For the past few decades, many regional organizations and countries have enacted several environmental governance tools to cope with alarming and pressing environmental concerns. In the procurement context, the linkage between environmental objectives and federal purchasing has been increasingly discussed as a regulatory tool to achieve environmental protection. This aforementioned link led to the creation of the green public procurement concept. Through its procurement directives and guidelines, the European Union has paved the way on green public procurement and environmental considerations within procurement actions. This Note analyzes some of the features of green public procurement models in the EU that have contributed to its broad and successful usage in procurement actions. Based on that analysis, this Note proposes a two-pronged archetype for the FAR Council to consider, should it seek a starting point for how to prioritize environmental considerations and adopt a European-style approach to sustainable procurement.
If greenhouse gas emissions continue at the current rate, the atmosphere will warm up by as much as 2.7 degrees Fahrenheit above pre-industrial levels by the year 2040. This change will result in grim consequences: mass inundations of coastlines, annual losses in the U.S. economy in the hundreds of billions of dollars, and the intensification of current extreme weather. Unless major emitters like the United States start undertaking mitigation and adaption efforts, serious consequences lie ahead in the near future. Due to this escalating environmental deterioration, sustainable practices such as green procurement have received considerable attention and sparked intense discussion around the world. A consensus has emerged that one effective method of addressing environmental concerns is to wield the significant buying power in federal procurements to achieve environmental goals and objectives. By leveraging the power of federal purchasing as a regulatory tool for environmental protection, governments can ensure that they are “associated with the highest possible standards” and encourage the broad acceptance of such standards.
In the European Union, legislators have highly prioritized environmental concerns and have gradually integrated them into procurement rules and regulatory frameworks. Procuring authorities in the European Union no longer view procurement as simply being about buying the cheapest goods or services, but rather, “as a process whereby organizations meet their needs in a way that achieves value for money on a lifetime basis and allows delivering aspects beyond savings” such as environmental protection. The European Union has positioned itself as a leader on sustainable procurement practices when it comes to the environment.
As the world’s largest buyer of goods and services, the United States’ government has a powerful and strategic tool at its disposal in federal procurement. However, “[w]ith spending power comes obligation and responsibility.” Various presidential administrations have recognized the need for environmental governance and employed this purchasing power in addressing environmental challenges. Comprehensive Executive Orders, such as Executive Order 13693, have moved the needle towards greater consideration of environmental concerns in federal purchasing. While the federal procurement regulatory scheme in the United States has made considerable strides with regards to sustainability, it does not prioritize environmental considerations enough, and it does not ensure that contractors and sub-contractors comply with recognized environmental laws and obligations throughout the procurement process. This is likely due to a lack of political will and the absence of a strong statutory backbone with respect to environmental protection. The definitional difficulties associated with green purchasing has also likely enhanced the above problem.
This Note suggests that elements of the green procurement framework utilized in the European Union can and should serve as a starting point for U.S. federal procurement. Ideally, Congress should pass legislation creating statutory authority that institutes an obligation for the “wide usage of environmentally friendly procurement mechanisms” in government contracts. More realistically, however, Congress should amend procurement regulations to ensure that environmental considerations occupy a permanent and central place in federal procurement practices. If Congress fails to act, federal agencies should promulgate internal guidelines based on Executive Order 13693 to ensure that environmental concerns are at least a notable consideration in the procurement process.
This Note advances a two-pronged model that demonstrates what European-style sustainable procurement could look like in the United States. However, this model does not purport to be a “Green New Deal” type of plan. Although it is undeniable that the looming climate crisis will require significant efforts on the parts of governments, this Note proposes a conceivable and practicable starting point.
The first step would be to amend Federal Acquisition Regulation (FAR) section 9.104 to require prospective contractors to comply with established environmental laws and obligations in order to be deemed responsible and eligible for contract awards. Second, the FAR Council should amend FAR subsection 15.404-1 to oblige contracting officers to reject abnormally low proposals in a price realism assessment, if such proposals are a result of noncompliance with environmental regulations. This Note also proposes amending FAR part 23 to add a subpart that would enumerate the aforementioned environmental laws and regulations. The specific environmental regulations to be used in conjunction with the responsibility determination and price realism assessment are beyond the scope of this Note and would need to be determined by the FAR Council or Congress. Nonetheless, adopting the proposed amendments would serve as a starting point for substantively integrating environmental considerations in federal procurement.
