GLOBE 2006

Speech given by Margaret Kenny, Acting Director General, Office of Greening Government Operations at the Green Procurement Policy: Setting Parameters for Change Workshop during the Globe 2006 Conference held in Vancouver, March 29 to 31, 2006.

Introduction

This panel session is particularly timely for the Government of Canada as the new federal Policy on Green Procurement comes into effect on April 1st – only three days from now. GLOBE 2006 provides us with an ideal opportunity to let people know that the Government of Canada has a new approach to procurement and consequently they can expect to see a change in this part of the market for environmentally preferable goods and services.

This afternoon I would like to talk about the policy, how it will be implemented and what it will mean for companies wishing to do business with the Government of Canada. I think you will see that this policy represents a fundamental shift in our approach. That is, we are moving from a model where green procurement decisions were very transactional and based on individual choice to a completely new model that reflects a strategic, corporate approach to procurement with much more emphasis on environmental performance.

Setting the Parameters for Change

In November last year, the National Roundtable of the Environment and the Economy, working with my organization, hosted a day long event where a number of diverse companies provided the government with advice on greening its operations in general and more specifically on green procurement. It was more than impressive and it was certainly informative. These companies had all made outstanding progress in this area.

So we recognize that we are not what you might call "leaders" in green procurement, but we do have an opportunity to have a significant influence in the marketplace with our demand for greener goods and services. And as such, the Federal Government's new Policy on Green Procurement, as the title for this panel session suggests, is very much about "setting the parameters for change."

By way of background, the department I work for – Public Works and Government Services Canada – is the main procurement arm of the Government of Canada. On behalf of federal departments and agencies, we purchase over $13 billion worth of goods and services annually – everything from paper clips to computers, from printing services to sophisticated military equipment.

Green procurement in itself, is not new to the department or to the Government of Canada. For example, green criteria are included in a number of commonly used goods such as copiers and fax machines. As well, more than 30 percent of the Department's vehicle fleet use fuels and technologies that reduce greenhouse gas emissions.

These are important initiatives but the decisions to buy an environmentally preferable copier or printer is made on a purchase-by-purchase basis. With the adoption of the new Policy on Green Procurement, however, we will move away from individual procurement officers working with their individual clients to make these decisions on a transactional basis to a situation where environmental performance considerations are systematically embedded into the procurement process of all departments and agencies, in the same way that we consider issues of price, performance, quality and availability. The idea is for green procurement to becomes a normal business practice.

While the principle of the policy is simple, the impact of this approach has the potential to be far-reaching.

First and foremost, our objective is to use more environmentally responsible planning, acquisition, use and disposal practices across the government to reduce the environmental impact of federal operations. In this way, procurement can support the Government in achieving specific environmental objectives such as reducing greenhouse gas emissions and air contaminants, improving energy and water efficiency, reducing ozone-depleting substances, reducing waste and supporting reuse and recycling, and reducing toxic and hazardous materials chemicals and substances.

Of course, this in turn should support innovation by stimulating the development of, and demand for, new environmentally preferred goods, materials and services.

About the Policy

First, let me emphasize that this is a government-wide policy that applies to all departments and agencies subject to the Financial Administration Act, unless specific acts or regulations override it. It is also supported by a number of "Expert Departments" such as Environment, Natural Resources Canada and Industry Canada, who are providing scientific and technical advice on environmental impacts, standards; performance and availability of environmental goods and services. The Treasury Board Secretariat too is involved in ensuring that departments report to Canadians on their performance in complying with this policy.

The policy is fully compatible with federal contracting regulations and with trade agreements, and it fully respects the Government's cornerstone procurement principles of non-discrimination, transparency and competition.

It applies to all types of procurement from all types of businesses, not just those operating in the environmental industry.

It is not a "set aside" that would allow departments to revert to alternative procurement practices once they have reached an annual quota of green purchases.

Rather, it aims to fully integrate environmental performance considerations into federal procurement practices, from planning to final disposal.

The policy fits with the "value for money" concept that is fundamental to the government's overall procurement objectives. What this policy says is that value for money is achieved by carefully considering many factors such as cost, quality and environmental performance. This requires an understanding of the environmental aspects and potential impacts and costs associated with the life cycle of the goods and services we acquire. In this context value for money means that, where opportunities exist to purchase goods and services that are less harmful to the environment and these represent value for money, the Government of Canada is committed to doing so.

The value for money analysis, when applied on a life cycle basis, requires environmental attributes to be considered in all four stages of the procurement process – planning, acquisition, use and disposal. For example, reduced energy consumption might be an appropriate environmental attribute to be considered for a product's use phase. In this case, the government might select computers with automatic power-down features or electrical equipment that consumes less energy than a conventional product.

Reduced resource consumption is another environmental attribute that might be considered by the government during the use phase. This could lead us to select printers with duplex printing features to help reduce paper consumption, or perhaps equipment with parts that can be recycled or replaced when damaged, rather than disposing of the entire unit.

Take-back of packaging, particularly for large items such as furniture and computers, is yet another attribute that could help tip the scale in favour of a specific product or supplier. We might also opt for products that reduce emissions of volatile organic compounds, such as furniture that does not have a lot of plastic components or carpeting that uses water-based rather than solvent-based adhesives. Of course, reduction of greenhouse gas emissions will be a major consideration in the years ahead. For example, you can expect to see the government moving to less polluting, more fuel- efficient vehicles.

The Canadian Approach

There are two major thrusts in the implementation of this policy that I would like to take a few minutes to explain. The first links with the government's initiative to consolidate and take a strategic approach to its procurement activities.

