SUSTAINABLE PUBLIC PROCUREMENT:

A NEW APPROACH TO GOOD GOVERNANCE

A.B. Adjei
This paper seeks to introduce the concept of SPP, its relevance in
governance, and significance of its application for sustainable economic
development. Good public procurement systems can help governments
optimize resources to obtain better value for money and improve projects
delivery. An enabling environment for good governance is thus created
when public procurement systems are strengthened. Governance,
according to the OECD, encompasses the role of public authorities in
establishing the environment in which economic operators function to
determine the distribution of benefits as well as the relationship between
the ruler and the ruled. Good governance is, among other things,
participatory, transparent and accountable. It is also effective and
equitable; and it promotes the rule of law (UNDP).
The International Development Law Organization (IDLO) based in Italy,
identifies five dimensions of good governance:

Structure of government

Structure of the accountability and contestability of political leaders;

Public sector management;

Open entry and competition in the private sector: and

Issues dealing with civil society, voice and participation

 Since the public procurement budget of developing nations is often

large (about 60% of total government expenditure), a well regulated
public procurement system will certainly promote good governance.
This will be visible in terms of efficient resource management (including
natural resources), social services delivery, increased projects delivery
(e.g. schools, hospitals, and highways), accountability, transparency,
competitiveness, fairness, promotion of growth of local industry, etc.
Public procurement can be influenced by consumer protection societies,
media, environmentalists, social activists, and other groupings that
demand social justice.
DELIVERABLES UNDER GOOD GOVERNANCE

Good governance demands that the state upholds the rights of the
vulnerable, protecting the environment, maintaining stable
macroeconomic conditions, maintaining standards of public health and
safety for all at an affordable cost, mobilising resources to provide
essential public services and infrastructure and maintaining order,
security and social harmony. These are all sustainability issues.
Good governance delivers sustainable development by ensuring
establishment of political, legal, economic and social circumstances for
poverty reduction, job creation, environmental protection and the
advancement of women.
According to the UNDP, the goal of governance initiatives should be to
develop capacities that are needed to realize development that gives
priority to the poor, advances women, sustains the environment and
creates needed opportunities for employment and other livelihoods (UNDP Policy document on Good Governance and sustainable human
development).
Sustainable development, according to UNDP, is the balancing of the
fulfillment of human needs with the protection of the natural
environment so that these needs can be met not only in the present, but in
the indefinite future. Sustainable development does not focus solely on
environmental issues. More broadly, sustainable development policies
encompass three general policy areas: economic, environmental and
social.
WHAT IS SUSTAINABLE PUBLIC PROCUREMENT (SPP)

Sustainable Public Procurement is about spending public funds on

products/services/projects that foster sustainable development. With

sustainability issues becoming vital in the developmental agenda of

nations, it is time to shift the focus of public procurement systems from
mainly immediate economic advantages to Sustainable Public
Procurement systems which will result in long-term benefits not just to
governments but to all their constituents.
Though a new concept, SPP is not another type of procurement; it rather
seeks to address the environmental, social and economic consequences of
procurement actions from design through manufacturing to use and final
disposal. African communities are faced with worsening climatic
conditions, poverty, deforestation and other environmental degradations.
These are mainly the result of inappropriate production and consumption
practices
Sustainable Public Procurement is defined as a process whereby Public
Institutions meet their needs for goods, services and works in a way that
achieves value for money on a whole life basis in terms of generating
benefits not only to the organization, but also to society and the economy,
whilst minimising damage to the environment. It is one of seven themes
being promoted under the Marrakech Task Force. The six other themes
are on:

Sustainable Products (hosted by the UK);

Sustainable Lifestyles (hosted by Sweden);

Sustainable Tourism (hosted by France);

Sustainable Buildings and Construction (hosted by Finland);

Education for Sustainable Consumption (hosted by Italy);

Cooperation with Africa (hosted by Germany).

