Select Committee on Environmental Audit Minutes of Evidence

Memorandum from HM Treasury


  1.  This memorandum has been prepared in response to the Environmental Audit Committee's request for information on the consideration given to environmental factors in the Gershon and Bates reviews, in the development of the consequent proposals and in the aims, objectives and remits of the proposed Office of Government Commerce (OGC) and Partnerships UK (PUK).


  2.  The Government's procurement policy is that all public procurement of goods and services, including work, is to be based on value for money, having due regard to propriety and regularity. Value for money is not the lowest price: it is the optimum combination of whole life costs and quality to meet the user's requirement. This policy is set out in guidelines which were re-issued to departments in November 1998.

  3.  The Treasury and DETR have worked closely to produce a joint note on environmental issues in purchasing. The joint note has been welcomed by departments as putting a proper focus on meeting environmental aims in ways which are consistent with procurement policy and the, mainly EC, legal framework. It explains how purchasers can take environmental concerns into account in specifying their requirements for goods and services and highlights the existing policy requirement to base purchasing decisions on whole life costs. The note was circulated to departments earlier this year and, as with the policy guidelines mentioned above, is available on the Treasury website.


  4.  The Gershon and Bates reviews did not address procurement policy itself: that remains as set out in the guidelines described above. They considered the delivery, in terms of structure and organisation of procurement in government, of that policy. The terms of reference for the two reviews were:


    "To review civil procurement in the light of the Government's objectives on efficiency, modernisation and competitiveness in the short and medium term, and to report within three months."


    "To make recommendations as to how best to manage the execution in the public sector of sound PFI and Public Private partnership deals."

  5.  Neither the Gershon nor the Bates reviews covered environmental issues, as such issues were seen to be about policy rather than structure and organisation. It is the joint Treasury/DETR note which sets out the policy framework within which environmental issues can be addressed in government procurement. It is within that policy framework that both the Office of Government Commerce (OGC) and Partnerships UK (PUK) will operate. In its "structural and organisational" role, for example, the OGC will be able to consider what more might be done to promulgate guidance on specific environmental issues. But it must look to DETR to initiate any proposals and to provide the technical knowhow. It will then fall to departments and others to take account of that advice within the terms of the joint note.

  Given that neither the OGC nor PUK is yet in existence, and in view of the fact that their key structures and objectives have yet to be agreed and put in place, it is not possible to say more at this time about how these bodies will operate.


  7.  The policy framework for taking account of environmental matters in procurement is set out in the procurement policy guidelines and the joint Treasury/DETR note. Insofar as more may need to be done to get environmental messages to Government purchasers, OGC may well offer a conduit for technical guidance from DETR.

November 1999

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