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What is Green Public Procurement (GPP)?

GPP is the process of purchasing goods, services and infrastructure with the aim to maximize the value-for-money throughout the lifecycle of purchased items. This implies that public entities consider economic, environmental and social dimensions in their procurement decision while maximizing the positive impacts and minimizing the negative ones. Goods, services and infrastructure procured by means of GPP will have lower environmental footprints and higher social values than items procured trough ordinary procurement that is solely driven by the purchasing

Does GPP require higher expenditures?

The answer depends on which costs are considered in the purchasing decision. GPP shifts the procurement attention away from narrowly assessing the purchasing price to assessing the value-for-money across an asset´s lifecycle. Therefore, lifecycle costs are a determining factor. Even though, the upfront costs of ‘green’ goods, services or infrastructure might be greater, these costs will often be recovered during the lifecycle of the asset due to lower costs for operation, maintenance, recovery and/or disposal. When considering the lifecycle costs in purchasing decisions, ‘green’ solutions will often be cheaper in the long run for the public entity.

The publication “Procuring Green: A Handbook for policymakers and public procurers. Volume 1: Good and Services” elucidates in section 3.7 several strategies that public entities can employ to further reduce the purchasing price of green products.

What is lifecycle costing?

Goods, services and infrastructure consist of several cost elements which arise during different lifecycle phases of the purchased solution. The purchase price (consisting of manufacturing, marketing, delivery and installation expenditures) is just one of the cost elements that is assessed by lifecycle costing. Other costs arise during the operational phase (running costs for energy, water etc.; maintenance costs and costs for spare parts) and at the end-of-life of an asset (costs for recovery, decommissioning or disposal). Lifecycle costs may also include costs of externalities, such as water pollution and negative health impacts for citizens.

To implement GPP, public entities can use lifecycle costing to compare offers based on value-for-money across the asset´s lifecycle. For different types of products, lifecycle costing is already advanced and online calculation tools are available. For example: http://www.smart-spp.eu/guidance

Can Eco-Labels help to procure green?

Eco-labels employ criteria for assessing the environmental and/or social performance of labelled products of a respective product category. Different types of labels can be distinguished depending on what they assess, how they communicate environmental and social performance, and whether the provided information is verified or not. Eco-labels can be based on one criterion only or on a mix of multiple criteria. Eco-labels exist under the form of a rating scheme that allows the consumer to compare products (e.g., rating A, B, C, D and providing an average product category score), or by means of providing quantitative assessment results in an objective manner without further interpretation (e.g., CO2eq. lifecycle emissions). Finally, conferred eco-labels can either be third party verified or are simply self-declarations by the company.

Eco-labels can be a helpful means to facilitate the procurement of green products. Tender specifications should not demand compliance with an eco-label since this tends to prevent open and fair competition (and indeed in some countries this is prohibited) but procurers can use eco-labels as point of reference for identifying relevant criteria for procuring green. Procurers can also use the label as a means of verification of the requirements they put down in the tender.

Why undertake GPP in Bhutan now?

GPP has the potential to drive green growth and hence contribute to a sustainable and equitable development as put forward in Bhutan´s Gross National Happiness philosophy. There are already many national policies and strategies in Bhutan that aim for holistic development and seek to balance economic growth with environmental conservation and equitable development. By making a commitment to procuring green goods and services, governments can: encourage innovation, create new jobs, usher in new industries and build new markets for green goods and services within Bhutan.

Section 1.3 of the publication “Procuring Green: A Handbook for policymakers and public procurers. Volume 1: Good and Services” provides further details about economic, social and environmental benefits that GPP can foster in Bhutan.

Does the national law in Bhutan allow to implement GPP?

In Bhutan, Chapter VI of the Public Finance Act provides the legal basis for public procurement. In addition, the Procurement Rules and Regulations (PRR) 2009 (revised 2014) provide detailed rules and regulations for the procurement of goods, services and works. As in most countries, Bhutan’s procurement legislation does not explicitly mention ‘green’ public procurement. However, opportunities to implement GPP are provided implicitly. In Bhutan´s PRR, Section 1.1.3(28) gives rise to the consideration of environmental and social criteria in the award methodology by determining that a contract will be awarded to “the bid which offers the best value for money, evaluated on the basis of various objective criteria set out in the bidding document.” Tenders in Bhutan do not have to be awarded based on lowest price, but on the lowest evaluated bid. In that principle lies the opportunity to implement GPP. This is, for example, echoed in the Standard Bidding Document for Goods, Article 43.1 states that “[t]he Purchaser shall award the Contract to the Bidder whose offer has been determined to be the lowest evaluated Bid.”

Public procurers in Bhutan can therefore begin to include environmental and social evaluation criteria in accordance with Bhutanese procurement rules.

For a full review of the Procurement Rules and Regulations (2009) in light of GPP please see GPP Bhutan’s research report, “Legal Analysis of the Public Procurement Framework in Bhutan: Prospects for Procuring Green”.

How to start implementing GPP?

GPP can be implemented in different stages of the procurement cycle. Environmental and/or social requirements can be introduced as follows:

  • Pre-qualification as means to ensure all bids being submitted meet minimum quality standards and capacity. For example, public procurers could request compliance with environmental and (domestic or international) labour laws, track records on contracting for the provision of green goods and services, established Environmental Management System as per ISO14001 or equivalent;
  • Tender specifications: Define technical or functional/performance-based tender specifications on environmental and social matters that have to be fulfilled by desired solutions;
  • Award methodology: Integrate lifecycle thinking as well as further environmental and social award criteria with significant weightings as part of the award methodology for contracts.

In the early stages of GPP, public procurers should reward suppliers that prioritize the delivery of sustainable goods and services while not crowding out those that do not. Therefore, making sustainability an option, rather than a mandatory requirement, is a good way to start introducing sustainability into public procurement. As markets for sustainable goods and services mature and an increasing array of products and services begin to appear on the market, procurers can move to include environmental and social performance in technical and functional specifications as well as mandatory requirements for the pre-qualification of suppliers.

Section 4.3 of the publication “Procuring Green: A Handbook for policymakers and public procurers. Volume 1: Good and Services” provides further details.

How to foster local economic development through GPP?

GPP can be used to support local economic development. For example, public procurement can benefit cottage, small and medium-sized industries by mandating that a minimum share or a given percentage of public spend is reserved for contracting with these industries. Public procurement can further support social inclusion by stipulating that a minimum share or a dedicated percentage of public spend be disbursed via contracts with companies that are owned and operated by women, minorities or disabled persons. Framework agreements also allow for more participation by CSMIs in public contracting. In Bhutan a price-preference can be given to bids from local suppliers. Further, an executive order to purchase local bricks was published in 2016.

Where to get training and further resources on GPP?

Royal Institute of Management conducts course on Green Public Procurement. RIM was part of GPP Bhutan project since its inception.

As of now following courses are provide on GPP :

  1. 13 Week Program on GPP
  2. Tailor made program on GPP
  3. 3 days program on GPP