SPP considers the environmental, social and economic consequences of:

design; non-renewable material use; manufacture and production
methods; logistics; service delivery; use; operation; maintenance; reuse;
recycling options; disposal; and suppliers' capabilities to address these
consequences. It upholds the principles of transparency, fairness (to both
the supplier and society), long term economy, and accountability (from
purchaser and supplier).

THE DIMENSIONS (PILLARS) OF SPP

SPP has three dimensions known as pillars. These are environment,

social, and economic. There are sustainable issues under each pillar that
should be integrated into the procurement processes.
Environment
Every product or service bought has environmental impacts throughout
its life-cycle- from the extraction of raw materials, the manufacturing of
the product through to its use and disposal. The product must be
environmentally harmonious, in the sense that its manufacture, use, or
disposal will not negatively impact on the environment. For example the
use of energy should be moderate (-use of energy saving lighting
systems), and the method of generation should take advantage of
renewable energies, to maintain fossil fuel levels.
Social
Purchasing actions have social implications, and public procurement can
be used to drive social improvements- for example working conditions
for publicly contracted construction workers, disabled access in public
buildings, employment opportunities for marginalised groups, working
against child labour or supporting Fair Trade. Another example of social
sustainability: products that have been manufactured under good
conditions and fairly traded.

Economic
The term economic in this case does not just mean the initial purchase
price but also means efficient procurement including usage costs such as
electricity and water consumption, maintenance expenditures and
disposal costs at the end of its life. Also, economic sustainability ensures
that there is an economic benefit both to the community from which the
product was manufactured and to that in which it was sold.
SIGNIFICANCE AND BENEFITS OF SPP

Governments being the largest single buyers, it is evident that what and
how governments buy and acquires in terms of goods, services and
works contribute significantly, both to its ability to deliver sustainable
development and to its credibility with its development partners. Public
Procurement carried out purely on the basis of upfront costs

demonstrates unsustainable economy, since the cost of ownership will far

outstrip the upfront cost.
Buyers have a lot of control over what is manufactured, and how it is
manufactured. Each time a product is purchased, the buyer is
effectively "electing" or "voting" for the company that has provided it.
When products are purchased from companies that are ethically
irresponsible, e.g. companies that exploit their workers, or companies
that degrade the environment through their operations, then these
companies engaged such un-sustainable practices are being encouraged
to continue. The purchasing power should rather be used to support
companies that produce sustainable products, e.g. recycled paper.
Government procurement therefore needs to consider sustainability
issues as it is the only way that it can be sure to offer real value for
money over a longer term without compromising environmental and
social responsibilities. This would ensure that development targets are
achieved through the acquisition of goods, works and services without
much damage to society and the environment.
With these considerations, SPP seeks long term impact on economic,
social and environmental issues, by helping to:

achieve value for money;

sustain economic development;

improve ethical behaviour of suppliers / contractors especially,

and the general public at large;

reduce harmful emissions and waste generation;

improved air and water quality;

make local industries applying SPP internationally competitive;

increase the wealth and health of the society (hence improve

living standards),

improve working conditions - health and safety, labour

standards;

reduce labour agitation;

improve condition of disadvantaged groups in the country;

help accelerate the achievement of the Millenium Development

Goals, and

create a better society, among other things.

EFFICIENT AND EFFECTIVE PUBLIC PROCUREMENT SYSTEM

An efficient and effective public procurement system is a good

governance tool that:

Promotes effective and efficient procurement practices and

systems to enable government to deliver the services demanded by its
constituents in a timely manner;

Seeks to achieve value for money based on whole life cost;

Enhances competitiveness among suppliers through its policies

and practices;

Adopts high standards of equity to ensure fairness and

transparency, and to avoid corruption in its practices;

Ensures accountability through good record keeping, auditing,

and transparent review procedures, among others;

Ensures uniformity for all public procurement by entities through

regulations and use of standard documents;

Ensures that public procurement complies with provisions of the

countrys public procurement law as well as the constitution;

Enhances quality and quantity of government projects delivered.

