APPENDIX SIX
Memorandum submitted by Metropolitan Borough
of Wirral
1. INTRODUCTION
1.1 Wirral is a peninsula of 60.35 square
miles on the North West coast of England, bounded by the Cheshire
Plain, the Dee Estuary, the River Mersey and the Irish Sea. The
Metropolitan Borough of Wirral was formed in 1974, following the
reorganisation of local government by the amalgamation of the
County Boroughs of Birkenhead and Wallasey, the Borough of Bebington
and the Urban Districts of Hoylake and Wirral.
1.2 It is a very large, complex organisation
with some 13,000 employees (including teachers) to provide a comprehensive
range of services to Wirral residents. It is by far the largest
single employer in the area.
1.3 Wirral is the ninth largest metropolitan
district in the country, the third largest in the north west of
England. It comprises 25% of the Merseyside area. The other four
local authorities which make up Merseyside are Liverpool City
Council, St Helens Metropolitan Borough Council, Knowsley Metropolitan
Borough Council and Sefton Metropolitan Borough Council.
1.4 The Authority has an annual budget of
£336 million and is responsible for the management of the
Merseyside Pension Fund presently totalling some £3 billion.
1.5 The Corporate Procurement Support Unit
(CPSU) was created in October 2003 to manage the Council's £160
million spend on its products and services. The Procurement Strategy
was approved by Cabinet in December 2003. To achieve the objective
that "all major procurement will recognise the impact on
the social, economic and environmental wellbeing within the Borough"
and in concert with the National Procurement Strategy, the CPSU
have produced a Sustainable Procurement Policy which was approved
in December 2004. This policy provides guidance for staff to "green"
their purchases to support our Environmental Management System
and national environmental objectives.
2. THE METROPOLITAN
BOROUGH OF
WIRRAL RESPONSE
TO THE
INQUIRY
2.1 The Inquiry outlines a number of key
issues to which it requests evidence. Each point is stated below
separately giving the original question and the response.
2.2 Is there a clear overall strategy within
Government for implementing a sustainable procurement policy?
2.2.1 The National Procurement Strategy
suggests "Every Council should build sustainability into
its procurement strategy, processes and contracts". It does
not prescribe how this should be incorporated or to what extent.
2.3 How coherent and effective is the guidance
made available to departments, non-departmental bodies and local
authorities on this issue?
2.3.1 Guidance in this area comes from a
variety of sources.
2.3.2 The Local Government Task Force (LGTF)
gives advice about incorporating sustainability into construction.
2.3.3 The Improvement and Development Agency
(IDeA) have produced a comprehensive document on "Sustainability
and Local Government Procurement". This outlines how local
authorities can implement a sustainable procurement policy. It
suggests a risk-based approach, focusing on specific categories
of spend.
2.3.4 The Department for the Environment
and Rural Affairs (DEFRA) and the Office of Government Commerce
(OGC) have produced guidance in response to the requirement in
November 2003 for all central government departments to set "minimum
environmental standards". This guidance outlines a number
of "quick wins" based on products common to government
departments and gives the specification for the minimum environmental
target.
2.3.5 The National e-Procurement Project
has also produced guidance on a Legal Framework for sustainability
of the local economy. This does provide useful guidance and real
examples where sustainability has been incorporated into contracts.
2.4 Are the roles and responsibilities for
dealing with sustainable procurement clear?
2.4.1 IDeA suggest leadership by members
and senior managers and implementation of the policy led by the
Head of Procurement. Chief Officers who undertake procurement
activity, particularly in the area of construction also have a
significant role to play in developing specification. Chief Finance
Officers also have a responsibility to encourage the consideration
of whole life costs when allocating budgets.
2.4.2 I would also suggest that the Environmental
Manager and/or LA21 officer have a role to play in ensuring that
procurement activity compliments environmental policy and the
community plan.
2.5 What scope do EU Regulations allow for
environmental considerations to be included in public purchasing
policy?
2.5.1 IDeA guidance advises procurement
staff to incorporate environmental issues at the specification
stage. This allows the tender to be evaluated according to compliance
with specification (amongst other criteria). This satisfies EC
public procurement rules. Environmental criteria can be used as
award criteria but the Procurement Officer must ensure it is relevant
to the contract and objective or they could leave themselves open
to challenge. There is still uncertainty regarding the extent
or weighting that can be given to environmental criteria and also
surrounding the use of ecolables (for example in specifying Forest
Stewardship Council (FSC) timber, we must state "or equivalent"
and consider all responses claiming "sustainable forest source"
equally, even though some sources cannot be substantiated as "fully
sustainable").
