Supplementary memorandum submitted by
the Office of Government Commerce
At the hearing on 30 November I agreed to supply
the Committee with further information about taking environmental
costs during production into account when calculating whole-life
costs. This letter provides the extra information and clarifies
the related point on `pursuing secondary policy aims' through
procurement. It also completes my evidence on OGC's response to
the 2005 NAO report into sustainable procurement in central Government.
I will discuss issues around sustainable procurement,
the OGC website and PSA targets with my Board colleagues at our
next Board meeting, in January 2006. I will report the outcome
of this discussion to the Committee.
Q34: ENVIRONMENTAL
COSTS DURING
PRODUCTION AND
WHOLE LIFE
COSTS
The DEFRA/OGC "Joint Note on Environmental
Issues in Purchasing", which is available on the OGC website,
makes it clear that whole life costs can be considered at various
stages of the procurement process. At the initial stage of the
procurement process (identifying a need and developing a business
case) a contracting authority is able to assess the likely whole
life costs and benefits to itself and also to the wider community.
An authority can determine its procurement strategy and specify
its requirements so as to deliver sustainable development benefits
in line with its own or the Government's objectives and the tests
of need, affordability and cost effectiveness.
That means that, in deciding what procurement
route to take and what kind of product, building or service to
specify, the whole life costs of production processes and transport
methods can be considered.
Once the contract award process is underway,
whole life costs should still be taken into account, along with
quality. That is what government procurement policy requires in
order to achieve value for money. It is not just about lowest
price. However, at this stage, only those whole life cost issues
which relate to the specified requirement—the products and
services being procured—can be considered.
Q35: SECONDARY POLICY
AIMS
On the point about secondary policy aims, the
issue here is that Government procurement policy (as set out on
page 19 of the environmental note) states that value for money
is:
"the optimum combination of whole life cost
and quality to meet the user's requirement".
This means that it is for the user or purchaser
to decide what he/she needs to purchase, in line with Government
or departmental sustainability objectives and the general principles
of need, affordability and cost-effectiveness. That then becomes
the subject of the contract and is not a secondary issue. Where,
for example, there is a Government policy to specify sustainable
timber or recycled paper that becomes the user requirement and
not a secondary issue. Secondary issues are issues not related
to the subject of the contract which are considered, particularly
at late stages in a procurement and which can distort the objective
of that procurement.
Of course, in a procurement exercise, there
is a need for care that requirements or criteria are not discriminatory
under EU law. This might happen where factors are built into specifications
or selection processes which rule out suppliers on grounds not
related to the subject of the contract—perhaps on the basis
of locality or the legal systems or policies in operation in other
countries.
NAO report on sustainable procurement in central
Government
We have begun work in answer to the recommendations
of the NAO report as detailed below.
There is a recommendation around amending the
Gateway Process and including sustainability considerations in
procurement guidance such as the Successful Delivery Toolkit.
The Gateway workbooks address the sustainability
agenda by seeking to ensure that government policies are being
addressed by the programme/project under review. Questions asked
include: "Does the preferred option meet wider government
and departmental policies, strategic objectives, standards and
business change programmes?" In addition, workbooks 1 and
2 explicitly instruct reviewers to check that appropriate weight
has been given to sustainability. OGC has work underway to further
raise the profile of sustainable procurement within the Gateway
Reviewer community through a tailored Review Team Leader (RTL)
email newsflash and "hot topic" sessions at forthcoming
RTL workshops.
The Successful Delivery Toolkit contains guidance
on sustainable procurement. For example, the Procurement Workbooks
cover the need to consider sustainable development objectives
throughout the procurement process. The Toolkit also includes
the Gateway Workbooks, the Achieving Excellence (in construction)
suite (including "Achieving Excellence 11: Sustainability")
and the sustainable procurement guidance OGC has worked on with
other departments, such as the Home Office/OGC publication "Think
Smart . . . Think Voluntary Sector!"
There is another recommendation around expanding
the written guidance available on sustainable procurement. The
Sustainable Procurement Task Force is looking at this issue. We
are contributing to the task force's work and we await the publication
of the Action Plan. The joint Defra/OGC Environmental Note is
not necessarily the best tool to include the best practice material
specified by the NAO, as it is focused on—legal and policy
issues.
There is another recommendation around emphasising
that value for money does not equate to least cost. OGC continues
to promote this message through procurement guidance, procurement
training, conferences and press articles.
There is another recommendation around encouraging
the uptake of Quick Wins. Responsibility for extending the Quick
Wins list and updating the minimum specifications lies with Defra's
Market Transformation Programme (MTP). MTP has identified a working
list of candidates that could be adopted as minimum procurement
standards and is currently consulting on extending and updating
the list. OGCbuying.solutions is geared to respond to any changes
made. In order to improve ease of access, the Quick Wins page
has been moved to the "Environmental Zone" of the OGCbuying.solutions
website and Quick Win products are clearly flagged through the
Catalist frameworks. Inclusion in Catalist means the products
are available at competitive prices from reputable suppliers through
frameworks which are fully compliant with EU directives. We believe
these changes have made it easier for purchasing teams to buy
products on the Quick Wins list and that future enhancements will
continue to improve the ease of use of the website.
Martin Sykes
19 December 2005
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