Even though the above issues are elements of efficient public

procurement systems, they are at the heart of good governance.
PROMOTING A SUSTAINABLE PROCUREMENT AGENDAGHANAS EXAMPLE

Sustainable Procurement should be run through deliberate national or

municipal level policy implementation backed by legal instruments.
Strong political will and leadership to drive the implementation process
is required for its successful implementation. Institutional buyers focus
on upfront savings and profit maximization would have to be redirected
to include consideration of sustainability issues to enhance social equity,
economic advancement and environmental sustainability. This may
necessitate legal/legislative compulsion, in combination with incentives.
There is need to train compliance inspectors for successful Sustainable
Procurement implementation.

Ghanas public procurement is regulated by an Act of Parliament which

was passed into law in December 2003, Act 633. Section 59 of Ghanas
Public Procurement Act, 2003 (Act 663) includes some Economic and
social sustainable issues. The emphasis as outlined in Section 59 is on
the Economic aspect. Despite this, some Economic sustainable issues
have also not been integrated into the procurement processes. There are
few social considerations, with virtually no consideration on
Environmental issues.
The Environmental aspect, though not captured in the law, has standalone regulations on issues like Energy Efficiency Standards, Pesticides
Control and Management, reduction in green house gas emissions, Forest
& Wildlife management, Mining and others.
On the Social side, Ghanas labour Law, Act 651 of 2003 addresses
issues like:

Equal Opportunity for Employment,

Occupational Health & Safety,

TUC-Employers dialogue,

Child labour, among others

These are sustainability issues (for supplier compliance) that are not
integrated into Act 663. Also, the Draft Bill on the Physically Challenged
when passed into law can influence public procurement once it becomes
a requirement under Act 663. There are however some Social issues in
the procurement Act, Act 663 that have not yet been mainstreamed into
the procurement process. For example Section 59 (4c) considers the
effect acceptance of a tender will have on encouragement of
employment in Ghana.
SUSTAINABILITY ISSUES IN PROCUREMENT LAWS OF OTHER
COUNTRIES

Like Ghana, most countries also have SPP issues in their procurement
and other laws and regulations. Each country has to search its laws/
regulations for sustainability issues and try to bring them under the
procurement law/regulations for ease of application.
Norways policy document on SPP
The primary objectives of the document are:

 Procurement in the public sector should take place with the

minimum of environmental impact and with respect for fundamental
workers rights and human rights.
Environmental and ethical/social considerations in public
procurement shall contribute towards an efficient public sector and a
competitive business sector.
Section12 (1 ) of the Tanzanian Procurement Regulation of 2005 ,
states A procuring entity shall avoid wherever possible the procurement
of chemicals, pesticides or other goods which are known to have or
suspected to have harmful effects on the health of the population, the
environment, domestic animals, wildlife and flora.
Botwanas policy document on SPP
Economic and social objectives and procurement clause: The
Government may from time to time introduce reserved and preferential
procurement schemes. The schemes referred to shall apply to specific,
disadvantaged women's communities and regions and areas subject
to occasional calamities.

Gambias policy document on SPP

The Authority is required under section 37(2) of the Procurement Act, to
identify and promote ways of facilitating participation by small
enterprises in public procurement. Such measures may include, for
example: Establishing small-enterprise set-asides (may be total, partial,
or limited to a particular region); and in the event of equal low bids,
making awards first to small enterprises
All the issues discussed under the various laws and legislations are
sustainability issues though it could be argued that they appear to be
protective clauses which may infringe upon WTO equal opportunity
provisions. An example of Social sustainable issues in a tender document
may include a clause or have as part of its specification:
that products that contribute to ozone layer depletion are
excluded.
that suppliers that use child labour in their production are
excluded; or

suppliers that do not administer fair wages are excluded.

