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
"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