Around the world, governments are embracing “green procurement” – environmentally sustainable strategies to reduce global greenhouse gas emissions and other forms of pollution. A number of webinars we have held at GW Law School, including a July 2024 series on emerging international best practices, confirmed that there are many parallels between these “green procurement” strategies.
A ”catalogue” of green procurement strategies in the European Union and the United States, prepared by the European Commission and the Office of the U.S. Trade Representative, confirmed these common strategies on both sides of the Atlantic, as we discussed in a 2024 webinar; see Marta Andhov & Christopher Yukins, A Transatlantic Analysis of EU and U.S. Strategies In “Green Procurement,” 66 Gov. Contractor ¶ 60 (Thomson Reuters, 2024).
As these common “green procurement” strategies are adopted by governments around the world, the UN Commission on International Trade Law (UNCITRAL) model law on public procurement, last revised in 2011, could be updated to facilitate implementation.
The brief discussion below highlights some key potential changes to the UNCITRAL model law procurement to further these “green procurement” strategies. In many cases, the proposed changes would mean making the competitive process more flexible, to accommodate emerging approaches to environmental sustainability. A key question for drafters, therefore, would be whether existing Article 15 of the model law — which allows for changes to a solicitation — affords the flexibility necessary to make green procurement work.
For a broader review of potential updates to the UNCITRAL model procurement law — including in green public procurement — see the piece by Christopher Yukins and Caroline Nicholas (previously a member of the UNCITRAL Secretariat), The UNCITRAL Model Law on Public Procurement: Potential Next Steps
UNCITRAL Colloquium — October 2024
To address developments in green public procurement, on October 23-24, 2024, UNCITRAL held a Colloquium on the Law of International Trade for a Greener Future at the UN’s Vienna International Center.
The colloquium was called to discuss potential changes to a broad array of UNCITRAL model laws, to address environmental sustainability. Specifically with the regard to the UNCITRAL Model Law on Public Procurement, a panel chaired by Michel Nussbaumer (European Bank for Reconstruction and Development (EBRD)) and joined by Professors Carina Risvig Hamer (U. Copenhagen) (presentation), Roberto Caranta (U. Turin) (presentation) and Christopher Yukins (George Washington U.) (presentation), and by Reto Malacrida (World Trade Organization) (presentation), discussed (among other things) the green public procurement strategies addressed below.
Planning
The first strategy looks to procurement planning. Brazil has used this strategy aggressively in its efforts to implement “green procurement,” and the U.S. government in April 2024 issued a final rule calling for contracting officials to plan to procure sustainable and services “to the maximum extent practicable.”
To make it easier to incorporate “green procurement” into procurement planning, the UNCITRAL model law might be amended to:
- Article 7 – Flexible Communications: Make it easier to change means of communication during the course of a procurement. Article 7 of the UNCITRAL model law calls for the means of communicating and record-keeping to be frozen during a procurement; as a practical matter, however, contracting officials may need to resort to new and unexpected means of interacting with industry and the broader community in order to accommodate new approaches to green procurement, which are rapidly evolving.
- Article 10 – Flexible “Subject Matter”: The current version of the UNCITRAL model law requires, per Article 10, that the “subject matter” of the procurement – what will be bought, and how – must be fixed, inflexibly, early in the procurement process. Given the rapid advances in “green procurement” strategies, there may need to be more flexibility built into Article 10 so that vendors and others can recommend other, “greener” approaches during a procurement, even if that means amending the “subject matter” of a procurement.
Contractor Qualification
Having contractor qualification (contractor “responsibility” in the U.S. system) hinge on vendors’ “green” initiatives has long been a very controversial approach. In the U.S. system, for example, a proposed rule which would have forced vendors to chronicle their greenhouse gas emissions in order to qualify for federal contracts has been stalled due to strong congressional opposition. That opposition stems partly from the steep costs of compiling greenhouse gas emissions data, and from the uncertain impact that barring “non-compliant” contractors would have on the U.S. government’s supplier base. Because political opposition to this strategy is likely to ease as data on greenhouse gas emissions becomes more broadly and cheaply available, the UNCITRAL model law might be amended to accommodate the “contractor qualification” strategy by:
- Articles 8, 9, 10 and 16 – Contractor Qualification: Taken together, the UNCITRAL model law’s relevant articles on contractor qualifications erect a fairly rigid framework. Article 8, for example, warns the procuring agency, “when first soliciting the participation of . . . contractors in the procurement proceedings, shall declare whether the participation of suppliers or contractors in the procurement proceedings is limited,” and any “such declaration may not later be altered.” These and other constraints under the model law are commendable anti-corruption measures, but may make it more difficult to accommodate emerging “green procurement” approaches. For example, rather than simply asking for a “clarification” (Article 16) of an environmentally related qualification criterion (Article 9), a bidder might recommend that other, equally powerful environmental qualifications be accepted – but Article 16 says that no “substantive change to qualification information or to a submission, including changes aimed at making an unqualified supplier or contractor qualified or an unresponsive submission responsive, shall be sought, offered or permitted.” By building more flexibility into the contractor qualification process, the UNCITRAL model law would make it easier to accommodate rapidly emerging “green procurement” approaches.
