Life Cycle Considerations

The principles of life cycle analysis and value for money are key to the Policy on Green Procurement. This section explains the life cycle approach and explores how environmental considerations can be integrated in each of the procurement phases – planning, acquisition, use and maintenance, and disposal.

• Value for Money
• Life Cycle Analysis
• Life Cycle Costing

• Four Phases of Procurement
  • Planning
  • Acquisition
  • Use and Maintenance
  • Disposal

Value for Money

In support of program delivery to Canadians, government procurement strives to fulfill functional requirements by acquiring appropriate goods and services in the most efficient and economical manner possible. In short the goal is to obtain 'value for money'. The procurement process considers cost, performance, availability, quality and environmental attributes, in making procurement decisions. To achieve 'value for money', the procurement action must achieve the optimal balance of overall benefits, for a given expenditure.

The federal government has committed to the purchase of environmentally preferable goods and services where value for money is demonstrated. A value for money approach to procurement means that the lowest upfront price will not automatically be preferred; all life cycle costs must be taken into consideration; and there are many values to consider in addition to cost, such as reduction of environmental impact.

Environmentally preferable goods are often less expensive than the goods they replace when life cycle costs are taken into consideration. Some examples include:

• purchasing the most fuel efficient vehicle that meets operational requirements saves on fuel costs throughout the life of the vehicle;
• selecting non-hazardous goods to replace hazardous materials avoids costly hazardous waste disposal and associated waste management training;
• purchasing multifunctional devices reduces the amount of solid waste produced over the life of the asset compared to having multiple single use devices, reducing disposal costs;
• selecting goods with energy saving features reduces energy consumption over the life of the good.

When environmental criteria are included in solicitations, the industry responds by offering goods and services that meet the criteria. Over time, the criteria requested becomes the new industry standard and goods and services not meeting the criteria get phased out.

As the environmentally preferred good or acquired services become more and more common, any initial incremental upfront cost tends to diminish and eventually disappear.

Other Resource

The Treasury Board Contracting Policy (section 9.0) also addresses value for money.

Life Cycle Analysis

Life cycle analysis is used to examine the environmental impacts and financial costs of a good or service, from its design through to production and then final disposal (from "cradle to grave"). In its most detailed form, a life cycle analysis considers costs and environmental impacts associated with, for example:

• the air, water and solid waste pollution generated when raw materials are extracted;
• the energy used in the extraction of raw materials and goods manufacturing
• the pollution and waste that results from manufacturing the good;
• the environmental harm that occurs during the distribution and use of the goods or services; and
• the solid and liquid wastes that are absorbed by the environment at the end of its useful life.

Much of the government's focus on life cycle analysis considers the impacts and costs associated with the phases of its procurement process. The Policy on Green Procurement requires the integration of environmental considerations into the procurement decision-making process. This affects each phase of the procurement life cycle: planning, acquisition, use and maintenance, and disposal.

It should be recognized that the federal government can, through its choice of specifications, drive broader positive environmental implications for earlier manufacturing-related stages in the life cycle of the goods or services being purchased. For example:

• Specifying a requirement for recycled content leads to solid waste reduction, as well as lower energy consumption and associated greenhouse gas emissions related to processing of raw materials; and
• Specifying a requirement for the elimination of hazardous chemicals from the production process or end product can result in the manufacturer acquiring, storing, handling and disposing of less hazardous materials.

There may be opportunities to work co-operatively with the supplier community to reduce the government's environmental impacts and address life cycle considerations. Continuous improvement should be sought, particularly with long-term suppliers. Opportunities could include, for example, encouraging suppliers to:

• offer bulk packaging to minimize waste and transportation when several orders are combined into one;
• use electronic communication wherever possible;
• phase out inefficient equipment used to render services or produce goods;
• reduce the hazardous material content in goods and service processes;
• phase in environmental specifications found in relevant eco-label standards;
• submit reports and other types of documentation printed or copied in black and white double-sided format or sent electronically; and
• implement return-to-vendor programs for packaging.

Life Cycle Costing

Life Cycle Costing is a method used to evaluate the environmental and economic costs of goods and services, based on each phase of their life cycle. From the government's perspective, these costs include those associated with its procurement phases:

• Planning costs, including administrative and other costs (internal to government);
• Acquisition costs, including administrative as well as design and production costs that are associated with the goods or services in question;
• Use and maintenance costs, including introduction and contingency costs; and
• Disposal costs including administrative costs, removal and transport.

Environmentally preferable goods and services are often less expensive than their conventional counterparts when life cycle costs are taken into consideration. In 2009, Collection of Statistical Information for Green Public Procurement in the EU (www) (PDF Version - 1.66 MB) (Help on File Formats) was published by the European Union that looked at the impact and costs of green public procurement in the 7 European countries most active in green procurement. The study found that when taking into account life cycle costing and the total amount spent on all green commodities, green procurement contributed to slight overall decreases in cost.

