Examination of Witnesses (Questions 160-176)
9 MARCH 2005
DR PAUL
LEINSTER, MR
MARK YEOMANS
AND MR
CHRIS BROWNE
Q160 Mr Challen: Transport is certainly
one of the areas which we have become aware of where there does
seem to be a barrier to getting better sustainable procurement.
Are there any moves that you are aware of to address that issue?
Mr Browne: The issue with transport
is that it is readily possible to specify the mode. For example,
we had to buy some aggregates a few years ago. We specified that
those must be transported by barge and rail to minimise environmental
impact. That is perfectly acceptable under EU legislation. What
we cannot do is limit the number of miles that it travels. Within
the EU we cannot say we will only buy within 50 miles or 100 miles
because that goes against the principle of an open market and
at the moment I am not aware of any moves that are being made
to change that because I think that would undermine the principles
of the open market within the EU. I cannot see that changing.
There is some flexibility around catering and food. Where you
let a catering contract there is some flexibility once that contract
has been let to agree with the supplier to limit the number of
miles the food travels, but it can only be done after the contract
has been awarded. It cannot be part of the award decision. For
example, we have just let our own catering contract. After the
award we mutually agreed with the contractor that as an initial
target 25% of all food coming into Environment Agency premises
will be from within 50 miles and we will build that up year on
year. We are using that as an experiment to see how far we can
go with local food procurement but it can only be done after the
contract is awarded. It must be divorced from the award decision.
Q161 Mr Challen: Quite a number of schemes
now have been created which as far as transport is concerned seek
to make transport carbon neutral, particularly in relation to
air transport. Would there be any barriers to insisting in your
specification that if you wanted to ship your aggregate from Poland
to Wales rather than from Wales to Wales whoever did it would
have to put into their price a cost for carbon neutrality?
Mr Browne: We would have to come
back on that.
Mr Yeomans: The area of expertise
on that would be the OGC and Treasury experts on European procurement
regulations. I expect that that would be classified as part of
the specification. One of the questions would be how relevant
the measure is to the contract that is being considered and whether
the nature of the requirement is in any way discriminatory. Without
looking at it in some depth I cannot comment.
Mr Challen: Now that ministers are going
to be carbon neutral when they fly abroad, except the Department
for Transport, perhaps there is a little problem there.
Q162 Joan Walley: In terms of short,
medium and long term costs of getting sustainable procurement
right how much do you take into account the fact that to change
from perhaps where you are at the moment to suppliers that you
want in the future there are often additional transitional costs
which are more expensive in the short term but which will give
payback in the long term over time? Is that something which is
accommodated within the guidance that there is or under the review
that is currently taking place?
Mr Yeomans: There are two elements
of costs in terms of implementing change. There are the internal
costs within the business and developing new methods and training
people and moving on through that process so that people do take
this activity as a matter of course. Probably you are looking
at the potential increased costs on purchase price?
Q163 Joan Walley: I am looking, for example,
at the school dinners argument that we have just had with Jamie
Oliver in respect of the fact that you need more than 47p to get
local fresh food and all those other things.
Mr Yeomans: I will give you an
example which does not have the same human impact as the example
you have given. The Environment Agency purchases pumps. We have
to clean mine water in a Cornish tin mine which pollutes the River
Fal and at its peak it is about six million gallons of water a
day. The pumps are an integral part of that process. We buy them
on whole life cost, so we do not buy the cheapest pump; we actually
buy the most expensive pump. We have been doing this for about
12 years now and we have proved that it is the most cost effective
thing to do because the pumps have been outliving the life of
the lowest price pumps by some considerable margin. The issues
around increased subsidy for meals would be perhaps a far wider
debate about human health.
Q164 Joan Walley: But that comes back
to the whole cost-cutting objective of government policy where
perhaps savings in one budget might result in greater costs for
the NHS. My question in terms of sustainable procurement is how
you can write this into the formula or the criteria when you are
looking at targets when the payback might be at another time or
in another department or elsewhere but nonetheless picked up by
the public system. How do you get that joined-up approach right
the way through?
Dr Leinster: The important thing
is scoping when you are doing your initial risk assessment and
your initial scope as to how many externalities you are going
to take into account within this overall assessment. If you take
our example of the pump, we have a capital budget which gets a
particular hit and we have to play that against a revenue budget
on an ongoing basis. You have to make that balance. It is a matter
of thinking very widely about all the possible benefits and disbenefits
and then doing a structured analysis and deciding on the balance
of all the benefits and disbenefits whether this is something
which is worth doing. I do not think there is a magic formula
in this. I think it is just applying a structured approach and
hoping that that structured approach will take you to a sensible
conclusion.
Q165 Joan Walley: But in so far as, for
example, right now applications will be going through to ODPM
possibly in respect of land remediation which might well need
pumping into other parts of the country, how much do other government
departments take on board those criteria that you have just outlined?
Dr Leinster: Most probably in
some areas of land remediation you have to balance that. We are
doing it ourselves because when we construct flood defences some
of the material that we excavate in those flood defences is contaminated
land. We then need to decide between the cheap option (although
it is getting more expensive), which is most probably dig and
dump if you can find somewhere to deposit it, or you can think
about remediation on the site or you can think about barriers
on the site. You just have to do a structured analysis of all
of those impacts. As you say, most probably in some of these decisions
there will be a planning decision and there will be a developer
who you have to get on board because, if we are talking about
remediation of contaminated land, it is about how soon can the
developer, if they have got a bank loan for that piece of development,
start constructing houses that they can then start selling. It
is a complicated area and I think that for a number of those joined-up
discussions that we need we are still at the beginning.
