Issue link: https://maltatoday.uberflip.com/i/446030
maltatoday, WEDNESDAY, 14 JANUARY 2015 13 Business Today I t is not difficult to understand why govern- ments tend to move slowly when imple- menting EU directives, and in particular those relating to the introduction of green public procurement. With hindsight it was in 2011 when the PN administration with much fanfare and aplomb announced its intention to appreciate advantages of GPP. Then it waxed lyrical about resource scarcity, which it blamed as the cause of recurrent annual deficits. The main culprit was rising costs of energy and raw materials. Since then, one hopes, lessons have been learned from past mistakes and the government is motivated to find new ways of producing more of the same, with fewer resources. It has been stated so many times since the start of a global recession in 2007/8 that using transparent procurement rules and maintaining sustainable supply chains are increasingly important. The EU is advising member states that unbridled consumption of resources is causing environmental damage at a rate that cannot be sustained. If the world as a whole followed the EU's current pattern of consumption, global resource use could quadruple within 20 years. Should this trend continue unabated official reports show rising environmental and health problems and this largesse could threaten economic growth due to rapidly decreasing natural resources and the cost of addressing these. It may come as a surprise for readers to know that at EU level public authorities spend 16% of GDP – almost €2,000 billion – on goods and services each year. Much of this is spent in sectors with high environmental impacts, such as transport, buildings and furnishings. Once faithfully followed by the government, the private sector companies and the general public GPP mitigates excessive consumption habits. Not a moment too soon that the Commission in 2004 produced a handbook on environmental public procurement which explained how best to integrate environmental considerations into public procurement directives. According to European Union rules public sector procurement must follow transparent open procedures ensuring fair conditions of competition for suppliers. The opening up of public procurement within the Single market has increased cross-border competition and improved prices paid by public authorities. In the current economic context, public procurement is a key element to stimulate innovation and economic development and an important instrument for the maintenance of a Single Market Act for a highly competitive social market economy. With the context of such a noble aim a revised EU study in 2006 revealed how only seven states were practising GPP to a significant extent – all other 20 Member states were lagging a long way behind. Here in Malta the application of GPP criteria was delayed within the public sector as it was introduced on a soft landing during 2012. The list of products included cleaning products and services, transport, furniture, food and catering services, electricity, construction, mobile phones, combined heat and power, thermal insulation, wall panels, hard floor coverings, windows, glazed doors and skylights, street lighting and traffic signals, and road construction and traffic signs. Introducing GPP measures on a voluntary basis certainly was like setting the cat among the pigeons – meaning it resulted in a haphazard approach. For readers who may not be familiar with the concept of green procurement this simply means that the State, as a formidable buyer, can and must play a major role in leading by example to set transparent procurement requirements, whereby it encourages a pivotal change towards sustainable consumption and production patterns. Thus it was a welcome move by the Malta Intelligent Energy Management Agency (MIEMA) to wake up and smell the coffee – by issuing a call for tenders last year, principally to recruit an expert to support GPP strategies – on a pilot scheme helping two government beneficiaries. The lucky bidder had to devise optimal strategies and provide a scientific methodology for carrying out a comprehensive research and analysis of the modalities of procurement of goods and services. It goes without saying the expert had to outline reference criteria for implementing eco-innovative products, including energy related products. He/she had also to help in the selection of suppliers/contractors for such national procurement, considering that the tender is a prescriptive one asking for the expert to have other support staff. Such assistance will serve as a link to technical/ scientific managers and internal staff employed by MIEMA. This tall order includes the deliverance of scientific studies to assist beneficiaries to introduce 10 environmental criteria in green public procurement. The fly in the ointment is that MIEMA was offering to pay the expert a princely sum – not exceeding €12,300 inclusive of vat. Upon reflection this budget allocation by MIEMA is a drop in the ocean knowing that it is supported by IEEE programme forming part of the Italia-Malta and co-financed by ERDF as to 85% so one expects a higher allocation to set the wheels in motion. It is unfortunate that since 2011, GPP has not yet been widely implemented even though the PN administration showed its intention to gradually introduce GPP directives. Readers may question – what are the barriers to the successful introduction of the GPP? The official answer is lack of policy and strategic vision, fragmentation of institutional responsibilities, poor awareness of the benefits of the GPP, and lack of technical capacity at the level of public procurers. In 2012 the PN administration issued an ambitious National Action Plan to rectify such deficiencies guided by the vision to promote sustainable public purchasing practices while being careful not to create market distortions. Officially the Office of the Prime Minister carries the overall responsibility for coordinating GPP rules, while as can be expected it is the Department of Contracts which will be implementing procedures. In this regard with effect from January, 2012 all calls for tenders, including departmental tenders and those published by the Department of Contracts, had to be fully compliant with the directive. Regrettably, although this directive is now well known to all procurement sections, slow progress has been registered so far. Typically one may ask if GPP was in place in 2011 would this have made a difference to the controversial procurement of a prototype BWSC plant burning heavy fuel oil? Obvious other examples apply and one is curious to know how many tenders since 2012 were issued fully compliant to the GPP template. This is a dubious start for a long and arduous journey – poorly funded by MIEMA. Cynics may ask why with so many millions of euros spent on high-heeled consultancies surely more resources could be allocated to find a speedy solution in reforming procurement methodology. As stated earlier the author thinks that MIEMA employing one expert for a fee of €12,300 is parsimonious, given the ambitious GPP targets for 18 product and service groups – all mandated at EU level. Certainly it is with a feeling of déjà vu when we contemplate why green Pubic Procurement found no open arms to be implemented in certain government agencies as monitored by the Director General for Public contracts. To conclude the road to achieving full compliance to GPP procurement rules is paved with good intentions but facts show that the achievement of such a noble cause is still elusive. Malta is an exporter country without natural resources (except for manpower, sun and sea) and consequently has to import a larger quantity of raw materials, industrial supplies and consumer goods. Green Public Procurement policy should aim at strengthening SMEs participation in public procurement and supporting achievement of other policy objectives at EU level: innovation, green growth, social inclusion. According to European Union rules public sector procurement must follow transparent open procedures ensuring fair conditions of competition for suppliers. The successful opening up of green public procurement rules by compliant EU countries has helped to increase cross-border competition and improved prices paid by their public authorities at a time when economic growth is sluggish. All this is further justification to wish that in the shortest time possible the Director of Contracts continues to apply GPP rules across the board – the country deserves nothing less. George M. Mangion is a partner in PKF, an audit and business advisory firm gmm@pkfmalta.com George Mangion Green public procurement – a rich harvest