1. Introduction

1.1 Introduction

The Policy on Green Procurement requires that environmental performance be included as a key consideration in the planning, acquisition, use, maintenance and disposal of all assets and acquired services. This guideline explains how environmental performance considerations can be integrated in all phases of the life cycle management of assets and acquired services to support value for money decisions. In particular, it explains the scope of the functions and activities where such issues must be taken into account within the framework of the federal government's legislative, regulatory and policy obligations as they relate to procurement.

1.2 Scope

This guideline will be useful to officials in a broad range of functions including program, financial, procurement, materiel management, asset management, services delivery, and oversight positions, as well as those who are responsible for managing the greening of their department's operations.

1.3 Environmentally Preferable Procurement

The Policy on Green Procurement is a key element of the Government's commitment to sustainable development. It requires departments to integrate environmental performance considerations in procurement decisions and in procurement management frameworks. It also requires departments and agencies to establish, as appropriate, green procurement targets against which performance can be tracked and reported.

Procurement is an instrument used by the federal government to obtain goods and services to support project and/or program objectives. In this context, green procurement provides an effective means of helping the government advance its sustainable development objectives and to reduce the environmental impact of its operations by choosing environmentally preferable goods and services wherever it is cost-effective to do so. Central agencies, program departments and common service organizations are mutually responsible for ensuring that decisions related to planning and requirements definition, acquisition, use, maintenance, and disposal reflect value for money based on an assessment of life cycle costs, including environmental performance considerations, within the context of their overall objectives.

The planning and requirement definition stage is where there is the greatest opportunity to consider environmental issues. It is at this stage that departments and agencies can plan the purchase of environmentally preferred goods and services as well as plan the management of how purchases are used, maintained and disposed. For example, a department can choose to purchase bio-based products even where they might be more expensive than fuel based products. They must, however, be in a position to demonstrate value for money in awarding the contract, i.e., the contract should be awarded to the bidder offering the best combination of costs, quality and performance to meet that requirement over its life cycle. The requirement for bio-based products should also be tested for need, affordability and cost-effectiveness in the context of department's mandate and overall program objectives. This is a matter of prudent financial management generally rather than specifically one of the green procurement policy.

Achieving value for money should be viewed holistically from the planning and requirement definition stage, through to the effective management of the acquisition and contractor performance, and the implementation of prescribed methods for use, maintenance and disposal.

1.4 Value for Money and Life Cycle Cost

1.4.1 Introduction

The federal government's policy is that all procurement decisions should be based on value for money, having due regard to sound stewardship and it is the responsibility of all departments within the meaning of section 2 of the Financial Administration Act, unless specific acts or regulations override it, to apply it.

1.4.2 Life Cycle Cost

The consideration of the total life cycle costs of goods, construction, or services is a key part of achieving value for money as well as the ideal opportunity to take a broad range of environmental factors into consideration.

Total life cycle cost assessment involves taking a broader and longer-term view by recognizing all of the costs, as practicable, associated with meeting a requirement. Generally, life cycle costs are divided into four broad categories:

  • Planning costs, including administrative and other costs;
  • Acquisition costs, including administrative as well as design and production costs that are associated with the good or service in question;
  • Operating and use costs, including introduction and contingency costs, and prediction of useful life; and
  • Disposal costs

Life cycle costs can be considered at various stages of the procurement process – at the initial stage of identifying a need and developing a business case, when producing specifications, when awarding a contract, or when identifying disposal options.

Assessment of life cycle costs will commonly require input from a broad range of sources including program managers, project authorities, procurement authorities, operational users, environmental and disposal experts, cost accountants and financial management advisors and standards organizations. Dialogue with the supplier community can also be useful to find out what is available and to inform the market of future requirements. Care should be taken not to distort competition – this process should not give any advantage to particular suppliers.

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