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Open SPP FAQsSetting sustainability criteria
Implementing Open SPP ultimately means purchasing goods, services and works in the most sustainable way, that is, minimizing negative externalities, such as CO2 emissions, and maximizing positive social and economic impact. Apart from clearly defining what the real needs are, and avoiding unnecessary purchases, this also means selecting the most sustainable option once the tender is published. To do this, public authorities have to introduce sustainability criteria in the procurement process, and openly communicate how suppliers will be evaluated against it.
- How the criteria are related to the subject-matter of the contract.
- How suppliers will be evaluated against the criteria.
- How the use of the criteria complies with the existing policy and regulatory frameworks.
What you should consider before introducing the criteria
Before deciding what sustainability criteria will be introduced in the procurement process, and how, there are certain factors that you should consider.
Decide how the sustainability criteria will be introduced
It is difficult to advise on the best way to introduce sustainability criteria in a procurement process, as the method used will largely depend on market capability, and what is allowed within the enabling framework. Below are included some of the ways you can consider for introducing sustainability criteria in a procurement process:
Once the sustainability criteria have been set, public authorities should openly disclose how compliance against it will be verified and monitored, and clearly translate sustainability requirements into contract obligations.
The Netherlands implements a system called the CO2 Performance Ladder in order to consider CO2 emissions when awarding public procurement contracts. The Performance Ladder is an instrument that organizations can use to reduce their carbon emissions, both within the business, and in specific projects. There are 5 levels on the Ladder depending on the scope of the organization’s effort to reduce CO2 emissions.
Organizations can obtain a certificate with their level on the Ladder, which they can use to receive an award advantage for their registration on tenders. In this way, contractors can benefit from a reduction of the submission price by proving and developing their efforts to reduce CO2 emissions.
As can be seen in the example on the following table, although supplier C had a higher entry price, the application of the discount associated with their level on the CO2 ladder (level 4) results in them being awarded the contract. By taking this approach to accounting for carbon emissions in procurement processes, sustainable suppliers can be selected even if the contract is awarded solely based on price.
COMPANY | ENTRY PRICE | LEVEL ON THE LADDER | DISCOUNT / AWARD ADVANTAGE | PRICE AFTER APPLYING ADVANTAGE | AWARD THE CONTRACT |
A | € 9.7 million | none | 0% | € 9.7 million | NO |
B | € 10 million | 3 | 4% | € 9.6 million | NO |
C | € 10.3 million | 4 | 7% | € 9.58 million | YES: € 10.3 million |
In 2014, Chile conducted a research study to evaluate how many public contracts were businesses owned by men, versus contracts awarded to businesses owned by women. This study showed that only 36% of public contracts were awarded to women, and that these represented 26% of total value.
Based on this study they established a series of measures to promote gender equality through public procurement. This included provisions for including award criteria to assess suppliers in terms of gender inclusion.
As an example, they propose giving this factor a weighing of 15% in the evaluation, and suggest different ways of evaluation. These include giving full points to companies which are led by women, or companies which demonstrate gender parity in its hiring, showing that the % of women hired with respect to the total number of workers in the same company is higher than 50%.