Part II of this Note provides a background on green procurement and its advantages. Part III analyzes the green procurement model in the European Union and discusses which components should be integrated into the U.S. federal procurement framework. The goal of these sections is not only to familiarize the reader with terminology and concepts often referred to when discussing green procurement, but also to demonstrate that European-style green procurement is feasible in the American context. Part IV provides a brief history of environmental considerations in U.S. federal procurement. Part V demonstrates how the European Union approaches can be translated into the American procurement context and addresses potential counterarguments and obstacles to the reform.
Green procurement, also known as green public procurement (GPP), is defined by the Commission to the European Parliament as a “process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life-cycle when compared to goods, services and works with the same primary function that would otherwise be procured.” The main objective of GPP is to integrate environmental considerations into the entire procurement process of contracting authorities and to help guide their purchases of goods and services that have the lowest environmental impact.
In theory, green procurement is a powerful instrument in tackling environmental challenges for several reasons. First, it allows contracting authorities to raise awareness of environmental issues and address them through their purchasing power. Governments can wield their spending power to structure their purchasing process in a manner that reduces the resulting environmental impact. Second, governments can influence the markets in a way that leads to an increase in the demand for greener goods and services, which thereby could incentivize contractors to develop environmentally responsible goods, services and technologies. By “modifying. . . purchasing behavior,” to “[favor] environmentally friendly products and services in public procurement,” federal agencies can set an example for the private sector to follow and can demonstrate the effectiveness and feasibility of green procurement practices. Consequently, federal agencies have more to gain by prioritizing environmental considerations in their procurement practices than by disregarding them.
In the European Union (EU), procurement accounts for an estimated sixteen percent of the EU’s GDP and between eleven and twenty percent of the GDP in each of its Member States. Similar to U.S. federal procurement, the EU framework largely aims to ensure that the “best value for money” is achieved in all of its purchasing. Environmental concerns have been highly prioritized in EU procurements because environmental protection is a major policy goal of the EU.
Generally speaking, the EU procurement regime is governed by two fundamental layers of rules and regulations. The Treaty on the Functioning of the European Union (Treaty), along with the consolidated version of the Treaty of the European Union establish the EU’s constitutional foundation. The two accords “regulate the relationship between the EU and EU citizens, between the EU and its Member States, between the EU and third states, between Member States, and between EU institutions.” Article 11 of the Treaty requires the integration of environmental protection requirements “into the definition and implementation of all Union policies and activities, in particular with a view to promoting sustainable development.” This environmental integration rule has been understood as a legal requirement for EU contracting authorities to take environmental considerations into account during the procurement process. In enforcing Article 11, the European Commission has on multiple occasions brought actions against Member States before the European Court of Justice. Specifically, the Commission has brought actions where Member States were “in violation of their duty to protect the environment.”
With respect to procurement, Articles 34, 49, 55, and 56 of the Treaty stipulate that all procurement contracts, irrespective of their value, are subject to various environmental principles. These principles create obligations that contracting authorities in the EU must abide by in all of their procurement activities.
The EU’s public procurement regime is additionally governed by several procurement directives issued by the European Parliament and the Council of the European Union to EU member countries. The directives are binding legislative instruments that regulate the purchasing procedures and methods EU contracting authorities must abide by in their selection and rejection of tenders and regarding contract awards. They essentially establish that each Member State “must enact its own national statute [regarding various aspects of public procurement] in a limited period of time.”
Currently, the applicable directives include the public sector directive, the utilities directive, and the concessions directive. Moreover, Directives 89/665/EC and 92/13/EC cover the judicial and administrative review of all procurements above a certain threshold value. Various factors affect the applicability and scope of the directives, such as the type of contract, the monetary values at issue, the sort of contracting entity, and whether any specific exemption from the directives apply.
National legislators in each EU Member State must incorporate all applicable directives into their national laws before a given deadline and notify the EU Commission of the directives. The transposition into national law can be in the form of a transposing act or a national implementing measure. Member States are thus accorded some discretion to allow for the varying “specific national circumstances” in their respective countries. If a Member State fails to take measures to transpose a directive into their national law, it is deemed to have breached EU law and is at risk of sanctions and considerable financial penalties. Ultimately, by transposing the directives into their national laws, EU Member States can guarantee that EU law remains effective.