The SPP Task Force

There is an international taskforce spearheading sustainable public
procurement, and Ghana is a member. It is the only African country
on the taskforce. Other members are drawn from China, Indonesia,
Philippines, Argentina, El Salvador, Sao Paulo, Austria, Czech Republic,
Norway, Switzerland, and United Kingdom.
The objective of the taskforce is to promote and support the
implementation of Sustainable Public Procurement, by developing
tools and supporting capacity building in both developed and
developing countries. Its functions are to:
Develop a practical Toolkit to give the various stakeholders in
the procurement process an easy start to imp lement the concept of
Sustainable Public Procurement;

Carry out research and prepare background documents in SPP;

Promote the implementation of SPP through pilot projects;

Facilitate the dialogue and work among different countries and

stakeholders interested in SPP.

SPP IMPLEMENTATION

The implementation of SPP concept in public procurement should be a

strategic rather than a short term process. The approach should involve
the following, among others:

Set up a national taskforce for SPP implementation;

Draw up an implementation plan;

Public education and training to create awareness; training of

entities;
Mainstreaming social and environmental issues into the Procurement
Act;
Ensuring the infusion of SPP issues into the existing procurement
processes;
Mobilisation of interested parties e.g. EPA, Energy Commission,
AGI, TUC, etc;

Establishing indicators to measure SPP operations and impact;

Mobilising budgetary support for SPP activities.

CHALLENGES AND REMEDIES

SPP implementation will certainly not be without challenges there will

be hurdles to be surmounted. However, the remedies outlined in this
section will largely address the implementation challenges. The
challenges will arise from the following areas, among others:

Getting a reasonable budget for SPP;

Availability of SPP Compliance Inspectors;

Legal framework;

Budget holders;

Suppliers / contractors;

Entities;

Politicians.

Funds will be needed to implement the SPP agenda. These can be

sourced from Governments own funds and from Development Partners.
Due to the benefits expected to accrue to the world at large,
Development Partners will be too willing to support SPP projects.
For SPP to work effectively there should be a class of Inspectors to
monitor and carry out audits to ensure compliance. This will be a
challenging task. Expects will have to be hired to train the inspectors.
Country procurement laws will need to be amended to introduce
sustainability issues. Closely linked is the ability to integrate the SPP
issues into the Procurement Process itself. Experts can be outsourced to
undertake this task.
For budget holders, there will initially be some resistance from them,
since they may have loyal suppliers / contractors who may not
necessarily qualify under the sustainable criteria.
Furthermore, they may resist because it will appear to them that they will
obtain less value for their money since the sustainable products may be
more expensive in the short term. A lot of effort should go into education
on the benefits of SPP to carry along the budget holders.
Suppliers / contractors will naturally show resistance since they will have
to expend additional funds to bring them up to an SPP compatible level.

They may need to change production technology, train staff on new

processes, and improve staff benefits, among others.
Politicians will act the same way as the budget holders because they will
feel that they cannot deliver as many projects as promised in their
manifestos as compared to the number of projects non-SPP projects
would yield due to perceived extra cost. The solution will again be
effective education. It is expected that with good planning of the
implementation process, SPP can take off and be implemented
successfully.
CONCLUSION

The world is paying much attention to sustainability issues, especially on

the environment (-global warming). Governments procurement budgets
are large and they should not be used to encourage procurement of
products/works that will contribute to degradation of the environment.
This is because in the long run it will cost those governments more in
trying to fix the problems.
Government procurement should also be used to bring development to
deprived areas in the nation through margins of preference and other
measures in the procurement process.
A nation stands to benefit in the long-term if Sustainable Public
Procurement is implemented (now). SPP is one major way of seeking to
achieve the UNDPs good governance goal of realizing development
that gives priority to the poor, advances women, sustains the
environment and creates needed opportunities for employment and other
livelihoods.
Countries stand to benefit in the long-term if Sustainable Public
Procurement is implemented. Sustainable Public Procurement is one of
many strategic instruments available for effective promotion of
sustainable production and consumption.
Most countries have embarked on institutional procurement reforms with
almost all of them operating under National Procurement Laws. These
laws have to some extent addressed sustainability issues in deciding on
the lowest evaluated responsive bidder. SPP can therefore be made
operational in these countries without having to pass new legislations.
Effective implementation of SPP will certainly promote and enhance
Good Governance.