The (sustainable) power of the public purse

The global north versus the global south

In a co-authored article on the concept and effects of sustainable public procurement, Quinot notes that sustainability has long been little more than a ‘buzz word’ or ‘fuzzy concept’ interpreted differently by various government agencies, political leaders, and interest groups.

It is only recently that environmental considerations have started to feature in public procurement objectives. This is more prominently the case in the northern hemisphere, particularly in Europe where the link between the environment and procurement is better established. In contrast, in sub-Saharan Africa the focus has been primarily on the link between procurement and social objectives such as wealth redistribution, opportunities for small businesses, gender equality, and job creation.

However, since the adoption of the United Nations’ 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs) by governments worldwide, there has been a noticeable shift towards a combined perspective. It’s no longer environmental or economic or social considerations that must be taken into account during procurement, but environmental and economic and social ones, says Quinot. “That is where we are now in terms of public procurement, and it’s exciting.

“The trick now is to try and balance these considerations so as to get to a point where we talk about sustainability as an objective as opposed to environmental, social, and economic objectives. They’re inextricably linked.”

Adding legitimacy to scholarly claims that sustainability is integral to public procurement is the inclusion of the latter in the foundations of the SDGs. Goal 12 focuses on ensuring sustainable consumption and production patterns, and explicitly states that governments must support sustainable procurement policies.

“Governments need to implement and enforce policies and regulations that include measures such as setting targets for reducing waste generation, promoting circular economy practices, and supporting sustainable procurement policies.”

The SDGs have liberated public procurement from the Bretton Woods and Washington Consensus notions of trade as the only path to development, emphasises Quinot. Signed in 1944 to help countries recover economically from the Second World War, the Bretton Woods Agreement was intended to facilitate international trade and cooperation. The Washington Consensus, in turn, is a set of economic policy recommendations for developing countries that was popularised during the 1980s. A central tenet is that the operation of a free market and reduced state involvement are pivotal to development in the global south. In recent years, however, shifting priorities and changes in the global risks landscape have led to a worldwide consensus that a radical transformation in the shape of a new Bretton Woods Agreement is needed to address inequalities and place the needs of developing countries centre stage in global financial decisions.

This is not to say that the adoption of a novel approach to sustainable public procurement has been without its challenges. “When you bring policy into the mix, you must sacrifice some [level] of competition. The idea of public procurement for policy is often in conflict with competition. However, since the adoption of the SDGs, sustainability and not trade has become the holy grail of public procurement.”

Procurement by design

By far the biggest substantive point of contention in recent deliberations on South Africa’s new Public Procurement Act (No. 28 of 2024) has come from the chapter dealing with preferential procurement, Quinot says. “The debate across the political spectrum has been around how to build social policy — wealth redistribution — into public procurement. Some role players insisted that race should remain the criterion, while others supported class.” Moreover, the act does not deal with the pertinent question of whether there should be a preferential premium for this policy, he says. “How much more should you pay for an item if there is a social policy objective built in?”

These issues highlight the importance of designing laws that make it possible to include policy objectives into public procurement. “The design, for me, is the interesting part. How do you design a system that will deliver on this? It becomes interesting when you consider other mechanisms as procurement criteria, not just race or wealth redistribution,” says Quinot.

He adds that it’s important to consider the sub-Saharan African context when designing procurement systems, as “there are very important distinctions between our public administrations and those of Europe, for example”.

Although digital tools work well in supporting sustainable public procurement, many local municipalities simply do not have access to these resources. In places that don’t even have a reliable electricity supply, it is unrealistic to expect smaller players to upload large tender documents onto a platform that may or may not work on any given day, Quinot argues. “We simply don’t have the digital depth that many other systems do.” While there are certainly practices that work elsewhere, one must always ask whether they translate into the local reality.

Food for thought

To illustrate how sustainability can be incorporated into public procurement, Quinot references his work with the United Nations’ Food and Agriculture Organization (FAO) on public food procurement for school feeding schemes. Regarding the FAO’s pilot projects, Quinot says: “It is astounding to see how you can connect dots across many different fields. In Ethiopia, for example, they have shown how various government departments — including education, health, and agriculture — as well as local subsistence farmers and small businesses can work together. So, you are rewarded with not only the substantive outcomes on half a dozen different policy objectives, but the way in which the procurement process works is also sustainable.”

As an added bonus, this approach also indirectly reduces the risk of the procurement process being abused, he adds. “Now, when the children show up at school and there isn’t a meal, it’s not a matter of a bad contractor somewhere not doing their bit. It’s the mothers and fathers of that very community. So, that farmer or the small business preparing the food internalises the cost of non-performance.” He goes on to explain: “If it’s my own child I’m feeding, and I’m known in the community, why would I be corrupt?” Quinot describes this kind of alignment between the regulatory instrument and the objective, with a built-in mechanism to minimise corruption, as “a thing of beauty”.

On your marks

This year’s Olympic and Paralympic Games in Paris present a good example of how a responsible procurement strategy can help make large events more sustainable. With the aim to reduce their carbon footprint by 55% compared to the 2012 London games, and to be the first international sporting events to achieve carbon neutrality, the Paris games adopted a comprehensive purchasing strategy. The latter saw all procurement contracts structured around a commitment to five actions that drive environmental and social innovation, namely: supporting the circular economy, reducing the events’ carbon footprint, preserving the environment, including persons with disabilities, and creating value in local areas by encouraging small and large businesses to join forces in consortiums.

One of the ways in which the events reduced their negative environmental impact was by prioritising renovation over new construction — 95% of the buildings in the Olympic Village were existing, repurposed ones.

As part of the commitment to socially responsible procurement, the authorities organising the events included a clause in tenders that encouraged the promotion of opportunities for social, as well as small and medium-sized enterprises. Although many of the socially responsible, green, and circular economy public procurement targets were met, a recent report  by RREUSE states that there are still barriers to leveraging public procurement for environmental, climate, and social benefits. More than half of all public tenders in the European Union still use lowest price as the only selection criterion.