In response to environmental concerns and the significant willingness of contracting authorities to include environmental considerations in the bidding process, the EU Commission officially launched the Green Public Procurement Policy in 2008. By placing an increased emphasis on environmental considerations in procurement, the EU Commission hoped to increase the demand of greener products, so it could incentivize the industry as a whole to develop environmentally friendly products and services.
While GPP is generally a voluntary process, it is mandatory in certain sectors such as transportation and energy. Scholars and environmental experts have attributed the EU’s widespread use of green procurement practices to a strong statutory framework with respect to public procurement, as well as to the EU community’s “broader desire to leverage public contracts” to attain secondary policy goals. Green procurement practices can be applied by EU Member States to all types of contracts, regardless of whether they are below or above the threshold for applicability under EU Procurement Directives.
Alongside the statutory framework, certain developments in EU case law crucially forged the path for the acceptance of environmental considerations in contract award criteria. Like the Supreme Court of the United States, the Court of Justice of the European Union (CJEU) has the last say on interpreting EU law. In 2002, Concordia Bus Finland Oy Ab v. Helsingin Kaupunki notably paved the way for the acceptance of environmental considerations in EU procurements. In that case, the CJEU held for the first time that contracting authorities may contemplate non-economic considerations at the award stage.
In 2003, The CJEU reaffirmed its Concordia Bus Finland ruling on nonprice considerations in the Wienstrom case. In Wienstrom, an Austrian contracting authority invited economic operators to submit tenders for the award of a public contract for the supply of electricity. The CJEU held that it is acceptable to use and give heavy weight to environmental award criteria, even if the criteria in question do not provide an immediate economic benefit. The CJEU further reemphasized the importance of the need for award criteria to be linked to the subject matter of the contract.
Following these cases, EU legislators codified the ability of authorizing contracting authorities to include environmental considerations into their procurement solicitations and contracts. To bring the law in line with the CJEU case law, EU directives established in 2004 contained a specific reference to the possibility of including environmental considerations in the contract award process. First, the preamble of the directive explicitly set out the objective of contributing to “the protection of the environment and the promotion of sustainable development, whilst ensuring the possibility of obtaining the best value for money for their contracts.” Second, the directives provided for the inclusion of environmental conditions in technical specifications, the setting of social and environmental conditions for the performance of contracts, the obligation for bidders to demonstrate compliance with environmental obligations, and the duty for bidders to prove they can perform the contract in line with environmental measures. Thus, case law from the CJEU paved the way for environmental considerations to be implemented throughout the contract selection and award process.
After codification in 2004, one of the main aims behind the 2014 EU directives was to make it easier for contracting authorities to pursue environmental objectives in public procurement. By introducing a minimum core of social and environmental provisions, the 2014 directives made it easier for contracting authorities to incorporate environmental considerations at various points in the life of the contract. The directives also enabled contracting authorities to establish rules regarding “exclusion and selection aimed to ensure a minimum level of compliance with environmental law by contractors and sub-contractors.” This section will discuss two of these rules: environmental compliance determinations and rejection on the basis of abnormally low tenders.
1. Qualitative selection and environmental compliance determinations
In the EU, a prospective contractor’s suitability typically is determined by contracting authorities’ examination of certain factors such as the prospective contractor’s financial standing, its experience and equipment, and its technical capacity. This process, analogous to a responsibility determination in U.S. procurements, is called a qualitative selection. Noncompliance with applicable EU, national, and international environmental laws may be grounds for exclusion under a qualitative selection determination. Procurement authorities have therefore viewed noncompliance with environmental laws as an “offen[s]e concerning professional conduct,” which allows the procurement authority to remove the prospective contractor from consideration for receiving the contract.
Contracting authorities are likewise permitted through Article 57(4)(a) of the public sector directive to exclude economic operators from participation in procurement dealings if it can be demonstrated that such operators are noncompliant with applicable EU or international environmental laws referred to in Article 18(2). Article 18(2) is the touchstone of the EU procurement directives with respect to compliance with environmental law dimensions. The provision explicitly requires EU Member States to take the necessary measures to ensure compliance with certain EU environmental conventions and several international environmental laws enumerated in Annex X. Hence, Article 18(2) has to be read in conjunction with the listed international social and environmental conventions. Furthermore, Recital 37 of the 2014 directives elucidates the scope of Article 18(2) by emphasizing the importance of Member States’ compliance with environmental law in public procurement.
