Sustainable Procurement Practice Note May 2013 - Australian ...

apcc.gov.au

Sustainable Procurement Practice Note May 2013 - Australian ...

AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Australasian Procurement and Construction Council

I c.

May 2013

Sustainable Procurement

Practice Note

incorporating a case study of the procurement of multifunction

devices

www.apcc.gov.au

0


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Australasian Procurement and Construction Council

Australian and New Zealand Government Framework for Sustainable ProcurementPractice Note

First published May 2013

Requests for copies of this document should be addressed to:

Australasian Procurement and Construction Council (APCC)

PO Box 106 DEAKIN WEST ACT 2600

Suite D

2 Geils Court

DEAKIN ACT 2600

Phone: 02 6285 2255 Fax: 02 6282 3787

Email: info@apcc.gov.au

Web Site: http://www.apcc.gov.au

PDF version of this document available for download from our website

The work contained within this document is copyright.

This document may not be in part or whole, reproduced without prior permission from the

Australasian Procurement and Construction Council.


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

TABLE OF CONTENTS

BACKGROUND 4

AIM 6

Incorporating Sustainability Objectives into Procurement 8

Sustainability and the Procurement Lifecycle 8

Phase 1: Procurement Planning 10

Phase 2: Supplier Engagement 28

Phase 3: Supply, Use, Maintain, Contract Management 39

Phase 4: Dispose, Replace, Assess ongoing need 45

References 47

Appendix 1: The Definition of Sustainable Procurement 49

Appendix 2: Risk Matrix 56

Appendix 3: Evaluation Analysis Summary Tables 57

About the Author 63


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

BACKGROUND

Sustainable procurement has been defined by the United Kingdom Government

commissioned Sustainable Procurement Taskforce as

“…a process whereby organisations meet their needs for goods, works

and utilities in a way that achieves value for money on a whole life

basis in terms of generating benefits not only to the organisation, but

also to society and the economy, whilst minimising damage to the

environment.”

(Procuring the Future, Sustainable Procurement Task Force, 2006)

Sustainable procurement considers products and suppliers. This includes

issues such as: resource extraction and consumption; manufacturing and

production; transport and logistics; product and asset design; use and

maintenance; recycling and disposal options; employee rights and

conditions, corruption, unfair competition and ethical behaviour.

Sustainable procurement means that when buying goods and services

organisations practicing sustainable procurement will consider:

Strategies to avoid unnecessary consumption and manage demand;

minimising environmental impacts of the goods and services over

the whole of life of the goods and services;

suppliers’ socially responsible practices including compliance

with legislative obligations to employees; and

value for money over the whole-of-life of the goods and services,

rather than just initial cost.

The set of principles described in this Framework should be integrated into

business as usual procurement practice.

4


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

In September 2007, the APCC published the Australian and New Zealand Government

Framework for Sustainable Procurement, providing a set of high level principles for the

adoption of sustainable procurement practice in government.

1. Adopt strategies to avoid unnecessary consumption and manage demand;

2. In the context of whole-of-life value for money, select products and services which

have lower environmental impacts across their life cycle compared with competing

products and services;

3. Foster a viable Australian and New Zealand market for sustainable products and

services by supporting businesses and industry groups that demonstrate innovation in

sustainability; and

4. Support suppliers to government who are socially responsible and adopt ethical

practices.

(APCC, 2007, p.8)

In 2012, the Australasian Procurement and Construction Council (APCC) engaged the

University of Canberra to develop further practical guidance for its members and

government procurement professionals on the steps to incorporate sustainability

features into their procurement processes. This came about due to members’

concerns about the lack of practical guidance for procurement officers on how to

incorporate sustainability principles and government policies into business cases,

requests for tender and contracts. The view was that while there is a growing level of

literature providing high-level strategic guidance, there is still little which can be

regarded as practical and able to be incorporated into manuals and training for

procurement officers.

5


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

AIM

This Practice Note aims to provide practical step by step guidance and advice for

government procurement practitioners on the integration of sustainability objectives in

to the procurement process. It complements other training materials to assist in

capability development within the government sector. In particular, the Practice Note

provides a case study of whole of government procurement of Multi-Function Devices

(MFD’s or printer/photocopiers) in order to illustrate the process of embedding

sustainable requirements, setting targets and key performance indicators, managing

and reporting on progress, and finally, considerations at the end of life stage. This

Guide builds on and references the APCC work to date as well as a number of

excellent documents which have been published by various government jurisdictions

in Australia, New Zealand and throughout the world.

6


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Case Study

Sustainable Procurement of Multi-function devices for whole of

government

7


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

INCORPORATING SUSTAINABILITY OBJECTIVES INTO

PROCUREMENT

Sustainability and the Procurement Lifecycle

Within each phase of the procurement lifecycle, sustainability objectives and principles

need to be considered and applied. The material below represents an outline of

potential steps and actions.

However, in applying this Guide, procurement officers need to be aware of the specific

requirements which may apply at the various phases in procurement for their

agency/organisation/jurisdiction.

The diagram on the following page illustrates the typical steps involved in a major

public sector procurement:

Phase 1 Procurement Planning;

Phase 2 Supplier Engagement;

Phase 3 Contract Management; and

Phase 4 Dispose, Replace, Refurbish, Demolish or Sell.

Depending upon the circumstances, not all steps will be undertaken and at other times

even more steps might apply to some jurisdictions, but overall this is typical.

Each phase is illustrated by using the whole of government/major procurement of

multi-function devices as an illustration. Because this is an acquisition of goods or

perhaps services (depending upon the procurement method and business case) this

determines the steps.

Procurement Officers should be cognisant of potential differences for goods, services

and works procurements.

Some references are also provided for each phase of the procurement.

In this case study, assumptions are made about decisions by government and market

conditions to allow the thread of the case to pass through the phases. Where this

occurs, it is mentioned in the Guide.

8


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Typical Public Sector Procurement Process

Phase 1: Procurement Planning

1. Recognition of need/demand

2. Establish a procurement project team and governance arrangements

3. Analyse demand/scope requirement

4. Identify policies/policy goals relevant to acquisition including sustainability objectives to

be pursued

5. Conduct stakeholder consultations

6. Conduct supplier market analysis

7. Conduct sustainability risk/impact analysis

8. Devise procurement (sourcing, evaluation and contract management) strategy

9. Undertake budget business case approval process

10. Develop detailed procurement plan and seek approval

1

Phase 2: Supplier Engagement Stage/Sourcing

1. Develop and release tender specification with sustainability elements and

requirements as agreed under procurement process (open, select, other

tender process)

2. Evaluate offers using sustainability assessment criteria which tests alignment to

specification/statement of requirements

3. Conduct verification and audit processes

4. Develop and execute contract with sustainability performance criteria

2

Phase 3: Contract Management

1. For goods and services, administer contract for supply

2. For works, construction stage/administer related contracts

3. Conduct audits, assurance of meeting sustainability performance requirements

4. Analyse contractor and supply reports to ensure meeting sustainability requirements

5. Manage non-compliance/under-performance

6. Manage demand/consumption of goods and services according to sustainability criteria

7. Other data collection, analysis and reporting

3

Phase 4: Dispose, replace, refurbish, demolish, or sell

1. Review and assess contract performance overall and in terms of sustainability

requirements

2. Review and assess ongoing need/demand/changes in requirement

3. Review and assess data and sustainability policies/goals and requirements

4. Examine changes in technology or function which might impact on future supply and demand

4

9


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Phase 1: Procurement Planning

1

Phase 1: Procurement planning steps

1. Recognition of need/demand

2. Establish a procurement project team and governance arrangements

3. Analyse demand/scope requirement

4. Identify policies/policy goals relevant to acquisition including sustainability objectives to

be pursued

5. Conduct stakeholder consultations

6. Conduct supplier market research/analysis

7. Conduct sustainability risk/impact analysis

8. Devise procurement (sourcing, evaluation and contract management) strategy

9. Undertake budget business case approval process

10. Develop detailed procurement plan and seek approvals

Prior to undertaking any procurement a number of important planning steps must be

undertaken. This section describes the activities which should be followed in order to

comprehensively plan for sustainable procurement. A set of tables and checklists are

provided to illustrate the MFD procurement.

In a public sector context, there is usually a separate process under legislation for the

seeking of approval to expend public monies to that for the procurement of goods,

services or works. That is, a Budget process to seek funding for a public benefit

purpose and then a procurement process to put the strategy into effect. The Budget

process involves decisions of Cabinet Government framed by financial legislation.

Each jurisdiction has its own budget processes, and guides describing requirements

and the Budget Cycle and Procurement Officers should be very familiar with these.

The Procurement Process may involve consideration by a Board of officials whose

responsibility is to advise government on their procurements and approval by a public

service delegate (someone who has a delegation under legislation to approve certain

activities). Where major or whole of government procurements are entertained, there

may be either a requirement to submit budget business cases as part of the normal

budget cycle or a requirement for a Cabinet Submission to gain approval because of

the cross-agency implications.

10


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

References for this section:

Australasian Procurement and Construction Council, Assessing a Supplier’s Sustainability Credentials, undated,

Canberra, ACT.

Australasian Procurement and Construction Council, Sustainable Procurement Product Guide, Business Machines,

May, 2010, Canberra, ACT. [This guide is a reproduction of the QCGPO Sustainable Product Guide Business

Machines, Available Online at: www.qgm.qld.gov.au

British Standards Institution, undated, The Quick Guide to BS 8903 for Procuring Sustainably.

Bruel, O., Menuet, O., Thaler, P-F., undated. Sustainable Procurement: a crucial lever to end the crisis? Whitepaper

based on the HEC 2009 Sustainable Procurement Benchmark and 21 interviews with Procurement Directors.

European Commission, 2004. Buying green! A handbook on environmental public procurement, Luxembourg.

Forum for the future, 2007. Buying a Better World: sustainable public procurement, London.

Government of South Australia, State Procurement Board, 2010. Sustainable Procurement Guideline, August 2010.

Government of Western Australia, Department of Finance, Government Procurement, 2011, Sustainable

Procurement Practice Guidelines, July 2011.

Ministry of Economic Development, New Zealand, 2008. Sustainable Government Procurement Project Category

Reviews, Standards, guidelines and targets for core Public Service Departments, First revision August 2008.

New Zealand Government, August 2012. Better Business Cases, “Investing for change”, Overview 2012.

New Zealand Government July 2010. Guide to Sustainable Procurement, Identify Needs and Assess Risk, A guide

for agencies, Ministry of Economic Development, Wellington, July 2010.

New Zealand Government, State Services Commission and The Treasury, Performance Measurement, Advice and

examples on how to develop effective frameworks, August 2008.

Queensland Government Chief Procurement Office, 2009. Procurement Guidance, Integrating sustainability into the

procurement process, Queensland Government Department of Public Works, November, 2009.

United Nations Environment Programme, Buying for a Better World, A Guide on Sustainable procurement for the UN

System.

