Net Zero and Unlawful Procurement

Despite existing for a few years, social value criteria are still regularly undermined by the rest of the tender. Social value and climate change are not just tick box exercises. They carry very real consequences to the opportunities of people and the effect they have on the planet.

As major flooding hits across the pond, the once bastions of sustainability, the UK, host of COP26, still struggles to implement sustainability and capture sustainable suppliers into its supply chain.

Anywhere from 70% to 90% of the embodied emissions of a product or service comes from its supply chain. This is entirely the part procurement is responsible for. If you don't buy it, you don't cause it. 70% of the floods in the USA this week are caused by procurement supply chains.

Not only is social value now a feature of UK public procurement that has legal weight, the effect of illegal, unlawful and ineffective procurement has real world consequences for people and planet.

In this case study, a UK based contracting authority has pre-rejected a bidder in a live tender, before the closing date, for no legitimate mandatory or discretionary reason. An unlawful breach of the Public Contracts Regulations. This potentially negatively impacts the climate, but also means the tenderer fails to meet their own requirement. That excluded bidder is the market's highest performing carbon and resource management platform and the one that grosses by far, the highest economic and financial value and Carbon reduction per tonne.

Important: As of writing, this is a live tender! You can find this. The tenderer is subject to the Public Contracts Regulations 2015 and the changes in the upcoming Procurement Act 2023. I don't intend to name the tenderer as that's not the purpose of this post. We are still deciding if we wish to challenge this decision even though it is still open, but one way or another, our participation is "not permitted". It doesn't require that the tender have closed, as the 30 day deadline to bring legal action starts the moment the issue arises.

Background

A tender was published on well known public contacting portals. It falls under the body of law collectively given effect through the Public Contract Regulations 2015 and soon to be Procurement Act 2023.

The requirement is for an "on-site recycler" able to recycle more of the waste and continue

"Providing and operating a system for the collection of Contract Waste and the onward provision of preparation for re-use, recycling, other recovery and disposal services which is environmentally sustainable

...

? Supporting the Authority in increasing its on-site recycling rate and maintaining a landfill diversion rate of 97%. The support will be by:

o Providing management information on a monthly basis which shows the weights (in kilograms) per bin per lift by area and waste stream

o Conducting site audits twice a year to ensure the number and type of bins are correct for our contract and recycling targets. This audit will include a review of all management information

o Identifying recycling routes for waste streams that are not currently recycled by the contacting authority and working with the authority to to maximise the amount of waste recycled via these routes i.e. through the right type of bins, management info and frequency of collections"

In addition, it has two other requirements:

"Process Efficiency and Continuous Improvement: The Contractor shall provide proposals for adding value to the Service by considering potential options outside of the Specification requirements. This may include ways that the cost of the Service can be reduced without significantly compromising Service quality or improving the performance of the Service through alternative options, such as improving the quality of segregated waste streams."

And

"Sustainability and Corporate Social Responsibility The Contractor shall be aware of and comply with all sustainability or environmental policies and targets in operation by the [authority] in respect of waste management and the Contractor shall deliver outputs that support these. The Contractor shall work with the [authority] to deliver the best environmental outcome for individual waste streams whilst keeping costs to an acceptable level"

Context

Public procurement best practise recommends requirements follow SMART objectives.

(S)pecific objectives which detail exactly what has to be done.

(M)easurable which have defined success criteria and measures of work

(A)chieveable targets which are well defined and enumerable (you can put a number to it)

(R)ealistic are not some far fetched, impossible to achieve idea. Like floating find in mid-air, or having to be both visible and invisible at the same time.

(T)ime Bound: Have a fair tendering period of at least a month, contract duration, with periodicity of service. This is the easiest for contracting authorities to implement. You never get a contract or framework agreement without start and end dates and the tender for them always has a closing date.

Indeed, public contract law requires that closing date (specific, time bound), relative weight of criteria (measurable) are included in any tender published. That is visible in the act of parliament. The targets for service are up to the contracting authority but in every case, they should provide them.

In addition, the public contract regulations and intermediate case law from the technical court, (the court that adjudicates on issues of procurement) mandate that Participation in the tenders must be full and fair a public contracting authority is not allowed to preclude a bidder before the closing date of the tender. Since this violates the principles of open, competitive procurement. This is especially important to prevent compromised buyers who want to redirect work to friend or family and simply tells other bidders this bid isn't for them.

In law, bidders are assumed to have familiarised themselves with the full requirement before submitting a response to the tender. In order to be given fair opportunity, this must allow it is to ask questions to clarify tenderer intent, requirement and what they're asking for. Especially in the event that the objectives aren't SMART.

In addition, the tenderer must respond with answers promptly enough to allow the bidders to digest the information and submit an appropriate response before the closing date. Answering the question on or after the closing date is unfair and thus, unlawful.