Other Resources

• Environment Canada Life Cycle Management
• International Institute for Sustainable Development Total Cost Assessment(www)
• United Nations Environment Programme (UNEP) Life-Cycle Initiative(www)
• Collection of Statistical Information for Green Public Procurement in the EU(www) (PDF Version - 1.66 MB) (Help on File Formats)

Green Procurement Considerations in the Four Phases of Procurement

There are numerous practical considerations to be made during each of the procurement phases – planning, acquisition, use and maintenance, and disposal – to ensure that environmental considerations are included in procurement decisions. Working with suppliers for continuous improvement is also an important element of furthering the green procurement initiative.

Planning Phase

During the planning phase departments and agencies can ensure that environmentally preferable goods and services are purchased, and plan the management of how they are used, maintained and disposed of. The planning and requirements definition stage offers the greatest opportunity to consider environmental issues. It is a chance to look at all aspects of the life cycle and, if necessary, to make a best-value argument to defend a higher upfront cost if long-term savings or benefits to the environment are likely.

Alternatives to Procurement

During the planning phase, you should first question whether or not the purchase is absolutely necessary. Question if assets could be repaired or upgraded instead or if there might be a surplus of the item elsewhere in the department or agency. There may even be opportunities to share goods or services among more users.

For example, laptops may be shared among multiple employees if they do not require use of the laptop at the same time. A review of the fleet may reveal that vehicles are not fully utilized and that, in fact, the department or agency could reduce its total fleet by 10% or 20% with little impact to travel efficiency by pooling vehicles or car-sharing.

Restrictions to Applying Green Procurement

There is little in terms of policy, regulations or trade agreements that affect or limit environmental performance considerations from being taken into account. Program managers, project authorities or other internal users need to work closely with the contracting authority to ensure that full consideration is given to environmental issues during planning and in the subsequent development of specifications.

Key Considerations

During the planning phase, the following should be addressed:

• Take into account specific green procurement objectives established either for all federal organizations or established by the procuring department or agency.
• Take the 3R's (Reduce, Reuse, Recycle) approach to the acquisition
• Investigate the possibility of aggregating demand amongst multiple users to achieve more efficient usage of assets, fewer shipments and/or enable the usage of bulk packaging.
• Consider suppliers that lessen the environmental impact of their operations. Consider also goods and/or services that are environmentally preferred and are produced or delivered in an environmentally sound manner.
• Consider alternatives to acquisition, such as introducing service options to meet a need, rather than acquiring costly and resource-intensive capital items.
• Specify packaging requirements that are less damaging to the environment
• Select options that have a long service life, such as durable goods and/or goods that are economical to repair or upgrade. Consider purchasing extended warranties and ensure that availability of warranties is well communicated to clients.
• Disposing of an asset in an environmentally sound manner can have a cost. This cost may impact which goods or services are chosen, therefore consider it when evaluating value for money.

Industry Readiness

Finally, potential suppliers should be surveyed to evaluate their readiness or ability to fulfill environmental requirements in order to determine if such criteria should be incorporated into specifications. This research is conducted in the development of green standing offers or supply arrangements produced through the PWGSC commodity management process. Wherever possible, it is recommended to take advantage of this research conducted by either planning to use PWGSC instruments or replicating the green procurement plan of procurement instruments related to the procurement in question.

If PWGSC procurement instruments cannot be used or replicated, potential suppliers should be surveyed to assess their capacity to meet the environmental criteria. This can be done through discussions with industry representatives or posting your requirement to MERX as a Request For Information or Letter of Interest. See the Green Procurement Checklist for key issues and questions to be addressed. Further information on environmental terminology, certification programs and Developing Green Procurement Specifications can be consulted to assist in better understanding the environmental considerations outlined in the checklist.

Acquisition Phase

Once a specific need has been identified and examined, the acquisition phase begins. Requirements and bid evaluation criteria for the solicitation and contract documents are determined in the acquisition phase, based on the research done.

Steps for Integrating Environmental Considerations

Consider the following steps for ensuring that environmental considerations are integrated:

1. Verify if there exists a green standing offer or supply arrangement for the commodity exists. Verify as well if green instruments exist for the maintenance or disposal of the goods or equipment. Check PWGSC's Standing Offer Index and the Goods and Services section of the BuyandSell.gc.ca site. If a PWGSC's procurement instrument exists it is likely that environmental considerations have already been incorporated.
2. If none exist, consult the green procurement plans of similar commodities, the green language repertoire, the green procurement tool kit and/or developing green procurement specifications for environmental specifications to consider.
3. Prepare the solicitation document(s) including environmental specifications and evaluation criteria.
4. Evaluate the bids.
5. Award the contract.
6. Manage the contract to ensure that the environmental benefits are realized.

Outcomes of the Acquisition Phase

Outcomes of the acquisition phase are:

• Technical Requirements: Create a statement of work that establishes a succinct outline of the technical requirements, including the environmental outcomes to be achieved.
• Terms and Conditions: Integrate environmental considerations into the terms and conditions of the resulting contract.
• Selection Methodology: Develop evaluation criteria that will use a value for money approach and take into account total life cycle costs and environmental performance.

