Council, Federal, Federal Government, Legislation, Legislation, Opinion, State

Government mandated procurement needs to be the norm

According to the Oxford Reference Dictionary, among several other meanings, the word ‘procurement’ refers to the ‘purchase of goods and services by the public sector at all levels of government’.

It is a word that is littered throughout the many purchase orders and contracts signed between the various levels of government and its third-party contractors who are responsible for either building infrastructure or maintaining current plant, buildings, and machinery. Plenty of operators in the waste and resource recovery sector would love to see a sentence or two in every contract that would say something along the lines of “the contractor must use X percentage of resources recovered from recycled products in this project, yadda, yadda, yadda”.

While most government departments like the idea, there are other issues that need addressing. What are the main blockages to getting such mandated procurement in these contracts? There are several, including cost, the amount of throughput/feedstock available, and the quality of the end product.

At a seminar at the AWRE conference in Sydney earlier this year, two members of the NSW government outlined policy indicators and what the NSW government looks for when awarding contracts as it pertains to procurement.

Natalie Alves is a senior policy officer for the NSW Department of Planning and Environment – i.e. the people who decide what projects can be executed when they meet government criteria; while James Erickson is a senior project officer – climate change and sustainability – for NSW Treasury i.e. the people who hold the purse strings.

Alves pointed out that although there are a range of benefits for using recycled products, the recovery rates have not moved much in the various waste streams. Procurement aside, in terms of needing a reliable source of feedstock, Alves also stated that it would be good if the recovery rates could increase for another important reason.

“We have data from the Centre of International Economics that states that increasing Australia’s recovery rate by 5 per cent could add $1 billion to Australia’s GDP and lift wages as well,” she said. “Plus, we know all about embodied carbon. We know that 45 per cent of global emissions are associated with the use and management of materials and products. We start to see key opportunities with respect to local recycling markets, in particular, and how we can support those.”

Alves said that these opportunities would be highlighted if Australia jumped on the growing movement nationally and internationally to shift to a circular economy. She said that the circular economies in Europe and the United Kingdom have shifted towards producer responsibility, resource recovery systems and strong economic incentives to improve the value of material and reduce the generation of waste.

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“More recently, other countries have taken bold steps to protect their environments from the negative impacts of waste,” she said. “And I’m talking here about the bans on the export of wastes and importing waste from other jurisdictions. The policy landscape is shifting as well to support material circularity. We’re acknowledging that the New South Wales Government can use its purchasing power to stimulate demand and support markets for recycled materials so we can really leverage these economic and environmental benefits.”

How is government coming on board when it comes to procurement in contracts stipulating a certain amount of recycled material needs to be incorporated into the contract? There is some good news on that front according to Alves. She said the NSW Government has made procurement commitments in its own waste and sustainable materials strategy.

“First and foremost, government departments are now required to preference products that contain recycled content,” she said. “That includes building materials and office fit outs and supplies on an ‘if not, why not?’ basis. It means they need to preference recycled content, where there’s no significant additional cost or negative impacts on performance or the environment.”

She said there was some specific commitments that are in the strategy, such as the $13 million Circular Innovation Fund, which is looking to support research into new technologies and uses for recycled materials and provide opportunities for those on government projects. The government is also going one step further.

“We’re also looking at establishing a direct directory of recycled materials’ suppliers to help producers find the products that contain recycled materials,” she said, “and a register of upcoming government infrastructure projects that will help them plan for the potential demand for recycled material. We’re looking at annual reporting as well to help with monitoring and evaluating actions.”

Talking about such initiatives and implementing them are not the same. Erickson came armed with some tangible examples of the type of procurement they are after. Treasury has also come up with branding titled Choose Circular, to try and send consistent messaging on what the state government is hoping to achieve in making sure recycled materials are being used in government projects.

“We really want to target materials that have low recycling rates, and ones that are subject to export bans,” he said. “Things like plastics, paper and cardboard, and tyres.”

Erickson said that where materials are already being used and don’t need a lot of help in terms of getting them onboard for the circular economy, the government sees its role as complementary, as opposed to leading the charge. He said it didn’t want to interfere where it’s not appropriate. Other materials that need a close eye kept on them include the usual suspects.

“There’s a lot of new policies and activities around organics, which means there’ll be a lot more organics in the market that need to find a buyer,” he said. “There are currently millions of tonnes of coal ash sitting in dams that could be put to use.

“It’s important that we’re looking at locally sourced materials in New South Wales so we can reduce the risk of exporting waste. Finally, we want to develop beneficial uses for materials and retain their value as long as possible.”

