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Implementing Sustainable Procurement in the Public Sector

Questions & Answers

What you need to know about sustainable procurement.

Legislation

  1. What is the Sustainable Development Act?
  2. What are the Principles of Sustainable Development under the Act?
  3. What are the Guidelines for Sustainable Development under the Act?
  4. How does the Sustainable Development Act apply to public sector organizations?
  5. Manitoba’s Sustainable Development Code of Practice?
  6. What are Manitoba’s Sustainable Development Procurement Guidelines?
  7. What are Manitoba's Sustainable Development Financial Management Guidelines?

What is Sustainable Procurement?

  1. What is Sustainable/Responsible Procurement?
  2. How do I incorporate Sustainable Development into procurement practices/What can I do as a buyer?

Policy Framework

  1. Beyond the Sustainable Development Act, what policy framework might be needed?

Roles & Responsibilities

  1. What authority says I am accountable for Sustainable Procurement?
  2. How am I accountable for Sustainable Procurement and how can I support sustainable procurement in my organization?
  3. What is Life Cycle Costing and how is it considered in procurement?
  4. How can Sustainable Development be incorporated into the procurement process and how can evaluation criteria support sustainable procurement?

Procurement Process

15. Reporting

Measuring Success

16. Measuring Success

Definitions

17. Definitions

 

  1. What is the Sustainable Development Act?

In 1998 Manitoba passed The Sustainable Development Act, a proactive piece of legislation with far reaching implications that sets out the principles of Sustainable Development for Manitoba.

The Act recognizes that the public sector, through its internal operations and procurement practices, has an integral role in promoting environmental awareness and Sustainable Development. Government departments and publicly funded agencies are required to apply Sustainable Development principles in their operations including purchasing decisions.

For more information, visit https://web2.gov.mb.ca/laws/statutes/ccsm/s270e.php

 

  1. What are the Principles of Sustainable Development under the Act?

Manitoba's Sustainable Development Act defines sustainable development as "meeting the needs of the present without compromising the ability of future generations to meet their own needs".  It is an approach to daily decision-making that combines likely effects to the environment, economy, human health and social well-being. 

The Act, made official in 1998, brings into law the Manitoba Principles and Guidelines of Sustainable Development (Schedule A and B) developed to guide the behavior and decision-making of all government departments, agencies and crown corporations, and is promoted in private industry and in society generally. The Sustainable Guidelines and Principles outlined in the legislation can be used to guide businesses through the process of becoming sustainable.  However, rather than prescribing specific courses of action, the principles and guidelines provide the framework to help businesses modify their decisions to consider future generations.

The Principles of Sustainable Development under the Act are included in Schedule A as follows:

  • Integration of Environmental and Economic Decision Making - economic decisions and environmental health programs should effectively reflect environmental, human health, and social consequences.

  • Stewardship - the economy, environment, human health and social well-being should be managed for the equal benefit of present and future generations.

  • Shared Responsibility and Understanding - Manitobans should accept responsibility for sustaining the economy, environment, human health and social well-being, and should make decisions and take actions in a spirit of partnership and open cooperation.

  • Protection - Manitobans should predict, prevent, or improve negative effects of economic, environmental, human health and social decisions and actions giving special regard to decisions whose effects are not entirely clear but which, on reasonable and well-informed grounds, appear to pose serious threats to the economy, environment, human health, and social well-being.

  • Conservation and Enhancement - Manitoba should:

  1. maintain the ecological processes, biological diversity, and life-support systems of the environment

  2. harvest renewable resources on a sustainable yield basis

  3. make wise and efficient use of renewable and non-renewable resources

  4. enhance the long term productive capability, quality, and capacity of natural ecosystems

  • Rehabilitation and Reclamation - Manitobans should:
  1. Endeavor to repair damage to or degradation of the environment
  2. Consider the need for rehabilitation and recovery in future decisions and actions
  • Global Responsibility - Manitobans should think globally when acting locally, recognizing that there is economic, ecological and social interdependence among provinces and nations. Manitobans should work cooperatively, within Canada and internationally, to integrate economic, environmental, human health and social factors in decision-making, while developing thorough and reasonable solutions to problems.

