Streamline Buying for the Environment

Streamline Buying for the Environment

Background

Buying for the environment means using the federal procurement process
to support programs intended to preserve the world's natural resources
for future generations of Americans. The procurement process is used to
encourage the development of markets for products that are energy
efficient, contain recovered materials, or are less harmful to the
environment than competing products and to conserve the world's natural
resources by promoting the use of new technologies.

A number of laws (e.g., the Energy Policy Act of 1992 and the Resource
Conservation and Recovery Act [RCRA] and executive orders require the
federal government to play a leadership role in developing and executing
programs that provide for the protection of the environment. Many of
these require the government to be an enlightened, environmentally
conscious, and concerned consumer.

The Resource Conservation and Recovery Act. RCRA requires federal
agencies to maximize their purchases of products made with recovered
materials.1 The Act requires:

-- the Environmental Protection Agency (EPA) to issue guidelines that
designate items which are or can be produced from recovered materials;

-- agencies, to the extent they purchase designated items, to purchase
those with the highest percentage of recovered materials practicable,
consistent with maintaining a satisfactory level of competition, unless
the items are not available within a reasonable period of time, fail to
meet performance standards, or are unreasonably priced;

-- agencies to eliminate from product specifications unnecessary
requirements for virgin materials; and

-- the Office of Federal Procurement Policy (OFPP), in cooperation with
EPA, to implement these requirements and report to Congress every two
years on agency progress in implementing RCRA.

RCRA also requires agencies to develop affirmative procurement programs.
The programs must contain four elements: (1) a preference program, (2) a
promotion program, (3) procedures for obtaining and verifying estimates
and certifications of the content of recovered materials, and (4) annual
review and monitoring.

From 1976, when RCRA was enacted, until the 1990's, implementation
throughout the federal government was perfunctory at best. EPA issued
only five guidelines, designating recycled paper products, cement and
concrete containing flyash, retreaded tires, rerefined lubricating oil,
and building insulation containing recovered materials. Agencies did not
collect purchase information data, and there were no interagency efforts
to promote the purchase of recycled products.

The Energy Policy Act of 1992 requires federal agencies to establish
energy management programs to reduce energy consumption by 20 percent by
the year 2000 using 1985 consumption as the base.2 Agencies are also
required to install all available energy and water conservation measures
in federal facilities when the payback period is 10 years or less.

The Energy Policy Act. The Energy Policy Act imposes a number of
requirements for the procurement of supplies and services, including the
requirements that:

-- Agencies negotiate with electric, water, and gas utilities to design
costeffective demand management and conservation incentive programs and
provide for the use of energy savings performance contracts. Demand
management and conservation incentive programs are established by
utilities because it is more costeffective for them to invest their
funds in conservation instead of constructing additional power plants in
order to accommodate projected customer demands. The utilities are in
effect buying conservation through rebate and other incentive programs
that pay customers for installing energyefficient equipment or changing
their operations to save energy.

-- Federal contractors, and their subcontractors, who manage and operate
federally owned facilities, use energy conservation measures designed to
reduce energy costs in governmentowned and contractoroperated
facilities, which are ultimately borne by the federal government.

-- The Administrator, General Services Administration (GSA), the
Secretary of Defense, and the Director of the Defense Logistics Agency
undertake a program to include energyefficient products in carrying out
their procurement and supply functions.

-- GSA coordinate and hold regular biennial workshops in each of the 10
standard federal regions on energy management, conservation, efficiency,
and planning strategy. The administrator is required to invite
Department of Energy (DOE), state, local, tribal, and county public
officials who have responsibilities for energy management or may have an
interest in such matters. These workshops must address the procurement
and use of energyefficient products.

Need for Change

Congress and the General Accounting Office (GAO) have criticized agency
implementation of RCRA.3 EPA took more than six years to issue its first
guideline, and has so far issued a total of five.  For calendar years
1990 and 1991, the federal government estimates that for the five items
covered by the guidelines, only 26 percent of all paper purchased had
recovered content, less than 3 percent of tire purchases were for
retreads, and less than 1 percent of rerefined oil was purchased.4

Recent progress. Over the last two years, agencies have placed greater
emphasis on the procurement of recycled, environmentally preferable, and
energyefficient products and services. For example, the Office of
Federal Procurement Policy (OFPP) issued a policy letter that emphasized
the need to procure environmentally sound and energyefficient products
and services, as well as those made with recovered material. The Council
on Federal Recycling and Procurement Policy was instrumental in
assisting agencies to develop and implement their affirmative
procurement programs, purchase recycled products, eliminate barriers to
RCRA implementation, and develop FAR implementation language.5 And, a
soontobesigned Executive Order on Federal Acquisition, Recycling, and
Waste Prevention will mandate increased procurement of recycled and
environmentally preferable products.

