A reflection on the Dutch Sustainable Public Procurement Programme

Abstract

Public procurement can contribute significantly to achieving sustainable development. The Dutch government has indicated that sustainable procurement is one of its priorities and has developed and installed a Sustainable Public Procurement Programme (SPPP). This essay reviews the current programme and assesses its actual contribution to sustainable development. Specific questions are raised with respect to both the set up and the content of the current decision criteria for supplier selection and contract provisions. This article argues that, so far, the focus on minimum requirements, the strict distinction between environmental and social criteria and the absence of specific long-term ambitions and a systems perspective have limited the actual contribution of the Dutch SPPP to sustainable development. Finally, ongoing discussions by involved stakeholders, with respect to suggested adjustments to the programme, are reviewed and linked to the assessment presented here. It is concluded that these discussions reflect promising trains of thought for the future of the Dutch SPPP.

Keywords:

• public procurement
• sustainable development
• systems perspective

Introduction

Accounting for environmental aspects in (the process of) public procurement is an important policy instrument within the wider context of stimulating sustainable development (Nissinen et al. 2009). The potential contribution of public procurement is evident for a number of reasons: (1) public sector procurement consumes a significant portion of Gross Domestic Product (Walker et al. 2009), (2) through providing specific services the public sector can have direct influence on sustainability, for instance by executing waste disposal (Preuss 2009) and (3) through its purchasing power the public sector can help develop markets for more sustainable products and services (Erdmenger 2003).

Simultaneously, globalisation and outsourcing have significantly increased the complexity of supply chains and related procurement decisions (Hutchins and Sutherland 2008). In fact, firms and organisations typically find it difficult to plan and predict supply chain management actions, because it involves accounting for the actions of numerous individual parties. Added to this is the increased complexity involved with having to address – from a sustainable development perspective – an even greater number of interacting parties and complex (sub)systems. It is, therefore, a challenge to predict the behaviour and estimate the outcomes of the system as a whole (see e.g. Sarkis et al. 2011). However, the interrelations and interdependence of ecological, social and economic systems are integral to the concept of sustainability and, therefore, firms and organisations that claim to act sustainably need to address them – beyond simply living up to legal responsibilities (Hutchins and Sutherland 2008).

What further complicates matters for these firms and organisations is that if they look for clues on how to tackle those issues in literature, they will have to agree with Seuring and Müller (2008), who, in a thorough review of sustainable supply chain management literature, concluded that there is a clear deficit on incorporating the social component of sustainable development as well as on the amalgamation of all three sustainability imperatives. Even though there is a relatively well-developed body of research dedicated to the link between sustainable development and procurement issues in the private sector, the majority of these studies explicitly focus on manufacturing industries and the environmental component of sustainability, while the social aspects have been “under-researched to date” (Walker and Brammer 2009, p. 129). This means that, especially for public procurement, the debate on how best to address the interrelations and interdependence of ecological, social and economic systems – in policy making – is ongoing.

The above sets the stage for this essay, in which the current Dutch Sustainable Public Procurement Programme (SPPP) is reviewed. This programme encompasses the criteria and guidelines put forward by the Dutch government for taking into account environmental and social aspects in all phases of any procurement or tendering process financed by public money. Even though this programme is just one example of the various – 21 to date – National Action Plans for Green Public Procurement of individual EU member states, it is especially interesting, because the Netherlands is widely regarded as one of the frontrunners in the EU in terms of applying environmental criteria. What is more, the Dutch programme also includes social criteria. Given the fact that it is the EU's ambition to also develop social criteria for all national action plans on public procurement, the Dutch programme offers a potential template for any possible future unified approach.

The Dutch Sustainable Public Procurement Programme

As stated on the government website dedicated to sustainable procurement, “the national government of the Netherlands […] wants to stimulate the market for sustainable products by giving a good example” (SenterNovem 2011a). By using its substantial buying power (Erdmenger 2003) – more than 50 million Euro/year – to do so, this “will be a substantial boost for the market for sustainable products” (SenterNovem 2011a). The government has indicated that its ambition was to make sure that by 2010 100% (of the volume in Euro) of governmental procurement is sustainable and 75% of procurement by municipal authorities and 50% of procurement of water boards and provinces. All of these parties have “committed themselves” to realise 100% sustainable procurement by 2015. Furthermore, universities and higher education organisations have “committed themselves” to realising 50% sustainable procurement by 2012. Progress made with respect to these ambitions is monitored every two years, and reported to the Dutch parliament, and the judgement on whether a specific purchasing decision is considered sustainable or not is based on specific criteria as laid down in the Dutch SPPP.

