The Federal government recently issues a new rule that requires that 95 percent of new contract actions be green.This sounds great. But there are some underlying systemic issued related to the timing of the FARC interim ruling. Industry groups and procurement agencies are scratching their heads. Several industry associations requested that the government stop issuing rules that change federal procurement policy without first considering public comment.
by Dave Meyer, Sustainable Economic and Environmental Development Solutions (SEEDS) Global Alliance (Northwest Operations) and SVP of Greenbridge International, LLC. Follow Dave on Twitter @DRMeyer1 and LinkedIn.
The Federal Acquisition Regulations Council (FARC) recently issued a new interim rule on green procurement. The draft rule specifically says that Federal agencies must “leverage agency acquisitions to foster markets for sustainable technologies and materials, products, and services. The head of each agency shall advance sustainable acquisition by ensuring that 95 percent of new contract actions, including task and delivery orders, for products and services, with the exception of acquisition of weapon systems, are energy-efficient (Energy Star or Federal Energy Management Program (FEMP)-designated), water-efficient, biobased, environmentally preferable (e.g., Electronic Product Environmental Assessment Tool (EPEAT)-registered), non-ozone depleting, contain recycled content, or are non-toxic or less toxic alternatives, where such products and services meet agency performance requirements.” [See Government Agencies Required to Go 95% Green on All Purchases ]
The effort was spearheaded by the Defense Department, NASA and the General Services Administration, and part of the Obama administration’s campaign to lead by example in sustainable purchasing. The interim policy also requires all federal contractors to support the government’s goals in environmental management, and includes new requirements for electronic or other paper-saving methods for submitting documents required by contracts. It is a follow-up to President Obama’s 2009 executive Order EO 13514 which requires agencies to meet a number of energy, water, and waste reduction targets, including:
- 95% of all applicable contracts will meet sustainability requirements;
- Leverage Federal purchasing power to promote environmentally-responsible products and technologies to foster markets in these sectors.
- Advance sustainable acquisition
This is a great development for the Federal government. Not only does EO 13514 drive new markets but requires government agencies to 1) define sustainable acquisition and 2) track sustainable contract actions and …get this…3) educate the acquisition workforce.
In a recent post on the new order, it is noted that “the effects of President Obama’s Executive Order have been rippling through the federal government purchasing community for a while.” The article highlights made by the U.S. government to green its procurement efforts. The U.S. Federal Trade Commission (FTC) has issued its Guides for the Use of Environmental Marketing Claims. The U.S. EPA is evaluating its role in evaluating products across their entire lifecycle, including “defining criteria for more sustainable products, generating eco-labels and standards and verifying products meet green standards. “ [ See A Crash Course in Selling Green to the Government ]
The U.S. General Services Administration (GSA) has also initiated its GreenGov program, primarily focused on identifying products and practices designed to reduce the governments environmental (specifically carbon footprints). As I noted in an article this past winter, according to Council on Environmental Quality Chair Nancy Sutley, “The Federal Government purchases $500 billion in goods and services annually, so you could say the Federal supply chain represents an enormous opportunity to support a clean energy economy”. Participating companies will share their experiences to help GSA develop a phased, incentive-based approach to developing contracting advantages to companies that track and disclose their greenhouse gas emissions. This process appears to be glacial in its pace, compared to the light speed pace of technology development in countries like China.
The GSA is developing and evaluating green technologies and practices in several areas including: electronics stewardship, innovative building technologies and greening the supply chain. These latest activities by GSA are in addition to individual efforts that the Departments of Energy and Defense, NASA, USDA and Department of Agriculture have been implementing for many years.
On the surface this sounds all good, in fact, great. But there are some underlying systemic issues related to the timing of the FARC interim ruling, and industry groups and procurement agencies are scratching their heads.
Left Hand, Meet Right Hand.
In response to the FARC interim draft rule , several industry associations requested that the government , specifically the FARC to stop issuing rules that change federal procurement policy without first considering public comment.