For procurement authorities to be able to evaluate whether a contractor has previously fulfilled environmental obligations, the solicitation for competition must state that environmental considerations will be used in the “comparison of tenders.” Therefore, breaches of environmental requirements in past contracts may be considered when procurement authorities make subsequent award decisions. Ultimately, the likelihood of exclusion from future contracts for noncompliance gives prospective EU contractors an added incentive to comply with environmental obligations.
2. Abnormally low tenders: new grounds for rejection
Additionally, the 2014 procurement directives moved the needle forward in terms of green procurement through contracting authorities’ use of environmental violations as a ground to reject abnormally low bids. Under Article 69 of the public sector directive, “contracting authorities shall require economic operators to explain the price or costs proposed in the tender where tenders appear to be abnormally low in relation to the works, supplies or services.” One of the elements prospective contractors must explain in regards to their low tender is their observance of the environmental obligations referred in Article 18(2). Should contracting entities determine that a tender is “abnormally low because it does not comply with applicable obligations referred to in Article 18(2),” the tender must be rejected automatically.
While the EU has put together a statutory framework for GPP over the last two decades, the U.S. federal government has addressed ancillary policy objectives like environmental protection through a mixture of implemented regulations, legislation, and Executive Orders. This section will discuss how federal procurement has successfully been used as a regulatory tool to address secondary objectives such as creating and guaranteeing opportunities for small businesses. Additionally, while Executive Orders have been a moderately useful tool in facilitating the use of procurement for environmental protection purposes, this section will demonstrate how they are too transient and political in nature to constitute a durable solution.
Federal procurement historically has been used as a policy instrument for objectives such as creating and safeguarding opportunities for small businesses, obtaining quality goods at low prices through competition, protecting American manufacturing from foreign competition, and promoting non-discrimiation and affirmative action. However, the use of federal procurement as a tool to address socioeconomic goals like environmental protection has often generated controversy, since the accompanying procedures tend to inconvenience contractors during the already complex procurement process. Nonetheless, any such losses in competition or efficiency have frequently been disregarded due to the widespread appeal of the socioeconomic objective itself.
The federal government first acknowledged the potential power of procurement on the environment in the 1970s when Congress passed the Resource Conservation and Recovery Act (RCRA). The RCRA encouraged the use of environmentally friendly products and required federal agencies to purchase recycled-content products. Nevertheless, after the passage of the RCRA, no additional guidance on green purchasing was issued for the next fifteen years. Environmental objectives historically have faced competition among many other federal procurement objectives.
One way the federal government has addressed the conflict of competing objectives is through the issuance of Executive Orders prioritizing environmental goals. Through its constitutional authority, the Executive Branch has used federal procurement to achieve secondary policy goals such as tackling climate change. Courts have also supported this use of federal procurement to accomplish and advance secondary policies. Since no procurement system can achieve all of its objectives, determining which goals are the most important is a challenge for each federal agency. Nonetheless, given the enormity of federal spending, there is arguably enough room to incorporate and prioritize environmental objectives among other significant ones.
The beginnings of promoting green federal purchasing through Executive Orders can be traced back to the Clinton administration. In 1993, President Clinton issued Executive Order 12873 to promote recycling and environmental procurement. This Executive Order mainly directed federal agencies to “increase and expand markets for recovered materials through greater Federal Government preference and demand for such products.” Moreover, Executive Order 12873 also sought to boost the acquisition of products and services with environmentally friendly attributes through the implementation of cost-effective procurement preference programs. Executive Order 12873 not only required federal agencies to align their procurement procedures with the RCRA, but it also instructed them to adjust their procurement programs to comply with U.S. Environmental Protection Agency (EPA) standards to the “maximum extent practicable.”
During the Bush administration, the White House initially revoked procurement-related Executive Orders issued during the previous administration. Nonetheless, in 2001, the Bush administration issued Executive Order 13212, which required federal agencies to “increase the production, transmission, or conservation of energy.” Executive Order 13212 also led to the Federal Energy Commission creating its own best practices to promote the federal purchase of EPA-designated energy efficient electronic equipment. Soon after, Congress passed the Energy Policy Act of 2005 (EPACT), which “in part amended the National Energy Conservation Policy ACT (NECPA) by adding a ‘green’ provision for the ‘Federal Procurement on Energy Efficient Products.’”
In 2007, the Bush administration issued Executive Order 13423, articulating a comprehensive sustainability policy that largely remains in place today. The Order was notable in that it required federal facilities to meet energy intensity targets for the explicit purpose of reducing greenhouse gas (GHG) emissions. Moreover, Executive Order 13423 also required federal agencies to demonstrate compliance with the green purchasing requirements prescribed in the Order through “formal, written, documented green purchasing plans, policies and/ or procedures for the implementation of the statutory and executive order requirements to purchase green products and services.”
