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Public Contract Law Journal

Public Contract Law Journal Vol. 50, No. 4

A Comparative Analysis of Green Procurement Practices as a Framework for New FAR Provisions Aimed at Combatting Climate Change

Eric David Brill


  • One way to combat the threat of climate change is through “green” procurement practices that promote the purchase of environmentally preferable products and services by government agencies.
  • Approaches to green procurement by the European Union, the Netherlands, Canada, and California inform the three proposals and recommendations to amend federal acquisition regulations (FAR) in the United States.
  • Executive orders have been at the forefront of setting green public procurement (GPP) standards, beginning with the Clinton Administration.
A Comparative Analysis of Green Procurement Practices as a Framework for New FAR Provisions Aimed at Combatting Climate Change
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The threat of climate change necessitates urgent and creative solutions. The United States, as one of the largest emitters of greenhouse gases on Earth, has a particular responsibility to take all feasible steps to lessen its CO2 emissions. Procurement is an area in which the federal government can decrease its CO2 emissions. As the single largest purchaser of goods and services on the planet, the United States has a unique opportunity to reduce the effects of climate change through “greener” procurement practices. This Note analyzes the approaches that the European Union, the Netherlands, Canada, and California have taken to green procurement in order to offer a set of proposals that the United States should incorporate into its federal-level procurement. Collectively, these proposals will help reduce the federal government’s carbon footprint while also improving transparency and accountability in the American procurement system.

I. Introduction

In 2018, the U.S. Global Change Research Program delivered the Fourth National Climate Assessment to Congress and the President, which found that human health and safety, quality of life, and the rate of economic growth in the United States are increasingly vulnerable to the effects of climate change. In recent years, public concern over climate change has also grown as average temperatures increase, glaciers continue to melt, oceans rise, and weather events like hurricanes and wildfires become more frequent and more extreme. In response to this climatological threat, calls for substantial efforts to halt the effects of climate change are growing stronger in the United States and around the world.

One way to combat the threat of climate change is through “green” procurement practices that promote the purchase of environmentally preferable products and services by government agencies. Such practices would require contracting officers to consider environmental performance alongside other priorities, such as price, availability, quality, and performance when determining which offeror to award a contract to. This can help reduce the carbon footprint of the government while creating new markets for products and services that reduce greenhouse gas (GHG) emissions, pollution, plastic waste, and the use of hazardous and toxic substances.

Local and national governments around the world have adopted green procurement programs, though their approaches vary widely. In the United States, FAR Part 23 codifies various provisions of broader environmental statutes, executive orders, and administrative rules that use federal contracts to help facilitate larger environmental policy aims. These requirements operate similarly to other acquisition regulations intended to effectuate public policies, such as small business set-asides or preferences for domestic products. However, based on an examination of the approaches that other governments are taking to green procurement, there is considerable room for improving and expanding existing federal requirements in the United States. As the largest purchaser of goods and services on the planet, the United States has both the unique ability and obligation to ensure that its procurement methods are conducive to the demands of the present climate crisis.

This Note examines the approaches to green procurement that other governments are taking in order to offer recommendations for new federal acquisition regulations that should be implemented in the United States. It begins by providing an overview of current green procurement requirements in the United States in order to highlight current gaps in the law. A discussion then follows of the various practices that the European Union, the Netherlands, Canada, and California have taken to make their procurement practices more environmentally friendly. This Note concludes by offering a series of recommendations for amending the FAR to lessen the federal government’s carbon footprint based on the best practices that the aforementioned governments have applied in their green procurement. Three proposals in particular are recommended: (1) expanding the categories of goods and services covered by green public procurement requirements in the FAR, (2) incorporating environmental product declarations into the bid evaluation process and (3) utilizing better evaluation tools and technology for evaluating the environmental impact of particular bids and bidders. The potential political and environmental advantages and drawbacks of these proposals are considered as well.

