Green Procurement

Italy

Current EU and national procurement legislation in the fields of

IT - no
household appliances - no
lighting - no
green power - no
vehicles - yes
building components - no
other - yes
general/universal - yes

European situation: careful attention needs to be paid to public procurement markets, since it is estimated that the average value of public procurements represents between 13,9 and 14,6 % of the EU GDP. The European existing policy aims at opening up national markets to competition from other Member States, based on transparent and competitive procurement rules. These aim to ensure value for money for taxpayers and efficient allocation of resources, thereby enhancing the quality of public services, improve economic growth, competitiveness and job creation. The main EU legislation dealing with (public) procurement is:

Commission Staff Working Document “Buying green! A handbook on environmental public procurement”, 18.08.2004, Sec(2004) 1050.
Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004, on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.
European Court of Justice, lawsuit C513/99, verdict of 17.9.2002.
Commission Interpretative Communication “on the Community law applicable to public procurement and the possibilities for integrating environmental considerations into public procurement”, COM (2001) 274, 4.7.2001
consolidated version of the Treaty of the European Community (O.J. C 325, 24/12/02), Art. 6.

Public Administrations and other actors to whom directives on public contracts are applied represent an important category of consumers. With their expenses, that amount to 1.000 billion Euro, they can greatly contribute to sustainable development. The new directive allows Member States to regulate “Central Purchasing Bodies” which may carry out call for tenders and then PAs can profit from results. The system is currently national, but the directive does not restrict cross-border co-operation.

Some Member States have already adopted initiatives to introduce an environmental dimension in the public contracts, at a national and local level.

Italian situation: in Italy it is estimated that the value of public procurements represents about 17% of the GDP. Even if the specific legislation on GPP is under preparation (the implementation of the EU directive is on-going and the scheme of the relevant Decree has been approved), the national rules dealing with procurement still include:

Preliminary approval pf the “Codice Unico degli Appalti” by the Council of Ministers, implementing inter alia directive 2004/18/EC and establishing rules for all public contracts.
The Financial Law 2006 stressed the need of rationalising the PA expenses, to be achieved also through the mandatory use of the CONSIP’s (Concessionaria Servizi Informatici Pubblici/Public Electronic Services Agent) Framework Agreements (or “Convenzioni”) if in the second half of 2006 Central PAs will not achieve the defined savings objectives. As alternative the FA benchmark should be reduced by 20% when directly purchasing goods and services on the market.
Law 191/2004 (“Urgent disposition to reduce the public expenses”) established that all PA (with the exception of Municipalities with a population below 1.000 units or Municipalities on the mountains with a population below 5.000 units) could use the CONSIP’s FA, or as alternative must use the quality/price parameters defined in the Framework Agreements when procure goods and services as maximum values. Should this the case, the purchasing contract shall be transmitted to the Control Authority and the person in charge of the contract is legally responsible of the choice.
Circulars of the Ministry for the Environment related to Decree 203/2003, on the operative indications for the re-cycled materials of different types: 08.06.2004 (textiles), 04.08.2004 (plastics), 03.12.2004 (paper, wood & furniture), 22.03.2005 (soil improvers), 15.07.2005 (building and road sectors) 19.07.2005 (rubber products).
Ministerial Decree 203/2003, implementing the “Ronchi” Decree 22/97: norms for the public offices and public societies to cover their annual needs of goods and articles with at least 30% of recycled product.
CIPE (Comitato Interministeriale per la Programmazione Economica/Interministerial Committee for the Economic Planning) deliberation 57/2002 on “Strategic environmental plan for the sustainable development in Italy” in which the PA is invited to commit to integrate the environmental aspects into the procurement procedures with the objective of modifying the public contracts for the purchasing of goods and services, including environmental requirements, without infringing the EU legislation.
DPR (Presidential Decree) n. 101 of 4 April 2002 established, together with the Framework Agreements system the rules for the electronic procurement through the use of the “electronic market” and “electronic tender”. Both are aimed at allowing the PA to procure goods and services through an automatic system for contractors selection, respecting all the rules on transparency and procedure simplification
Since 2000 a modernisation process for the Public Administration is under development, including the project “rationalisation of the purchasing of goods and services of the Public Administrations”, promoted by the Ministry of Economy and Finance through CONSIP, that boosts the purchasing from public Bodies via internet (e-procurement), as consequence of the Law 448/1999.
Law 448/1999 (financial law 2000): including the obligation of introducing the quality/price ratio concept in auctions, giving prevalence to the product (biologic) quality. Art. 26 establishes that the Ministry for Economy and Finance stipulates, through the controlled society CONSIP framework Agreements with selected enterprises, which are committed to accept the supply orders from PA up to the fulfilling of the specific FA. Central and local PA are obliged to procure goods and services through the FAs while other PA could adhere to the CONSIP initiative, or as alternative must use the same price/quality parameters for the purchases of similar goods and services. The law also establishes the purchasing of 20% of recycled tyres.
Decree 22/97 (Ronchi Decree), promoting the prevention and the reduction in production and danger of wastes by means of, inter alia, the definition of procurement conditions which show off the capacity and technical competence for the reduction of waste production and foresee the use of recycled materials to promote their market. In particular 40% of the paper should be recycled.
Law 9 January 1991, N.10 “Norms for the implementing of the National Energy Plan for the rational use of energy, the energy savings and the development of renewable energy sources which establishes the professional figure of the “Responsible for the conservation and the rational use of energy” and Ministerial Decree 27 march 1998 on “Sustainable mobility in urban areas” which establishes the “Mobility Manager” within companies and prescribes that 50% of vehicles with bio fuels by 2003.