In 2009, the Obama administration substantially broadened the mandate to address GHG emissions in federal operations through Executive Order 13514. This Executive Order set forth numerous environmental goals ranging from reducing toxic chemicals to promoting integrated energy planning. The order was considered at the time to be the broadest mandate for green procurement because it required federal agencies to increase energy efficiency, conserve water, and reduce waste in operations through federal procurement.
In February 2015, President Obama signed Executive Order 13693 with the objective of reducing the federal government’s GHG emissions by forty percent by the end of fiscal year 2025. The order consolidated the environmental procurement rules set forth in prior Executive Orders and required federal agencies to “promote sustainable acquisition and procurement” by including environmental performance criteria “to the maximum extent practicable” in their procurement decisions.
In March 2017, the Trump administration issued Executive Order 13783, titled “Promoting Energy Independence and Economic Growth.” The Trump administration described the new Executive Order as a tool to promote the development of American energy resources, “while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.” The order essentially sought to dismantle climate change initiatives established during the past administration. Moreover, the Executive Order directed federal agencies to review and possibly rescind or revise rules and “agency actions” that impede U.S. energy production.
Subsequently, the Trump administration issued Executive Order 13834 on federal operations, effectively revoking President Obama’s Executive Order 13693. Executive Order 13834 eliminated the timelines for emission reduction goals prescribed in Executive Order 13693 from the previous administration. Additionally, it asked agencies only to minimally comply with statutory guidelines while giving them discretion to set their own environmental goals. Hence, the Trump administration has considerably dismantled imperative prior Executive Orders for green federal procurement through its own Executive Orders.
In addition to Executive Orders, the federal government has also prominently addressed environmental concerns in the procurement context through the FAR. In combination with several executive orders, Executive Order 13123 led to the promulgation of FAR part 23 in 2001. The initial objective of part 23 was to direct federal agencies to purchase products with energy efficiency in mind. The May 2011 amendments to the FAR mitigated the issue of multiple competing objectives by formulating a sustainable acquisition policy. FAR part 23 now requires federal agencies to “advance sustainable acquisition by ensuring that ninety-five percent of new contract actions for the supply of products and for the acquisition of services (including construction) require that the products are: (1) energy-efficient; (2) water-efficient; (3) biobased; (4) environmentally preferable; (5) non-ozone depleting; or (6) made with recovered materials” Procurement actions conducted outside of the United States are, however, exempt from the above requirement.
Nonetheless, while the May 2011 amendments to the FAR demonstrate an increased emphasis on environmental considerations in federal procurement, they generally do not require federal agencies to purchase environmentally preferable products in any specific procurement. The ninety-five percent figure used in part 23 is arguably too vague to have real value. Hence, in the absence of clear and comprehensive language and legally binding requirements, significant gaps exist in green federal purchasing. Unless procurement regulations are amended, these gaps will continue to exist.
While the inclusion of environmental considerations in federal procurement has become more robust over time, the government’s approach to green purchasing is still largely fragmented and disconnected. Currently, there is no uniform generally accepted, multi-attribute life cycle-based certification or labeling system available to federal agencies for green procurement. With the exception of the EPA’s environmentally preferable purchasing program (EPP), the emphasis has been mainly on products with a single preferred environmental attribute. Additionally, the EPP is a considerably weak approach to green procurement since it neither requires federal agencies to acquire environmentally preferable goods or services nor guides them with regards to how green they should be. When it comes to service contracts, which account for half of all federal purchasing, there is a noticeable lack of purchasing preferences as compared to that of products. In the next section, this Note proposes a coordinated top-down approach to address the considerable gaps and deficiencies that exist in the current sustainable acquisition practices of federal agencies.
Although it is easy to identify the harms and potential effects caused by climate change, coming up with a robust and effective solution is a far more difficult task. An effective starting point would be to ensure that environmental concerns are prioritized and placed at the center of U.S federal procurement. This could be achieved by emulating certain elements of the EU green procurement model and translating them into the U.S procurement framework. While the amendments this Note proposes would not entirely solve the current environmental crisis, they would at least ensure that contractors make a more concerted effort to incorporate environmental considerations into their procurement decisions and properly comply with environmental regulations throughout the procurement process.
