Examination of Witnesses (Questions 100-117)
2 MARCH 2005
MR RAY
GEORGESON AND
MR DAVID
MOON
Q100 Chairman: You might
have been listening to the conversation we were having before
the public session started!
Mr Georgeson: I
was not, but I share your frustration with that, because yet again,
sustainability is falling into the box of only being the responsibility
of Defra and it is deeply frustrating for those of us who care
very much about sustainability.
Q101 Sue Doughty: Just
a brief comment on this. It looks to me, from what we are hearing
here, as if things are on the website; in other words, I can pull
that information if I want to know, but nobody is pushing it at
me at all, and I am not going to react. I am a busy person, I
am buying, I have everybody on my back, I have to meet deadlines,
I have to get the price right, everything else. How much more
should OGC be pushing that information down the line? Everything
is on the Web if you know where to look and you have time to do
nothing else but look.
Mr Moon: I would
think there is potential for more pushing. I think you are right.
If it is just on the Web, people do not have the time to find
it.
Q102 Mr Challen: Finally,
I would just like to get your take on this issue of whether or
not you have to build in at the very beginning, at the early stage,
the sustainable procurement principles, if you like, in terms
of your contracts and so on, or whether you should have this kind
of two-stage approach which we heard about, whether you should
be able to compare prices afterwards rather than thinking, "We
won't go down that road to start off with because it's going to
be too expensive." What is your understanding of the regulations
on that? I am a little confused as to what you are allowed to
get away with.
Mr Moon: The OGC/Defra
joint note on environmental issues in purchasing said that the
best place to include environmental requirements is up front,
in the tender specification. Putting that in relation to Gershon,
what you want to do is say, "These are my requirements on
sustainability, and then I am going to use procurement to be as
efficient as possible, to gain my maximum value for money in meeting
my sustainability requirements."
Q103 Mr Challen: Do you
think, before they even get to that stage, they assume it is going
to be more expensive if they follow that particular path, so they
just do not do it; they will just go on price alone? Have you
any experience or anecdotal evidence that people tend to shy away
from building in sustainability from the very beginning?
Mr Moon: Yes. There
seems to be a general reaction that, if it is sustainable, it
is going to cost more. I think you are right that people need
the evidence up front that something is affordable. When we went
first had the dialogue with Bristol City Council on their schools,
they said, "We need to know that these products are affordable
and available," so we did a study looking at the major products
you are going to use in a typical school building—the bricks,
blocks, concrete roof tiles, floor beams, that sort of thing—and
looking at brands of blocks. Can we find brands with high recycled
content at equal price or cheaper? Can we do it for bricks? We
went through a whole series of products to build the evidence
base to say, "OK, we don't know exactly what brands your
contractor will use, but looking across the market for a typical
school building, here is the evidence that they will be able to
find the right product at the right price when they come to design
your building." That was, if you like, the affordability
evidence, and then they set the requirement.
Q104 Mr Challen: What
if that process did reduce the market to just one brand, which
is not inconceivable?
Mr Moon: It is
not inconceivable but the evidence we produced is that there are
a range of brands. Also in that case we advocate setting specifications
that are outcome requirements. Requiring that 10% of the materials
value of the project should derive from recycled content means
that it is up to the contractor to determine whether it is going
to be in the bricks or the blocks or the plasterboard or the chipboard
or whatever that they are going to find their extra recycled content
to meet the client's requirement. If the client sets that outcome
requirement but then leaves it to the superior technical knowledge
of the contractor to meet the requirement, you will get a more
economically efficient outcome.
Mr Georgeson: If
it is helpful to you, rather than quote you a lot of numbers,
we do have some useful case studies and examples now where the
cost parity between recycled products and others has been met
that we do use, as do others, as case studies and examples of
good practice to demonstrate that this is the case. We will provide
those to you.
Chairman: That would be
very helpful. Thank you very much.
Q105 Paul Flynn: The local
authority in my constituency in Newport are building a new school
at the moment, and they have said that they are building it to
the highest possible standards of sustainability. Is this the
fruit of your work? Is it a copy of what is happening in Bristol?
Is the process spreading throughout the country?
Mr Moon: I am not
aware of the Newport example. Possibly they have picked it up
through the recommendations of the Sustainable Buildings Task
Group, which is clearly in the public domain. We have seen other
examples where people have picked up on that. Is this a major
PFI project?
Q106 Paul Flynn: It is
a major project, rebuilding a school. It is not a PFI.
Mr Georgeson: The
Welsh Assembly does have its own distinct initiative on sustainable
procurement.
Q107 Paul Flynn: You have
mentioned several times the importance you stress on benchmarks
and the outcomes, and you have expressed some concerns in your
written evidence about the lack of clear benchmarks in the public
sector on what should be bought and what should be specified,
and you praised the Quick Wins list. You say this is an exceptional
exemplar of excellence. Is it your view that it has had a positive
impact?
Mr Moon: It is
very visible what you have to achieve. For example, this Committee
has criticised MoD and Department for Work and Pensions for not
achieving it. It is very apparent when someone is not meeting
their commitment.