Current national practice in procurement

The local/central Authorities are important customers in many markets. As a rule (applicable to both the public and the private sectors) the cheapest supplier is awarded the contract for large purchases, which makes it difficult for innovative or green products, usually more expensive, to be purchased. However, since 2000 actions on green (public) procurement were put in place by local administrations.

Public Administration, unlike the private sector, must follow laws and rules aimed at transparency (through the use of standardised procedures avoiding subjective decisions) and fair competition (access to procurement schemes to national and international companies). The provision set in Law 191/2004 foresee that PA procurement actions, with amount is higher that 200.000 Diritti Speciali di Prelievo (Special Account Rights, an account unit used as reference for the Community transactions) or 236.945,00 €¹ , VAT excluded, must follow one of the following procedures: Open Procedure through public auction, Restricted Procedure through call for tender or Negotiated Procedure through private contract.

“Green” criteria can be added as threshold requirements, when the contract is awarded to the most economic advantageous offer. In the case a “score” system is used, with specific “points” assigned to the environmental quality, only products fulfilling the specific green characteristics (i.e.: energy consumption, end of life collection, recycle and disposal) are awarded with the points. A combination of the two methods is also possible.

As result of the overall legislative framework, the start-up phase of the centralisation of the public purchase lead to significant savings: 2,3 billion Euro in 2002 compared to 2001, with an average saving of 27% on purchasing price, going from 81% for mobile telephony, 68% for fixed one, 35% for Laptops, 32% for photocopiers, 10-20% for fuels, 15% for vehicles and stationery and 9% for food
coupons. In 2002, of the 97 billion Euro were spent by PA for purchasing of goods and services, 8 billion Euro were managed by CONSIP. At the beginning of 2004 CONSIP had established 56 Framework Agreements for more than 30 product categories with 130 suppliers and the number is continuously increasing. The CONSIP’s role developed from purchasing centre for Ministries and PA
to a strategic centre for public expenses co-ordination and rationalisation and started to introduce green procurement procedures. Similar “purchasing centres” have been established or are setting up at Regional level.