If elements of the EU model of green procurement were to be emulated and espoused in the U.S. federal procurement system, a FAR rewrite would be a solid first step in implementing comprehensive systemic changes. The following two-pronged approach is one example of how components from the EU model could be adopted in the federal procurement framework. As a first step, FAR section 9.104 should be amended to require prospective contractors to comply with established environmental laws and obligations in order to be deemed responsible and eligible for contract awards. Second, FAR subsection 15.404-1 should be amended to oblige contracting officers to reject abnormally low proposals in a price realism assessment if such proposals are a result of noncompliance with environmental regulations.
These FAR changes would thus serve as a concrete starting point in utilizing the power of our federal procurement system in the fight against climate change. While they would not solve all climate-change related problems, these modifications could embolden contracting officers to procure more environmentally friendly goods and services.
1. Amend FAR section 9.104 to require prospective contractors to comply with established environmental laws and obligations in order to be deemed responsible and eligible for contract awards
To ensure at least minimum compliance with environmental laws, U.S. federal procurement needs to follow the EU’s lead and establish comprehensive legally binding environmental commitments within the FAR. Specifically, FAR subsection 9.104-1 should be amended to include a new clause explicitly requiring prospective contractors to demonstrate that they have taken suitable measures to ensure compliance with recognized U.S and international environmental laws listed in part 23. The FAR Council may look to the EU’s approach with Article 57(4) for inspiration, whereby the contracting officers have the burden of showing breaches of environmental laws. Alternatively, the FAR Council may also choose to structure the clause in a manner that requires the prospective contractor to make an affirmative showing that they have taken the necessary steps to comply with the enumerated environmental regulations. Thus, a prospective contractor would have to demonstrate that they currently comply with the environmental conventions listed in part 23 to be determined responsible.
The FAR Council could also look to the EU public sector directive, which permits EU contracting authorities to exclude bidders from participating in procurement procedures if it can be demonstrated that such bidders are noncompliant with applicable EU or international environmental laws. FAR part 23 could be likewise amended to include a subpart that details an exhaustive list of recognized and established environmental regulations that prospective contractors have to abide by to be deemed responsible under subsection 9.104-1. Under this framework, federal agencies would likely be able to ensure that prospective contractors take compliance with environmental regulations seriously and incentivize them to engage in greening their practices to make sure they meet the responsibility determination.
Currently, U.S federal agencies do not have the power to prefer certain contractors over others purely based on environmental factors. Nonetheless, agencies are statutorily required to avoid entering into federal contracts with contractors who the EPA can demonstrate have violated certain portions of the Clean Air Act and the Clean Water Act. To further strengthen environmental protection, part 23 could be amended to include a subpart that explicitly sets out important environmental statutes that must be followed, such as the Clean Water Act, the Ocean Dumping Act and the Montreal Protocol on Substances that Deplete the Ozone Layer. This would not only place the burden of proof of compliance on the contractors’ part, but would also force contractors to observe all parts of these conventions, including in procurement documents such as Requests for Proposals.
Additionally, just like in the EU green procurement model, FAR subsection 9.104-4 should also be amended to require joint liability of the main contractor and any subcontractor for compliance with environmental obligations, and to require the replacement of a subcontractor where its compliance with environmental obligations cannot be verified.” Thus, subcontractors would also be required to adhere to the enumerated environmental regulations in part 23 to be deemed responsible. As with the EU green procurement model, any language used should not be so restrictive as to ensure that it does not hinder any other fundamental principles of federal procurement such as non-discrimination or competition. Ultimately, the above proposed amendments would be a solid first step in incentivizing prospective contractors to robustly comply with relevant environmental conventions if they wish to be deemed responsible and thus eligible to contract with federal agencies.
2. Amend FAR subsection 15.404-1 to oblige contracting officers to reject abnormally low proposals in a price realism assessment, if such proposals are a result of noncompliance with environmental regulations
If the U.S. federal procurement framework were to emulate the EU’s approach, FAR subsection 15.404-1 should be amended to include a clause requiring offerors to explain their price or costs in their proposals where such price or costs appear to be abnormally low in relation to the works, supplies, or services. A subsequent clause should be added to allow contracting officers to require an explanation particularly regarding a contractor’s compliance with the environmental obligations referred to in the proposed addition to FAR part 23.