Victoria, State Government, 2011. Good Practice Guidelines, Environmental Procurement, Strategy and Policy,

Government Services Group, Department of Treasury and Finance, July 2011.

Victoria, State Government, State Purchase Contract Business Case Template, June 2009.

World Economic Forum and Deloitte Touche Tohmatsu, 2009. Sustainability for Tomorrow’s Consumer, The

Business Case for Sustainability, Cologne, January, 2009.

Ministerial Council on energy Forming part of the National Greenhouse Strategy, 2003. Scanners and Multifunction

Devices, Product Profile, Standby Product Profile 2003/5, October 2003.

11


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

1. Recognition of need/demand

In this Case Study it is assumed that a Cabinet submission is required to be developed

due to the whole of government/cross agency nature of MFD procurement. Approval is

not required through the budget process because funding is already available to

agencies within their already approved administrative budgets. The Cabinet

submission is to be accompanied by a business case.

In the Case Study, there is currently no single contract for the supply of whole of

government MFD’s. The area responsible for major procurements and whole of

government contracts recognise there is a potential to achieve considerable savings

and introduce sustainability principles into a new whole of government contract to

supply the continuing need. In order to implement this change, they have to convince

government of the benefits. Eighteen months may be the minimum time required to

develop and undertake a new process such as this, taking into account all of the steps

in phase 1 and phase 2. It may require aligning the expiration of multiple contracts.

At this stage, there is no indication of how the need for MFD service will be provided

into the future. At this point procurement officers need to be aware of the need and

open to all possibilities of meeting the need.

2. Establishing a procurement project team and governance arrangements

The second step in the process is to establish an appropriately resourced project team

and develop governance arrangements for the procurement. These staffing resources

may already exist within a central agency. This team

would then ‘project manage’ the sustainable

procurement of the requirement. Remember that one of

the crucial aspects of sustainability is the success of the

procurement project itself in terms of project

The Procurement process itself

must be sustainable as well as

the supply

management goals, on time supply, on budget, and fit for purpose or superior quality.

That is, considerations of sustainability must be both internal to the project and

external. The procurement process itself must be sustainable as well as the supply. In

this regard project management principles should be brought to bear at the outset.

In the MFD Case Study, a small team is established in the major procurements unit to

run the process. It will be their role to manage the procurement through each phase.

They establish record keeping and data collection systems specific to this

procurement. A cross-agency steering committee with representatives of the major

user agencies including Treasury Departments oversee the project.

12


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

3. Analyse demand/Scope Requirement

The third step is to analyse the current demand and supply. This requires

extensive research into the current contract/s and suppliers, unless this is a new

supply. In the MFD Case Study copying and document transmission is an

ongoing requirement. In question is how this service can be supplied (through

purchase, lease or service) and how much (what exactly is the requirement for

copying/i.e. how many pages; how much document transmission takes place and

therefore how many machines are required. This may be an important question

for the tender given that some machines provide more volume). In this MFD

example, it is assumed that the service cannot be outsourced (that is, machines

need to be located in administrative work places. This

may not be the case with all procurements).

Consultation with stakeholders

is required

Given this, the team must collect data and information

about the current supply of MFDs, their physical

location on office floors, their output and so on. Copies

of current contracts should be sourced and analysed to ascertain conditions and

specifications. The Table below indicates some of the information which may be

required in collating current usage data for MFD supply. It is likely to occur

together with extensive consultation with stakeholders.

Table 1: Case Study Example Record of Current Stock/Use of MFD’s*, **

Agency Device type Asset Age

(years)

Asset

life

Asset Value

$’s

Company/supplier Contract

end date

Department MFD22 2 4 300 ABC Pty Ltd 21/12/14

A

Department

B

MFD 50

Printers 45

3

5

5

5

500

10

XYZ Pty Ltd, ABC Pty Ltd,

OXO Pty Ltd

OXO Pty Ltd

30/6/2014

No contract

Department

C

Department

D

Department

E

*Note this table could have hundreds of entries and would be compiled from central records or from

individual stakeholders’ records

**Developed from the Queensland Government Chief Procurement Office, Integrating sustainability into the

procurement process, Procurement Guidance, November 2009; and Government of Western Australia,

Department of Treasury and Finance Government Procurement, Sustainable Procurement Practice

Guidelines, September 2010; and Forum for the Future, Buying a Better World: sustainable public

procurement, 2007

13


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Analysis of the current and future demand for the service (MFDs) should be

extensively work shopped with a representative group

of stakeholders to ensure that there are no gaps in

Considerable potential to

the analysis. To complement this, a study should also

reduce numbers by centralising

be made of the physical location of current MFDs and

whether there is potential to optimise this and reduce

numbers, promote staff productivity and well-being and contribute to savings. In

this MFD Case Study there is considerable potential to reduce numbers by

centralising copying work areas on each building floor area (see Table 3).

Location of MFD devices on

the floor plan

In addition, and in order to ensure that there is a baseline from which to compare

potential (at tender stage) and realised savings or costs during use, it is important

to conduct a lifecycle cost analysis of the current

supply (if there is one). This might be limited by

available data, however, it should be possible to

ascertain total costs for purchase/lease; maintenance;

Lifecycle cost analysis of the

current supply

consumables (paper, toner etc); energy and power if agency data and machine

specific data is not available.

To complement this, conduct a carbon emissions audit to gain baseline data

about the emissions from current usage. Otherwise how will you know that you

have improved upon your current situation?

Again it is likely that there will be gaps in data for the emissions audit; however,

even an estimate is useful. For example it is likely that only a study of the

emissions from electricity usage will be possible (analysis of the emissions

through the full life cycle will not be available unless this was sought in the

previous tender). Nevertheless, as noted earlier, some data is better than none.

14


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 2: Case Study example Energy/Carbon emissions from current use of MFDs

MFD models Numbers Energy Usage Carbon Emissions

Estimate

MFD22 250 1000Kwatts year 1.06 tons year

Total

There are several useful websites and references to assist in calculation of

emissions. See the Resource Guide.

Table 3 summarises the results of the demand analysis for the MFD Case Study.

Each procurement has separate demand drivers and issues associated with it,

including impact levels if not supplied. The Table demonstrates the kind of

considerations which might occur in this MFD Case Study. For example, there is

a high need for the service of printing and document transfer in this case;

however there is no single contract, no movement toward changing processes to

save resources particularly paper and obviously little contract management. The

table specifies an impact level if the associated issues are not addressed and

when the issue must be addressed.

15


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 3: Case Study example of demand analysis for procurement of MFDs

Demand drivers Issues Example MFD Procurement Impact

level

Need for the product or service

Reduction in demand for product or

service

Use of alternatives

Alternative purchase/

lease/owner-ship arrangements

Short, medium and long term demand

patterns

Interconnect with other procurement (interdependencies)

Current usage (numbers, current

cost both capital and recurrent).

Implications if service or good

unavailable.

Output or benefit of good or

service.

Avoidance of need e.g. reuse,

upgrade.

Process change, behavioural

change, organisational change to

reduce demand.

Extension of life of assets.

Rationalise scale of supply while

meeting same need.

Technology improvements over

time reducing demand.

Alternatives to meet need such as

lease.

Demand likely to increase or

decrease over time

Usage of this product or service

leads to other procurement needs

and vice versa.

Currently the Government owns x 000 laser colour, multi-function devices (MFD’s) and x

000 stand-alone single use monochrome laser printers and x 00 colour inkjet desktop

printers.

These are supplied under 11 separate contracts (to different agencies) by 3 different

companies. The machines are of various ages, the oldest being 7 years.

The contracts for the supply of this equipment vary in term from 5 to 7 years and are

valued at a total of $00m.

The various printers output x million pages of documentation per week (xx million per

year).

Although there has been some movement toward use of electronic documentation

substituting for paper based, the levels of paper usage are increasing across the service

from xxx tons in 2000 to xxxx tons in 2012.

Localised printing of documents remains critical for policy and program output.

See attached table.

There is considerable scope for the rationalisation and reduction of the requirement for

this product/service in the short to medium term through more strategic placement on

office floors of devices; increasing the proportion of officers to printer capability; greater

use of electronic transmission of documents through process change.

Further at present the high speed, high volume MFD’s are being turned over every 3

years. This could be extended dependent upon maintenance schedules to 4 years.

MFD technology is constantly improving, particularly with respect to use of consumables

(toners) and energy use.

There is potential for the devices to be purchased or leased. A cost benefit of

alternatives would need to take place at tender response time to gauge alternative value

for money over the life of the service.

Demand for MFD or print capability is increasing rather than decreasing. The inflexibility

of contracts to enable down-sizing of the asset fleet with down-sizing of the service is a

barrier. Co-use is limited by the physical layout of offices and location of various

agencies in different buildings. However, there is scope to manage demand through

amended contract terms which allow take-back, reduction of requirement. There is also

scope to limit increases in demand in the medium term through changed behaviour and

greater use of electronic transmission of documentation. This would require changes in

procedures and training.

The numbers of MFDs and printers drives demand for paper and other consumables

such as toners. The current varying models of MFD’s and printers means that value for

money is not maximised by purchase of few high volume products. Further, the number

of different devices complicates maintenance and spares capability and reduces value

for money outcomes in this respect.

Devices are not always strategically placed to maximise efficiency or occupational health

and safety considerations.

MFDs are important consumers of energy.

Waste management and disposal contracts need to be complementary.

High

Med

Med

Med

Low

Med

Application at project

phase

Tender specification

Tender Specification,

transition training, use

Tender

specification/innovation

requirements

Procurement Strategy,

tender evaluation

Stakeholder/User

training at transition

and on-going. Tender

specifications/contract

requirements.

Procurement Strategy,

tender specifications,

contract requirements

and contract

management

The above information forms part of the platform for developing a new procurement strategy. Essentially it is important to know what you currently use; what the gaps are; limitations in current service and opportunities for improvements in terms of

sustainability.

16


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

4. Identify policies/policy goals relevant to acquisition including

sustainability objectives to be pursued

Having completed the demand/needs analysis and a stock record of current

purchases, the next step is to examine the relevant government policies

(procurement included) which will likely impact this procurement. Following is

a worked example, using the MFD Case Study example. Of course there

may be many more policies depending upon the jurisdiction.

The Table also provides an indication of the impact or importance or the

policy with respect to this particular procurement that is, sustainable MFD

supply, in terms of High, Medium or Low impact or potential. To the

procurement officer, this indicates areas of emphasis in terms of

implementation and of advice to government decision-makers.

17


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 4: Case Study example of policy framework for procurement of MFDs*

Government policy relevant to the Policy requirements MFD Case Study Project implications Impact level

procurement

Procurement policy

Principle of value for money and whole of life cost must be pursued in Important consideration at all stages of procurement, particularly High

government procurements.

Additional: probity and ethical standards, open and effective

competition etc.

tender evaluation.

Government policy on reduction in All procurements and government activity to contribute to reduction in Important to consider at specification stage, tender evaluation, High

waste by 2020

waste targets.

contract management (maintenance) and disposal stages.

