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Dmitriy Nikolayev discusses how the Commonwealth of Massachusetts has made efficiency gains whilst reducing its environmental impact by adopting a environment friendly procurement programme.

Q1 The Commonwealth of Massachusetts’ Operational Services Division has an Environmentally Preferable Products Procurement Program (the EPP Program) as a part of its pollution prevention plan. Can you tell us briefly what the program is about?

The Environmentally Preferable Products (EPP) Procurement Program is a partnership between the state’s central purchasing agency (Operational Services Division) and the agencies responsible for environmental protection.  OSD establishes statewide contracts for a wide range of products and services used by offices, facilities and vehicle fleets of state executive agencies need for their operations.  Other public-sector organizations, such as the legislative and judicial branches of government, local (city and state) governments, public schools and colleges, are eligible (although not required) to use those contracts. The goal of the program was to use the combined purchasing power of all contract users to develop markets for EPPs and to reduce the state’s environmental impact.

The program consists of one full-time and one part-time staff members who:

• Identify and research EPPs available in the marketplace,
• Write product and service specifications and work with procurement managers to make EPPs available through the statewide contract system,
• Conduct an extensive education and outreach program to promote the available EPPs to purchasers across the state, and
• Work with other states and organizations to expand these efforts nationwide.

Historically, the program’s approach to increasing the purchase of EPPs across the state has been that of education rather than mandating EPP purchasing.  The program uses a wide range of educational and marketing devices to convince purchasers to switch to EPPs, including a website with a continuously updated guide to available products and services, a monthly email newsletter, educational workshop and presentations, an annual trade show and conference, and articles in a variety of publications that reach their target audience.

This approach has been successful and has increased the purchase of recycled-content products alone from just over $5 million in Fiscal Year 2002 to over $100 million in Fiscal Year 2004.  The purchase of other EPPs is currently estimated at another $80-100 million.

Q2 You have said that the improved environmental and cost performances of these higher-quality products generate savings of more than $1.7 million annually. Can you explain to us how you measure those savings?

Tracking the value and quantities of EPPs purchased as well as the cost savings and environmental benefits associated with those purchases are the main performance measures of our program.  Some EPPs sometimes cost significantly less than competing products.  Many green products, by virtue of conserving energy or water or being more durable, help reduce operation (e.g. energy or water), maintenance or disposal costs.

Our program has identified or developed cost savings tracking methodologies for a number of EPPs purchased by the state.  One of the tools, EnviroCalc, developed by our program has recently won an award from the National Association of Public Procurement Officials.  The tool estimates the environmental benefits and cost savings associated with a variety of recycled-content and energy efficient products (http://www.mass.gov/epp/envirocalc/).

The table below represents the purchases that resulted in savings and (in parentheses) the costs that these products helped reduce.  The total annual savings are an equivalent of over 22 times the cost of the program itself.

Q3 Can you tell us how you source and find environmental products? Does this kind of sourcing not increase your costs as research and expertise is needed in the process?

Environmentally preferable product purchasing is a rapidly developing field, and sourcing innovative products requires some additional work.  The amount of extra effort needed depends greatly on the product or service purchased.  For example, many recycled-content and energy efficient products that are widely available do not require any extra labor (or extra money) to research and purchase compared to non-EPPs.  Products that evolve quickly or have multiple environmental attributes, such as computer equipment and environmentally preferable cleaners, do require additional work to research, specify and evaluate.

There is a broad realization in the environmental purchasing community that organizations have scarce resources to devote to EPP purchasing.  This realization is one of the factors that is driving the efforts to coordinate research and specification writing between public purchasing organizations nationwide – and to develop tools that reduce the efforts needed to evaluate and purchase green products.  Our program participates in many of those efforts.

Overall, there are many reasons why organizations choose to invest additional resources into purchasing EPPs.  For some it is the savings, others are primarily interested in the environmental and public health benefits of the products, yet another group focuses on reducing health risks for their employees.  What unites those organizations is an understanding that environmentally preferable products are associated with additional value compared to non-green alternatives – and that additional value justifies the effort needed to source the product.

Q4 There is a political pressure in buying cheaper to get results faster. As purchasing environmental products often benefits society long term rather than short term, how do you deal with these political pressures?

There is a common perception that purchasing environmentally preferable products is associated with increases in cost.  This perception is often wrong: many EPPs cost less than non-green products while an even larger number of them are priced competitively with products that have higher environmental and public health impacts.

Some EPPs do cost more, initially, but offer significant savings over the life of the product.  For example, compact fluorescent light bulbs cost more than regular incandescents, but consume three times less energy cutting the electric bill by the same percentage, in addition, they last up to 10 times longer requiring that much less labor to replace.

The challenge we face daily is making an organization look beyond the price of the product.  There are a number of serious constraints for that, including the fact that some organizations maintain separate budgets for purchases, operation/maintenance and disposal.  As a result, the purchasing manager may not necessarily have an incentive to save money for the department that handles operations and maintenance.

The Commonwealth of Massachusetts operates under the principles of “best value” (as opposed to “low bid”) procurement, which means that purchasing managers and their teams have some flexibility in defining what constitutes the best deal for the Commonwealth.  In a lot of cases, this definition will include not only the price, but also operation, maintenance and disposal costs as well as the impact on the environment and public health.

Q5 Do you think environmental purchasing will have a greater impact on public procurement purchases in the coming years?

Definitely.  There are several trends that are currently taking place in the US reflecting the growing influence of environmental purchasing:

Purchasing organizations across the nation are beginning to coordinate their environmental purchasing efforts, including using research, specification writing and product evaluation.  The most recent development is the establishment of the Responsible Purchasing Network, coordinated by the Center for a New American Dream (http://www.newdream.org/procure/).  The network, which is still at its early stages of development, aims to facilitate sharing of information and resources, to develop model specifications to be used by members, and to encourage other organizations to think beyond product cost.

The combined buying power of large organizations is gaining importance as a tool for influencing markets and as an alternative to government regulation.  In 2002, a large group of governments across the US adopted a common set of specifications for purchasing environmentally preferable cleaning products.  The industry response was nothing short of an explosion of green cleaning products that have become available as more and more organizations use the consensus specification.

The work to develop consensus product guidelines successfully involves the vendor community.  Over the past two years, a multi-stakeholder group of purchasers, government, environmental activists and vendors, worked to develop the Electronic Products Environmental Assessment Tool (EPEAT).  EPEAT is essentially a system that rates desktop computers, laptops and monitors based on multiple environmental attributes, which manes it easier for purchasers to take environmental considerations into account when purchasing electronic equipment (http://www.epeat.net/description.htm).