II. Overview of Green Purchasing in the United States as a Collateral Policy in Federal Procurement

Implementing policies through the federal acquisition process is a well- established practice. Examples of policies that have been implemented in this way include programs aimed at assisting small businesses through set-asides, establishing a preference for the purchase of domestic products, and ensuring that contractors are equal opportunity employers who hire qualified individuals with disabilities. Proponents of these types of collateral policies stress that the government has the power, through purchasing preferences, to open up competition, promote social priorities, and bolster American industry. While opponents argue that collateral policies lead to higher prices and a slower, more complex acquisition process, the opportunity to advance social priorities, such as combatting climate change, outweighs any potential inefficiencies or administrative burdens.

In recent years, executive orders have been at the forefront of setting green public procurement (GPP) standards in the United States. Beginning with the Clinton administration, the federal procurement community has increasingly taken environmental concerns into consideration when making purchasing decisions. Efforts to increase consideration of environmental concerns in procurement decisions continued under the Bush administration, namely through Executive Order 13423, which directed federal agencies to reduce their emission of greenhouse gases and give preference to certain environmentally sustainable products. Though later revoked, Executive Order 13423 continues to undergird many FAR provisions today. President Obama broadened the green procurement framework in 2009 with Executive Order 13514, which established baselines for reducing GHG emissions while requiring agencies to reduce waste and conserve energy. These orders are now incorporated into the FAR and emphasize a preference for acquisition of sustainable products as well as “green” services. A subsequent executive order, Executive Order 13693, signed in 2015, set a goal to reduce GHG emissions over the next decade by forty percent from 2008 levels.

When President Trump took office in 2017, he and his administration made a point of rolling back environmental regulations, leaving the Paris Climate Accords, and consistently downplaying the severity of the threat of climate change. Among these efforts was the implementation of Executive Order 13834, which eliminated the specific GHG reduction goals and efficiency standards for federal acquisitions that Executive Order 13693 had put in place. Executive Order 13834 also led to the withdrawal of a proposed FAR rule that called for “environmental performance and sustainability factors” to be included “to the maximum extent practicable for all applicable procurements.” Since the election of President Biden, there has already been a return to Obama-era efforts at promoting sustainable procurement, but this recent regulatory rollercoaster illustrates the drawbacks of doing so by executive fiat.

The motivation to pursue green procurement stems from the potential to reduce the environmental impact of federal activities substantially. Moreover, incentivizing private contractors to utilize products with smaller environmental footprints may lead to the adoption of such practices more broadly in the private sector and by state and local governments. The trickle-down of green procurement may even contribute to the development of green industries themselves.

Current federal requirements stem from various statutes, the aforementioned executive orders, and regulations that require or at least encourage contracting officers to take environmental considerations into account when procuring goods or services. FAR Part 23 in particular sets out a number of environmental requirements for contracting with the federal government. FAR 23.7 sets out policies for acquiring environmentally-preferable products and services, and FAR 23.8 establishes requirements related to ozone-depleting substances and greenhouse gases. However, the FAR could do more to label environmentally-sound goods and services as well as to establish more technical evaluation strategies and tools for making such assessments.

FAR 23.103 additionally requires federal agencies to ensure that ninety-five percent of new contract actions for the supply of products and the acquisition of services be either energy-efficient, water-efficient, bio-based, environmentally preferable, non-ozone depleting, or made with recovered materials. However, the FAR does not define the remaining five percent, effectively allowing agencies to exempt themselves from this eco-labeling requirement. Consequently, it is virtually impossible to challenge this requirement. Professor Yukins notes that there have been no reported GAO bid protest decisions raising such a challenge. Closing this loophole and addressing other shortcomings in current FAR requirements will be important for improving the sustainability of federal procurement.

III. Governmental Approaches to Green Procurement in the European Union, the Netherlands, Canada, and California

The following subsections outline the approaches other governments have adopted to promote green procurement. After surveying the European Union’s green public procurement program, this Note highlights the Netherlands’ additional efforts. Although less substantial than the discussion of other programs addressed herein, a discussion of Canada’s Green Policy follows, before considering California’s legislative efforts to curb GHG emissions and purchase environmentally preferable products. The countries and governments discussed below are similarly industrialized in comparison to the United States, similarly spend a significant amount of gross domestic product (GDP) on purchasing goods and services, and have a demonstrated record of success in their green procurement initiatives.