Q108 Paul Flynn: Do you
have proof that the Quick Wins list has had a beneficial outcome?
Mr Moon: We have
had dialogue with MoD and we know that they are looking at how
they can avoid criticism in the future.
Q109 Paul Flynn: How do
they do it? Do they have recycled bombs?
Mr Moon: This is
on paper. Quick Wins are only going to work for certain selected
product categories, things like paper, refrigerators, air conditioning
equipment, so it very much applies to procurement of goods. When
you go on to procurement of works and services, like construction
of buildings, specifying that your dense concrete blocks have
got to achieve a certain recycled content, we think that is too
prescriptive, and for construction we would advocate going to
the project level requirement.
Q110 Paul Flynn: You praise
the Quick Wins list. Do you think there are other things that
should go on that list, and how do you think the approach of the
Quick Wins list should be expanded?
Mr Moon: There
are other things that can go on. We have put forward in particular
using envelopes made of recycled paper on to the Quick Wins list.
I am sure that there are other products, particularly in the energy
efficiency area, likewise, and potentially also some water efficiency
devices.
Q111 Paul Flynn: You have
expressed the view in your document that to achieve quicker progress
in the procurement of works and services it would be better to
set outcome or performance-based requirements rather than try
to persuade practitioners to integrate sustainability into the
procurement process. Is this because there is little likelihood
of significant improvements in the latter, in the short term at
least?
Mr Moon: I think
that setting clear requirements gives everyone something to work
to. As an example, we work with the Defence Estates barracks modernisation
programme, and the reaction of Bovis Lend Lease, who are the main
contractor on that programme, was "Give us a simple target
so that we know what we have got to meet. Do not give us lots
of prescription. Give us some clear, simple targets and we will
meet them."
Q112 Paul Flynn: What
kind of outcomes or performance-based requirements would you like
to see set? Any other ideas on how it could be improved?
Mr Moon: The principal
one we are plugging is this one in construction, because the construction
sector is the biggest single sector in terms of the potential
to divert tonnage from landfill.
Q113 Paul Flynn: This
is the Code for Sustainable Buildings.
Mr Moon: This is
trying to get things into the Code for Sustainable Buildings.
Q114 Paul Flynn: Would
you like to see the Code for Sustainable Buildings used in practice
to improve procurement generally?
Mr Moon: Yes. The
Sustainable Buildings Task Group recommended that the code be
adopted for all public procurement.
Q115 Sue Doughty: I would
just like to quickly return to the Gershon review, because trying
to find £3 billion worth of efficiency savings is quite a
challenge. We touched on it with the earlier witnesses. What I
am interested in is, is it going to make your work more difficult
in getting sustainable procurement built in alongside these £3
billion efficiency savings, particularly since we have already
established that sometimes people do not realise that you can
have both?
Mr Moon: Yes. To
some extent it makes it more difficult because there is this perception,
as I said, that sustainability always costs more. With the particular
case of recycled content, there are significant areas where you
can generate cost savings. If you take something like highway
maintenance, there are some good examples of significant cost
savings. Essex County Council set a target for 20% recycled content
for financial year 2002-03. Their contractor delivered 59% and
they achieved cost savings of £150,000. That was ploughed
back into additional maintenance work, so that was a non-cashable
saving in Gershon terms, but there is significant scope. As far
as recycled content is concerned, we can see some win-win with
the efficiency review if people realise that cost savings can
be achieved.
Q116 Sue Doughty: We are
going to have a lot of focus on the cashable rather than non-cashable
savings. Traditionally, of course, you look at lifetime cost of
ownership and start saying this is where we get the benefits overall
in terms of a product. The highways example is good, but where
we have people under pressure, where somebody is breathing down
their neck saying "We have got to have those savings,"
is that cashable going to work against the opportunities within
looking at lifetime cost of ownership, where sometimes sustainability
will win in that case just because of the long-term aspect?
Mr Moon: I think
potentially it can. I was talking to one of the partners at Davis
Langdon, who are a big quantity surveyor, cost planning consultancy.
They were saying there has been a lot of increase in demand for
consultancy input to help find the cash savings for Gershon, and
they perceive that the drive is simply to reduce capital cost,
so if you take the example of trying to meet the Government's
Decent Homes standard, Gershon will drive you to say "I need
to meet the minimum requirements of the Decent Homes standard.
How can I drive down the cost of doing that?" So you would,
for example, meet the minimum requirement for thermal insulation
under Decent Homes, but you might actually want higher levels
of thermal insulation because over time it would be financially
beneficial. But the Gershon driver would be to say minimise the
cost to deliver just the Decent Homes standard. Because of that
pressure, that you have to get the cash saving, you are not going
to spend to save.
Q117 Sue Doughty: So having
worked towards best value over a number of years, and away from
lowest price, we are at risk of going back to lowest price, and
possibly not getting the benefits that we might get.
Mr Moon: There
seems to be something of that risk. Again, with the issue of annual
budgets within the public sector, people will say "Yes, I
should be delivering on whole life," but nevertheless, there
are some pressures on them to minimise cost.
Chairman: Thank you very
much indeed. It has been most helpful. We also thank you for your
written evidence.
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