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Creative Public Procurement: Lessons from Italy and the UK
Dr. Roberta Sonnino
School of City and Regional Planning
Cardiff University
The Potential of Public Procurement
Public procurement holds significant development potential: Enormous market in the EU, where it
represents ca. 16% of the total GDP (€ 1,500 billion in 2002)
In the UK, the public sector spends some £ 150 billion/year, or around 13% of its GDP
Significant opportunity to promote socially and environmentally friendly products and services – concept of sustainable procurement
Sustainable public procurement
Bringing together the business and the policy arms of government is what sustainable procurement is about. It is about how the government’ s immense buying power can be used to make rapid progress towards its own goals on sustainable development. […] Sustainable procurement – in short using procurement to support wider social, economic and environmental objectives in ways that offer real long-term benefits, is how the public sector should be spending taxpayers money (Neville Simms, UK Sustainable Procurement Task Force, 2006)
Sustainable public procurement in the EU: the background
In the 1990s, public procurement in the EU was subordinated to the philosophy of free trade and the single market 4 directives aimed to provide an effective competitive
market for public contracts that delivered best value for public money
No consideration for environmental and social costs of products and services offered
Sustainable public procurement in the EU: the background
Principles of free trade and the single market began to be openly questioned after the Treaty of the European Union (1997) Article 6 requires the integration of environmental and
social objectives into all EU’s policies to promote sustainable development
Helsinki case C-513/1999: the European Court of Justice agreed that contracting authorities can take into consideration the “production methods” of the bidder
Sustainable Public Procurement in the EU
Legislation reformed in 2004
Two new directives
Article 26 of the Public Sector Directive establishes that:
Contracting authorities may lay down special conditions relating to the performance of a contract…The conditions governing the performance of a contract may, in particular, concern social and environmental considerations
Sustainable Public Procurement in the EU
I think that one of the key concerns for us […] is this big argument about the fact that […] most of the plus points, the gains that we got in the European directives are in the recitals, and the UK government has a strict policy of transposing the articles only into the regulations […] Member states in their implementation have an obligation to provide as much information to public authorities who are the targets of the legislation[…] You can’t do that effectively without making reference to the recitals. […] We felt that, in the UK context, knowing that the local authorities exercise caution, these directives, as the Commission itself said, would extend the scope for the environment and social, they said they were there to clarify, and we think that the recitals are crucial to the clarification, and as such the regulations should be informing about the spirit of that clarification. […] We are disappointed at the national level…for us a lot of the spirit of the Directives, that we worked very hard to change, is not there…KATHLEEN WALKER-SHAW, BRITISH GENERAL UNION
Sustainable Public Procurement: the Potential of School Meals
A sustainable school meal system is one that:
reduces diet-related health problems promotes sustainable patterns of consumption creates new markets for local producers provides environmental benefits
Sustainable Public Procurement and its Barriers: the Case of the UK
Progressive deterioration of the school meal service since the 1980s
Abolition of nutritional standards Compulsory Competitive Tendering (CCT) as a
market-driven regulatory regime that spawned a cost-cutting culture (Morgan and Sonnino, 2008)
Lower quality school food Loss of kitchen infrastructure in schools Reduction in the numbers and skill levels of
catering staff
Sustainable Public Procurement and its Barriers: the Case of the UK
The UK system is obsessed with cost-effectiveness and “value for money”
Gershon Review of the public sector (1999) called for reform to secure better value for money and said we should not accept a “green premium” while greening public procurement
Lots of sensible choices that could be made by procurement managers are ruled out by a spurious perception of efficiency (B. Tuxworth, Forum for the Future, June 2006)
The School Food Revolution: Hungry for Success in Scotland (2002) New vision for school meals:
Promoting the “whole school approach” Raising the quality and nutritional standards of the meals Re-imagining school meals as an educational and health
service Significant financial investment: £ 63.5 million for the years
2003-2006
The School Food Revolution in East Ayrshire Deprived rural county of
120,000
Far-sighted council working in the spirit of ‘joined-up thinking’
Goal of “environmental stewardship, connecting children with food and with where the food comes from” (R. Gourlay, Head of Catering)
Re-localizing the Food Chain in East Ayrshire
Pilot project at Hurlford primary (2004), extended to the other 10 primary in 2005 Radically new menus
Health benefits of the Mediterranean diet Fat, sugar and salt were reduced Added colorings, artificial flavorings and GM-foods were
banned Fresh and unprocessed ingredients were prioritized
Local suppliers actively involved Establishment of relationships between producers and
the Council
Re-localizing the Food Chain in East Ayrshire
Strict “straightness” guidelines for class 1 vegetables made more flexible to attract organic suppliers
Products broken into 9 lots to attract local producers
Four innovative “quality” award criteria
Ability to supply to deadlines Quality and range of foodstuffs Food handling arrangements
and facilities Use of resources
Re-localizing the Food Chain: Procurement Mechanisms
13 Expressions of Interest and 10 bids received “Lack of understanding of the full process on the part of
some producers” (Bowden et al., 2006) Contracts awarded to 2 local wholesalers and 5 local
