Sustainable Public Procurement Ministry of Finance Department of

Sustainable Public Procurement Ministry of Finance Department of Expenditure Government of India July, 2019 1

Definition- SPP ❑ Process whereby public organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life-cycle basis in terms of generating benefits not only to the organization, but also to society and the economy, whilst significantly reducing negative impacts on the environment. (UNEP SPP Review 2017) 2

Why SPP? ❑ Responsibility towards Environment; ❑ Social Sustainability; ➢ Responsibility towards weaker sections of society; ❑ Responsibility towards Tax Payer’s Money by achieving Value for Money (Vf. M) through the use of Life Cycle Costing (LCC) 3

International Obligations q SDG 12. 7 pertains to SPP Ø Promote public procurement practices that are sustainable in accordance with national policies and priorities q Indicator 12. 7. 1 (Tier III: No internationally established methodology or standards are approved) Ø Number of countries implementing sustainable public procurement policies and action plans 4

Initiatives so far In India… 5

Provisions in existing Rules ❑ General Financial Rules (GFR), 2017 ➢ Rule 173 (xi) (b): Criteria for determining responsiveness are to be taken into account for evaluating the bids such asperformance/efficiency/environmental characteristics; ➢ Rule 136 (iii): No work shall be commenced or liability incurred in connection with it untila properly detailed design has been sanctioned; while designing the projects etc, principles of Life Cycle cost may also be considered; 6

GFR… ❑ Star Rating Certification ➢ Rule 173 (xvii) of GFR, 2017 states that Ministries/ Departments while procuring electrical appliances shall ensure notified threshold or higher Star Rating of BEE; ➢ Depicts that purchase is done on the basis of Value for Money and not on the basis of L -1

Enabling provisions in Procurement Manual of Mo. F ❑ Star Rating Certification Thresholds ➢ Para 2. 2. 1 of Manual for Procurement of Goods, 2017 Appliance Threshold Star Rating Split Air conditioners 5 Star (under normal conditions where annual usages are expected to be more than 1000 Hrs) 3 Star (where usage of AC is limited e. g. in conference rooms) Frost Free Refrigerators 4 Star Ceiling Fans 5 Star Water Heaters 5 Star 8

EESL Model ❑ Energy Efficiency Services Limited Scheme http: //www. ujala. gov. in (EESL): UJALA ➢ Government of India initiative for domestic lighting and appliances; ➢ 350 Million LED Bulbs distributed across India; ➢ Cost Savings of Rs. 18, 224 crores (USD 2. 60 Billion); ➢ Development of market for Sustainable products and hence reduction of rates; ➢ As of 31 st May, 2019, 37 Million tonne CO 2 reduction

Social Sustainability ❑ Rule 153 (ii) of GFR, 2017 refers to the Micro, Small & Medium Enterprises (MSMEs) Procurement policy, 2012 ➢ 358 reserved items; ➢ 25% procurement through MSE if they quote within L 1+15% and match price of L 1 10

Social Sustainability… ❑ Startups: Rule 173 (i) of GFR 2017, Para 5. 1. 4(g) of Manual for Procurement of Goods, 2017 and para 1. 9. 1 (ix) of Services Manual, 2017 ➢ The condition of prior turn over and prior experience may be relaxed for Start-ups, subject to meeting of quality & technical specifications and making suitable provisions in the bidding documents

LCC Example ❑ Delhi Metro Rail Corporation (DMRC) used LCC approach in award of their contract worth USD 597 Million ➢ Between the winning bidder and lowest, there was a difference of USD 92. 4 Million. ➢ What safeguards should be taken to secure this difference? Additional BG? ➢ Vitiation of process?

Eco-Mark Status ❑ Eco-Mark scheme was instituted in 1991 by Mo. EFCC for procurement of environmental friendly products; ❑ Eco-Mark certification is given by BIS and is an addition to the ISI Certification. At present there are 52 ecomark licenses; ❑ Lack of interest from market/ Govt. Procurement Policies; 13

Sustainable Procurement Task Force (SPTF) ❑ In March, 2018 a Sustainable Procurement Task Force (SPTF) was constituted with following Terms of Reference ➢ Review International Best Practices in the area of SPP; ➢ Inventorise the current status of SPP in India across Government organizations; ➢ Prepare a draft Sustainable Procurement Action Plan; ➢ Recommend initial set of product/ service categories (along with their specifications) where SPP can be implemented ❑ Identification of few items where SPP can be started is the focus area of the Task Force 14

Ongoing. . Product Prioritization Study ❑ A prioritization exercise funded by UNEP is being conducted ❑ Through this study, sustainable product groups/ items shall be identified and prioritised; ❑ To suggest corresponding sustainable procurement criteria for the top three ranking product groups; ❑ To organize consultations with stakeholders

Thank you !! 16