The Dutch SPPP encompasses environmental criteria for 45 product groups and the first version of this programme was published in July 2009. Based on lessons learned from this first phase and from application of the various criteria in practice, the criteria development process was adapted in autumn 2009. The current process for developing new criteria or updating existing ones consists of the following five phases:

1.	Initiation of the process by announcing the decision to start the process on the website of Agentschap NL – the governmental agency responsible for executing governmental policies with respect to sustainability, referred to as NL-Agency in the remainder of this essay – and sending emails to all interested parties that have registered for this product group.
2.	Development of draft criteria based on the outcome of a public start-up meeting and the preparatory work of a workgroup consisting of representatives of NL-Agency and stakeholders that have registered through the NL-Agency website, indicating that they want to be involved in the criteria development process.
3.	Development of concept criteria by public consultation, which means that the workgroup prepares the concept criteria based on the draft criteria and the reactions to the published draft criteria of anyone that has submitted reactions by email within a four week period after publication.
4.	Assessment of the concept criteria by the Ministry of Infrastructure and Environment, which also includes checking whether the criteria adhere to EU procedures and criteria (for tendering processes).
5.	Final decision and publication of the criteria (document).

The product groups for which criteria have been developed range from office furniture, beverage vending machines and public lighting to article, catering, public transport and green spaces. For each product group, the core criteria encompass both minimum requirements with respect to the product or service to be procured and selection criteria to be used for selecting the (most) appropriate supplier. If these core criteria are applied within the context of a purchasing decision, this procurement process is considered to be “sustainable.” To illustrate these criteria, consider the following two examples of product groups and related criteria:

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The product group catering comprises the service itself and the product suite, but it excludes equipment (separate product group) and vending machines for cold and warm drinks (separate product group). For this product group, no specific criteria have been formulated with respect to supplier qualification, which means that there are no criteria stipulating grounds for exclusion or inclusion of specific suppliers. The minimum requirement for catering products and services to be considered “sustainable” is that “40% of the product suite, expressed as a percentage of the purchasing volume for that year, must demonstrably consist of organic products and/or products with one or more other sustainability properties,” where organic is defined as “produced by means of production methods that comply with the provisions laid down in the EU Regulation No. 834/2007, during all stages of production, preparation and distribution” and sustainability properties refer to characteristics such as the fact that “animals can roam freely and/or can forage” and “fish is caught or cultured using sustainable practices” (NL-Agency 2010a, p. 4). Furthermore, “products that are labelled with the quality marks EKO, Demeter, BIONaturland, Soil Association, Graskeurmerk, Vrije-uitloop/CPE, Erkend streekproduct, Milieukeur and Marine Stewardship Council (MSC) or with a green or yellow colour on the WNF Fish Watch Card are considered to meet this requirement in any event” (NL-Agency 2010a, p. 5). With respect to selection criteria (also referred to as “award criteria”), the criteria document stipulates that “if the product suite to be provided, expressed as a percentage of the purchasing volume, each year demonstrably consists of more than 40% organic products and/or products with one or more sustainability properties, then this section of the tender will be awarded a higher rating” (NL-Agency 2010a, p. 5). Finally, the contract provisions in place for this product group stipulate that contractor and client must prepare a communication plan that describes how information related to sustainable catering will be communicated to end users and the contractor and client need to design and execute – “in a verifiable way” – a plan to reduce the impact on the environment, addressing topics such as “energy and water consumption, packaging, loss, waste, cleansers and transportation” (NL-Agency 2010a, p. 7).