producers 50% of the ingredients utilized are organic 70% are locally sourced 90% of the food served is unprocessed
Costs of a two-course meal: £ 2.10 (ca. €3) 10 p difference between buying off national contracts and
buying locally
Re-localizing the Food Chain: The Impacts of Re-localization
Environmentally: Food miles reduced by
70% Less packaging waste Organic and local
sourcing have helped the Council to save almost £ 100,000 in environmental costs
Economically Multiplier effect of £
160,000/12 schools on local economy
Food Miles
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Before Af ter
Re-localizing the Food Chain: The Impacts of Re-localization
Culturally: Improving children’s eating habits and knowledge Breaking down misconceptions on the scope for
procuring local food Socially:
Increased users’ satisfaction 67% of children think that school meals taste better 77% of parents believe that the scheme is a good use
of the Council’s money Social Return on Investment Index of 6.19
Sustainable Public Procurement and its Potential: Examples from Europe
Even before the reform, some European countries have found room for manoeuvring within the old directives: Finland: Pori and the “acceptance of variants” method Sweden: Malmoe and the development of energy-
friendly transport technologies Italy: sustainable food procurement
Sustainable Food Procurement: the Italian Model
Sustainable food procurement has a quite long history in Italy
The “Guidelines for a Healthy Italian Diet” (1986), published by the National Institute for Nutrition, explicitly promoted the Mediterranean food model in public catering
Finance Law 488 (1999):To guarantee the promotion of organic agricultural production of ‘quality’ food products, public institutions that operate school and hospital canteens will provide in the daily diet the use of organic, typical and traditional products as well as those from denominated areas, taking into account the guidelines and other recommendations of the National Institute of Nutrition
Significant development of green and local food procurement in the Italian schools. In 2003:
68% of Italian schools made at least some use of organic ingredients
561 organic school canteens
In contrast with the UK, a multifunctional view of school meals supports sustainable procurement in 3 ways:
1. Contracting authorities retain complete control over the service
2. Possibility of discriminating in favour of local operators
3. Wide interpretation of “best value”
Sustainable Food Procurement: the Italian School Meal System
School Meals in Rome: The Numbers
140,000 meals supplied every day
92% of the meals cooked in the schools
Service entrusted to 6 catering companies but strictly monitored by the centre: 3,500 inspections by
dieticians/year 1,100 inspections performed by
a specialized firm in 2005 Involvement of Local Health
Authorities Canteen Commissions
Sustainable School Meals in Rome: The Process
Rome began its “quality revolution” in 2001
Contracts awarded on the basis of the “economically most advantageous tender”
Incremental procurement approach identification of a few basic quality criteria development of innovative award criteria
Sustainable School Meals in Rome: The Process
2002-2004 tender: 100-point award system Price of the meal (51 points) Organizational characteristics of the service
(30 points) Projects, interventions and services offered to
improve the eating environment and promote food education (15 points)
Additional organic, PDO and PGI products offered (4 points)
Sustainable School Meals in Rome: The Process
In the 2004-2007 tender, Rome increased the number of both basic quality criteria and award criteria
New requirements to prevent childhood obesity Renewed emphasis on seasonality, variety, tradition
and nutritional health Increased number of organic products
2004-2007 AWARD CRITERIA Points
A Price 51
B Improving and restoring canteens, kitchens and furniture
17
C PDO and PGI products (meat and cured meats) offered in addition to those required by the tender
9
D Organization of training courses and informational campaigns
8
E Organizational features of the service 4
F Use exclusively of products from "bio-dedicated“ food chains
4
G Organic products offered in addition to those required by the tender
4
H Fair Trade products 2
Sustainable School Meals in Rome: The Costs
Costs of a meal: € 4,11 (£ 2.83) Ingredients: € 1.9 (£ 1.31) -- 47% of the total Other direct costs: € 2 (£ 1.38) -- 50% of the total Profit for caterers: € 0.13 cents/meal – 9 p/meal (3,2% of
the total)
Families pay on the basis of their income: 5 meals/week: € 41.32 (£ 28)/month 25% discount for low-income families Service free for poor families
Costs of the school meal service in Rome: almost € 110 million (£ 76 million)/year The city invested € 166 million (£ 114 million) for the years
2004-2007
Case Study 1: The School Food Revolution in Rome
2007-2012 tender School meals and social inclusion
Unutilized foods and leftovers to charity associations and animal shelters
Incentives to source products from social cooperatives School meals and environmental sustainability
Recycling, low-impact detergents, bio-degradable plates “Guaranteed freshness”
Case Study 1: The School Food Revolution in Rome
Today: 67.5% of the food is
organic 44% of the food comes
from ‘bio-dedicated’ food chains
26% of the food is local 14% of the food is Fair
Trade 2% of the food comes
from social cooperatives
Is Rome acting legally?
EU regulations support sustainable procurement
If it is set out in a non-discriminatory way, there’s no doubt whatsoever that you can use as your technical specification that all foodstuff must be organic, full stop. […] It is legitimate to say “we want foodstuff that is not older than”, it’s a legitimate idea…If that means in practice that it will have to be locally-grown, so be it! It remains a legitimate criterion, but it is not a legitimate criterion if you say that it has to be produced within 10 kilometres from the school. Interview at DG INTERNAL MARKET
The School Food Challenge: Some Lessons
Rethinking school meals as a health and well being service Public meals as part of a wider strategy for sustainability
integrating production, consumption, health and education
Investing resources Involving all actors in the food chain Disseminating good practice from one area to
another Long-term vision