ON THE RIGHT: Good procurement helps governance

SUSTAINABLE PUBLIC PROCUREMENT (SPP) is about ensuring that the products and services purchased by governments are as sustainable as possible, both in the sense of generating the lowest possible environmental impact, and in the sense of producing the most positive social impacts.

By redesigning procurement policies and procedures, governments can trigger multiplier benefits internally and across society, creating efficiency gains, energy and financial savings, improved access to services and better working conditions. SPP can serve as a key policy driver allowing governments to use their purchasing power and regulatory influence to reshape markets.

Procurement is the process of acquiring goods, services and infrastructure. Procurement drives and supports the work of an organisation by providing everything the organisation uses – everything it hires, buys, rents or leases. Public procurement is the process of acquiring goods, services and infrastructure for public purposes. In undertaking sustainable public procurement, governments attempt to procure on the best possible social, economic and environmental terms, and in support of national development strategies. They attempt to optimise value-for-money across the lifecycle of the product, service or infrastructure.

Public procurement can be a powerful tool for governments trying to create dynamic, innovative and sustainable markets, economies and societies. The impact of sustainable procurement is not limited to the procuring organisation. The impact is transmitted through the supply chain. Sustainable public procurement can create demand for environmentally friendly goods, services and infrastructure; encourage suppliers to innovate; model and provide incentives for better treatment of workers and healthier communities; and drive green industrial development.

The primary duty of public procurers is to procure goods, services and infrastructure in a way that optimises value for public funds. Value-for-money is often narrowly interpreted as the lowest purchase price and this is often the basis on which tenders are awarded and concessions negotiated. SPP, however, challenges public procurers to go further and optimise value-for-money, not simply at the point of purchase, but over the lifecycle of every asset. This moves the entire public procurement mindset toward the total cost of ownership. Decisions consider a broad range of costs, such as management operations and maintenance costs, beyond the purchase price. SPP also challenges procurers to consider and maximise the positive economic, social and environmental multipliers of their purchasing decisions – as the power of the public purse is substantial. Public procurement typically represents as much as 20 per cent of a country’s GDP. 

These percentages indicate significant purchasing power – which makes public procurement a crucial economic lever in all countries. The public sector buys a wide array of goods, services and infrastructure – everything from paper and paper clips to vehicles, medical equipment, roads and bridges. Public procurement can be used to provide the long-term and scaled-up demand needed to change the trajectory of markets and realign them towards more sustainable and equitable development. All governments procure goods, services and infrastructure as a matter of course. Making public procurement sustainable should not require additional or more cumbersome processes. It requires a change in thinking about purchasing, and it requires long-term vision. SPP puts the public procurement profession in the driving seat and encourages procurers to spend in a way that yields long-term value-for-money rather than the lowest cost at the point of purchase.