Under the current regulations, contracting officers sometimes conduct a price realism analysis to determine “whether an offeror’s proposed price is too low to cover the expected costs of performing the contract.” While the FAR does not define, require, or use the term “price realism,” it states that cost realism analysis may be used to evaluate fixed-price proposals for purposes of assessing proposal risk, but not for the purpose of adjusting an offeror’s evaluated price. Additionally, federal agencies may still “elect to conduct an analysis in fixed price contracts to determine the offeror’s understanding of requirements.”
To remedy this, FAR subsection 15.404-1 should be further amended to require that federal contracting officers reject proposals in cases where they establish that the abnormally low offer price or costs result from the offeror’s noncompliance with the enumerated environmental laws and regulations in the proposed addition to FAR part 23. By adding environmental breaches as a ground for rejection, federal agencies could incentivize contractors to gradually move away from a price-only focus in their proposals. With these amendments, federal agencies could use a prospective contractor’s noncompliance with any environmental obligations as grounds to “reject an abnormally low bid” much like contracting authorities in the EU.
Ultimately, the above FAR rewrites would be a solid first step in placing environmental concerns and considerations at the center of procurement decisions and hopefully in the forefront of contractors’ minds.
When it comes to the environment and other socioeconomic objectives, federal procurement is arguably a wasteful and overused method to address such matters. The linkage of secondary policy objectives with fundamental procurement principles may be considered not only unworkable, but also ineffective. Proponents of this viewpoint believe that the most effective method of achieving results with regards to such secondary policy objectives is through legislation. Nonetheless, given the highly politicized nature of environmental topics, and the difficulties associated with legislation passing through Congress, procurement is sometimes the sole means of achieving environmental objectives.
Likewise, a prevalent perception exists that environmentally friendly products cost more than their standard counterparts. In U.S. federal procurement, green products and services are sometimes seen as overly expensive and worse than typical products and services. This perception is furthered because certain institutions in the United States have implemented policies like price preferences, whereby purchasers may pay a higher cost for environmentally friendly products. While misconceptions associated with the costs of green procurement may be overcome eventually, certain other barriers such as costs externalities may be harder to curb.
As government contractors largely lack property rights in prospective contracts, courts generally do not find them to have been deprived of due process when agencies opt to buy goods and services other than those they provide. Similarly, because distinctions between product vendors based on the environmental attributes of their products do not involve suspect classifications on the basis of sex, race, or the exercise of fundamental rights, a court will likely not find that vendors whose products lack the desired environmental attributes are denied equal protection under the law.
When it comes to procurements involving intelligence, law enforcement, or national security, federal agencies like the Department of Defense may exempt such contracts from environmental preferences under certain circumstances. However, the number of procurements usually exempted as such is a small percentage compared to the overall number of procurements carried out in a year. Therefore, the proposed solutions that this Note suggests largely will not be affected by the national security exemption.
Likewise, the use of evaluation factors based on environmental considerations in government contracts has been largely upheld by the Government Accountability Office (GAO) in bid protests. In Sunshine Kids Service Supply Company, the GAO upheld the award of a contract based in part on consideration of the vendors’ “environmental stewardship.” In Future Solutions, Inc., the GAO similarly upheld an award based, in part, on consideration of the vendors’ use of green delivery vehicles and implementation of environmental management systems. Although the use of evaluation factors tied to environmental considerations has been generally upheld, federal agencies are still subject to certain limitations in the use of such factors.
Ultimately, any increased regulatory burden or potential loss of competition that may accompany green procurements should be disregarded because of the underlying importance and purpose of green procurements. As with small business set asides, green procurement practices are of national importance given the wide-ranging impact that the looming environmental crisis will have on the entire country. Nonetheless, should the above changes be adopted, federal agencies must ensure that any such acquisitions still adhere to the general principles of the federal procurement system such as “best value procurement.”
Due to the “enormity of the potential consequences associated with manmade climate change,” the United States government has a moral and fiscal responsibility to address environmental challenges in the most strategic and vigorous manner. If the United States is going to achieve significant progress, it needs to start taking hard-hitting steps by greening its procurement practices. The European model of green procurement is a strong and valuable benchmark in terms of its innovative rules and jurisprudence on green purchasing. The United States should look to the EU and tailor elements of its green procurement system through use of its federal procurement framework. By adopting the above changes to federal procurement regulations, the United States will be taking a crucial first step in prioritizing environmental considerations in federal procurement while ensuring that it is incentivizing contractors to green their own practices as well.