 

  1. What are the Guidelines for Sustainable Development under the Act?

Guidelines for Sustainable Development under the Act are included in Schedule B as follows:

  • Efficient use of Resources:
  1. encouraging and assisting the development and operations of systems for proper resource pricing, demand management, and resource distribution, together with motivation to encourage efficient use of resources.
  2. employing full-cost accounting to provide better information for decision-makers.
  • Public Participation:
  1. establishing meetings which encourage and provide opportunity for discussion and participation in decision-making processes to Manitobans.
  2. aiming to provide proper methods, early warning, and suitable and well-timed compensation to those negatively affected by decisions or actions.
  3. Striving to achieve agreement amongst citizens with regard to decisions affecting them.
  • Access to Information:
  1. Encouraging and assisting the improvement of economic, environmental, human health and social information.
  2. Promoting the opportunity for equal and well-timed access to information for all Manitobans.
  3. Integrated Decision-Making and Planning - encouraging and assisting decision-making and planning practices that are helpful, well-timed and responsible, and which include a forward-thinking view of future needs and consequences
  • Waste Minimization and Substitution:
  1. Encouraging and promoting the development and use of substitutes for limited resources where such substitutes are both environmentally sound and economically viable.
  2. reducing, reusing, recycling, and recovering the products of society
  • Research and Innovation - encouraging and assisting the research, development, applications, and sharing of knowledge and technologies which further our economic, environmental, human health and social well-being.

 

  1. How does the Sustainable Development Act apply to public sector organizations?

The Sustainable Development Act applies to all Departments of the Manitoba Government, including Agencies, Boards, Commissions and Committees that report to the executive branch of government.

The Act also applies to Crown Corporations, and the broader public sector, referred to as the MASH Sector which includes local authorities (municipalities), school divisions, universities, colleges, health authorities and hospitals.

Guidelines and recommended practices have also been developed and depending on the type of public sector organization, the requirements that apply to the organization may be:

  • Included in the Sustainable Act; or

  • Communicated through a Cabinet approved document; or

  • Included in Regulation

 

Requirement

Application

Government Departments

MASH Entities

Sustainable Development  Code of Practice

Cabinet Document (2001)

Cabinet document adopted by MASH entities

Principles of Sustainable Development

Sustainable Development Act (Schedule A)

Sustainable Development Act (Schedule A)

Guidelines for Sustainable Development

Sustainable Development Act (Schedule B)

Sustainable Development Act (Schedule B)

Financial Management Guidelines

Cabinet Document (2001)

Regulation 4/2004

Sustainable Development Procurement Guidelines

Cabinet Document (2001)

Regulation 4/2004

 

 

  1. Manitoba’s Sustainable Development Code of Practice?

Manitoba’s Sustainable Development Code of Practice was released by Cabinet in 2001 and is intended to assist in integration of sustainable development into the decisions, actions and operations of provincial public sector organizations. The Code is available here.

 

  1. What are Manitoba’s Sustainable Development Procurement Guidelines?

Manitoba’s Sustainable Development Procurement Guidelines are to be considered in any procurement and in broad outline would include the following: 

  • Promoting Environmental Sustainable Economic Development
  • Conserving Resources
  • Conserving Energy
  • Promoting Pollution Prevention, Waste Reduction and Diversion
  • Evaluating Value, Performance and Need

The Procurement Guidelines are broad in scope and allow for both flexibility and creativity in their application by Manitoba's buying professionals. They can range from the familiar attention to recycled products and avoidance of toxic substances, to the more fundamental recognition that purchasing decisions should consider the unique aspirations and needs of the people of the various regions of the province including Manitoba's Aboriginal Peoples.

 

 Government Departments are governed by the Sustainable Development Procurement Guidelines released by Cabinet in 2001; available here.

 

MASH Entities are governed by the Guidelines for Sustainable Procurement issued by Regulation 4/2004 (Schedule B) under the Sustainable Development Act, available here.

 

  1. What are Manitoba's Sustainable Development Financial Management Guidelines

Financial Management Guidelines were established to evaluate the sustainability of spending decisions on activities and programs. The purchasing and spending decisions public sector organizations make have major effects on the sustainability of the programs they operate, or on aspects of human health and on the environment and economy.

When driven by a narrow focus and one set of outcomes, budget choices can result in inadvertent harmful effects. This can create additional costs or adverse effects outside the organization, by providing smaller benefits than might have been available, or by compromising the health and sustainability of the organization itself.

Government departments are governed by Sustainable Development Financial Management Guidelines issued by Cabinet in 2001; available here.

MASH sector entities are governed by Financial Management Guidelines issued by Regulation 4/2004 (Schedule A) under the Sustainable Development Act, available here.