In Canada we have a unique opportunity to implement the new policy through the federal government initiative to transform procurement through establishing a government-wide approach to the procurement of specific commodities, such as fuels and lubricants, IT hardware, furniture, digital imaging devices and copy services, and office supplies.

Commodity management will allow us to standardize and aggregate purchases, which in turn enables us to achieve economies of scale and savings. It also allows us to systematically take account of environmental considerations, rather than focusing on individual procurement transactions. Commodity management provides a means to review, plan, acquire and assess the total life cycle activities of a distinct group of goods or services while allowing us to understand and meet the operational requirements of government departments as a whole, thereby achieving value for money for Canadians.

In reviewing how and what the federal government buys, we will establish Commodity Plans identifying procurement objectives for these commodities, as well as the sourcing strategy, procurement plan and contract management approach. Based on these Plans the federal government will establish procurement tools such as standing offers. It will be mandatory for departments to use these tools to meet their needs, which in turn will enable us to ensure that departments and agencies will have access to environmentally preferable goods and services without having to go through their own time-consuming tendering and appraisal processes.

So commodity management not only allows us to achieve economies of scale and savings, but also improved environmental performance.

The move to commodity management provides an ideal opportunity to advance the objectives of the new Green Procurement Policy. As I have already noted, commodity management emphasizes the use of a life-cycle approach to examining the costs associated with specific goods and services, which is also the cornerstone of the Green Procurement Policy. As part of our strategy for implementing commodity management, we are engaging stakeholders – including product and service suppliers – in a collaborative effort to achieve the goal of embedding environmental performance considerations in the procurement process.

The second thrust deals with the goods and services that are not yet, or will not be, included in the process I just described. In order to deal with these goods and services, the 35 largest Departments and Agencies will be setting their own green procurement targets. These targets will be based on the mandate of the Department or Agency, the environmental of their work, and where there is greatest opportunity to use procurement to advance the greening of their operations. These targets will be published in their Sustainable Development Strategies and tabled in Parliament in December 2006.

I mentioned at the outset that the Green Procurement Policy comes into effect on April 1st. As you will appreciate it will not be all implemented overnight - by necessity implementation will be phased.

The initial phase is already underway and targets five commodity areas: computers and IT hardware; imaging equipment such as printers and facsimiles, as well as printing and photocopying services; office supplies; fuels and lubricants, and furniture.

These commodities were chosen for the initial phase of implementation based on:

• the Government of Canada's volume of spending in these areas;
• the level of environmental impact and risk for these commodities;
• opportunities to apply principles of life-cycle management; and
• the ability of suppliers to respond to environmental performance considerations.

Over the next few years it is the government's intention to expand implementation to include additional commodities that will represent a significant portion of federal procurement spending.

At the same time as these initiatives are rolling out, tools to support implementation, such as templates to help Departments determine which goods and services to target and training guides, are being developed. A particularly important tool that is currently under development is the Government of Canada Marketplace – an electronic service that will help us identify green products and give us the ability to track green procurement.

What Does The Policy Mean for Businesses?

The green procurement policy sends a clear signal to the business community that change is on the horizon. And in sending that signal, we are giving notice that businesses will need to position themselves accordingly if they wish to sell products and services to the Government of Canada. If they haven't already done so, they need to start looking carefully at how the goods and services they produce measure up from an environmental perspective.

This is of course important for Canadian companies who want to supply goods and service to the Government of Canada but it also applies beyond our borders. The reality is that green products and services are the way of the future around the world. Governments in other countries – including some of Canada's most important trading partners – are also implementing green procurement policies. In so doing, they are setting environmental performance standards that Canadian companies will need to meet in order to compete in global markets.

We recognize that the new policy may present challenges to some suppliers who are currently doing business with the Government of Canada. But it will also present opportunities. Small and medium-sized enterprises in particular stand to benefit, since they are often at the forefront of innovation in developing and marketing environmentally friendly products. Our intent with this policy is to help create the pull needed to get worthwhile products into the marketplace and promote further innovation in the area of environmentally preferable goods and services. We also know there is work to do to ensure that this is the case. In fact, PWGSC has established an Office of Small and Medium Enterprises specifically to oversee and represent the interests of these businesses as it moves towards a more consolidated approach to commodity management. This Office's role is two-fold. First, it has a mandate to support SMEs wishing to do business with the Government of Canada by helping them navigate the government procurement system. And second, the Office is working within the federal government to ensure the procurement system treats SMEs fairly. For example, the Office will work with SME organizations to share information on forming joint venture consortia to access major government contracts. We have a representative from this office, Ms. Llynne Plante, with us today.

So what will all of these changes mean to the way suppliers do business with the Government of Canada? Well, you should know that most things will remain unchanged. Although our criteria for selecting suppliers and awarding contracts will now include environmental attributes, procurement will still be conducted in a way that promotes access, encourages competition and ensures fairness. As is currently the case, most government requirements will be advertised through the Government Electronic Tendering Service – better known as MERX – which is accessible to potential bidders across Canada.

For those of you who are not familiar with these processes or want to learn more about doing business with the Government of Canada, let me suggest that for any of you take a few minutes over the next couple of days to visit the Office of Greening Government Operations' booth in the exhibition hall. We would be delighted to explain how PWGSC is working with suppliers through seminars, awareness sessions and other events and activities to facilitate doing business with the Government of Canada. We can also tell you more about the Green Procurement Policy and our role as a government-wide centre of expertise and leadership in the area of greening government operations.

In the meantime, I look forward to the next two presentations and our discussion. Thank you for your attention.