PLC Public Sector reports:
The impact of the credit crunch on local authorities, ranging from losses arising from the Icelandic banking crash to warnings about reduced revenues from falling recyclate markets, has been well publicised. Undoubtedly, 2009 is going to be difficult year for local authority purchasers with belts being tightened and budgets shrinking. In these circumstances, it may seem a logical option to steer procurement policy and evaluation away from the trend towards sustainable procurement back to being more (lowest) price focussed, in order to enable reduced budgets to deliver more. However, such a step in both the short and long-term could prove to be a mistake.
There are many reasons why sustainable procurement should take on even greater importance, in these difficult economic times, for example:
- Local authorities are at the forefront of providing opportunities to SMEs and the third sector. A focus on price alone in evaluation will mean that certain markets are closed to these providers. As larger companies are forced to make considerable cut backs to deal with the credit crunch, thriving SME and third sectors are likely to be vital to local economies.
- A focus on price in the short-term can negate consideration of whole-life costs. Often over the long-term, while the initial capital investment may be larger, the actual cost of the sustainable option is comparable to (or even cheaper) than the short-term ‘cheaper’ option.
- Any problems with falling recyclate markets are likely to be reduced if the public sector continues to support these markets with its purchasing. Therefore, not only will procurement be more sustainable, but authorities are more likely to be able to meet recycling targets and increase their revenues from these markets – a virtuous circle!
In addition, Government policy and authority objectives are not going to change, for example the Government recently published guidance requiring the public sector to promote equality in its procurements. This follows guidance previously issued on taking account of social issues and green procurement. Authorities simply have to maintain the push to make procurement greener and more sustainable. Authorities should take account of these objectives as early in their procurement processes as possible, preferably in defining user requirements.