Juli Lau considers how public purchasing power can be used to champion Net Zero goals, and how public procurement might be used as another driver for change.
The purchase of goods and services by public authorities spans industries and sectors across the UK, and a Government report this year concluded that public spending represented 52.5% of GDP in 2020/21. Meanwhile, there is a drive not just by Government but by society at large, to take urgent action against climate change.
This article considers how public purchasing power can be used to champion Net Zero goals, and how public procurement might be used as another driver for change.
The Government’s ‘Net Zero’ target is summarised in the introductory paragraph of the Cabinet Office’s Procurement Policy Note (“PPN”) 06/21: “The UK Government amended the Climate Change Act 2008 in 2019 by introducing a target of at least a 100% reduction in the net UK carbon account (i.e. reduction of greenhouse gas emissions, compared to 1990 levels) by 2050.” We provide the legal context for this target in our article.
Contracting authorities have also in some cases declared their own commitments to achieve Net Zero, in some cases far in advance of 2050.
How is Net Zero relevant to public procurement?
All procuring authorities have been mandated by Government to apply the National Procurement Policy Statement (“NPPS”), which sets out three main national priorities to feature in public procurement exercises across central and local government levels. The ‘Social Value’ national priority expressly includes “tackling climate change and reducing waste”.
PPN 05/21 and subsequent communications from Government indicate that the requirement to have regard to NPPS priorities when undertaking procurements, will soon be enshrined in legislation.
How can public procurements be used to tackle climate change?
Central Government bodies have been mandated via PPN 06/21 when procuring contracts valued at over £5m per annum to include as a selection criterion, when assessing a supplier’s technical and professional ability, requirements for bidders to:
- Provide Carbon Reduction Plans which meet certain required standards,
- Confirm their commitment to achieving Net Zero by 2050 for UK operations, and
- Set out the environmental management measures that they have in place during the performance of the contract.
Government has published the Technical Standard and Guidance documents to assist with setting the minimum standards and assessing compliance with the standards, and although local authorities are not obliged to comply with PPN 06/21, there is nothing stopping them from adopting and adapting the concepts into their standard selection questionnaires, provided this is done in a proportionate and relevant manner, and with regard to any overriding statutory duties.
PPN 06/20 and its requirement to take into account the value of social benefits when awarding contracts, is another piece of guidance which while only mandated for central government bodies, provides a useful model for all public sector buyers. ‘Fighting climate change’ is a stated theme of the Social Value Model, and in particular the Government encourages taking into account activities that:
- Deliver additional environmental benefits in the performance of the contract including working towards net zero greenhouse gas emissions, and
- Influence staff, suppliers, customers and communities through the delivery of the contract to support environmental protection and improvement.
Contracting authorities will find assistance in the model evaluation questions and model award criteria provided by the Government in its Social Value Model.
Contract performance stage
Finally, having selected a supplier that is aligned with Net Zero goals and who commits to delivering environmental benefits through the awarded contract, the appropriate use of contractual measures will help to ensure that the contractor delivers on its promises.
Contracting authorities will want to consider the use of performance measures such as key performance indicators, performance targets, and possibly performance deductions. These will need to be considered carefully to ensure legality and effectiveness. We will explore these in an upcoming article.
With great power comes great responsibility… to champion and to balance
It remains to be seen how public buyers will use their purchasing power, and what sort of behavioural changes and innovation might develop in the market, as a result of procurement strategies.
Our team of public procurement specialists is ready to help with incorporating Net Zero priorities into the procurement life cycle in a way that complies with mandatory requirements and legislation (which it should be noted may differ as between local and central government authorities), meets authorities’ own ‘green aspirations’, while achieving value for money, a priority which remains at the heart of public buying.
Juli Lau is Legal Director at Sharpe Pritchard LLP.
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