GPP actions monitoring: according to the Survey on State of Play of Green Public Procurement in the European Union for the EC DG Environment (ICLEI, 2003) the percentage of PA procurement containing environmental criteria was:

	< 5% GP	5-50% GP	> 50% GP
Italy	39,3	50	10,7
EU	21	50	22

A survey about the GPP knowledge developed by the Italian Ministry for the Environment on a sample of 215 Local Administrations (municipalities and provinces) by population, resulted in:

Results of a survey about the GPP knowledge

In general, most of the available examples are referred to the purchase of specific products: the review developed by “Ecosistema Urbano 2001” among all principal towns in the Italian provinces resulted in 55% of the municipalities purchasing recycled papers (but less than 10% of the municipalities for an amount larger that the half of the needs), 40% using biologic products in canteens and 40% taking the EU energy label into consideration when buying lighting products. Experiences of a co-ordinated and integrated green procurement are more rare.

Recognised barriers & strategy to overcome them

National barriers/problems...: in Italy the EU legislation on green procurement is under implementation (see above), therefore no legal/standards barriers are there - in principle - in the country. Nevertheless, some obstacles have been largely recognised to the spreading of green procurement.

Main global open problems are:

Scarce diffusion of some green (labelled) products;
Application of the decree 203/2003 (minimum amount of recycled products) still on going;
Guide role of CONSIP for the Public Administration under consolidation (on going co-operation with the Ministry for the Environment) on GPP;
Scarce diffusion of a co-ordinated GPP within PA, although some examples do exist (GPPNet, APE project in Turin, Region Lombardia and Emilia Romagna actions, etc.);
Possibility to use different procurement approaches for the local PA² ;
The culture of filing a formal protest in procurement process by those who did not win it lead to the fact that procurers are rather cautions and prefer to define their specifications very detailed, which can lead to a lack of products on the market;
The provision of technological good, prototype or service cannot be conceived with the current practices (this is more related to the so called “technological procurement”).

Main specific obstacles are:

Difficulties in the creation of a local green market;
Lack of a specific purchasing policy by both PAs and private purchasers;
Scarce professional training of the people involved in procurement;
Lack of specific technical knowledge on ecological criteria and on product selection criteria;
Cultural resistance (to the change);
Objective difficulties to include environmental criteria in purchasing procedures;
Fear of price increase of products, competition limitation and local market put out of competition;
Cost/benefit evaluation tools scarcely available and lack of knowledge on their proper use;
Lack of co-ordinated initiatives with the “offer” side (product policies); if the offer of green product is not properly contemporarily supported, the action on the demand through green procurement are less effective.

... and strategy to overcome them:

Green procurement must be organised in order to increase the chances for innovative products and environmental protection. Green products should guarantee and prove their better environmental performance, evaluated through specific tools, such as a (simplified) LCA), and criteria should not move the environmental problem from one aspect to another of the product life;
Instead of focussing only on the purchasing price, more weight should be given to other criteria, better addressing the long-term benefit of a product/service to promote really innovative products. In this respect, the LCC (life cycle cost) approach, i.e. the cost of the product during the entire life, could be followed; or the value added for the citizens as customers of the State. Some experience show that when green criteria are correctly selected, green procurement can result in a 15-20% cost reduction;
Use of “variants”: a more flexible approach to the introduction of green criteria. Some general criteria are used as minimum threshold to be fulfilled by suppliers to participate to the tender, while other (more stringent) criteria are considered additional but give an advantage (i.e. more points) to the suppliers when the contract is awarded;
Sharing of the G(P)P experience and creation of ad-hoc “help-desks” or “call centres” to help local administration officers in the selection of green criteria and their inclusion in procurement actions;
Improve the knowledge of green products and green market;
Extension of the GPP to large public & private operators (such as health care, multi-utilities, insurance companies, banks, etc.);
The implementation of green procurement (although usually gradually introduced) requires the re-organisation and re-definition of the overall purchasing policy, based on a better knowledge of the real qualitative and quantitative needs and of the criteria to be considered;
Information to suppliers could help to avoid local market put out of competition. An early involvement of suppliers in the process allows the timing adoption of new technologies, with innovation improvement and possibly more product/process R&D. Technological innovation improves industry competitiveness on the local, national and global market, however, innovation always requires investments (human and resources).
Better co-ordination between GPP and IP policies.