Erickson said in an ideal scenario it’s important to keep materials recycling in the economy as long as possible at their highest value.

Low carbon materials were also a priority because the government is determined to decarbonise its infrastructure wherever possible. Treasury has been consulting with stakeholders in its key target markets. Erickson said most of these people are procurement people, and therefore not experts in the waste or resource recovery industries. What the government is concentrating on are the buyers because they will be executing the projects and contracts.

“We’ve done a lot of engagement over the past year through interviews, workshops, and lots of different forums that we’re participating in,” said Erickson. “We’re doing this because we’re taking a needs-based approach. We’re trying to figure out what are the needs and barriers for those people doing procurement and how we can design these projects to help them. And that’s important because the strategy’s not prescriptive per se – it doesn’t say you have to buy this or have X per cent of that – because that’s not very practical, or useful to do at a government level. We need to understand how those different agencies and organisations work.”

Erickson said he has found that the procurement system across New South Wales is “quite devolved” and varies a lot. He also said that one of the main issues surrounding procurement was how such a model could sit within the circular economy. The goals of a circular economy might not align exactly with those procuring products and services for the various levels of government – quality and cost of products being examples of where these two ideals might not meet.

“And let’s say somebody does know about a new alternative product that contains recycled content,” said Erickson. “What we hear a lot is ‘well, I’m not sure this is going to be right for me’, or ‘is it going to be all right for my project? I don’t trust it’, and ‘I prefer to be risk averse and stick with what’s been done in the past decades’.”

He also said that even if there is a product that’s tried and tested and is ready to go, there are other issues that arise. These can include procurers saying that they might cost more, it takes too much time to source, and they don’t have the manpower in their team to do a quality assessment of the new product(s).

“This is particularly so when it comes to something like infrastructure where the timelines are very tight,” said Erickson. “You don’t want to introduce additional risks into your project by looking at a new product. However, there’s an opportunity to share learnings better through case studies, and general knowledge sharing.”

That all being said, the Treasury Department has instigated initiatives designed to bring down some of the barriers. First, there is the aforementioned supplier directory.

“The objective here is to provide the information to the person who’s doing procurement or managing the contract or putting a tender out at the right time,” he said. “That also serves the purpose of signalling to industry that this is what the government wants to buy and what is valuable to us.”

He pointed out that such a system can provide data back to the department – i.e. know what’s being searched for, or what’s available, which is useful to those doing the buying.

Then there are ideas around resources and materials that can be embedded into the procurement process.

“In other words, guidelines, frameworks, everything that can make it easier for people to do this,” said Erickson. “[Then there is] addressing that awareness barrier. There’s a whole range of things that we’re considering here – formal training, case studies, materials, events, newsletters – just to raise awareness and build capability.”

The final initiative, he said, is trying to take a more organisational-targeted approach. This entails going in to see what an agency is doing – whether it is health, education or infrastructure – and start to make a tailored plan for how they can increase the uptake of recycled materials.

Erickson is aware that when it comes to the supply side of the equation, they need to forecast and then signal demand to the market for recycled materials, which is generally based on the current pipeline coming from the construction sector. Another piece of data that is in demand from procurers and recycled products is around specifications.

“We’ve heard a lot in our consultations that specifications are a key part of getting more recycled materials into projects, particularly around construction,” he said. “There’s a lot of people looking at specifications, particularly from an embodied carbon point of view. That will be a co-ordinated piece of work – looking at what research is needed and what specifications are needed – over the coming years.”

They are also looking at demand indicators – what the industry might need in terms of recycled materials that can be used in state infrastructure projects.

“This is obviously to help suppliers prepare for [those projects and] can help justify investment,” he said. “It can feed into business cases in those organisations, and at the same time, it can help those government agencies estimate what is their potential to take up recycled content. It might also be in line with sustainability strategies that they have for their own agencies.”

The last issue that needs addressing is educating those procurers. Erickson agrees, which is why his department is pushing for more engagement in that space.

Education is not only needed to make sure people are up to speed, but different organisations and parts of the process are going to be at a different state of readiness.

“Education and communication are critical,” Erickson said. “I think for the program that we’re delivering, we’re focused on government as a key procurer but also government as a leader. Part of the program of works that we’re looking at is the state of readiness across government agencies.

“We’re looking at the available specifications and we’re looking at the opportunities.

“We want to lead the way with respect to increasing the education and awareness and providing those materials to industry and local government where appropriate, so that they can join us in moving forward and increasing our overall level of maturity and ability to use these materials.”

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