 

  1. What is Sustainable and Responsible Procurement?

Purchases based on a process whereby governments and organizations buy assets  goods and services  including utilities in a way that achieves value for money on a life cycle basis in terms of generating benefits not only to the organization, but also for the environment, society and the economy.  Factors taken into consideration include:

  • Value for money considerations such as, price, quality, availability, functionality.
  • The entire life cycle of products.
  • Environmental aspects; the effects on the environment that the assets, supplies and/or services have over the whole lifecycle
  • Social aspects: effects on issues such as poverty eradication, inequality in the distribution of resources, labour conditions, human rights, Fair-trade.
  • Sustainable or recycled materials/products.

Manitoba’s Sustainable Development Procurement Guidelines include the following five goals:

  • Promoting Environmental Sustainable Economic Development
  • Conserving Resources
  • Conserving Energy
  • Promoting Pollution Prevention, Waste Reduction and Diversion
  • Evaluating Value, Performance and Need

 

  1. How do I incorporate Sustainable Development into procurement practices / what can I do as a buyer?

Sustainable procurement does not differ greatly from the “old-style” procurement process. Sustainable procurement incorporates an initial evaluation to determine the impact of the proposed purchase to help select an outcome that is economically, environmentally and socially acceptable.

The evaluation consists of the following:

  • Researching the environmental and social impacts associated with the product or service to be purchased,
  • A review of the sustainable goods and services offered by manufacturers or suppliers.
  • The market availability of these preferred products or services

The evaluation completed by the buyer is then used to establish sustainable development specifications criteria and requirements in the bid documents.

 

  1. Beyond Sustainable Development Act, what policy framework might be needed?

From the broader organizational level to the operational, the established Manitoba Government framework offers a model that can be used by any public sector entities, though most parts of this framework currently apply only to Government departments, SOA’s and certain agencies.  A complete policy framework is key to mandate and encourage “on the ground” sustainable procurement practices.  

The framework’s hierarchy starts with the high level principles of the Sustainable Development Act, Sustainable Development Procurement Guidelines, Financial Management guidelines, goals, policy and, finally, procedures. Each level will provide increasing detail from the mandate to act in an environmentally responsible way. By developing the required framework including procedures and tools, front line staff will be empowered to make sustainable procurement possible.   

Government Departments

  • Sustainable Development Act here
  • Sustainable Development Procurement Guidelines here.
  • Sustainable Development Financial Management Guidelines
  • Sustainable Development Procurement Goals
  • Manitoba's Green & Sustainable Procurement Policy here.

 

In addition to the government framework noted above, the International Institute for Sustainable Development (IISD) provides a number of helpful documents to support sustainable procurement. One such document, "Procuring Green in the Public Sector: A Checlist for Getting Started" is designed to help procurers who are seeking to launch or improve sustainability practices within their procurement policies. It provides information required to move from a "value for money" to a "value for money across the life cycle" culture in public procurement. The checklist includes 21 elements, which together lay out a path to success in sustainable public procurement. http://www.iisd.org/publications/pub.aspx?id=1441

 

  1. What authority says I am accountable for Sustainable Procurement?

If I am part of the Provincial Government, a Crown Corporation or a MASH entity, the Sustainable Development Act, Regulations, Guidelines and policies apply.

 

  1. How am I accountable for Sustainable Procurement and how can I support Sustainable Procurement in my organization?

All employees working for the government have responsibilities under the Sustainable Development Act and associated regulations.

Roles and Responsibilities for key positions may include the following: :

  • Buyers:
    • Perform sustainable procurement evaluation for required goods and services consisting of the following:
      • Researching the environmental and social impacts associated with the product or service to be purchased,
      • A review of the sustainable goods and services offered by manufacturers or suppliers.
      • The market availability of these preferred products or services
      • Advise departments of the sustainable options for the commodity or service.
      • Provide departments with the mandatory sustainable criteria and evaluation criteria that will be placed in the bid document to support the sustainable purchase.
  • Directors and Managers:
    • Incorporate sustainable procurement requirements into business planning and annual budgets
    • Where required develop Sustainable Development policies, guidelines, and procedures
    • Provide overall direction to staff
    • Ensure that the departmental vision, mission, mandate and/or goals support sustainable procurement
  • Executive:
    • Ensure high level policy framework for Sustainable Procurement is established for all levels of the organization
    • Ensure the Vision, Mission, Mandate are supportive of Sustainable procurement

 

  1. What is Life Cycle Costing Analysis and how is it considered in procurement?

The visible cost of any purchase may represent only a small proportion of the total cost of ownership. Often the responsibility for acquisition cost and subsequent support cost are held by different areas/department and, consequently, there may be little or no incentive for a project manager/department/internal client to apply the life cycle analysis (LCA) at the time of purchase because they will not see the benefits resulting from their efforts. Therefore, the use of LCA to represent the real cost of a purchase often falls on the purchasing professional.