A. The European Union’s Green Public Procurement System

The European Union (EU) and its member states offer a useful model for American green procurement practices, as their public expenditures cover roughly sixteen percent of GDP and have similar foreign policy commitments as the United States. A majority of European countries have adopted a voluntary approach to the EU’s green public procurement program, while a handful of countries, such as the Netherlands, have additional mandatory requirements for their central governments.

Green public procurement (GPP) offers voluntary thresholds for its member countries that are meant to combat GHG emissions while stimulating green markets for products and technologies and enhancing competition throughout the EU. The majority of EU member states have adopted GPP in some form, though with varying levels of adaptation. The EU’s voluntary target was for fifty percent of procurements to follow the program’s criteria. However, individual countries have also set their own GPP targets, ranging from twenty percent of procurements in Poland, to one hundred percent of procurements in the Netherlands.

While there is not a firm set of criteria to evaluate in the aggregate because each country has adopted a variety of approaches, the EU has developed GPP standards for nineteen product and service groups with their own award criteria. For example, in the construction sector, construction materials are assessed by their life cycle impacts, carbon footprints, and “global warming potential” associated with extracting, manufacturing, and transporting the materials. Construction materials also have minimum thresholds for their recycled contents.

In addition to the broader program, the EU also created GPP 2020, which was aimed at mainstreaming low-carbon procurement through low-carbon tenders as well as training and networking events, and has led to the creation of permanent support structures in eight countries. The project was created with the goal of achieving a twenty percent reduction in GHG emissions, a twenty percent increase in the share of renewable energy, and a twenty percent increase in energy efficiency by 2020. Over a three-year period, more than one hundred low-carbon tenders were implemented by over forty public authorities, saving over 900,000 tons of CO2 and 140,000 tons of oil equivalent (toe). This program presents potential policy options for the United States to consider. The use of low-carbon requirements has thus far proven to be a successful strategy in the EU and one the United States could replicate in its own procurement practices.

B. European Countries’ Green Actions Independent from the European Union

Other countries in the EU have implemented their own programs, apart from and in addition to the EU’s, but with similar policy goals in mind. For example, Austria’s national plan has set guidelines for fourteen categories of procurement, including chemical products, waste collection, and energy use and services. This is similar to some of the categories mentioned in the FAR, although the FAR does not present the categories in an explicit list as the Austrian plan does. While the GPP standards in Austria’s national plan are mandatory for the central government to follow, they are voluntary for state and local governments. In determining the plan’s criteria, the Austrian government utilized a total-cost-of-ownership (TCO) approach, which is similar to life-cycle analysis in that it seeks to evaluate the product or service holistically.

The United Kingdom has also taken a number of concrete steps towards “greening” their procurement practices. In 2006, the United Kingdom created the Sustainable Procurement Task Force (SPTF) to “use its immense buying power” in furtherance of the country’s sustainable development goals. This led to a national action plan, revised in 2010, with broad goals for reducing the government’s carbon footprint, encouraging market adaption toward sustainable products and services, and providing purchasing data to improve transparency. These policies apply to the entire government of the United Kingdom and cover eighteen categories of government spending. The British government designates product specifications as either “mandatory” or “best practice” based on input from the government, industry players and other stakeholders, and market research. The United Kingdom, while not a main part of this Note’s analysis, presents a useful framework for comparing GPP, given the United Kingdom’s relationship with and similarities to the United States.

C. The Netherlands’ Evaluation Tools in Green Procurement

The Netherlands is perhaps the global leader in green procurement practices. In 2005, before the EU had implemented its own voluntary GPP criteria, the Netherlands set a target for its own central government to have one hundred percent of its procurement activities adhering to GPP standards by 2010. By 2015, this goal was expanded to Dutch provinces, municipalities, and district waterboards. These efforts were successful, as all entities achieved one hundred percent compliance. While GPP at the state and municipal level in the United States is beyond the scope of this Note, the top-down uniformity of the Netherlands shows how far changes can eventually extend.