Government policy on packaging National Packaging Covenant requirements to limit or reduce Important to consider at specification stage, tender evaluation, Med

(Packaging Covenant)

unnecessary packaging.

contract management (maintenance) and disposal stages

Government policy on reduction in All procurements and government activity to contribute to reduction in Important to consider at specification stage, tender evaluation, Med

emissions by 2020

emissions.

contract management stage.

Government policy on reductions in All procurements and government activity to contribute to reduction in Important to consider at specification stage, tender evaluation, Med

energy use by public sector

Government policy on the employment

of disadvantaged persons

energy use.

All procurements and government activity to consider employment of

disadvantaged persons where appropriate.

contract management stage.

Likely a consideration for local distribution, maintenance and repair;

and disposal stage.

Med

Government policy on transport miles

for purchase of goods, services and

works

Government policy on local industry

development

Government policy on occupational

health and safety.

Government international agreements

and treaties

Australian Government, National

Television and Computer Recycling

Scheme

All procurements and government activity to contribute to reduction in

energy use by considering opportunities to reduce transport miles.

All procurements and government activity to consider the impact on

local industry, small medium enterprises (SMEs), and local

employment.

All government activity to manage and implement programs to

maintain the highest standards of OH&S.

E.g. USA Free Trade Agreement, Australia and New Zealand

Government Procurement Agreement, etc.

Currently enables consumers and small business to

drop-off used televisions, computers and printers free of charge at

designated access points, which may include permanent collection

sites, take-back events or through a mail-back option.

Consideration for tender specifications and evaluation.

Likely more a consideration for local distribution, maintenance and

repair; and disposal.

Important consideration at specification (chemicals, design), location

of devices, minor maintenance. An issue for audit during contract

management phase.

Important to consider at tender stage.

Important to consider at specification stage, tender evaluation,

contract management (maintenance) and disposal stages

Low

Low

Med

High

High

Australian Government national waste

recovery policy

The policy describes Australia’s waste management and resource

recovery direction to 2020.

Important to consider at specification stage, tender evaluation,

contract management (maintenance) and disposal stages. See 11

above. May be an issue for audit during contract management phase

High

Probity and ethical behaviour of

suppliers

Adherence to international standards for ethical behaviour in terms of

treatment of workers etc.

Important to consider at specification stage, tender evaluation,

contract management (maintenance) and disposal stages. May be an

issue for audit during contract management phase.

High

Quality management of suppliers Adherence to national and international standards for quality. Important to consider at specification stage, tender evaluation,

contract management (maintenance) and disposal stages. May be an

issue for audit during contract management phase.

High

*Policies listed are examples only. Officers should develop their own jurisdiction-specific policy framework listing.

18


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

5. Conduct stakeholder consultations

In undertaking major cross agency procurement

such as MFD supply, extensive consultation will be

required with current and potential new users. The

need has already been mentioned. The success

and level of achievement of the sustainability

objectives of the procurement are likely to hinge

upon this phase being carried out extremely well

The success and level of

achievement of the

sustainability objectives of the

procurement are likely to

hinge upon this phase

by the procurement project team. Care will need to be taken to ensure that

users are not only understanding of the sustainability objectives of the

procurement but are also willing and able to participate to achieve the

objectives. The Table on the next page summarises the results of

stakeholder consultations and possible issues and actions.

19


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 5: Case Study example of stakeholder consultation analysis for procurement of MFDs*

Stakeholder Role Key Issues Influence/

Impact

Reforms options Likely support Actions

Department X

Major user, large

agency.

Loyal to current incumbent

contractor due to

proficiency of service.

Reluctance to change. Due

to size located in a number

of buildings and over

several floors.

Not savvy in relation to

procurement. Does not

consider sustainability

objectives (green

purchasing) to be of highest

priority for agency.

High has 30% of current

government stock

Supply of data including original data on numbers of machines

etc., data on energy use, consumables expenditure;

maintenance schedules

Aggregated supply of MFDs

Rationalisation of brands/models

Reduction in ratio of MFDs to staff

Central management or centre-led management of contract

Amendments to procedures to limit/reduce paper based

documentation

Low at start

Med

Med

Med

Med

Med

Will need to be convinced of

sustainability business case.

Communicate with a focus on providing

information about alternative options

and government policy initiatives

supported by the options.

Consult fully with various levels of

agency to ensure that needs and usage

are fully understood and articulated for

the specification.

Provide training and information at

different levels regarding the initiative to

garner support from executive level to

officer/ user level.

Include agency representative in

workshops to amend procedures and

working methods to reduce usage,

energy etc.

Department Y Minor user Keen to leverage other

arrangements to limit costs.

Concerned about service

levels.

Low. Very small percentage of

stock

Supply of data including original data on numbers of machines

etc., data on energy use, consumables expenditure;

maintenance schedules

Aggregated supply of MFDs

Rationalisation of brands/models

Reduction in ratio of MFDs to staff

Central management or centre-led management of contract

Med - lacks staff

to collect

High

High

High

High

Communicate with a focus on providing

information about alternative options

and government policy initiatives

supported by the options.

Consult fully with various levels of

agency to ensure that needs and usage

are fully understood and articulated for

the specification.

Provide training and information at

different levels regarding the initiative to

garner support from executive level to

officer/ user level.

Keep agency representative informed

of progress of workshops to amend

procedures and working methods to

reduce usage, energy etc.

Developed from the Queensland Government Chief Procurement Office, Integrating sustainability into the procurement process, Procurement Guidance, November 2009; and Government of Western Australia, Department of Treasury and Finance

Government Procurement, Sustainable Procurement Practice Guidelines, September 2010.

20


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

6. Conduct supplier market analysis

Analysis of the market is the next step. There are a number of market

considerations which will impact on the potential for the procurement to

achieve/leverage sustainability goals, including market concentration,

horizontal and vertical integration, ownership, supply chain complexity,

government as a client, value of the industry to the economy, supplier

maturity in relation to sustainability, level of market regulation, and level of

technological development and innovation. The next table considers these

factors with respect to the procurement of MFDs.

21


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 6: Case Study example of supplier market analysis for Procurement of MFDs

Market considerations MFD market Impact on procurement/leverage potential Application at project phase

Market concentration -

numbers of suppliers

8-12 suppliers. Approximately 5 major suppliers.

Other suppliers concentrate on home and small

business market

Good level of competition

Procurement strategy

Horizontal and vertical

integration

Ownership

Supply chain complexity -

location of manufacture,

distribution network

Government influence on

supplier as a client

Value of industry sector to

economy/state/territory

Supplier maturity in

relation to sustainability

factors

Level of market regulation

Level of technological

development in the market

Manufacturers tend to retail their own product as

well as through local authorized dealers.

Suppliers are generally large global

conglomerates.

Overseas owned with local distributorships.

Generally multi-nationals.

Overseas manufacture (US, Europe and Asia

based). Raw materials sourced worldwide.

Extensive and complex supply chains.

High. Major contract in Australian supply context

for any supplier. Government viewed as attractive

important client.

Good level of competition.

Free Trade Agreement compliance. Local

industry development limited. Contractual

risk.

Supply chain risk. Government reputation

risk.

Should ensure cooperation and enable

negotiation of sustainability elements, good

value for money outcomes.

Procurement strategy stage

Tender and contract formation stage

Tender specifications, contract

management

Procurement strategy, tender

Zero manufacturing. X% retail. Employment x. Local industry development limited. Procurement strategy, tender

Relatively good. Driven by demand. Major

companies have quality management systems;

report on either Corporate Social Responsibility or

on a triple bottom line basis. Some are accredited

by various green purchasing rating agencies.

Likely to have scope or be able to provide options

to achieve government sustainability objectives.

Varies depending upon origin/manufacture. For

example banned substances in manufacturing

processes in US and Europe. However, mostly

voluntary eco-labelling and supply chain audits.

High. Linked to IT industry and changes frequent.

Needs to be tested at tender stage and

monitored and evaluated during contract

management.

Requirement for reassurance (audit) of

supply chain sustainability and green claims.

Consider issues of obsolescence and ability

to require latest standards.

Tender specifications and evaluation

Tender specification and evaluation,

contract management

Tender specification

22


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

7. Conduct sustainability risk/impact analysis

Different procurements have differing levels of capacity to be leveraged or

deliver sustainability outcomes. Much of this depends on the outcomes of

the analysis above but also a specific sustainability impact study. This is

where the particular procurement is considered in the light of the four

(sometimes three where financial and economic are combined) pillars of

sustainability – financial, economic, social and environmental and the

strengths, opportunities and weaknesses of the procurement in terms of

fulfilling the various government policy goals.

The following table utilizes the Australian Standard Risk Assessment

strategy AS/NZS ISO 31000:2009 to allocate a priority rating to the various

sustainability risks and opportunities identified. See Appendix 1 for the Risk

Matrix.

23


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 7: Case Study example of sustainability impact assessment for Procurement of MFDs*

Sustainability area Impact Issues for MFD procurement Likely-hood Ability to influence/

importance for Procurement of

Financial

Economic

Capital cost to government of

procurement. Impact on budget.

Recurrent cost to government of

procurement

Financial viability of the new supplier

firm

Financial viability and capacity of

losers

Switching or churn costs to change

supplier

Impact of consolidation of

procurement to one or fewer suppliers

on the supplier market.

Impact of consolidation of

procurement to one or fewer suppliers

on local employment, small business.

If all stock is turned over in the short term, agencies and Treasury would need to

consider budgets for equipment. However, if progressively turned over at the same rate

as previously, budgets would likely already contain reserves for continuous equipment

refresh. Purchase/lease/service options would impact on this.

See above.

Generally, Budgets will contain amounts for the supply and maintenance of equipment

each year. Equipment such as MFD’s are amortized over 3 years (usually).

Unlikely

Likely

MFDs/ Opportunities

Major contract with ability to drive

costs right across the life of the

product from purchase/lease/service

to disposal.

Major contract with ability to drive

costs right across the life of the

product from purchase/lease/service

to disposal

Potential to default. Unlikely Minor. MFD suppliers are global

companies.

Potential to default. Unlikely Minor. MFD suppliers are global

companies

Likely be a transition period as current machines are retired and new come on stream. Possible Minor. Will impact on contract

Will require transition arrangements

management during transition.

Liquidation or loss of other suppliers. Market concentration/

Unlikely Minor. MFD suppliers are global

distortion.

companies.

Loss of local employment in distribution and/or maintenance Possible Possible. Impact on employment

dependent on size of firms and

other clients.

Priority/

rating

High

High

Low

Low

Low

Low

Medium

Application stage for

project

Business case and

procurement strategy

Business Case and

Procurement Strategy

Tender evaluation

Procurement Strategy

Procurement strategy

Business Case, Procurement

Strategy

Business Case, Procurement

Strategy

Impact of consolidation of

procurement to one or fewer suppliers

on capability of suppliers to meet

demand.