Few agencies have made substantial efforts to purchase products that are
not covered by EPA guidelines or to purchase items containing more
recovered material than the minimum content standard set by EPA.
However, it is possible to do so. The new Executive Order will require
EPA to streamline its guideline process so that more products can be
designated faster and content standards can be updated more regularly.
This should enable agencies to make greater strides in purchasing these
products. GSA has contracted for more than 900 products (mostly paper
products) containing recovered materials and an additional 1,200
products that have other environmentally beneficial features.6 As a
central procurement agency for the federal government, GSA has marketed
these products to other federal agencies.

Barriers to success. One of the reasons RCRA is difficult to implement
is that there are no common definitions for certain critical terms. EPA
proposed consensus definitions for certain terms used by consumers and
industry but included a disclaimer that the terms used in federal
procurement may differ from the proposed consensus terms because of RCRA
definitions.

EPA deferred to the Federal Trade Commission (FTC) with respect to
environmental marketing claims.

Currently the law requires estimates, verification, and certification of
a certain nature because it presumes agencies will select vendors based
on highest recycled material content.  Of all the acquisition strategies
available, this is the least likely to be used since there is no way to
accurately verify content estimates. The result is a paperwork burden on
industry that is not linked to the acquisition strategy.

Another problem is the requirement that purchase contracts stipulate the
collection of information on the amount of recycled material contained
in products. This imposes still more paperwork burdens on the
government. The paperwork burden is particularly large for small
transactions.

Agencies are currently implementing the Energy Policy Act of 1992. The
Department of Energy is in the process of developing regulations
covering certain aspects of the law, including those that deal with
energysavings performance contracts. GSA is responsible for taking
action on those aspects of the Act dealing with intergovernmental energy
management planning and coordination.

Governmentwide implementation of the Act can be furthered by the
establishment of indefinite delivery contracts for energy audits and
retrofit projects. Such contracts should be made available to federal
agencies for optional use. The Naval Facilities Engineering Command in
San Diego established such contracts for small retrofit projects (e.g.,
replacement of small motors, lighting fixtures) that can serve as the
model for establishing contracts for use by all government agencies.

GSA and the Navy have been working with public utilities, such as San
Diego Gas & Electric, to take advantage of services that the government
is entitled to under tariffs approved by the public service commission,
such as energy audits, demand management, and conservation programs. In
some cases, when public service commissions approve public utilities
rates, they provide that a portion of the rate charged be used for
programs to promote conservation. Until recently, federal agencies were
not able to take advantage of such programs because of statutory
limitations.  However, the Energy Policy Act now authorizes agencies to
accept financial incentives, goods, or services generally available to
customers who participate in utility incentive programs. GSA is
responsible for negotiating areawide utility contracts for use by
federal agencies in acquiring utility services.

Many of the provisions of the Energy Policy Act require contracting
personnel to develop new and innovative contracting methods in order to
aid agencies in achieving the goals for saving energy by the year 2000.
Contracts will be needed for new technology, and new financing sources
(e.g., energy savings performance contracts) will be involved as well.
An electronic commerce system is a means to both streamline procurement
processes and reduce the use of paper.


Endnotes

1. Resource Conservation and Recovery Act (42 U.S.C. 6962).

2. Public Law 102486 (October 24, 1992).

3. U.S. General Accounting Office, Solid Waste: Federal Program to Buy
Products with Recovered Materials Proceeds Slowly, RCED9358 (Washington,
D.C.: U.S. General Accounting Office, May 1993).

4. Data as of July 1993 provided by the Office of Management and Budget,
Office of Federal Procurement Policy.

5. Executive Order 12780, "Federal Agency Recycling and the Council on
Federal Recycling and Procurement Policy."

6. Data as of July 1993 provided by the General Services Administration,
Federal Supply Service.