The Tale of the Tall Tail

This particular case was interesting because a bidder notices there were no details of the total volumes or masses of waste collected on the authority site. Just the number and size of bins, without any ad hoc collections detailed, which creates an unknown (breaching the Specific requirement of SMART objectives and thus, making it unAchievable and unRealistic). So they did the standard thing and asked a clarification question seeking the mass of waste collected in the previous period to prepare their proposal.

In the same submission, they also asked if a more effective approach would be appropriate to generate more money and reduce transport and emissions impacts, given the requirements of the tender.

They were met with this response:

“Whilst this is an interesting proposal, it isn’t something that we have the capacity to implement at present. In light of this, is the breakdown of the tonnage of materials still required?”

This answer immediately signals exclusion of the bidder, even though there was 3 weeks left to run. A direct and unequivocal breach of the Public Contract Regulations 2015. Since it prevents market participation in a free and fair invitation to tender.

The bidder does not operate a standard traditional service, because traditional waste recycling services are not even close to sustainable. Most increase emissions by 1.6 times relative to landfill. As a result, this bidder operates an on-site system to create products from that waste the authority can use to substitute for items elsewhere in its supply chain. Saving money. Yet its service is, to all intents and purposes identical on the ground except for the existence of the circularity hubs inside buildings, but uses a different subscription-based pricing system and does not use bin trucks at all. Since the waste never leaves site. Reducing total emissions by over 97%, scope 3 by 99.1%, energy by 99.74%, transport by 99.91% and contributing to nature regeneration and the creation of local jobs. Other diversion from waste suppliers increase emissions over landfill by 1.2 tonnes for every tonne. We reduce it by 780kg per tonne. A difference of 1.98 tonnes avoided. Never mind the emissions saved in manufacturing.

Yes. That bidder, is us.

We’re still trying to determine if its worth a challenge, but that’s an expensive litigation exercise we don’t have time for. Instead we are taking the unusual step of putting this out as a learning exercise (if another bidder is in my connections list and wishes to take that on, we’re happy to prepare and sign a Witness Statement with your legal team – just let me know).

The key question is what damage does this do to the planet?

The Long Impact

Tenders select suppliers for anywhere from 3 to 35 years (Sheffield City Council - *facepalm emoji*). This not only closes the door to any other supplier, as the contract needs to run its time [or contracting authorities will face legal challenge and damages awards from the appointee] the selection of a suboptimal contractor risks pausing a contracting authority’s climate action for just as long.

At the moment, climate change is on an unstoppable trajectory. It’s here now. Pumping more emissions into the atmosphere today, has the same effect as pumping nearly 60 years of pre-industrial emissions into it. Every year that passes, it accelerates. As the biosphere struggles to keep up with the pollution humans generate.

And while it accelerates, councils and central government stand still.

Appointing the wrong supplier causes inordinate damage to people and the planet. Prior to the introduction of social value criteria, appointing the wrong supplier happened 7% of the time on average. With the introduction of social value, and from a social value perspective, it is nearly 100% due to the low, statistically insignificant social value weighting, which results in statistically insignificant scoring differences on the total score. It is still drowned in the margins [of error].

What makes this worse, is continued over-reliance on text responses mean bidders can hide bad behaviour or climate and ecological harm from tenderers very easily! Text based responses, by their nature, breach SMART criteria because they equate empirically provable evidence, with text based, unevidenced claims. That means liars are equated with truth tellers. For an average win-rate of 1 in 20, empirical evidence improves your chances to 1 in 16, but a well written, unevidenced bid, improves it to 1 in 4.

This is bad enough when the procurement is based on the opinion of an authority, but when it’s based on the laws of physics, with provable climate control limits, it makes it even worse!

And it gets even worse than that! When an authority has signed SBTi commitments, but continues to reject science based evidence. In such a case, it can't stop breaching something, somewhere. As the harm of a poor procurement is also visible in the landscape.

The case of pre-excluding a supplier is not only illegal, in this case, it also has the effect of excluding the very supplier you have sought to meet the key objectives in process efficiency and sustainability that they seek. Making this not only an unfair procurement, but also an ineffective one.

The only way that authority can now go, is to continue the illegal procurement, or stop it.

Best practise would be to stop and reissue it. But most buyers will choose to continue, despite being informed of it. Which is yet another legal breach.

Continue to do harm to people.

Continue to do harm to sustainable businesses.

Continue to do harm to the planet.

There is a silver lining for us. We won't be wasting resources (pun intended) bidding for a tender we are guaranteed not to win. But it's not about us. What's key is how effective procurement is to buy the right things to fix climate change.

But unlawful procurement is not only maintaining the damage, it's going backwards. Even in law.

What do you think? If you were advising them, would you suggest they continue to break the law and be challengeable by any bidder or stop and reissue it?