Obstacles at EU level: a recent European survey on GPP resulted in main obstacles, or perceived
obstacles being:

perception that green products are more expensive, 44%;
lack of knowledge on environmental technical aspects and on the possible ways to introduce environmental criteria in tenders, 35%;
lack of internal support and policy towards GPP, 33%;
lack of practical information and tools (such as manuals), 25%;
lack of support from competent public offices, 25%.

EU strategy to overcome the barriers: a strategy to overcome identified barriers requires some actions both at “systemic stage” and at “procurement stage” to be developed at European level:

a) Systemic Approach:

Decision on a new rationale: should (green) procurement be part of a (technological) innovation
policy ? depending on the answer: a more risk-taking with the State (Public Administration) could be expected strategic integration of innovation into all public policy as general framework to justify G(P)P
co-ordination with sectoral policies aimed at innovation
combination with other demand and supply (policy) measures
political commitment, professional training and positive lobbying from the industry are important ingredients of success
innovative (green) procurement is not inevitably related to protectionism, and international collaborations can enhance it.

b) Procurement strategy

Functional targets (performance) and life cycle costs to be considered to insure the best possible use of (public) resources on the basis of a real cost-benefit analysis
Industry as partner, an early interaction is needed to co-ordinate industrial R&D with the procurement criteria
Build up of expertise in policy-making and procurement at public and private levels: (better) knowledge on public/private needs, definition of sectoral strategies (better) knowledge on supplying markets (structures, potential, technological feasibility, economical burdens put on all the stakeholders) (better) knowledge on spill over effects (networks, diffusion)
create/improve legal and financial expertise (new forms of contracts, life cycle, risk management)
Horizontal and vertical coordination of actions, with a strong leadership (see the example of the Italian CONSIP for the PA)
Multi-stakeholders approach: involvement since the beginning of key actors: public institutions, administration, suppliers, companies, consumers and their Associations.

Opportunities

If correctly managed green (public) procurement could be an important driving force for (technological)
innovation. This would not only help innovative enterprises, but also the citizens, who would benefit
from the resulting greater efficiency of public bodies at all levels.

G(P)P could contribute to:

the improvement of the energy/environmental performance of the goods/services in the purchasing phase
the promotion of the re-organisation and rationalisation of the public (and private) purchase
the promotion of an environmental friendly behaviour in consumers (energy savings, resources consumption reduction, etc.)
indicate to industry of the need to produce environmental friendly/technologically improved goods by following the market rules
the spread of the energy and environmental labels/environmental communication/certification tools.

Main information sources

Presentations of the meeting of the project "Appalti verdi in Ob2 - Un percorso regionale di accompagnamento al GPP”, Milan, 09 March 2006, Region Lombardia
W. Sancassiani, G. Lembo, Green Public Procurement, Esperienze di acquisti verdi negli Enti Pubblici, FocusLab, October 2005
Ochoa, C. Erdmenger, Study contract to survey the state of play of green public procurement in the European Union, Final Report, Freiburg, July 2003
Presentations of the Workshop “Public Procurement Stimulating Research and Innovation Towards Better Practice, 14 December 2005, Centre Borschette, Rue Froissart 36, Brussels
Presentations at the Second meeting of the project "Laboratorio acquisti verdi e consumi responsabili", developed by Province of Varese with the constribution of Region Lombardia, 16 March 2006, Villa Recalcati, Varese.
CONSIP: www.consip.it and www.acquistinretepa.it

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