Poor service outcome. Unlikely Minor. MFD suppliers are global

companies

Low

Business Case, Procurement

Strategy

Environmental Carbon emissions of manufacture Complex emissions during manufacturing process. Likely Moderate. Low ability to influence. High Tender specification and

evaluation

Energy use during contract use phase Majority of energy attributed to MFDs is during use. Likely Major. High ability to influence and

mitigate.

Very High

Tender specification,

contract, contract

management phase

Water use during manufacturing Complex water use and wastewater. Likely Moderate. Low ability to influence. High Tender specification and

evaluation

Water during use phase No water use. Unlikely Not applicable. NA NA

Waste during manufacturing. Complex and extensive waste in manufacturing process. Likely Moderate. Low ability to influence. High Tender specification and

evaluation

Waste during use Consumables and packaging Likely Moderate. High ability to mitigate

impact and high ability to influence

Toxic substances/

pollutants in manufacturing process.

Toxic substances/

pollutants in use.

Manufacture of plastics and various metals. Likely Major. Ability to influence through

contract quality assurance

requirements.

Issue for maintenance. Possible Major. High ability to mitigate impact

and high ability to influence through

tender and contract conditions.

High

Very High

High

Tender specification,

contract, contract

management phase

Tender specification,

contract, contract

management phase

Tender specification,

contract, contract

management phase

Natural resource use

Waste on disposal – amount of

material to landfill

Sources of metals could be from countries with unsustainable practices eg. Conflict

minerals in Africa.

Likely

Major. Low ability to mitigate impact,

some ability to influence through

contract conditions.

How much of the machine is recycled and how much ends up in landfill at the end of life Likely Major. Ability to influence through

legislation and contract

requirements

High

High

Tender specification and

evaluation

Tender specification,

evaluation and contract

*Developed from the Queensland Government Chief Procurement Office, Integrating sustainability into the procurement process, Procurement Guidance, November 2009; and Government of Western Australia, Department of Treasury and Finance

Government Procurement, Sustainable Procurement Practice Guidelines, September 2010; and Forum for the Future, Buying a Better World: sustainable public procurement, 2007

24


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 7: Case Study example of sustainability impact assessment for Procurement of MFDs continued

Sustainability

area

Impact Issues for MFD procurement Likelihood

Social Impact on human health of manufacture or use Manufacture of minerals and plastics with various toxic Possible

substances.

Impact of manufacture/distribution on fair Manufacturing in various locations throughout the world Likely

working conditions, fair pay, child labour etc. in including third world.

supply chain.

Employment of disadvantaged in supply chain. Manufacturing in various locations throughout the world Likely

including third world. Distribution and packing centres and

dismantling and disposal/recycling

Policy and

Political

Occupational health and safety in supply chain

Potential to provide leadership and

encouragement to industry and the community

if sustainability benefits are realised.

Manufacturing in various locations throughout the world

including third world using machinery and toxic substances.

Distribution and packing centres and dismantling and

disposal/recycling

The procurement of MFDs, if all KPIs are achieved should

contribute to reductions in government energy use and

carbon emissions.

Likely

Likely

Ability to influence/

Major. Low ability to mitigate impact, but some ability to

influence through contract conditions.

Major. Low ability to mitigate impact, but ability to influence

through contract conditions and requirements to meet

certification standards.

Major. Possible importance at the several stages

depending upon local arrangements. May be influenced by

seeking information at tender stage which can be used in

comparative evaluation.

Major. Possible importance at the several stages

depending upon local arrangements. May be influenced by

seeking information at tender stage which can be used in

comparative evaluation

Moderate. Media attention could be significant depending

upon how it is promoted.

Sustainability

area

High

High

High

High

High

Impact

Tender specification and

evaluation

Tender specification and

evaluation

Tender specification,

contract, contract

management phase

Tender specification,

contract, contract

management phase

Media promotion following

signing and after at least

one year of operation

25


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

The sustainability impact assessment provides guidance to the procurement officer

in relation to inclusions within the requirements/specifications and actions to be

taken during contract management phases. The very high and high risks would be

addressed either by banning supply, audit and/ or reporting requirements. It should

be noted that the above is not a comprehensive risk plan which must be developed

for all procurement projects. Rather, it serves to illustrate some of the sustainability

issues to be considered.

8. Devise procurement (sourcing, evaluation and contract management)

strategy

At this stage a detailed procurement strategy may or may not be required. In this

example, a Cabinet process is required prior to even contemplating a procurement

process. It may be that government will not agree to a whole of government

approach. However, in developing the Cabinet Submission and Business Case for

a whole of government approach it is important to have a broad strategy

developed.

In this case, the research and analysis to date is strongly indicating that a public

tender process for a whole of government approach has the potential to bring

benefits. There is competition in the market and significant potential for innovative

responses. In addition, centralised management of a whole of government contract

would likely have the greatest advantage in managing, reporting and evaluating

the results of the approach. Further in order to ensure cooperation and buy-in by

strategic agency users, the Project Team for the MFD procurement propose a

cross agency evaluation team approach with final approval by the Steering Group.

9. Undertake Budget Business Case approval process

All of the information gathered to date is incorporated into a Cabinet Submission

and Business Case (see Template below) in order to persuade government of the

benefits of the MFD Project Team’s preferred approach, including reduced

numbers (and overall cost), reductions in energy use, reductions in maintenance,

potential reductions in consumables. Only the list of contents of the Business Case

is provided in this Guide.

The analysis above would be incorporated into the Business Case together with

other jurisdictional specific analysis

26


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

10. Develop detailed procurement plan and seek approval

In this Case Study, following submission of the Cabinet Submission and Business

Case the government agreed to the MFD whole of government procurement and

requires annual reporting of results.

In many Australian jurisdictions the separate Procurement Approval Process now

begins with a detailed Procurement Plan developed and assessed by approving

authorities.

This stage may require the submission of a draft Tender Document, Draft

Contract, Draft Evaluation Plan, Draft Probity Plan, Comprehensive Risk Plan and

Draft Contract Management Plan for approval by a Delegate.

In keeping with Project Management Principles ensure that all of the action

requirements arising from the procurement planning phase (Tables 1-7) are

collated into a single table and monitored to ensure that they are completed at the

appropriate time. An example could be as below:

Sample Compilation of Actions

Arising from Sustainable

Procurement Analysis Timing Responsibility Progress

Actions

Table 5

Reduction in ratio of MFDs to staff -

consultation with Agency

Table 6

Supply chain complexity - location of

manufacture, distribution network -

Tender specifications, contract

management

Table 7

Recurrent cost to government of

procurement - Include in Business Case

and Procurement Strategy

Financial viability of the new supplier

firm - Tender evaluation

Nov-12

Jun-13

Jun-13

Jan-13 and

June-13

A Apple

B Bloggs and J

Smith

Consultation

Complete, Business

Case 100% agreed.

Requirement to be

included in Tender

Tender Specifications

50% - Contract

Management 0%

B Bloggs Business Case 100%

Complete -

Procurement Strategy

underway 50%

Jan-14 B Bloggs 0%

27


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

The development of the Statement of Requirements and Evaluation Criteria is

discussed in the next section although it could appropriately fall here depending

upon jurisdiction specific administrative arrangements.

Phase 2: Supplier Engagement

Supplier Engagement Stage/Sourcing Steps

2

1. Develop and release tender specification with sustainability elements and

requirements as agreed under procurement process (open, select, other tender process)

2. Evaluate offers using sustainability assessment criteria which tests match up to

specification/statement of requirements

3. Conduct verification and audit processes

4. Develop and execute contract with sustainability performance criteria

References for this section:

Australasian Procurement and Construction Council, Assessing a Supplier’s Sustainability Credentials, undated,

Canberra, ACT.

Australasian Procurement and Construction Council, Sustainable Procurement Product Guide, Business

Machines, May, 2010, Canberra, ACT. [This guide is a reproduction of the QCGPO Sustainable Product Guide

Business Machines, Available Online at: www.qgm.qld.gov.au

New Zealand Government, State Services Commission and The Treasury, Performance Measurement, Advice

and examples on how to develop effective frameworks, August 2008.

New Zealand Government, 2010. Guide 4 to Sustainable Procurement, Define specifications and invite tenders, A

guide for agencies, Wellington, July 2010.

New Zealand Government, 2010. Guide 3 to Sustainable Procurement, Evaluate and Select Suppliers, A guide

for agencies, Wellington, July 2010.

Wilkinson, A and Kirkup, B., 2009. Measurement of Sustainable Procurement, for the East Midlands Development

Agency, September, 2009.

Augustine, A. D., Saptharishi, A., and Moffat, A. undated. Supplier Self-Assessment Questionnaire (SAQ):

Building the Foundation for Sustainable Supply Chains, Ceres, California.

28


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

1. Develop and release tender specification with sustainability elements

The Guides and References listed above contain valuable information. This section

should be read in conjunction with them. Based on the analysis in the first Planning

Stage, sustainability criteria should be incorporated into:

the Tender Documents including Statement of requirements as part of

performance and corporate requirements; and

the Mandatory and Assessable Evaluation Criteria.

However, before you get to this point, consider the title of the procurement. By

labelling the procurement as a ‘sustainable’ procurement, you indicate clearly

upfront to potential respondents that you are seeking sustainable outcomes.

The user/demand data and baseline carbon emissions and energy usage data

would form the starting point and line in the sand which you want respondents to

improve upon. This would be prominently published in the tender documents and

form the benchmark for evaluation of offers and future contract management

performance data. Prospective Tenderers should be made fully aware that it is the

Government’s aim to significantly improve on the current situation in terms of

numbers, energy use, emissions etc. and will be closely monitoring progress.

29


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 8: Listing of possible sustainability criteria/specifications to include in Statements of Requirements for MFD supply

Requirements Sustainability area Inclusion in Statement of Requirements

Product

Performance

(See APCC

Sustainable

Procurement

Product Guide,

Business Machines,

May 2010)

Economic/financial

Customer satisfaction policy

Average life of consumables

Local employment numbers

Frequency of scheduled maintenance

Average life of product/warranty period

Energy use by machine per day, per annum in use and standby. Total estimated energy use for all machines per day and per annum.

Estimated Carbon emissions per machine per day and per annum. Total estimated carbon emissions for all machines per day per annum. Compliance with

Greenhouse and Energy Minimum Standards (GEMS).

Reduction in numbers of machines where there is downsizing with corresponding reduction in payment

Innovative value adds in terms of economic/financial sustainability e.g. payment methodologies, billing, service call arrangements.

Environmental

Percentage of product which is recyclable

Estimated carbon emissions over lifecycle of product

Management of toxic chemicals during manufacture and use or EPEAT equivalent

Efforts to minimise transport miles over the supply chain or mitigate impact of transport on carbon emissions.

Recycled content of product

Initiatives to reduce packaging. Compliance with Packaging Covenant. All packaging to be recyclable and recycled by supplier.

Environmental sustainability policy and reporting to shareholders and public

Level of noise emissions – commitment to low noise emissions. Compliance with ISO 7779 measurement of noise and declaration under ISO 9296 with the

declared operating modes.