The efforts made in the acquisition phase will lead to the award of a contract that achieves value for money while addressing environmental considerations.

Other considerations

Acquisitions activities within the green procurement context are subject to all of the standard procurement obligations associated with international and national trade agreements, the Government Contracts Regulations, as well as federal government procurement policies.

The PWGSC Supply Manual contains procurement policies and procedures, including a list of evaluation schemes and various selection methods. Environmental considerations have been integrated into the Supply Manual.

All factors leading to the contractor selection must be clearly defined in the solicitation documentation, including any green evaluation criteria established in the planning. Please note that these documents are made available to government users only due to their commercial confidential nature.

Examples of Environmental Considerations

Where relevant to the subject matter of the requirement, the solicitation can request information to support environmental criteria. The following are some examples of information that might be requested:

• Specific environmental attributes of goods, including features which result in lower environmental impact;
• Goods and services with a third party certification or a reputable eco-label, such as EcoLogo^M;
• Goods that minimize packaging and/or reusable or recyclable packaging;
• Existence of environmental policies;
• Existence of an environmental management system – evidence of measures that are relevant to the execution of the contract may be required;
• Availability of extended warranties to prolong the life of equipment;
• Replacement schedules based on the functionality of assets rather than time; and
• Take back options the supplier offers for packaging after delivery.

The bidder whose proposal best meets the requirements as outlined in the solicitation documentation will be awarded the contract.

Use and Maintenance Phase

Since the introduction of the Policy on Green Procurement, greater attention is being paid to the responsible use and maintenance of assets to maximize environmental benefits and minimize waste. Where appropriate, users of the asset need to be advised to make choices and take actions that will maximize environmental benefits and life cycle cost savings. In other words, the actual conditions of use and maintenance for the asset must be the same as the assumptions made in the life cycle analysis and acquisitions phase to derive the expected environmental outcomes. Depending on the good being purchased, materiel management or information technology may need to be engaged to ensure proper use and maintenance.

To achieve full environmental performance, a good must also be properly used and maintained to extend its service life. When economically feasible, equipment should be repaired, refinished and reused.

For example,

• Using extended warranties for repairs rather than replacement to extend the useful life;
• Upgrading software applications and/or storage capacity, rather than replacing computer equipment; and
• Conducting proper maintenance of vehicles (e.g. maintaining proper tire pressure).

Disposal Phase

How should a good be disposed of? The actual mode of disposal should be consistent with the choices made in the planning phase to realize the environmental outcomes expected. While there can be significant environmental factors at stake when it comes to disposal, cost can also be a significant factor. Disposing of an asset in an environmentally preferable manner can have cost implications and this should have been considered when evaluating value for money because it may impact which good is chosen.

General Considerations

Consider alternatives to outright disposal, such as:

• reuse
• recovery/reclamation of components and hazardous materials, such as heavy metals
• recycling of components or whole assets
• upgrades

The goal is to find the most environmentally preferred method and ensure that it is carried out in an environmentally responsible manner. Waste generation should be minimized to the greatest extent possible. Hazardous waste must be disposed of following appropriate regulations.

Consider ease of disassembly during planning to facilitate recycling and reclamation of components at the end of life.

Return-to-Vendor Programs

Suppliers may have return-to-vendor programs available, whereby goods are sent back to suppliers at the end of their life. These programs are recommended for toner cartridges but should not be used for electronic and electrical equipment. Refer to the Federal Electronic Waste Strategy for the disposal of all surplus electronic and electrical equipment. For any other commodity, please contact the Office of Greening Government Operations for specific advice.

Other Considerations

From an environmental perspective, there are some important aspects of the disposal phase to consider:

• A good can only be considered recyclable if local facilities exist for recycling. For example, in some cities, foam cannot be recycled, so foam packaging cannot be considered recyclable packaging in those jurisdictions.
• Finding an alternative for a hazardous material has a significant environmental and cost benefit. Hazardous materials disposal costs are high and employees require costly regular training to legally handle these materials properly and safely.
• The incorrect disposal of hazardous waste can result in an environmental impact and costly remediation in the future. If it is necessary to use hazardous materials, calculate the capacity to properly use and dispose of them as part of the life cycle costing.
• If reuse, resell and donation are not possible, where available, use standing offers for disposal options such as recycling (e.g. electronic and electrical equipment). To be awarded a standing offer for disposal, the supplier must have been accredited by the Government of Canada for using environmentally sound practices.

In addition to environmental and cost considerations, there are also policy issues to consider. The Treasury Board Policy Framework for the Management of Assets and Acquired Services, Policy on Management of Materiel and related Guide to Management of Materiel provide direction on the management of materiel assets through their life cycle. This includes direction on the disposal of hazardous substances and a requirement to manage disposal in an environmentally responsible manner.

Treasury Board also provides direction on the Disposal of Surplus Materiel