Even though the “interim rule” is based on directives within executive orders (like EO 13514) from 2007 and 2009, the organizations (including members of the Council of Defense and Space Industry Associations, the U.S. Chamber of Commerce (no surprise), Professional Services Council and TechAmerica) came out and stated that increasing reliance on “interim rules” is a misuse of the “urgent and compelling” circumstances those rules are supposed to be issued under. The groups asked that the FARC withdraw the interim rule and republish it as a “proposed rule”, allowing for public comment.
The FARC maintains that the interim rule only mandates what previous executive orders, laws and sustainable programs have asked agencies to do and should not impact the agencies economically. But that may not be the case.
While many of the agencies that I mentioned above are well on the way to responding to the previously issued Executive Orders (and I applaud them for their efforts!), they appear to be doing this in different ways- which may inadvertently find some suppliers being able to respond to one agencies tender processes and not to another. It only took me a few moments to “Google” “government + green purchasing + requirements” to find remarkably outdated and variably detailed documents from Federal agency to Federal agency, some going as far back as the Year 2000! Even a report from the Congressional Research Service from April 2010 indicated that “The federal approach to green procurement is arguably largely piecemeal and fragmented.” Also, it would appear that agencies may still lack consensus on product “green” performance standards, which is clearly a part of the EO 13514 mandate
There is little in the way of specifics behind the statement that they must be “energy-efficient, water-efficient, bio-based or non-ozone depleting, and are certified as environmentally friendly, contain recycled content, or are nontoxic or less toxic than alternative products.” And it’s this lack of specificity and consistency among agencies that vexes small and large businesses alike.
“ there appears to be significant ambiguity about which type of green product or service agencies should procure in situations where multiple types could meet their needs. For example, the FAR requires agencies to acquire recovered-content products instead of biobased ones when both types would meet agency needs. However, no similar guidance exists for the other types of preferred products and services discussed in this report. That leaves agencies without guidance in determining whether, for example, they should procure Energy Star or FEMP-designated products, or recovered-content or environmentally preferable products.” Green Procurement: Overview and Issues for Congress, Congressional Research Service 7-5700, R41197 www.crs.gov
Why am I not surprised at the discontinuities that exist within Federal government (he asked rhetorically)? Even President Obama alluded these redundancies and inefficiencies in his January State of the Union address. According to a Government Accountability Office report released in January, the U.S. government has more than 100 programs dealing with surface transportation issues, 80 for economic development, 47 for job training, and 17 different grant programs for disaster preparedness, 15 agencies or offices handle food safety, and five agencies are working to ensure the federal government uses less gasoline. Really?! Inefficiencies are wasteful…plain and simple. This is no way to run a government let alone a business. And let’s face it, government is BIG business.
Training, Training, Training
What’s also concerning to me is that agencies may not have not adequately trained procurement staff that are prepared to implement detailed operational related to the “interim rule”. I also am concerned that federal acquisitions staff lack the technical training on green supply chain management to make informed choices beyond how to price and negotiate a contract. As a matter of fact the CRS report states that “…certain requirements, most notably those involving environmentally preferable products, may be difficult for the existing workforce to implement because agencies must consider multiple attributes of products when determining which product to purchase.”
According to Neal Couture, President of the National Contract Management Association (which represents public and private contracting officers), “Contracting people that I talk to have received very little training in the area of sustainability”. Additional cases in point, as described in a recent Federal Times article:
- The Federal Acquisition Institute, which provides training for the federal acquisition workforce, offers no courses specifically addressing green procurement. The Defense Acquisition University (DAU) offers an optional, two-hour course devoted to the Defense Department’s Green Procurement Program.
- Leslie Deneault, program director for acquisition services at Defense Acquisition University (DAU), said there are optional courses available that cover the many legislative actions that affect acquisitions.
- Professional Services Council executive vice president Alan Chvotkin said contractors and government officials may find it hard to get needed products and services that meet environmental standards, possibly due in part to other contract specifications that often limit local sourcing or small business participation.
- Program managers who write the requirements will need to know to which environmental standards certain products and services should be held, according to Mr. Couture said.
And you think one interim rule is going to straighten the green purchasing issue out? There’s got to be a better way, and it may be found within the private sector.