Participation in Australian Government National Television and Computer Recycling Scheme

Indoor air emissions compliance with Good environmental Choice Australia eco-label or equivalent.

Provision of reporting (monthly, quarterly, annually) usage data, including: energy use per machine/per annum; volume of recycled disposed machines;

estimated carbon emissions; volume of recycled packaging; numbers/frequency of scheduled and unscheduled maintenance; use of consumables; recycling of

consumables; service complaints.

30


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Table 8: Listing of possible sustainability criteria/Specifications to include in Statements of Requirements for MFD supply continued

Requirements Sustainability area Inclusion in Statement of Requirements

Environmental cont...

CSR Policy and certification under SA 8000 Social Accountability Standard and/ or AS 8003:2003 Corporate Social Responsibility

Corporate Social

Responsibility

(CSR)

requirements

Social

Innovative approach or value add in terms of meeting product environmental sustainability objectives

Employment and worker conditions policies e.g. average working hours, pay and conditions.

Community engagement programs

Occupational health and safety incidences of noncompliance with regulations and voluntary codes

Worker conditions incidences of noncompliance with regulations and voluntary codes

Employment of disadvantaged persons policy and numbers

Innovative value add in terms of social sustainability

Economic/Environment

al/Social

Extent of audit of supply chain or influence over supply chain

Certification under ISO 28002:2011 Supply Chain Security

Frequency of audit of supply chain

Qualifications of supply chain auditors and contact details

Financial capability assessment.

Participation in other certification schemes - other product performance labelling (other than Energy Star)

Significant fines or non-compliance with laws and regulations concerning provision, manufacture or use of products.

Monthly, quarterly/annual meetings with client contract managers to discuss contract and corporation performance in terms of sustainability and service.

Other innovative value adds.

31


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Sustainable Procurement Evaluation Criteria (in addition to other functional,

technical, performance and financial criteria) fall into three categories:

mandatory, assessable and financial. Below are listed some of the sustainability

evaluation criteria for the MFD Case Study which could fall into these categories

as part of the Tender Evaluation Plan. It should be noted that Mandatory Criteria

may limit the number of possible tender responses, so these should be devised

carefully. Some of the items listed below could be transferred to the Assessable

Section to mitigate this possibility. This depends on the strength of commitment

and purpose in relation to seeking sustainability outcomes. In addition, complex

statements of requirements tend to stifle innovative responses so this should

also be kept in mind.

In addition to setting the criteria (mandatory and assessable) it is important to set

weightings for the criteria in terms of relative importance to the procurement and

to government goals and objectives. It may be that a 50% weighting is applied to

Sustainability Criteria and 50% to Technical/Functional Criteria (assuming price

is not weighted). This is a matter for the jurisdiction. In order that the

Sustainability Criteria does not drive an outcome where the technical/functional

user requirements are not met, it is important that minimum standards are set in

the Statement of Requirements and that these are tested by trial or evidenced as

appropriate.

There are arguments for and against declaring evaluation weightings in tenders,

however, with respect to a sustainable procurement, declaration of the

sustainability criteria would send a clear message about the importance of these

to government and provide appropriate leadership.

SAMPLE TENDER EVALUATION CRITERIA FOR MFD SUPPLY

1. Mandatory Criteria

Economic/Financial

ISO 9001 Quality Assurance Certification [supply of current certificate]

ISO 310000:2009 Risk management [supply of evidence]

Good financial viability/capability assessment [as per jurisdiction’s Financial

Assessment Policy]

2-3 Site Visits (head office, distribution point, manufacturing facility) [supply of

schedule agreeing to visits signed by authorised company personnel]

32


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Social

ISO 26000:2012 Social Responsibility [supply of evidence]

No supply of ‘Conflict Minerals’ [supply of evidence or argument/reference]

Environmental

ISO 14000 Environmental Management [supply of evidence]

Energy Star Certification [supply of evidence/certification]

Participation in Australian Government National Television and Computer

Recycling Scheme [evidence]

Australian Government National Packaging Covenant compliance/participation

with 100% packaging recycled [evidence]

Governance, Management and Reporting

Conduct of supply chain audit processes [supply of evidence]

Agreement to participation of client in supply chain audit and provision of

result information [supply of schedule signed by authorised company

personnel]

Agreement to provide monthly/quarterly reports, data and performance

information on products i.e. energy use, consumables, maintenance [supply of

schedule signed by authorised company personnel].

Agreement to participation in monthly/quarterly contract management

sessions with client and stakeholders [supply of schedule signed by

authorised company personnel].

Agreement to partnering to drive sustainability objectives and innovation

[supply of schedule signed by authorised company personnel].

33


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Technical/Functional Performance [not covered here]

This is the technical non-sustainability elements of MFD performance e.g. speed

and capacity which is not covered here. There may be some overlap with the

sustainability criteria but minimum standards must be met.

2. Assessable Criteria

Economic/Financial

Product performance

Financial Sustainability innovation value add

Corporate Social Responsibility

Corporate governance and management performance

Social responsibility performance

Corporate and Social Sustainability innovation value add

Environmental

Supply chain audit results

Corporate Environmental initiatives and performance

Sustainability Innovative value add

Onsite Evaluation/Presentation of tenderer

The Respondents should be required to host a site visit and presentation

program for the Tender Evaluation Team.

Technical/Functional Performance [not covered here]

This is the technical non-sustainability elements of MFD performance e.g. speed

and capacity which is not covered here. There may be some overlap with the

sustainability criteria but minimum standards must be met.

34


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

2. Evaluate offers using sustainability assessment criteria

One of the key issues with the evaluation of whole of government procurements

is managing complexity and making like for like comparisons. The best way to

manage this is to provide Returnable Schedules which the criteria listed so that

each respondent is required to fill in the same information. Some of the

Schedules can be presented as questions.

The tender evaluation methodology and weighting of the sustainability criteria will

have already been approved by government (with an explanation of the

implication of the weighting strategy) as part of the Procurement approval

process and perhaps in the Budget Business Case. Traditionally a Pass/Fail

methodology is used to determine compliance with Mandatory Criteria. This

means that failure in any criteria means that the Tenderer is then not further

evaluated.

With respect to Assessable Criteria a number of evaluation methods can be used

but usually a numeric rating scale is applied. A scale of one to ten is the most

common but other methods are applied. Various methods are then used to link

pricing with the subjective Assessable Criteria. Each jurisdiction is different and

the appropriate approved method should be applied. In this MFD Case study

example, a rating scale of 0 to 10 is used for illustration purposes with 0

representing Extremely Poor or Information Not supplied through to 5 which

represents Barely Acceptable Minimum Information Provided up to 10 which

represents Excellence Best Practice Industry Leader.

In a procurement of the magnitude of the MFD Case Study, separation of

Financial and Non- financial criteria in a two envelope method is also advisable.

The lowest price will not necessarily be the best value. Nevertheless a cost

benefit analysis of the alternative price/financial offers/options is advisable as an

indicator of optional value, noting that not all benefits and costs will be able to be

valued. Options to purchase or lease certainly should be evaluated using an

approved financial assessment method such as cost-benefit analysis.

35


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

3. Conduct verification and audit processes

It will also be important for the Tender Evaluation Team to evaluate and verify as

far as possible the claims which respondents make particularly in relation to

sustainability credentials. This can be achieved best by various methods such as

site visitation, checking with auditors and independent verifiers and presentations

by the respondents of machine capability etc.

It is particularly important to verify any claims of holding certification or conduct of

audit processes. In this regard all certifiers and all auditors should be contacted.

It would also be advisable to accompany any of these certifiers and auditors as

they conduct their assessments at least once during the course of the contract.

There is concern that certification and audit practices are not always bona fide or

best practice. The only way to verify this is to research them and to check their

process first hand.

In practice, each tender offer would be separately evaluated and a

comprehensive report produced by the Tender Evaluation Team. The information

in each report would be collated into summary tables in order for evaluation

comparisons. Schedules 3 and 4 below provide a limited example of some of the

assessment and verification processes for the MFD Case Study.

For the purposes of the MFD Case Study, the analysis of the Mandatory Criteria

Responses using a Pass/Fail methodology reveals that only Offer A and B go

through to the next stage. C and D fail (see Schedule 3).

Schedule 4 provides an example of the type of summary of the detailed analysis

of the Assessable Sustainability Criteria which might be produced by the Tender

Evaluation Team. It demonstrates that there is one clear leader in this case –

Tenderer A. Tenderer A has demonstrated a strong commitment to

Sustainability principles and provided superior offers in relation to the functional

aspects (not covered here) and a competitive pricing regime (not covered here).

A has also offered a number of value adds and these need to be incorporated

into the contractual arrangement.

36


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

4. Develop and execute contract with sustainability performance criteria

For ease of reference for the contract manager, the sustainability measures

should be separated from other requirements under the contract and grouped

together in the Schedules.

For example, a Schedule X Special Conditions of the contract for MFD supply

could contain all elements relating to sustainability under a heading Sustainability

Requirements as illustrated on the next page.

37


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

SCHEDULE X SPECIAL CONDITIONS Sample contract requirements

Sustainability requirements of the contractor

Item 1: ‘Quality and Management Assurance’

(1) The Contractor must:

(a) implement and maintain a quality, risk and environmental management systems for the

manufacture and supply of MFD’s (“Quality System”) which:

(i) is listed on the Joint Accreditation System of Australia & New Zealand (JAS-

ANZ) register as having current third party certification in accordance with the latest

edition, as amended, of AS/NZS ISO 9001 and ISO 310000:2009 Risk management

and ISO 14000 Environmental Management; or

(ii) has been assessed as suitable or equivalent; and

(b) provide the Principal with access at all times to the Contractor’s and each of the

Subcontractor’s Quality and Management Systems to enable monitoring and quality auditing.

(2) The implementation of Quality Systems will not relieve the Contractor of its

obligations under the Contract.

(3) Specific quality requirements are included in the Specification. The Quality

System requirements of the Technical Specification will take precedence over the

requirements of this Part X - Quality and Management Assurance.’

Item 2: Recycling and Waste Management

(1) The Contractor must:

(a) recycle all packaging material in an approved manner;

(b) recycle all machines in accordance with the Australian Government National

Television and Computer Recycling Scheme;

(c) maximize the recycling of consumable materials such as toners; and

(d) if required, store any material to be recycled on Site or other approved location to

facilitate efficient handling of the material;

(e) Report to the Principal on the level and volume of recycling of materials in

accordance with the reporting requirements.

(f) Report to the Principal on the level and volume of materials which are relegated to

landfill.

Item 3: Supply Chain Audit

(1) The Contractor must:

(a) conduct a supply chain audit of the goods supplied under the contract by an

independent auditor within 18 months and 36 months at least of the commencement of

the contract respectively;

(b) give the Principal 30 days’ notice of the audit and permit a Principal’s representative

to participate in the audit;

(c) provide the Principal with a copy of the Audit Results within 30 days of completion.

