police

– TfL

• Central Government:

– Dept for Transport

– Dept of Health

– DWP

• Arup

• City of Wakefield MDC

• Durham County Council

• IBM

• Leeds City Council

• London Borough of Greenwich

• Skanska

• Value Wales

Risk management -Good practice

• GLA Group focus on Mayoral priorities results in strong performance on eg. equality and diversity

• Robust risk-based methodologies used by leading organisations. eg. DWP focus on high risk contracts

• DfT prioritisation of categories led to strategy, guidance notes, training in those categories first

• Wide range of environmental and socio-economic issues considered and tools developed

• eg. Leeds toolkit, Skanska’s balanced scorecard,

MoD scenario planning for future materials scarcity

Capability-building & measuring outcomes – Good practice

• GLA Group is generally strong on capability-building but, like other organisations, finds it hard to measure impact ‘on the ground’ of capability-building actions

• Developing consistent metrics across a diverse organisation is a challenge for many interviewed. eg. Skanska, Arup, MoD

• DfT annual external ‘health check’ of FFW progress

• Skanska focus on Key Performance Indicators – “We’re a business of KPIs”

Life cycle costing –Good practice

• Most organisations interviewed do some LCC

• Most commonly used for fleet eg. LFB and buildings eg. Skanska; sometimes IT

• Clean Vehicles Directive: public sector must monetise & incorporate costs of emissions in purchase decisions

• Skanska’s “light-bulb moment” - realising we would never dare go to the industry and say you can have a safe project but it will cost you

more”

• GLA has started to investigate existing tools and tools

in development. eg. ICLEI LCC tool

Engaging suppliers and procuring innovation – Good practice• Proactive approach to identifying requirements as sustainable /

responsible in the contract title. eg. “Ultra-efficient” rather than “sustainable”

• Forward Commitment Procurement. eg. Wakefield’s 3 FCP procurements: current or in the pipeline (ultra-efficient …heating and lighting systems for swimming pools, street lighting and playing pitches)

• Incorporating sustainability at the design stage – eg. Skanska (buildings), MoD (ships)

Internal communications and leadership / accountability –Good practice

• GLA Group senior management commitment is generally very strong

• Leading organisations ensure leadership is embedded at all levels and responsibilities are well understood. eg. Skanska’s deep ecological building strategy

• Clear guidance and accountability. eg. Skanska’s 5 zeros, Leeds’ 5 freedoms

• Some organisations, including Metropolitan Police and

LFB are providing sector level leadership

Recommendations –Innovation

Investigate, potentially through market survey or dialogue:

– Opportunities to convey the responsible procurement requirements through the title / subject matter of the contract

– Opportunities for Forward Commitment Procurement

– Earliest possible engagement in the procurement process eg. Design stage

Recommendations – Risk management

• Tactical: – Can learn from others and make rapid progress. – eg. carbon footprint of NHS in England

• Strategic:– Review environmental and socio-economic criteria used in risk

assessment to focus resources on areas of maximum risk

– Apply across all procurement spend, category and sub-category levels

Recommendations – Capacity

building and measurement • Give attention to capability-building at senior management level

so that everyone fully understands their roles and responsibilities

• Work to associate capability building to individual procurement actions and then to responsible outcomes. eg. Progress against carbon target

• Expand on the work done through MGPC to measure outcomes

• Work with Defra, WRAP and others to test new methodologies (developing leading practice)

Recommendations – Life cycle costing

• Further develop LCC approaches and toolkits

• Identify where LCC approaches are best applied:– Bid evaluation; options appraisal; business case

• Work to investigate which categories of spend might lend themselves to quantification and monetisation of emissions – Data could be used to inform resource allocation (budgeting)

and procurement decisions (ie. choosing between competing product/service options)

Graham RandlesLRS Consultancy

[email protected]

tel: 020 7061 6388

Mayor of London’s Green Procurement Code

www.greenprocurementcode.co.uk

Thank you!

‘Ask the Expert’ Q & A

Graham Randles

Sarah Griffiths

LRS Consultancy

Government Buying Standards Statement from Lord Henley• “We are facing tough times in the UK as we define

and follow the path to recovery. And now more than ever we need to be thinking about balancing environmental, social and economic needs.

• What we buy in the public sector is absolutely vital as it affects product markets as well as local economies. Whilst finding cash savings is important in the short term, it also is imperative that what we buy now is cost effective during its lifetime. There is no point buying the cheapest computer on the market if it is not energy efficient. Today’s savings must not be tomorrow’s costs.

• http://sd.defra.gov.uk/advice/public/buying/




• Prepare for the long game - All the things you currently rely on; energy, supply chain, consumers, investors, regulation – are going to change as a result of increased sustainability risks and concerns

• Plan to explore how to make sustainability commercially beneficial for your business - innovation

• KPMG International survey of 378 large and medium-sized companies spread across 61 countries show that 62 percent already have an active sustainability program in place, and 11 percent are currently developing one (Dec 2010)

• 72 % of those with sustainability programs found that, despite some increase in investment, the benefits

clearly outweighed the drawbacks

The business case for sustainability

The Green Procurement Code – the future

Proposed elements of the new service for large business members:

• Benchmarking using Part 1 of the existing Progress Review (up to level 3 of the flexible framework)

• Bespoke action plan detailing how you can improve your performance

• Consultancy support time (1 day) to assist with implementing your action plan

• Networking and Events (3 to 4 per year)• Indicative cost - £1,775 (exc VAT)• New certification system (soon to be announced!)

What do you think?

The Green Procurement Code – the future

Proposed elements of the new service for SME members:

• Benchmarking using the existing Progress Review (up to level 3 of the flexible framework)

• Bespoke action plan detailing how you can improve your performance

• Evidence based audit and certification to Bronze, Silver & Gold level

• Workshops (3 to 4 per year)• Indicative cost - £370 (exc VAT)

What do you think?

Benchmarking against the Flexible Framework: Following the principles of sustainable procurement.

Documents

sustainable procurement

procurement activity

green green

greening of public procurement

sustainable goods

flexible framework slide

euenvironmentgpp slide

time slide