The Dutch government uses a software tool called DuboCalc to calculate its CO2 and other GHG emissions based on life cycle analysis, which it utilizes in setting minimum GPP criteria for forty-five different product groups. DuboCalc translates the environmental impact of the materials and services sought to be procured into a single number known as the “environmental cost indicator” (ECI). This statistic is based on the extraction, demolition, and recycling of materials and services. The ECI better informs the procuring official about which bidder to award the contract to based on the best price-quality ratio. Each product in the different groups has a maximum ECI, forcing contractors to adapt their products and services to ensure they are in line with sustainable technological trends. Adopting DuboCalc itself, or a another similar program, is a tool that procuring officials in the United States could and should utilize.

In addition to DuboCalc, the Netherlands also uses a CO2 Performance Ladder scheme for construction contracts and materials. Offerors are evaluated based on four factors to determine if they can be certified to receive awards during the tendering process. The Ladder consists of five levels, and the higher the level of the organization, the higher the award advantage. This type of voluntary scheme intends to incentivize contractors to go above-and-beyond in their reduction of CO2 emissions. Adopting this type of scheme is another straight-forward step that the United States could adopt in some form with seemingly little difficulty.

D. Canada’s Green Policy

Canada’s Policy on Green Procurement (the “Green Policy”) aims to integrate environmental considerations into procurement activities, including planning, buying, use, maintenance, and disposal in order to reduce environmental effects while ensuring best value. Therefore environmental performance is considered alongside cost, performance, quality, and availability in making contract awards. The Green Policy sets out a series of requirements for deputy heads to ensure that the objectives of green procurement are realized, namely integrating life-cycle principles in planning practices and buying preferable goods and services while also balancing other cost and performance factors. The inclusion of life-cycle analysis in the Green Policy is one of its main contributions to sustainable development, and is the aspect of the program that the U.S. would be well-served to replicate.

In addition, Canada focuses on a handful of other priority areas for making government operations more sustainable, like improving energy efficiency in buildings and vehicle fleets, as well as promoting the green procurement of goods. In support of these efforts, Canada hopes to achieve a government-wide forty percent reduction in GHG emissions by 2025, and no later than 2030. Similar to the EU and the Netherlands, Canada also has an enumerated list of categories and products with set environmental criteria. It requires departments and agencies to report on green procurements and utilizes software for tracking progress. Taken together, Canada’s approach to green procurement is more thorough than the United States’ current scheme and offers a number of possible ideas for future FAR provisions or executive orders.

E. California’s Environmentally Preferable Purchasing Program and the Buy Clean California Act

In addition to the approaches taken in other parts of the world, California’s Environmentally Preferable Purchasing (EPP) program is another that the federal government should seek to replicate. EPP involves “the procurement or acquisition of goods and services that have a lesser or reduced effect on human health and the environment when compared with competing goods or services that serve the same purpose.” State agencies incorporate EPP specifications into bid solicitations, which prescribe the desired positive environmental attributes of a product. EPP Procurement Engineers then verify that products meet the minimum specifications in the solicitation through third-party certifications, certification databases, and publicly available supporting documentation. A purchase can also be deemed environmentally preferable if it is State Agency Buy Recycled Campaign (SABRC) compliant. In 2020, sixty-five percent of California’s spending was environmentally preferably purchased after roughly three-fourths of their purchases met EPP standards in 2018 and 2019. Despite this dip, the state’s EPP has generally been on an upward trajectory in recent years.

In conjunction with the state’s EPP efforts, California passed the Buy Clean California Act in 2017, which requires that any state-funded building projects consider the global warming potential (GWP) of the materials procured for construction, including carbon steel rebar, flat glass, mineral wood insulation, and structural steel. Manufacturers seeking to sell these materials must submit facility-specific environmental product declarations (EPDs) verifying that they are below the GWP limits set by the state. California’s Department of General Services (DGS) regulates this policy implementation by setting “maximum acceptable” GWP for different product categories that contractors must meet in order to place bids on state-funded projects.

A goal of the program is to close the “carbon loophole,” as more than twenty percent of the world’s GHG emissions are caused by the manufacture of products in one state but consumed in another. States can only regulate the emissions that come from within their borders. However, by setting GWP limits, California can influence the actions of out of state manufacturers who, hoping to take advantage of California’s sizeable market, will invest in cleaner processes and technologies to make their products available for the state’s procurement. The same logic would certainly hold true for the federal government, given its greater influence on the market. While there is a preference for products with smaller carbon footprints at the federal level, nationally following California’s lead by formalizing the requirement for common construction materials will decrease the federal government’s own output of CO2 emissions and also encourage major industry players to adapt their materials to be more environmentally friendly.