LCA is based on the premise that to arrive at meaningful purchasing decisions all significant expenditures of resources which are likely to arise as a result of any purchase must be addressed. Completing an LCA will help the purchaser develop sustainable specifications that consider all relevant costs for each purchasing option - from initial consideration through to disposal (cradle to grave).

LCA involves identifying the total cost relating to the procurement of the product or service. These are often referred to as direct and indirect costs.   Direct costs are the “one-time” costs paid for the acquisition whereas indirect costs are the recurring costs incurred throughout the life of the product or service. Furthermore, recurring costs can increase with time.  For example increase maintenance costs as equipment ages. The types of costs incurred will vary according to the goods or services being acquired, some examples are given below.

Examples of direct costs include:

  1. Purchasing price
  2. Initial training
  3. Transportation and brokerage costs
  4. Installation cost
  5. Residual value/disposal cost

Examples of indirect costs include:

  1. Retraining
  2. Inventory management
  3. Operating costs
    1. labour
    2. preventative maintenance
    3. corrective maintenance
  4. Service charges
  5. Downtime/non-availability

The use of LCA is an important tool when making the business case for a sustainable product and service.  Using LCA, the argument that sustainable products and services are more expensive can often be debunked.  In addition to providing a more accurate picture of financial cost, many LCA approaches for sustainable products provide the purchaser with insight on the environmental impacts/benefits associated with purchasing decisions. Understanding the impacts and benefits is important to ensure the sustainable requirements of your organization are taken into consideration at the time of purchase. 

14. How can Sustainable Development be incorporated into purchases?

Many sustainable specifications placed in bid documents will be defined as mandatory by the buyer and  bidders who offer goods or services that do not meet the minimum requirements are not considered in any further evaluation.

Points may be assigned to evaluate sustainable performance over and above the minimum mandatory requirements. Bidders are then awarded points to the extent they meet or exceed environmental specifications, standards, or performance. For example:

 

Evaluation Criteria

Point Value

Non-mandatory Environmental Considerations

20

Price

80

Total

100

 

15. Reporting

  • The Sustainable Development Act requires reporting.
  • Provincial government departments must report their Sustainable Development procurement activities each year through their program managers, to senior management, which in turn is reported publicly through the departments’ Annual Reports.

 

16 Measuring Success

Key Performance Indicators (KPI’s) of sustainable procurement practices should enable the tracking of data to measure the performance of the purchasing organization and its success in managing environmental targets or goals. Foundational to tracking KPIs is the ability to make comparisons, such as:

  • National, provincial or organizational benchmarks
  • Regulatory requirements
  • Year-by-year standards

 

Data reporting may include:

  • Defined toxic substances exclusion for commodities such as cleaning supplies and hygiene products, construction materials.    
  • Define minimum recycled content for specific commodities
  • Percent of coffee and tea procured as fair trade certified.
  • Percentage of total food purchased by dollar value as organic, and/or Buy Local.

 

17. Definitions

Environmentally Preferable Products: Goods and materials that have a less adverse impact on human health and the environment when compared with competing goods and materials. This comparison shall consider raw materials acquisition, production, manufacturing, packaging, distribution, re-use, operation, maintenance, and waste management of the good or material.

Environmentally Preferable Services: Services that have a more beneficial or less adverse impact on human health and the environment when compared with competing services.

Full-cost Accounting: Accounting for the economic, environmental, land use, human health, social and heritage costs and benefits of a particular decision or action to ensure no costs associated with the decision or action, including externalized costs, are left unaccounted for.

Procurement: The acquisition by any means, including by purchase, rental, lease or conditional sale, of goods, services or construction, but does not include:

  • any form of government assistance such as grants, loans, equity infusion, guarantees or fiscal incentives; or
  •  government provision of goods and services to persons or other government organizations

Reasonable Price: Price that provides the best total value, consideration given to availability, delivery, fitness for purpose, payment terms, quality, quantity, and service. A reasonable price is not necessarily the lowest price.

Recycled Products: Goods or materials manufactured with waste goods or materials that have been recovered or diverted from the waste stream.

Sustainable Development: Meeting the needs of the present without compromising the ability of future generations to meet their own needs.

Toxic Substance: A substance whose quantity, concentration or the conditions under which it is managed poses an elevated risk to the environment or human health.

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