Modelling Environment in awards of Central Government Contracts

United Kingdom

The Cabinet Office and the Department for Digital, Culture, Media & Sport is currently consulting on a new evaluation model for incorporating social value, including environment considerations, into awards of central government contracts. Part of the proposal is that a minimum of a 10% weighting would be applied to social value (where this is relevant) in the evaluation of bids. Below we briefly look at the environment aspects of the proposals.

The consultation can be found here. The consultation closes on 10th June 2019 and a response is planned for 2nd September 2019.

Applicable contracts

The intention is that these proposals will apply to procurements by central government departments, their executive agencies and non-departmental public bodies which are subject to Part 2 of the Public Contracts Regulations 2015, except where they are already covered by the Balanced Scorecard for Growth (i.e. procurements for infrastructure, construction and capital investment contracts over £10 million).

Rationale

The Public Contracts Regulations 2015 permit contracting authorities to incorporate social and environment aspects into specifications, award criteria and contract conditions where these are linked and proportionate to the subject matter of the contract. This allows the buying power of the public sector to be harnessed for social value, particularly if omission to capture that value might otherwise become a cost elsewhere to public services. Reasoning in the consultation behind the need for a new evaluation model is that “commercial teams in major government departments are often far removed from local delivery, particularly for lower value contracts or common goods and services. The potential for evaluating social value in these contracts is not always obvious to those designing the procurement. They do not have a standard tool to ensure a robust approach to evaluation criteria and a consistent message to the market on what is important”.

New evaluation model

The proposal is that in order for relevant social impact (including environment) to be a differentiator between bids, departments “must” apply (note that this appears to be mandatory rather than permissive) a minimum of a 10% weighting to social value in the evaluation. These departments would also be free to apply a higher weighting if they deemed this to be appropriate (no percentage ceiling is mentioned). Detail on the suggested model is to be found in Annex A of the consultation.

Environment criteria in the model

Criteria are set by reference to themes, policy and policy context, possible award criteria, questions to bidders, evaluation and metrics (e.g. for evaluation). In terms of environment, the policy outcome is singular and simple: reduce environment impacts. There is no reference to securing an environment gain, but presumably a bidder than can secure a gain will be better placed than a bidder that secures only a lesser impact. The policy context is the 25 Year Environment Plan and the following strategies, the Resources and Waste (England), Clean Growth, Greening Government Commitments, and Clean Air.

In terms of an evaluation question to bidders, this is reasonably straightforward “Describe how your organisation would perform the contract to ensure that environmental impacts are reduced, and how you would monitor and measure this?” In terms of evaluating responses, it is anticipated that responses should set out how the prime contractor and any key suppliers would minimise or mitigate negative environment impacts and contribute to the appropriate targets in the 25 Year Environment Plan in performance of the contract by reference to (and presumably this is not exhaustive) clean air, clean and plentiful water, thriving plants and wildlife, reducing risk of harm from environment related hazards, sustainable use of resources, enhancing the natural environment, mitigation and adaptation re climate change, managing exposure to chemicals, enhancing bio-security and reducing the use of consumer single-use plastics.

Reference to potential metrics are broadly cited. These are the number and type of initiatives related to the contract to reduce environment impacts, and annual percentage by which environment impacts will be reduced in the contract delivery from a baseline to be established in the first year.

Comment

There will be many potential contracts with central government where positive value could be brought to bear in terms of environment considerations. The proposal provides a mechanism whereby more opportunity may arise to demonstrate this. Of course there will risk of greenwashing, and to counteract this no doubt scrutiny on the metrics will be crucial.