IV. Proposals for Improving Federal Green Procurement in the United States

The federal government can improve the sustainability of its purchasing practices by adopting elements of the approaches implemented by California and abroad. First, the federal government should expand the list of categories requiring green procurement practices based on those included by other countries. Second, the government should require contractors to submit EPDs as part of their bids so that contracting officers can more fully assess the differences in environmental quality associated with different contractors. Third, the government should adopt some of the tools used in other countries for evaluating carbon emissions. All three of these proposals complement each other and can help ensure that procurement is conducted in a way that minimizes environmental degradation to the greatest extent possible.

Many of the issues holding green procurement back from being more effective in the greater United States are cost, a lack of data and measurement, and political inertia. The federal approach to green procurement has been largely piecemeal and has resulted in ambiguity that can create confusion for potential contractors. Therefore, apart from a focus on “greener” products and services, the procurement system put into place must be coherent and not unduly restrictive on the market. There must also be steps taken to create ways of measuring and tracking all facets of the federal procurement system in order to mold it in a way that best fits the needs of the environment, the government, and contractors.

The following proposals are made with these considerations in mind. As a matter of political expedience, these proposals could be implemented through an executive order if necessary, like a significant number of green procurement policies over the past twenty-five years, as well as through a Congressional statute or administrative rulemaking. The exigencies of the threat of climate change demand immediate action wherever feasible.

A. Expand the List of Categories of Goods and Services Covered by Green Procurement Requirements in the FAR

While the FAR requires federal agencies to engage in sustainable acquisition and GSA maintains a database of different environmentally friendly products, it would be helpful to formalize a list of products with specific green public procurement requirements in the FAR in the same way that many European countries have done so. Adding categories with specific, mandatory requirements would help decrease the government’s carbon footprint. These added requirements, following the model used in the aforementioned European countries, should be reevaluated periodically, with ceilings for the amount of CO2 emissions that a material or service could produce in order to be eligible for contract award. The list of products would include, at a minimum, various construction materials, metals, paper, chemicals, transportation, vehicles, and hazardous waste. By making the list of products and services more comprehensive, federal agencies would be encouraged to contract in ways that are environmentally friendly wherever possible. While current requirements are geared toward this goal, covering more bases through a more robust FAR provision would be more effective.

To reassure small businesses concerned that they may not be able to meet heightened sustainability standards, the government could plan to set a lower bar initially for acceptable emissions standards and gradually lower the maximum emissions allowed, similar to preferences that the FAR permits for certain small businesses. In doing so, the government can incentivize industry-wide improvement in the amount of CO2 associated with various products, much like California has done with the Buy Clean California Act. By adding these thresholds, transparency and accountability will improve, as it will be easier to track compliance. Congress could set different requirements for products based on the procuring agency, such as for the Department of Defense where procurement needs may be more pressing due to the nature of work, thereby giving political flexibility to lawmakers and the agencies themselves.

B. Incorporate Environmental Product Declarations Into the Bid Evaluation Process

As part of the bid evaluation process, the federal government should require contractors to submit an environmental product declaration that includes life-cycle analysis of the product or service being procured. Canada requires life-cycle analysis in its acquisitions and California requires life-cycle evaluations as part of the Buy Clean America Act for construction materials. A similar form at the federal level would be helpful for contracting officers in making sure that bidders are compliant with federal requirements for carbon emissions. These EPDs would work in conjunction with the expanded list of goods and services covered by green procurement requirements in the FAR.

California’s approach to green procurement is particularly instructive not only because it has developed within the United States, but because the state spends significant amounts of money on procurement. Formalizing the federal requirement for all types of procured products will not only decrease the federal government’s own output of CO2 emissions, but will also encourage major industry players to adapt their materials to be more environmentally friendly. Similar evaluation techniques are used by other countries and while the federal government currently has some tools for making evaluations, a more formalized process would be helpful to contractors and agencies alike.