Eco-Labels
Eco-labels – typically certifications confirming that a product or service is “green,” i.e., causes low greenhouse gas emissions – are rapidly emerging as a popular “green procurement” strategy, probably because eco-labels are relatively cheap and easy to require and implement. Both the European Union (Directive 2014/24/EU, Art. 43) and the United States (FAR 52.223-23) have embraced eco-labels.
To facilitate eco-labels, the UNCITRAL model law could:
- Article 10 — Nondiscriminatory Eco-labels: One common problem with eco-labels is that they tend to be localized and so discriminatory – an eco-label that is fully accepted in another market is unrecognized and so unaccepted in another. One solution would be to bring Article 10 into line with Article 43 of EU Directive 2014/24/EU, to ensure that eco-labels: (a) concern only “criteria which are linked to the subject-matter of the contract and are appropriate to define characteristics . . . that are the subject-matter of the contract; (b) “are based on objectively verifiable and non-discriminatory criteria”; (c) were “established in an open and transparent procedure in which all relevant stakeholders, including government bodies, consumers, social partners, manufacturers, distributors and non-governmental organisations,” could participate; (d) are accessible to all interested parties; and (e) were “set by a third party over which the [bidder] applying for the label cannot exercise a decisive influence.” These safeguards, many of which are drawn directly from the Court of Justice for the European Union’s decision in the “Max Havelaar” case (C-368-10), are not fully reflected in the current version of Article 10. Furthermore, because eco-labels are a form of technical specification, and as recital (71) of the EU Directive explains, “technical specifications should be drafted in such a way as to avoid artificially narrowing down competition,” and so where a solicitation references a national standard (such as an eco-label), “tenders based on equivalent arrangements should be considered by contracting authorities,” so long as the bidder can “prove equivalence with the requested label.”
Technical Evaluation
Another popular strategy is to incorporate “green procurement” considerations into the technical evaluation for award in a procurement – for example, to give a “greener” product (one that caused less greenhouse gas emissions) more “points” in the evaluation. The threshold challenge here is to ensure that there is sufficient information in the marketplace to make this kind of requirement workable. (This is why, for example, governments sometimes require vendors to compile information on their greenhouse gas emissions as a condition of qualification – see above.) If vendors’ “green” data on their products and services are available, that information could be more easily assimilated into procurements under the model law by:
- Articles 10 and 58 — Flexible Technical Evaluation Criteria: The UNCITRAL model law’s Article 10 and Article 58 (its analogue in second-stage framework agreement competitions) make it relatively difficult to change technical evaluation criteria, once set forth in a solicitation. To make it easier to accommodate emerging “green procurement” approaches in a procurement, Articles 10 and 58 could be made more flexible to allow an agency, once a procurement has begun, to amend the solicitation to accommodate new green procurement strategies that emerge (for example) from exchanges with industry.
Life-Cycle Cost
One “green procurement” strategy is to take the full life-cycle costs of a product – including, potentially, its costs to the broader society due to greenhouse gas emissions – into account when assessing the product for award. To make this strategy work better under the UNCITRAL model law could be amended as follows:
- Article 10 – Environmental Characteristics Clarified: Article 10 of the model law currently states that the evaluation criteria for award must include “the characteristics of the subject matter of the procurement, such as . . . the environmental characteristics of the subject matter.” The model law (and its Guide to Enactment) could be amended to make it clear that these “environmental characteristics” can be interpreted broadly to include all the direct and indirect environmental costs of a good or service, across the procurement life-cycle.
Notably, the model law’s Guide to Enactment (2012) already contemplates this broader view of environmental costs in its discussion of sustainable procurement, which in many ways anticipated the current round of reform:
Sustainable procurement is included as a declared objective of some procurement systems. UNCITRAL has noted that there is no agreed definition of sustainable procurement, but that it is generally considered to include a long-term approach to procurement policy, reflected in the consideration of the full impact of procurement on society and the environment, for example through the promotion of life-cycle costing, disposal costs and environmental impact. In this regard, sustainability in procurement can be considered to a large extent as the application of best practice as envisaged in the Model Law. The Model Law allows sustainability to be promoted through procurement via qualification criteria (under article 9, which expressly allows the procuring entity to impose environmental qualifications, and ethical and other standards that could include fair trade requirements).
The question, then, is how the model law itself should be amended to accommodate life-cycle costs as a “green procurement” strategy.
Conclusion
When the UNCITRAL model procurement law and its Guide to Enactment were concluded in 2012, “green procurement” was just emerging as a critical global imperative. As a result, “green procurement” was “not listed as a separate objective in the Preamble of the Model Law,” but instead was “addressed as an element of processes under the Model Law.” The global realities have shifted since then, and the time seems right to update the UNCITRAL model law and its guide to enactment to reflect advances in “green procurement” – and in our understanding of the impact of global warming on our lives.