2.5.2 The Commission of the European Communities
has produced a Commission Interpretative Communication on the
Community Law applicable to public procurement and the possibilities
for integrating environmental considerations into public procurement.
This provides guidance for procurement personnel on formulating
specifications, the use of ecolables, specifying production process,
prescribing primary materials and consideration of whole life
costs.
2.5.3 It is left to the contracting authority
to find a balance between financial considerations and "greening"
their purchases. The Commission recommends requesting variants
(with perhaps a higher environmental performance) to allow consideration
of "green" products where additional cost is outweighed
by the environmental benefit. This can often prove difficult for
procurement staff to implement without a set policy by either
the Local Authority or the Government due to the delegated nature
of budgetary control.
2.6 To what extent does the UK Government's
public procurement policy fully exploit this scope?
2.6.1 The National Procurement Strategy
outlines strategic objectives for "Stimulating markets and
achieving community benefits" advising councils to "use
procurement to help deliver corporate objectives including the
economic, social and environmental objectives set out in the community
plan". This includes a target to "build sustainability
into the procurement strategy, processes and contracts".
2.6.2 The advice given on "how"
to achieve these community benefits is limited to a few lines
on whole life costing and risk based strategies to include environmental
requirements in the specification. However, it does refer the
procurement officer to the IDeA for further guidance in Annex
D.
2.7 How are the public sector efficiency proposals
in the Gershon Review likely to impact on the implementation of
a sustainable procurement policy within both central and local
Government?
2.7.1 The Gershon Review defines efficiency
in terms of reducing the number of inputs, creating additional
outputs and enhancing the quality of service. The emphasis on
"lower prices for resources" has concerning implications
for procurement staff who recognise the need to account for whole
life-cycle costs, not just the lowest purchase price. The Review
sets out savings over a relatively short three years, putting
pressure on procurement staff to realise savings over the short
term, rather than looking at more long term, sustainable options.
2.7.2 Gershon also suggests "aggregating
Public Sector demand in a strategic way with the supply sector,
thereby enabling the supply side better to anticipate and plan
for shifts in the public sector demand". Concerns were raised
during the initial consultation that encouraging aggregation and
the use of consortia could be contradictory to the strategic objective
of "using procurement to help deliver corporate objectives
including the economic, social and environmental objectives set
out in the community plan" as outlined by the National Procurement
Strategy. Through aggregation of demand and the creation of large
regional "super contracts", we could be excluding local
SME's and the voluntary sector, although the Centres of Procurement
Excellence have a Local Economies workstream whereby Local Authorities
can meet, discuss and implement policies that balance objectives
that on first sight can appear contradictory.
2.7.3 Sustainability involves environmental,
social and economic factors over the long term. It may be necessary
for Local Authorities to put measures in place, where savings
may not be fully realised in the short term, therefore not conducive
to the drive for short term savings as emphasised by Gershon (the
example of the energy efficient light bulb having a higher initial
price but lower running costs over a longer life cycle illustrates
this point).
2.8 How might the inclusion of environmental
specification in the procurement process be affected?
2.8.1 Inclusion of environmental specification
(for the raw material, product performance or manufacturing method)
in the procurement process can lead to a more costly initial purchase
price. This cost can usually be outweighed by environmental, social
or economic benefit, however, this is difficult to allocate a
"cash" saving to. Often, an environmentally friendly
product would have greatly reduced disposal costs if the product
components can be recycled or, as in the example above, the running
costs are reduced through energy efficiency.
2.9 Is the Office of Government Commerce's
£3 billion cost-saving target likely to have a detrimental
impact on environmental considerations?
2.9.1 The pressure to realise significant
savings in the short term could be detrimental to the aim of long
term sustainability as the focus for the Procurement Officer is
lowest initial or short term cost. The Government have indicated
their commitment to sustainability and set targets in place to
improve environmental performance of public sector purchases (for
example, recycled copier paper and carbon emissions on vehicles).
However, without mandatory levels of minimum environmental specifications
(currently only "recommended" environmental specification
in the quick wins list compiled by the OGC), Procurement Officers
will be more concerned with lower cost, shorter term options to
achieve Gershon's efficiencies.
7 February 2005
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