38


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Phase 3: Supply, Use, Maintain, Contract Management

Phase 3: Supply, Use, Maintain

3

1. For goods and services, administer contract for supply

2. For works, construction stage /administer related contracts

3. Conduct audits, assurance of meeting sustainability performance requirements

4. Analyse contractor and supply reports to ensure meeting sustainability requirements

5. Manage non-compliance/under-performance

6. Manage demand/consumption of goods and services according to sustainability

criteria

7. Other data collection, analysis and reporting.

References for this section

Australian/New Zealand Standard, Environmental management – Life cycle

assessment- Principles and Framework, AS/NZS ISO 14040:1998.

Government of South Australia, State Procurement Board, 2008. Life Cycle Costing

Guideline, November 2008.

New Zealand Government, 2010. Guide 6 to Sustainable Procurement, Audit and

Improve Supplier, A guide for agencies, Wellington, July 2010.

New Zealand Government, 2010. Guide 7 to Sustainable Procurement, Manage the

contract and disposal route, A guide for agencies, Wellington, July 2010.

39


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

1 and 2 Administer contract

This is usually the longest phase of the project, and may be up to 7 years (or

longer) depending upon contract timeframes and extensions. The Contract

Manager may change during this time. It is important to establish clear contract

management frameworks which can be handed over to new personnel.

An outline of the contract management plan will have been provided at the

Business Case Stage and the Procurement Plan or Strategy approval stage.

However, prior to commencement of the contract it is important to flesh out the

plan with the details of the deliverables, requirements, key performance

indicators, timing etc. as written into the contract. This would appropriately be

done using project management methodology.

The Contract Manager will be in charge of the following contract administration

tasks which impact on sustainability goals:

1. Maintaining a record of the contract (including any variations);

2. Devising and maintaining a record of the

obligations/deliverables/requirements of the contractor eg. Quality

Assurance AS/NZS ISO 9001 maintenance. This would involve seeking

copies of updated audits as they happen;

3. Receiving and sending correspondence about the contract including

monthly/quarterly/annual reports from the contractor;

4. Convening monthly/quarterly/annual contract management meetings with

the contractor’s representatives and preparing minutes;

5. Analysing the data and information provided by the contractor to assess the

performance of the contract, including lifecycle costing analysis;

6. Liaising with stakeholders on the performance of the contract;

7. Managing the performance of the contractor through feedback on

customer/stakeholder satisfaction and/or implementing performance

improvement;

8. Preparing reports to senior officials/government on the performance of the

contract;

40


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

9. Reporting to senior officials/government on any risks arising during the

performance of the contract;

10. Scheduling and attending site visit audits of the contractor’s

premises/manufacturing and distribution centres (one to two times during

the course of the contract);

11. Managing the transition phase of the contract both at the beginning and the

planning for the new; and

12. Managing the partnering aspect of the contract. This should involve both

celebration of innovation and improvements through e.g. joint press

releases from government and open and full disclosure and communication

on both sides, including at times when issues occur.

Tenderer A who is the successful Tenderer in this case has offered a number of

value adds as part of the Tender. Capture of these value adds should be

incorporated into the contract management plan and progress on their realization

monitored and reported.

In the MFD Case Study, regular monthly/quarterly meetings and reporting is

required. An important aspect of this Case Study is the regular monitoring of the

achievement of sustainability goals – decreases in energy usage per month/per

quarter; decreases in emissions; savings in relation to maintenance due to

rationalisation of models and reductions in overall numbers. The contractor’s

performance overall, including sustainability achievements should be a shared

responsibility that is the Principal and the contractor working together to achieve

the goals – the Principal on the demand side and the contractor on the supply

side. The regular meetings should include as part of the agenda, a performance

report which takes account of both parties’ achievements under the contract. On

the Principal’s side would be billing and payment, nuisance call-outs, and

information flows and on the Contractor side would be customer satisfaction,

41


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

3. Conduct audits

In addition, the contract requires that the Principal be permitted to accompany

the Supply Chain Auditor during audit processes as specific times during the life

of the contract. This should be at the discretion of the Principal following

appropriate notice (14 to 30 days say) because it would involve cost on both

sides, however, it should not be avoided because of cost as this is a

considerable stick to performance by the contractor and would also reveal

information to contract managers making them better informed about the supply

chain for this procurement.

Under the MFD Case Study a supply chain audit is to be carried out within 18

months and 36 months of the commencement of the contract. The Contract

Manager would write to the Contractor advising of the upcoming requirement to

audit and seek information about the timing and scope of the audit. The

Principal’s representative (Contract Manager) would then involve themselves in

whatever aspects of the audit provides sufficient information and assurance of

compliance with the Contractor’s claims at Tender stage.

4. Analyse contractor and supply reports

A significant part of the management of the contract will be in analysing

sustainability data provided by the Contractor and comparing it to the baseline

captured in the Planning Phase. At the minimum, data on energy use, estimated

carbon emissions, consumables usage, regular and irregular maintenance

should be monitored and reported to ensure that the Business Case goals

(reductions in cost, emissions, energy) are being realised. Under this Case

scenario, the Government has asked that the progress of the contract be

reported to it at regular intervals.

In the Case Study, the Government decides to downsize or consolidate functions

into fewer buildings. The contract manager takes advantage of the Contractor’s

agreement to take back equipment and charge less in the future. It will also be

important to monitor and manage agency clients to ensure there is no outside

contract buying which would diminish the sustainability objectives of this

procurement. In the MFD Case Agency A buys some standalone printers

because staff are complaining about having to walk so far to the printer room. In

this case, Agency senior management and staff should be informed about the

consequences of such actions and the energy and emissions costs of these

machines. Staff should also be trained in the importance of physical movement

away from workstations in terms of occupational health and safety. Continued

42


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

outside contract buying should be reported to senior management and

government in order to discourage this activity.

5. Manage non compliance

As with all government contracts there should be financial and non-financial

incentives for contractors to achieve the objectives of the contract. Major noncompliance

could be dealt with through breach of contract, financial penalties

and or cancellation.

Major non-compliance with respect to sustainability principles could be:

Failure to meet energy and emissions as per rating systems claimed in tender;

Failure in terms of employment and conditions for workers such as child

labour, extremely low wages;

Major toxic substances found in machines; and

Major corruption found in the company.

Under the MFD Case Study, during the supply chain audit a parts manufacturer

is discovered to be underpaying workers. The Company steps in and demands

rectification or it will take its business elsewhere. Under this scenario, there

would be no action against the head company.

6 Manage demand and Consumption

One of the key principles of sustainability is to limit consumption. By not over

buying (having stock in warehouses or storage and potentially deteriorating) or

by utilising machines and materials for longer periods, resources are saved.

Under the MFD Case Study, one of the tasks of the Contract Manager would be

to monitor demand not only for the MFD units against the contract (it is likely that

government bodies will be buying off the contract without knowledge of the

original estimate of supply) but also other associated products such as

consumables and levels of maintenance required. Where an agency begins to

exceed the level of MFD supply originally estimated, this should be investigated.

There may be several causes: laxity in saving and sustainable consumption;

growth of the agency and therefore associated requirement; poor training of

users resulting in breakdowns and maintenance call outs; inappropriate location

of MFDs to maximise efficiency.

43


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Many of these causes can be mitigated by action on the part of the Contract

Manager – additional training, consultation and suggestions on better locations

and refresher training on sustainability principles and objectives.

7. Other data collection, analysis and reporting

In addition to monitoring the contract, the Contract Manager should remain up to

date on developments in rating and other sustainability tools. There are

significant developments worldwide in relation to supply chain assurance, energy

and emissions rating scales; recycling of materials; technical and scientific

advances and other sustainability issues that it is likely that the Contract

Manager will want to incorporate many of these into the next contract. The

Reference Guide accompanying this Practice Note contains some of the many

sources of information.

44


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Phase 4: Dispose, replace, assess ongoing need

Phase 4: Dispose, replace, refurbish, demolish, sell

4

1. Review and assess contract performance overall and in terms of sustainability

requirements

2. Review and assess ongoing need/demand/changes in requirement

3. Review and assess data and sustainability policies/goals and requirements

4. Examine changes in technology or function which might impact on future

supply and demand

References

New Zealand Government, 2010. Guide 7 to Sustainable Procurement, Manage the

contract and disposal route, A guide for agencies, Wellington, July 2010.

For this MFD Case Study, disposal is ongoing with the life of the equipment over

the contract. Under the Australian Government National Television and

Computer Recycling Scheme, the disposal phase has been made easy and

sustainability objectives are maximised under this regulation. Suppliers of

computer and associated equipment are now required to take back and recycle

their equipment. Although the Australian Government will be auditing the

scheme, it would be prudent for the Contract Manager to audit the specific

disposal of the equipment, packaging and consumables waste under the MFD

contract in their jurisdiction. This would provide assurance that the conditions of

the contract are being met.

Following the life of the contract, the cycle begins again with analysis of the

demand/use data obtained during the course of this and previous contracts and

other planning activities.

45


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

1. Review and assess contract performance

Prior to the end of the contract life a collation of the contract performance data

should be made and analysed. Ideally the contractor should be party to the

performance information which as noted earlier is a shared responsibility.

2. Review and assess ongoing need/demand/changes in requirement

Over the life of the contract many changes will have occurred in the

requirements of the users of the MFD service. Prior to the cessation of the

contract these changes need to be captured and analysed for the next

contract. Table 3 in Phase 1 would be reinvigorated.

3. Review and assess data and sustainability policies and goals

The government’s policies and sustainability goals will change considerably

over the life of the contract. Table 4 of Phase 1 would be updated.

4. Examine changes in technology function which impact

supply/demand

For example, under the MFD Case Study new improved ratings and standards

will have developed over the contract period due to technological

advancement.

46


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

References

Augustine, A. D., Saptharishi, A., and Moffat, A. undated. Supplier Self-Assessment Questionnaire (SAQ):

Building the Foundation for Sustainable Supply Chains, Ceres, California.

Australian Procurement and Construction Council, Australian and New Zealand Government Framework for

Sustainable Procurement, 14 September 2007, Deakin, Canberra, ACT.

Australasian Procurement and Construction Council, Assessing a Supplier’s Sustainability Credentials,

undated, Canberra, ACT.

Australasian Procurement and Construction Council, Sustainable Procurement Product Guide, Business

Machines, May, 2010, Canberra, ACT. [This Guide is a reproduction of the QCGPO Sustainable Product

Guide Business Machines, Available Online at: www.qgm.qld.gov.au

Australian/New Zealand Standard, Environmental management – Life cycle assessment- Principles and

Framework, AS/NZS ISO 14040:1998.

British Standards Institution, undated, The Quick Guide to BS 8903 for Procuring Sustainably.

Bruel, O., Menuet, O., Thaler, P-F., undated. Sustainable Procurement: a crucial lever to end the crisis?

Whitepaper based on the HEC 2009 Sustainable Procurement Benchmark and 21 interviews with

Procurement Directors.

Department for the Environment, Food and Rural Affairs, United Kingdom Government Report, 2006,

Procuring the Future. Sustainable Procurement National Action Plan: Recommendations from the

Sustainable Procurement Task Force.