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The product group paper refers to paper that is procured to print on and for copying. For this product group, no criteria have been developed for supplier qualification and the criteria document neither includes selection criteria nor contract provisions. However, minimum requirements for the actual paper procured have been formulated. The requirements include various technical specifications, such as using chlorine-gas-free methods to produce the paper and the fact that “cleaning chemicals, de-inking chemicals, foam inhibitors, disperants or coatings shall be free of alkyl phenol ethoxylates (APEOs) or other alkyl phenol derivates” (NL-Agency 2010b, p. 5). Furthermore, “the emissions to air and/or water from the pulp and paper production for the paper to be supplied may not be greater than the values […] calculated according to the method as described in the EU Ecolabel” (NL-Agency 2010b, p. 7).

More (detailed) information on the (core) criteria that have been formulated for the various – 45 to date – product groups addressed by the Dutch SPPP is available on the following dedicated websites: http://www.pianoo.nl/duurzaaminkopen (Dutch version of the website) and http://www.senternovem.nl/sustainableprocurement/index.asp (English version).

One of the latest developments within the context of the Dutch SPPP has been the formulation of social criteria as an addition to the environmental criteria in the original programme. These criteria mostly deal with compliance to international labour and human rights standards and focus on procurement issues within international supply chains. Additional criteria under development address elements such as occupational health and safety, working hours, wages and fair trade standards. So far, the social criteria that have been developed represent contract provisions and cannot be used to select suppliers. Furthermore, these criteria are only “mandatory” “at the national level […] [applying only] to contracts whose value exceeds the thresholds defined in European procurement regulations (€133,000 for goods and services and €5,150,000 for works). Other levels of government must decide for themselves what thresholds to adopt” (NL-Government 2009, p. 2).

It is important though to note that, with respect to monitoring the progress of implementing the criteria of the SPPP for public procurement, the judgement on whether a specific purchasing decision is considered sustainable or not is, as mentioned above, based solely on the core, environmental, criteria. Based on this reference point, the 2008 monitor revealed that none of the involved parties had managed to realise more than 50% sustainable procurement except the ministries of the Dutch government, scoring a little more than 50%, while the percentage of criteria that had been applied had increased by 7% compared to 2006 (KPMG 2010). However, the 2010 monitor (KPMG 2011) reveals that these percentages have now gone up to 99.7% for the ministries, 96% for provinces and between 87% and 90% for municipalities, while the percentages for other parties involved, such as water boards and universities, are all 75% or higher and, therefore, clearly above the targets that have been set.

A critical assessment of the current programme

The agency in charge of coordinating the Dutch SPPP is probably correct in stating that “the Netherlands is one of the frontrunners in the EU in the actual application of environmental criteria” (SenterNovem 2011b). Furthermore, one could argue that the Dutch government deserves praise for trying to incorporate social criteria in their SPPP, despite the “conceptual chaos” (Vallance et al. 2011, p. 1) associated with this element of the sustainability tripartite. Finally, the results of the 2010 monitor discussed above seem to suggest that implementation of the programme has been quite successful and the Dutch government has all but managed to realise its ambitions. However, one could argue that all this does not necessarily mean that the Dutch SPPP is perfect and that the above does not portray the full picture. To illustrate this and expand on it, some specific characteristics of the current programme, and the (possible) effects from a sustainability perspective, are addressed below to refine this picture.

Consider the social criteria that have recently been developed. A review of the governmental website section dedicated to this topic, http://www.pianoo.nl/duurzaaminkopen/sociale-voorwaarden, clearly reveals the “amorphous” nature of the current Dutch SPPP with respect to this type of criteria. This section explicitly states that the programme accounts for the fact that many supply chains are so complex that it is virtually impossible to oversee the chain. Therefore, social criteria that have been developed refer to a “reasonable effort” from the purchasing party as a measure for sustainability. Furthermore, testing compliance by contractors is mostly based on testing the “timeliness” of reporting on social effects and only “marginal testing of content.” Unfortunately, even though this approach acknowledges the complexities involved in addressing the social component of sustainable development, it does not seem to strive to overcome the compromised utility of this component. In fact, the current Dutch SPPP seems to represent an approach that accepts a “normative vacuum” (Vallance et al. 2011, p. 6) with respect to social sustainability, rather than one that actually tries to tackle the issue.