Mr Yeomans: In respect of the
procurement elements of major public investments some element
of an answer to the question you raise arises from the Office
of Government Commerce and the implementation of Gateway processes
for all major procurements which should consider cross-cutting
impacts, as Paul has indicated, that we have to consider as an
organisation, so I would have some hope of that covering some
of the issues you have raised.
Q166 Chairman: Can I go back to the EU
situation? One of the things that the committee will be keen to
do is explore your evidence that the EU is often used as an excuse
not to do the right thing. To what extent is there a debate between
EU directorates, in particular the environment and competition
directorates, about what is or is not appropriate in relation
to procurement?
Mr Yeomans: We are not aware of
a debate taking place in that context but the issue we perceive
is that the promotion of an approach to best practice environmental
management does on occasion seem to be at odds with European procurement
policy and one of the issues there around the single market principles
and we have spoken about transport and other elements. There is
an interesting view that we receive when we attend European conferences
on this and that is that the northern European Member States seem
to be quite advanced in their approach to sustainable procurement
and I think that is something over which they do not spend much
time considering the potential conflicts between different outputs
from the Commission.
Q167 Chairman: Can you be a little bit
more specific about that?
Mr Yeomans: Some of this is anecdotal
but when you press a fellow procurement professional in a Scandinavian
country and you say, "We take these issues into account",
you can be met with a shrug of the shoulders and a smile, in other
words, "We do not take that into account necessarily".
Q168 Chairman: Any Scandinavian country?
Mr Browne: Denmark.
Q169 Chairman: By way of example?
Mr Yeomans: By way of example.
Q170 Chairman: What motivates Denmark
in this? Is it concerned with the environment or is it the protection
of local suppliers?
Mr Yeomans: No, it is quite explicitly
the environmental goal that they have set themselves.
Q171 Chairman: But it does incidentally
benefit local suppliers, does it not?
Mr Yeomans: If you are looking
for markets for recycled product then those markets will tend
to rest in northern Europe because of the development in this
area over several decades. There can be an argument that if you
specify or promote that particular product you could be favouring
northern European Member States as a supply market. That was the
issue I recall at the time.
Q172 Paul Flynn: You said you were encouraged
by the sustainable development strategy to some extent but you
made the point that there is an absence of any targets in there.
I think perhaps the feeling is that the government has been so
bruised by the targets that they set for everything these days
that targets are often measures of failure rather than measures
of success, but it does have a national action plan and key performance
indicators. Are these adequate alternatives to setting firm targets?
Mr Yeomans: I will pass that to
my colleague but one of the great difficulties you have in this
area is that you tend automatically to end up with input measures
rather than outputs.
Mr Browne: I am struggling at
the moment to see any targets that are going to drive sustainable
procurement across government. The difficulty, of course, is going
to be that often targets are difficult to measure. Ideally they
should be output orientated in terms of CO2 reduction and that
is something which we find very difficult ourselves to measure
because when you go to procurement it is very difficult to measure
what has been the CO2 reduction in moving from one type of steel
to another type of steel. Perhaps there should be targets that
are more input orientated around risk assessments of statutory
contracts or having a supplier development programme with key
suppliers and having environment improvement plans for key suppliers.
At the moment I am struggling to see targets that relate to sustainable
procurement in what has been published so far.
Mr Yeomans: Some measures that
my colleague mentioned are covered in chapter three of the Sustainable
Development Strategy document. The issues that we have are around
how do we measure, as you point out, but we would like to see
targets that are more specific perhaps to the activity of procurement,
to do with sustainable procurement, as opposed to targets that
move above the process. We are talking about ensuring that the
process of sustainable procurement is embedded within public procurement.
Q173 Chairman: Does the idea of a national
action plan make your pulses race? Is it really something that
you think is going to be achieved?
Mr Yeomans: I was very pleased
to see the profile that sustainable procurement has received.
I have looked at it from the perspective of having been a purchasing
professional for many years and see it as a means by which procurement
can contribute to issues such as corporate social responsibility
for both public and private sectors.
Q174 Paul Flynn: There is also a commitment
in the document to embed sustainable development within the OGC.
Do you think the fact that it has not been there before is the
reason why it has not increased in its importance and developed
as an issue in recent years? Surely this should have been done
years ago.
Mr Yeomans: Yes, at the end of
the day the portfolio that OGC has is very broad and I think that
if you look at the work they have done in areas such as electronic
procurement and the like, which has a sustainability linkage in
its output, they would say that their resources have been taken
in those directions. My belief from recent briefings that I have
received at OGC is that they are moving in this direction.
Q175 Paul Flynn: But the primary focus
of the OGC is an equal army(?) one. Do you think it can be changed
and concentrated on environmental ones, on sustainability?
Mr Yeomans: I feel that one of
the great successes of OGC in its very early days was to emphasise
the principle of whole life cost as being the way in which public
contracts should be let and therefore I feel that it would be
difficult for anyone to argue that whole life cost does not have
a strong link to sustainable outcomes. My view is that they are
aligned, not mutually exclusive.
Q176 Paul Flynn: Should it not perhaps
be whole lives cost if you are looking for the reuse of some of
the materials?
Mr Yeomans: It may be.
Chairman: That concludes our questions.
We are grateful to you. Thank you very much indeed.
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