European Commission, 2004. Buying green! A handbook on environmental public procurement,

Luxembourg.

Forum for the future, 2007. Buying a Better World: sustainable public procurement, London.

Goodland, R. 1995. The Concept of Environmental Sustainability, in, Annual Review of Ecology and

Systematics, Vol. 26, 1995, p.1-24.

Government of South Australia, State Procurement Board, 2008. Life Cycle Costing Guideline, November

2008.

Government of South Australia, State Procurement Board, 2010. Sustainable Procurement Guideline,

August 2010.

Government of Western Australia, Department of Finance, Government Procurement, 2011, Sustainable

Procurement Practice Guidelines, July 2011.

Ministry of Economic Development, New Zealand, 2008. Sustainable Government Procurement Project

Category Reviews, Standards, guidelines and targets for core Public Service Departments, First revision

August 2008.

New Zealand Government July 2010. Guide to Sustainable Procurement, Identify Needs and Assess Risk,

A guide for agencies, Ministry of Economic Development, Wellington, July 2010.

47


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

References Continued

New Zealand Government, 2010. Guide 3 to Sustainable Procurement, Evaluate and

Select Suppliers, A guide for agencies, Wellington, July 2010.

New Zealand Government, 2010. Guide 4 to Sustainable Procurement, Define

specifications and invite tenders, A guide for agencies, Wellington, July 2010.

New Zealand Government, 2010. Guide 6 to Sustainable Procurement, Audit and

Improve Supplier, A guide for agencies, Wellington, July 2010.

New Zealand Government, 2010. Guide 7 to Sustainable Procurement, Manage the

contract and disposal route, A guide for agencies, Wellington, July 2010.

New Zealand Government, August 2012. Better Business Cases, “Investing for change”,

Overview 2012.

New Zealand Government, State Services Commission and The Treasury, Performance

Measurement, Advice and examples on how to develop effective frameworks, August

2008.

Queensland Government Chief Procurement Office, 2009. Procurement Guidance,

Integrating sustainability into the procurement process, Queensland Government

Department of Public Works, November, 2009.

Salamon, L. M., ed., 2002. The Tools of Government, a guide to the New Governance,

Oxford University Press, Oxford.

United Nations Environment Programme, Buying for a Better World, A Guide on

Sustainable procurement for the UN System.

Victoria, State Government, 2011. Good Practice Guidelines, Environmental

Procurement, Strategy and Policy, Government Services Group, Department of

Treasury and Finance, July 2011.

Victoria, State Government, State Purchase Contract Business Case Template, June

2009.

Wilkinson, A and Kirkup, B., 2009. Measurement of Sustainable Procurement, for the

East Midlands Development Agency, September, 2009.

World Economic Forum and Deloitte Touche Tohmatsu, 2009. Sustainability for

Tomorrow’s Consumer, The Business Case for Sustainability, Geneva, January, 2009.

48


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Appendix 1: The definition of Sustainable Procurement

The definition of sustainable procurement is not settled. Whilst there is

agreement that the definition of sustainability and sustainable development

(‘development that meets the needs of the present without compromising the

ability of future generations to meet their own needs’) emanated from the

Brundtland Report (‘Our Common Future’, World Commission on Environment

and Development, Chapter 2, 1987), sustainable procurement is a relatively

more recent concept.

The Brundtland Report outlined the linkages between physical resources, social

equity and economic progress and development, noting:

In essence, sustainable development is a process of change in which the exploitation of

resources, the direction of investments, the orientation of technological development;

and institutional change are all in harmony and enhance both current and future

potential to meet human needs and aspirations.

(World Commission on Environment and Development, Chapter 2)

This not only provided a direction for the broad consideration of sustainability but

also assistance with the process of coming to grips with sustainable procurement

and its impact on the exploitation of resources and direction of investment. For

government, this is necessarily an investment of public money in capital

equipment and consumables for the consumption of government and the

community for the betterment of society.

Sustainable procurement was defined in the United Kingdom Government Report

“Procuring the Future” (2006) as:

…a process whereby organisations meet their needs for goods, works and utilities in a

way that achieves value for money on a whole life basis in terms of generating benefits

not only to the organisation, but also to society and the economy, whilst minimising

damage to the environment.

(Sustainable Procurement Task Force, 2006, p.10)

The APCC noted in 2007 that ‘Sustainable procurement considers products and

suppliers. This includes issues such as: resource extraction and consumption;

manufacturing and production; transport and logistics; product and asset design;

use and maintenance; recycling and disposal options; employee rights and

conditions, corruption, unfair competition and ethical behaviour’ (APCC, 2007,

p.5).

49


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

The 2007 APCC report also noted that sustainable procurement means ‘that

when buying goods and services organisations practicing sustainable

procurement will consider: strategies to avoid unnecessary consumption and

manage demand; minimising environmental impacts of the goods and services

over the whole of life of the goods and services; suppliers’ socially responsible

practices including compliance with legislative obligations to employees; and

value for money over the whole-of-life of the goods and services, rather than just

initial cost’ (APCC, 2007, p.5).

In 2009, the World Economic Forum described sustainability as:

… the capacity to maintain a certain process or state indefinitely. In an ecological

context, sustainability is defined as the ability of an ecosystem to maintain ecological

processes, functions, biodiversity and productivity into the future. In a social context,

sustainability is expressed as not compromising the ability of future generations to meet

their own needs. When applied in an economic context, a business is sustainable if it

has adapted its practices for the use of renewable resources and is accountable for the

environmental impacts of its activities.

(World Economic Forum, 2009, p.35-36)

The British Standards Institution (BSI) describes the aims of sustainable

procurement as:

minimising any negative impacts of goods, works or services across their life cycle and

through the supply chain (e.g. impacts on health or air quality);

ensuring that fair contract prices and terms are applied and respected and that minimum

ethical, human rights and employment standards are met;

providing opportunities for small and medium sized businesses, voluntary sector organisations

and also supporting jobs, diversity, training and skills development; and


minimising demand for resources (e.g. by reducing purchases).

(The British Standards Institution, undated, p.1)

50


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

In their guide to BS 8093, BSI proposes that the principles of sustainable

procurement include:

A sound approach based on ‘fairness, openness and transparency, non-discrimination and

competition’;

An ethical approach based on methods to ‘ensure integrity, encourage diversity and avoid

corruption’;

A holistic approach where considerations of the impacts of procurement decisions include the

‘quality of life, environment and society in general’; and


A risk/opportunity approach adopting strategies of ‘continual improvement’.

(The British Standards Institution, undated, p.2)

These principles align fairly closely with the APCC principles outlined in page 4.

Together they provide a framework for procurement planning and implementation

as outlined in the diagram below from the BSI. However, the basic principles and

objectives of all procurement should be added to complete the list:

Obtain value for money;

Deliver products/services which are fit for purpose or meet the need;

Deliver the products/services on budget; and

Deliver the products/services on time.

51


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Figure: Sustainable Procurement Lifestyle

(Source: The British Standards Institution, undated, p.6)

Procurement practitioners and academics tend to separate the considerations of

environmental, economic and social sustainability, including with respect to

procurement (see Strategy and Policy, Government Services Group, Department

of Treasury and Finance, State Government Victoria, Good Practice Guidelines,

Environmental Procurement, July 2011).

52


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Robert Goodland (1995) defined economic sustainability as focused on:

… that potion of the natural resource base that provides physical inputs, both renewable

(e.g. forests) and exhaustible (e.g. minerals) into the production process. … economics

values things in money terms, and is having major problems valuing natural capital,

intangible, intergenerational, and especially common access resources, such as air.

Hicks’ definition of income – “the amount one can consume during a period and still be as

well off at the end of the period” – can define economic sustainability, as it devolves on

consuming interest, rather than capital.

(Goodland, 1995, p.2-3)

He went on to say that environmental sustainability

adds consideration of physical inputs into production, emphasizing environmental

life-support systems without which neither production nor humanity could exist. …

Continuous depletion or damage by human activities to irreplaceable and

substitutable environmental services would be incompatible with sustainability

(Goodland, 1995, p.2).

Goodland (1995) also noted that social sustainability was dependent upon

environmental sustainability and that social sustainability is only:

Achieved … by systematic community participation and strong civil society…cohesion of

community, cultural identity, diversity, sodality, comity, tolerance, humility, compassion,

patience, forbearance, fellowship, fraternity, institutions, love, pluralism, commonly

accepted standards of honesty, laws, discipline etc. constitute the part of social capital

(Goodland, 1995, p.3)

Goodland (1995) observed that the ‘paths needed by each nation to approach

sustainability will not be the same’ (Goodland, 1995, p.11). Indeed, he noted that

not only different countries need to approach sustainability differently due to

different resource endowment and resource policy issues but regions within

countries might need to concentrate on certain sustainability issues (such as land

or water pollution; or deforestation and salinity; destruction of fisheries; reduction

of urban and industrial waste; or air pollution) than others.

The separation of sustainability into social, economic, financial and

environmental concepts is important to government procurement practitioners

because procurement is a tool of government policy action (Salamon 2002). All

government jurisdictions have numerous and different policy goals which impact

53


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

on sustainability. In Australia this is somewhat further complicated by the federal

system of government whereby there is overarching Australian Government

policy objectives (e.g. free trade agreements, greenhouse gas emission targets,

prices on carbon) and state and territory policy (e.g. local industry development,

waste reduction targets and emissions targets).

This means that government procurement professionals need to consider not

only how to address the sustainability policies of their incumbent governments

but also the context of the impacts of the procurement on sustainability in the

wider community and regionally. For most of us this has been and continues to

be extremely difficult.

The Forum for the Future’s report ‘Buying a Better World’ (2007) provides a

diagrammatical representation of the complexity of some of the sustainability

objectives placed upon procurement. It demonstrates the interconnectedness of

these objectives and in particular the relationship between the economy, the

society and the environment.

Figure: Complexity of Sustainability Objectives for Procurement

(Source: Forum for the future, action for a sustainable world, buying a better world: sustainable public procurement,

London, 2007.)

54


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Goodland (1995) urged that despite the difficulties and the lack of scientific

information and guidance to implement sustainability policies, we should all

observe the precautionary principle and that in addressing environmental

sustainability we ‘should seek rough rather than precise indicators of

sustainability so that we can move on’(Goodland, 1995, p.19). Given that

seventeen years later, there is still insufficient information to enable very precise

implementation, this is very sound advice.

Sustainable procurement is good procurement and should not be viewed as an

abstract, idealist goal but as a practical and achievable objective for all

organisations.

(The British Standards Institution, undated, p.1)

Planning for government procurements must be taken in the light of this

imperfect information framework. In government procurement, this means

making do with what indicators and tools we have to pursue the best outcomes

possible for government procurement in terms of sustainability, no matter how

limited they may be.

This fundamentally drives the contents and objectives of the business cases for

procurements, tender documents and contracts, particularly large whole of

government procurements which tend to have considerable impact and

complexity. However, it should not be forgotten that even very small

procurements can have extensive impact on specific sectors in terms of

sustainability, such that sustainability considerations should be fundamental to all

procurement.