The way environmental criteria are addressed within the Dutch SPPP also raises some questions. A recent study (KPMG 2010), commissioned by Actal (2011) (the Dutch Advisory Board on Administrative Burdens) and executed by KPMG Advisory N.V. (referred to as KPMG in this essay), addresses some of these questions. For instance, the study concludes that for some product groups the SPPP criteria are actually not stricter than already existing rules, regulations and practices. A clear example of this refers to the product group office furniture. For this product group, meeting the criteria of the Dutch SPPP does not require any additional steps or measures with respect to producing these products compared to the EU criteria that are already in place for this sector. However, the Dutch SPPP does require suppliers to, once again, separately from those EU regulations, prove that they meet the criteria in the SPPP (KPMG 2010). Consequently, the SPPP does not contribute to sustainability issues related to those products, while administrative burdens associated with procurement of those products have increased.

What is more, the choice for criteria based on minimum requirements does not really allow for companies to stand out with respect to sustainability and makes it extremely difficult for companies to predict what would be the appropriate “direction” for new initiatives and innovations that exceed those minimum requirements. In fact, KPMG (2010) argues that the choice for this type of criteria actually hinders innovation and further increases uncertainty and costs for companies. Simultaneously, the choices made with respect to content of the criteria often lead to higher production costs and, therefore, purchasing costs for the contractor. Clear examples of this are some of the requirements mentioned for the product group catering (see above), especially those related to measures that result in lower efficiency for growing vegetation (see e.g. Ruben and Fort 2011) and increased surface areas needed, thus higher production costs, for keeping animals (see e.g. Kumm 2002). Furthermore, the absence of clear selection criteria for various product groups (see e.g. the core criteria for paper discussed above) and specific references to various existing (sustainability) labels and certification schemes make it virtually impossible to be selected as a supplier without having those labels and certificates. This both favours bigger companies, because some of these certification schemes are quite expensive and small companies can often not afford them, and can result in situations in which a clearly more sustainable product, but without label or certificate, cannot be selected over a less sustainable product with label or certificate. An example of this relates to products, such as vegetables and fruits, produced by glasshouse farmers that do so by adhering to strict ecological procedures, while applying a production process that produces energy instead of using it. Unfortunately, to date there is no certificate or label linked to these, sustainable, practices (KPMG 2010). Therefore, one could question the actual contribution of the Dutch SPPP to sustainable development related to those criteria and product groups.

Unfortunately, even though increased costs and the absence of clear selection criteria raise specific questions, these are certainly not the only drawbacks related to the current core criteria and the set up of the current Dutch SPPP. To illustrate this, once again, consider the core criteria for the product group catering (see above). These criteria stipulate that products are considered sustainable if they comply with one or more specific sustainability properties, where one of these properties is defined as “animals can roam freely and/or can forage” (NL-Agency 2010a, p. 4). With respect to the procurement of meat, this would imply that as long as this meat originates from animals that could roam freely and/or forage it is considered to be sustainable. However, research has shown that this is most certainly not a “given” (see e.g. Nguyen et al. 2010) and that such a criterion oversimplifies matters from a sustainable development perspective, even if we were to limit our perspective to specific environmental impact factors that are linked to the production process. For instance, organically produced meat can actually amount to higher discharges of nitrogen and greenhouse gas per kilogram of meat than conventional meat production (Kumm 2002). Add to this, for instance, that it could very well be that conventional meat production facilities are located nearer to the consumption location than organic production facilities. Once again, this would result in additional emissions related to transportation. Would a Dutch ministry actually contribute to sustainable development if it decided to procure this meat? Based on all the above, the answer would have to be a firm “no” to many environmental experts. However, based on the criteria included in and the set up of the current Dutch SPPP the answer would be “yes.”

Discussion

Obviously, the above only represents a limited and partial analysis and assessment of the current Dutch SPPP, mostly focusing on examples related to two specific product groups. However, the study commissioned by Actal (KPMG 2010) clearly shows that it would be reasonable to assume that a detailed analysis of all individual minimum requirements, selection criteria and contract provisions would raise many more questions about the actual contribution to sustainable development of the current programme. In fact, one could even argue that these problems are not just linked to the choices made with respect to specific requirements, criteria and provisions, but are inextricably linked to the concept of sustainable development itself.