C. Utilize Modern Tools and Technology in the Bid Evaluation Process

There are tools available, such as DuboCalc in the Netherlands, that the United States should incorporate into its procurement practices to evaluate potential contractors. Adopting a program like DuboCalc would be useful for procuring officials and would promote accountability in the evaluation of bids when it comes to environmental impact. By setting maximum ECI figures on various products and services, ideally in conjunction with the first proposal to set a firm and comprehensive list, contractors are forced to adapt and make sure that they are in line with sustainable technological trends. It would also likely benefit contracting officers to have a quantifiable gauge to use when evaluating the qualifications of various bidders.

The United States should also implement an incentive program, similar to the CO2 Performance Ladder scheme of the Netherlands, for contractors wishing to get a leg up on their competitors by showing that their products and services are more eco-friendly than others in the field. Whether the United States adopts a similar service created by a private organization as the Netherlands has done or creates a certification program of its own, there is an opportunity for a voluntary program that businesses could take advantage of. The Dutch model also helps alleviate concerns about mandatory requirements by merely incentivizing lessened carbon outputs by contractors. This proposal would help move the federal acquisition process toward a system that more comprehensively ensures green procurement while also incentivizing the private sector to adapt their products and services to the needs of the environment.

D. The Proposals’ Advantages and Drawbacks

These proposals are meant to be less politically explosive options for addressing climate change than other prior suggestions, such as a “Green New Deal” or a carbon tax. Efforts to combat climate change remain a highly partisan issue, despite the considerable scientific consensus regarding the effects that humans have had on warming trends over the past century. In such a polarized political climate, greener procurement practices may present a less headline-grabbing, more pragmatic option for legislators and the President.

Given the spending power of the federal government, incremental changes towards greater sustainability present significant opportunities to lessen the country’s carbon footprint. This is in part why it is important that green procurement requirements be established at the federal level. In addition to ultimately reducing carbon emissions, these proposals will help incentivize the private sector contracting with the federal government to change the way in which they create goods and conduct services to reduce their own carbon footprints. Although one hopes that all fifty states will adopt comprehensive green procurement practices of their own organically, and although many localities have already done so, more stringent federal requirements can accelerate the process by influencing the availability of green products and services in the larger marketplace. Ideally, if contractors curb the emissions of their goods and services to satisfy federal standards, those same, more eco-friendly products will be used at the state level, regardless of specific state requirements.

The most glaring drawback to any increase in environmental regulations is the effect that changes can have, at least in the short term, on competition and on the cost of contracting. For example, requiring more products and services to be covered by sustainability requirements in the FAR while utilizing tools that enhance the evaluation process is likely to increase costs and administrative burdens. However, these are expected downsides to implementing collateral policies through procurement. There may also be concern over the ability of small businesses to meet enhanced environmental requirements, compared to larger contractors. As mentioned previously, however, the FAR already includes provisions which allow for accommodation of small businesses in contracting competition should costs be a concern that can be replicated in this program.

V. Conclusion

At a time when climate change presents perhaps the most significant geopolitical threat to the United States (and the rest of the world, for that matter), every feasible step to reduce its causes and reverse its effects must be taken. The federal government’s spending power and carbon footprint are among the largest in the world, which means that curbing every facet of the United States’ purchasing to be more conducive to long term sustainability is paramount.

While current FAR provisions do encourage green procurement, an examination of the approaches taken in other parts of the world and at the state level show potential next steps that the federal government can take. Setting specified standards for different products and services in the FAR while also establishing uniform evaluation tools for bidders and contracting officers will help guarantee that the American procurement system becomes a leader in sustainable purchasing. At the same time, these steps will also incentivize industries hoping to profit off of the considerable contracting opportunities available with the federal government to adapt their products and materials to reflect the long term needs of the planet.

The steps outlined above are feasible and meaningful options for executive agencies, Congress, or the President to take in furtherance of the effort to combat climate change. While the politics of environmental change have proven rocky in recent years, the planet is not waiting patiently for consensus. Temperatures will continue to rise as natural disasters worsen in scope. The country’s leaders must take steps to stem this tide quickly. Amending the procurement system is both an achievable and effective course of action.