There are probably two criticisms of current procurement either it focuses on up

front financial cost and does not consider whole of life elements and true value

for money; or it includes only environmental considerations along with cost and

neglects economic and social considerations and impacts.

To be sustainable, procurements must take into account all four.

55


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

APPENDDIX 2: RISK MATRIX

(Source: ACT Government)

56


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

APPENDIX 3: EVALUATION ANALYSIS SUMMARY TABLES

EVALUATION ANALYSIS OFFER A Verification of

claims

OFFER B Verification of claims OFFER C Verification of claims OFFER D Verification of claims

MANDATORY CRITERIA

Economic/Financial

ISO 9001 Quality Assurance

Certification

ISO 310000:2009 Risk

management

Good financial viability/capability

assessment (as per jurisdiction’s

Financial Assessment Policy)

Agreement to 2-3 Site Visits

(head office, distribution point,

manufacturing facility)

Social

ISO 26000:2012 Social

Responsibility

√ Current

certificat

e

provided



√ Auditor

contacted and

confirmed

√ Auditor

contacted and

confirmed

√Financial

Assessment

rating of 85%

Very Good

√ Current

certificate

provided



√ Auditor contacted and

confirmed

√ Auditor contacted and

confirmed

√Financial Assessment

rating of 60% Fair

√ Current

certificate

provided


√ Auditor contacted and

confirmed

√ Auditor contacted and

confirmed

× × Financial Assessment returned

rating of 50% fair to poor viability

√ Current certificate

provided

√ Schedule signed √ Schedule signed × Schedule not signed √ Schedule signed


√ Auditor

contacted and

confirmed

No supply of ‘Conflict Minerals’ √ Information

provided

confirmed - not

subject to audit

however.

Environmental

ISO 14000 Environmental

Management


√ Auditor

contacted and

confirmed

Energy Star Certification √ Confirmed by

Energy Star





√ Auditor contacted and

confirmed

Information provided

confirmed - not subject

to audit however.

√ Auditor contacted and

confirmed

Confirmed by Energy

Star

×No evidence

provided



√ Auditor contacted and confirmed

√ Auditor contacted and confirmed

√Financial Assessment rating of 90% Very

Good

× √ √ Auditor contacted and confirmed

√ Information provided confirmed -

not subject to audit however.


×Claimed

√ Auditor contacted and

confirmed

×Energy Star could not confirm

claims

× No information

provided



× *

√ Auditor contacted and confirmed

Confirmed by Energy Star

Participation in Australian

Government National Television

and Computer Recycling Scheme


Confirmed by

Commonwealth

agency


Confirmed by

Commonwealth agency

×No evidence × √ Confirmed by Commonwealth agency

Australian Government National

Packaging Covenant

compliance/participation with

100% packaging recycled


Confirmed by

Commonwealth

agency


Confirmed by

Commonwealth agency

×No evidence × √ Confirmed by Commonwealth agency

57


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

EVALUATION ANALYSIS OFFER

A

Verification

of claims

Governance, Management and Reporting

OFFER B

Verification of

claims

OFFER C Verification of claims OFFER D Verification of claims

Conduct of supply chain

audit processes

Agreement to participation

of client in supply chain

audit and/or provision of

result information

Agreement to provide

monthly/quarterly reports,

data and performance

information on products i.e.

energy use, consumables,

maintenance.

Agreement to participation

in monthly/quarterly

contract management

sessions with client and

stakeholders.

Agreement to partnering to

drive sustainability






√ Auditor

contacted

and

confirmed

Schedule

signed

Schedule

signed

Schedule

signed

Schedule

signed


√ Auditor contacted

and confirmed

√ Schedule signed × Schedule not

signed

√ Schedule signed × Schedule not

signed

√ Schedule signed × Schedule not

signed

√ Schedule signed × Schedule not

signed

× No response × √ √ Auditor contacted and confirmed

× √ Schedule signed

× √ Schedule signed

× √ Schedule signed

× √ Schedule signed

objectives and innovation

SUMMARY PASS PASS FAIL FAIL*

* AN EXAMPLE OF A MANDATORY CRITERIA KNOCKING OUT A POTENTIALLY GOOD SUPPLIER

PROBLEM

NEUTRAL

PASS

58


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Economic/financial

Criteria Group

ASSESSABLE CRITERIA SUMMARY

TABLE

Offer A Response

Rating

0-10

Offer B Response

Rating

0-10

Customer satisfaction policy Yes. Detailed policy available on website. 8 Yes. Policy not detailed. 6

Average life of consumables 7 years 8 5 years 7

Local employment numbers 1000 8 500 5

Frequency of scheduled maintenance Every 6 months 8 Every 4 months 7

Average life of product/warranty period 5 years 7 4 years 5

Energy use by machine per day, per annum in

use and standby. Total energy use for all

machines per day, per annum.

Estimated Carbon emissions per machine per

day, per annum. Total estimated carbon

emissions per day per annum. Compliance

with Greenhouse and Energy Minimum

Standards (GEMS).

Reduction in numbers of machines where

there is downsizing with corresponding

reduction in payment

X Kilowatts 7 XX Kilowatts 5

X tons 8 XX tons 5

Agreement by company 10 No response 0

Innovative value adds in terms of

economic/financial sustainability e.g.

payment methodologies, billing, service call

arrangements.

Electronic billing and electronic call

outs/tracking for service

8 Some value adds in terms of billing

only.

5

59


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Environmental

Assessable Criteria Offer A Response Rating 0-10 Offer B Response Rating 0-10

Percentage of product which is recyclable 60% 6 50% 5

Estimated carbon emissions over lifecycle of product X tons 7 XX tons 6

Management of toxic chemicals during manufacture and use or EPEAT

equivalent

Strong protocols for

managing chemicals

during manufacture.

Corroborated by auditor

8 Fair processes for managing chemicals. Audit

reports to evidence.

7

Efforts to minimise transport miles over the supply chain or mitigate impact of

transport on carbon emissions.

Some effort to manage. 5 Company has strong policy of managing transport

miles. Confirmed by audit.

8

Recycled content of product 20% 7 15% 6

Initiatives to reduce packaging. Compliance with Packaging Covenant. All

packaging to be recyclable and recycled by supplier.

Initiatives in Australia are

strong. Audit shows less

attention at point of

manufacture.

6 Minimum attention to packaging across the supply

chain.

4

Environmental sustainability policy and reporting to shareholders and public

Strong Triple Bottom

Line Reporting –

Separate sustainability

report

8 Some sustainability reporting in the annual

report.

5

Level of noise emissions – commitment to low noise emissions. Compliance

with ISO 7779 measurement of noise and declaration under ISO 9296 with the

declared operating modes.

Machines more than

comply to standard

9 Machines comply to standard 8

Participation in Australian Government National Television and Computer

Recycling Scheme

Indoor air emissions compliance with Good environmental Choice Australia

eco-label or equivalent.

Yes 10 Yes 10

Machines comply 8 Machines comply 8

Provision of reporting (monthly, quarterly, annually) usage data, including:

energy use per machine/per annum; volume of recycled disposed machines;

estimated carbon emissions; volume of recycled packaging;

numbers/frequency of scheduled and unscheduled maintenance; use of

consumables; recycling of consumables; service complaints.

Yes agreed. Already

provide similar reports to

other clients.

8 Yes agreed. 7

60


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Corporate Social Responsibility (CSR) requirements

Specific Criteria Offer A Response Rating 0-10 Offer B Response Rating 0-10

CSR Policy and certification under SA 8000 Social Accountability

Standard and/ or AS 8003:2003 Corporate Social Responsibility

Innovative approach or value add in terms of meeting product

environmental sustainability objectives

Yes confirmed by audit and

certificate.

Yes. Company has a research area

devoted to sustainability

improvements. Company has aims

to meet its own further

sustainability goals.

9 Yes confirmed by audit and certificate 9

8 None offered 0

Employment and worker conditions policies e.g. average working

hours, pay and conditions.

Yes. Strong policies on ethical

working practices in Australia and

overseas. Confirmed by audit.

8 Some policies on pay and conditions in Australia.

No evidence from overseas.

5

Community engagement programs

Company has strong community

programs in Australia but also

overseas.

9 Some engagement in overseas manufacturing

sites.

6

Occupational health and safety incidences of noncompliance with

regulations and voluntary codes

None reported by auditors or firm 10 None reported by auditors or firm however, lack

of evidence from overseas

5

Worker conditions incidences of noncompliance with regulations

and voluntary codes

Strong policies on worker

conditions. No non-compliance

detected.

10 Weak policies. No no-compliance reported by

auditors or firm however, lack of evidence from

overseas

5

Employment of disadvantaged persons policy and numbers

Innovative value add in terms of social sustainability

Strong policies in Australia and

overseas.

Strong human resource and social

engagement policies and practices

– proposed some possible

additional value add in local area

with respect to maintenance.

9 None provided 0

7 None provided 0

61


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Economic/Environmental/Social

Specific Criteria Offer A Response Rating 0-10 Offer B Response Rating 0-10

Extent of audit of supply chain or influence over supply chain

Company instituted annual supply chain audit of

manufacturing and parts. About to bring in

maintenance.

7 Audit of manufacturing only. 6

Certification under ISO 28002:2011 Supply Chain Security Yes. 10 Yes 10

Frequency of audit of supply chain Annual 10 Every two years 6

Qualifications of supply chain auditors and contact details Yes accredited 10 Yes accredited 10

Participation in other certification schemes - other product performance labeling

(other than Energy Star)

Significant fines or non-compliance with laws and regulations concerning

provision, manufacture or use of products.

Monthly, quarterly/annual meetings with client contract managers to discuss

contract and corporation performance in terms of sustainability and service.

Carbon Reduction Label, Cradle to Cradle 8 None

None 10 None 10

Yes agreed. Already does this with other clients. 10 Yes. Agreed but not current policy with other clients. 7

Other innovative value adds. None provided. 0 None provided. 0

Summary

This Tenderer demonstrates a strong

commitment to sustainability.

Total 289/360 Av 8

This Tenderer demonstrates some commitment to

sustainability. In the acceptable range.

178/360 Av 4.9

62


AU STRALASIAN PRO C UR EME N T AND CONSTRUCTION COUNCIL

Acknowledgements

This Practice Note is one of many practical tools developed by the APCC that underpin

the APCC Australian and New Zealand Government Framework for Sustainable

Procurement, September 2007.

The APCC Sustainable Procurement Working Group’s role in developing and

contributing to this Practice Note is greatly appreciated.

The APCC acknowledges the excellent work of Dr Robyn Hardy, School of Building

and Construction, University of Canberra as the author of this Practice Notes. Dr

Hardy was previously responsible for the majority of tendering and contracts for ACT

Government goods and services procurements and public works, and other varies

careers in the public service. This wealth of experience was invaluable in developing

this practical ‘hands-on’ tool for procurement practitioners.

63

More magazines by this user
Similar magazines