As noted earlier, the interrelations and interdependence of ecological, social and economic systems are integral to the concept of sustainability and organisations that claim to act sustainably need to address them beyond simply abiding by their legal obligations (Hutchins and Sutherland 2008). A system dynamics approach has been suggested by many as the logical and appropriate approach to investigating these interactions and developing possible solutions (see e.g. Newman 2006). What is more, the solutions and the targets set need to account for not only the systemic nature of sustainable development, but also existing practices of actors involved. In light of this and considering the fact that sustainable development might ultimately be dependent on (technological) breakthroughs that lie in the future (Giampietro 1994), it is critical that strategies to realise this development are not too technocratic (De Graaf et al. 1996). As indicated by Frame and Brown (2008), dealing with challenges related to sustainable development cannot always rely on technical problem-solving or focus on demand-driven performance, but needs to stimulate those involved to develop new solutions and new approaches to known problems. One could question whether the set up of the Dutch SPPP answers to the above-mentioned reference points and stimulates contractors and clients to apply such an approach.

The current programme is based on minimum requirements per product group and does not account for the consequences of choices with respect to the procurement of one specific product on other ecological or social systems. The examples with respect to catering products and office furniture, as described in the previous section, clearly highlight the absence of such a systemic perspective. What is more, the set up of the current Dutch SPPP encompasses a strict distinction between environmental and social criteria. The interrelations and interdependence of ecological, social and economic systems are not addressed in the actual criteria used to assess the “sustainability” of specific decisions, which means that decisions based on those criteria leave us “uninformed about important outcomes in other dimensions” (Agrawal and Chhatre 2011, p. 1).

This drawback of the current programme is further aggravated by the fact that it is mostly based on minimum requirements and many of these requirements refer to technical product specifications. As has been indicated by Actal (KPMG 2010), this approach does not stimulate the type of innovations that are needed for long-term sustainable development. In fact, recently a number of key stakeholders involved with sustainable procurement in the Netherlands have again urged the ministry of Infrastructure and Environment to address this issue. In line with the arguments and examples provided in this essay, they conclude that the current programme is too technocratic and suggest adjusting the set up of the Dutch SPPP to allow for a more process-oriented approach, focusing more on functional requirements instead of product requirements (VNO-NCW et al. 2011).

Considering the examples presented in this article, and taking into account the contributions of KPMG (2010) and VNO-NCW et al. (2011), it can be concluded that the (set up of the) current Dutch SPPP lacks a clear vision on how public procurement can contribute to achieving long-term ambitions with respect to sustainable development. However, it is just as important to note that the current programme does include a number of characteristics and procedures that would support and facilitate adjusting the Dutch SPPP in line with what has been suggested above. For instance, the procedure for developing criteria, as described earlier in this article, already allows for contributions and input of key stakeholders. The fact that implementation coaches and examples of successful procurement cases are already part of the (website of the) current programme could facilitate a more process-oriented, functional approach, without the need for a complete redesign of the system as such.

More importantly, it seems there is growing support for such an adjustment and the inclusion of clear ambitions with respect to sustainable development as the overall criterion on which specific procurement decisions will be judged. Not only the advice by VNO-NCW et al. (2011) is a clear indication of this growing support, but also the reaction of the ministry of Infrastructure and Environment to this advice. In their letter to the Dutch parliament (Ministerie van Infrastructuur en Milieu 2011), the ministry states that they support the analysis included in this advice. Interestingly, by now they acknowledge that even though the results of the 2010 monitor, at first glance, seem to suggest that ambitions related to sustainable procurement have all but been realised, a more systemic perspective to sustainable development reveals that a number of opportunities to boost the market for sustainable products still remain and some aspects of the current programme could actually be deemed counterproductive (see e.g. Ministerie van Infrastructuur en Milieu 2011, PIANOo 2011). They have now embraced VNO-NCW et al.'s suggestions for an adjusted Dutch SPPP based on a system of (functional and process) criteria that are more in line with the reference points discussed above. In fact, a first series of seminars dedicated to discussing these suggestions has already been organised (PIANOo 2011).

Based on all the above, it can be concluded that adjustments to the current Dutch SPPP are needed to alleviate some of the weaknesses of the current set up, from a long-term sustainable development perspective. Therefore, the discussion presented here suggests that the biggest contribution of this programme to the EUs ambitions with respect to sustainable procurement might, ultimately, not be based on the programme serving as a prime example, but rather on bringing into the debate some of the lessons learned from the Dutch situation.