Collaborative Cleantech Partnerships Rising to Meet the EO 13514 Mandate
One organization that is taking the initiative in responding to the interim rule on green purchasing and EO 13514 is the Clean Technology Trade Alliance, based in Bremerton, Washington. According to Mark Frost, the Executive Director of the organization, the CTTA provides the ultimate partnership between business and environmentalists by creating a market-based reason to become sustainable and operate with efficient, environmentally responsible products and services. In addition, the technologies and products associated with CTTA members fit nicely into the Federal government’s EO 13514 vision for sustainable and environmentally preferable products.
The CTTA mission is to drive the expansion of global clean technology by connecting buyers with sustainable solutions. One part of this mission that fits squarely into the Federal government procurement model and most recent FARC interim rule is identifying and verifying clean technology solution providers for business and government. Since it’s essential to validate the extent of sustainable practices of member businesses, the CTTA is getting ready to roll out an independent review process to validate clean tech solution providers. In doing so, the CTTA will reviewing each organizations operational processes and products and giving them a score based on defined criteria, using life cycle, product foot print, energy and multi-resource consumption and efficiency factors, etc. This review effort has the opportunity to become a market driver that moves companies to meet the highest “green and clean” technology standards in order to be more profitable and competitive. The CTTA also provides the means to discover clean technology solutions that will enable these companies to improve their score and profit from their efforts.
In addition the CTTA assists its members in 1) making commercialization of products easier with a trained sales force, that provide members qualified leads, and facilitating distribution lines for both established and unseasoned products; and 2) developing synergies between businesses that create new technologies, open new markets and discover new efficiencies. Those who collaborate with the CTTA receive a single point of contact to find clean technology business solutions, and most importantly a market reference point for making clean technology purchasing decisions.
The CTTA is uniquely positioned to provide the Federal government with a single, unbiased, point of entry for identifying and vetting clean technology solutions. First the basic identification and reporting service is a no cost service. Second if the CTTA does not have a member, or several members, that can provide the solution they will conduct a search to identify potential solution providers and conduct a basic survey to provide an initial vetting for the requestor. Third if the solution exists they will find a provider, if it does not they can work with companies to develop the solution if there is a sustainable market. The CTTA is a membership-driven organization, recruiting new members and servicing existing members- this is how the CTTA grows. Mr. Frost states that providing services to customers like GSA, the DoD, NASA, Boeing and others allows the CTTA to recruit small and mid-sized business members and is another example of the business synergy the CTTA pursues.
What Can Be Done to Harmonize Green Procurement?
The CRS report raised many of the questions about the efficacy of legislative initiatives or federal rulings that came to my mind in the months since I participated in a GSA GreenGov Summit in Portland, so I figured I’d just repeat just a few of them here:
- What, if any, are the most useful and appropriate policy goals for green procurement?
- Are the means by which different green-procurement preferences, programs, and other initiatives have been established the most appropriate for meeting policy goals?
- How effectively are agency implementation and performance of green procurement being assessed?
- How successful are current programs and initiatives at meeting policy goals?
- Are policies on the acquisition of green services sufficient?
- Are the preferences and the methods of implementing them sufficiently harmonized and integrated?
- Are there significant gaps in the various federal preferences for types of green products and services?
- Are there implementation methods not currently used by the federal government that should be considered?
- Is training of procurement officials sufficient?
Until these questions are fully explored, I suggest the Federal government hold off on finalizing its interim rule and consider the collaborative private sector example being implemented by the CTTA. In a perfect scenario, the White House should instruct representatives from the GSA, OMB, DoD, DoE, USDA, EPA, and Agriculture (and others) to come together in one place, at one time. Attendees should also be invited from the private sector too- the best brains in the science, engineering and design of clean technology, standards development, policy, manufacturing and procurement/material acquisition.
In systematic and structured manner, they can hammer out a viable, results driven framework for sustainable sourcing and procurement. This in turn (I am sure), will promote new technologies and drive the creation of new “green economy” markets….without all the confusion and lack of harmony.
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