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Sustainable public procurement: towards procurement of novel and innovative products

Vos, Gert (2010) Sustainable public procurement: towards procurement of novel and innovative products.

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Abstract:With annual expenditure of € 57.5 billion, public procurement accounts for a substantial part of the Dutch economy (IOO, 2009). As such, public procurement is an attractive policy instrument for effecting positive changes in the broader economy. In particular, public procurement could be used to stimulate the production of innovative and sustainable products. To this end, the current Dutch Cabinet has included two policy goals in its coalition agreement that affect public procurement (Ministry of AZ, 2007). These two policy goals are: using sustainability as a significant criterion in all of the Central Government‟s procurements from 2010 onwards; and strengthening the innovative capabilities of the Dutch economy (Ministry of AZ, 2007). In addition to the Central Government, other governments consider sustainability criteria in their procurement activities from 2010 onwards as well. The driving force behind using the sustainability criteria is the political commitment. In order to support taking sustainability into account in all procurements, the Ministry of VROM and Agentschap NL1 developed sustainability criteria for forty-seven product groups. These sustainability criteria consist of tenderer and tender criteria. For both tenders and tenderers there are obligatory criteria and discretionary criteria. Only obligatory tenderer and tender criteria have to be used in 100% of the procurements for the Central Government from 2010 onwards. In order to strengthen the innovative capabilities of the Dutch economy, the coalition agreement states three specific aspects (Ministry of AZ, 2007). First, innovative companies will be stimulated by lowering tenderers‟ requirements with regard to experience and turnover. Second, innovative offers will be given a head start when awarding tenders. Third, the Government acts as the first user of innovative technologies with the aim of leapfrogging the introduction of new technologies (launching customer). Around the spring of 2009, various sources in both the public and the private sector claimed that the sustainability criteria that had been developed were not stimulating innovation and were sometimes even hindering innovation. The alleged negative effects on innovation create significant risks for the success of sustainable public procurement in the Netherlands because the objective of sustainable public procurement is to stimulate new sustainable techniques. In addition to this, the scale of sustainable public procurement would directly frustrate employing the public procurement function to strengthen the innovative capabilities of the Dutch economy. As a result of these claims, the Interdepartmental Programme for Sustainable Procurement, situated at the Ministry of Housing, Spatial planning, and the Environment, wanted to research the alleged hindering effects of the sustainability criteria. In addition to researching the hindering effects, they expressed a desire for an approach that stimulated innovation. This desire led to the following research goal. Modifying the existing sustainability stimulating instruments, in order to stimulate the procurement of products that are in addition to sustainable also innovative. In response to the research goal of this master‟s thesis five research questions have been posed. In order to develop a theoretical foundation for the developed instruments and possible solution strategies this master‟s thesis starts by presenting a theoretical framework for public procurement. The first two research questions start with a broad overview of theoretical drivers, barriers, and approaches for public procurement for sustainable products and for innovative products. Subsequently the existing Dutch approaches for public procurement for sustainable products and for innovative products are presented and compared to theoretical drivers, barriers, and approaches. In order to explore these issues in more depth, the existing sustainability criteria for office furniture and roads are analysed in detail. For public procurement for innovation, the initial broad focus narrowed down to direct public procurement of innovations applicable in basic tendering procedures. This has resulted in ten generic innovation stimulating elements applicable to all product groups. The third research question focuses on the direct motivation for this Master‟s thesis; researching the alleged hindering effect of the sustainability criteria on innovation. In addition to this, the influence of the innovation stimulating instruments on sustainability has been researched. Both of these influences have been researched by means of a questionnaire among four key stakeholder 1 Agentschap NL originated in the beginning of 2010 through the merger of SenterNovem, The Dutch patent centre and the EVD. Sustainable Public Procurement: Towards Procurement of Novel and Innovative Products iv groups. These key stakeholder groups were purchasers, suppliers, policymakers accountable for developing policy for sustainable public procurement, and policymakers accountable for developing policy for public procurement for innovation. From the results of this questionnaire we conclude that none of the existing sustainability criteria for either office furniture or roads significantly hinders the procurement of innovative office furniture or roads. Moreover, we conclude that for office furniture three existing obligatory sustainability criteria significantly stimulate the procurement of innovative office furniture. Finally, all the existing discretionary award criteria were found to be significantly stimulating the procurement of innovative office furniture and roads. Nevertheless, we observed that there is sufficient room to increase the positive effects of the sustainability criteria on innovation. The fourth research question focuses on modifying the existing sustainability criteria for office furniture and roads in order to stimulate procuring products that are at once sustainable and innovative. In order to generate a wide variety of possibilities two brainstorming sessions have been held with various key stakeholders. The suggestions from the brainstorming sessions served as a profitable foundation for the modifications of the existing sustainability instruments. Despite the dissimilarity of the two chosen product groups, the recommended modifications are equivalent. Combining the sustainability criteria into one single score for sustainability is the main recommendation. Combining the sustainability criteria has been executed in accordance with existing theory on selecting suppliers based on multiple selection criteria (Telgen, 2007). The fifth research question focuses on generalising the results applicable to all forty-seven product groups, for which sustainability criteria have been developed. The modifications for office furniture and roads served as a foundation for the generalised modifications. In addition to this, a quick-scan among all forty-seven existing product groups supported the applicability of the modifications to all product groups. The generalisation of the recommendations for office furniture and roads resulted in the following general recommendations.  Combine all the existing obligatory technical specifications and discretionary award criteria for product groups into one single score for sustainability.  Use the presented modified weighted factor score model (a semi-compensatory method) to combine the sustainability criteria.  Modify the existing sustainability criteria according the developed flowchart into semi-knockout-, knockout-, or scoring criteria (Figure 7.1).  Determine weights for the sustainability criteria according to recommended approaches.  Develop appropriate scoring methods for the sustainability criteria, bearing in mind the recommendations.  Select the winner by applying the modified weighted factor score in the technical specifications or in the award criteria. The generalised recommendations have been validated by applying these recommendations to two additional product groups; special transportation and working clothes. This validation could not falsify the applicability of the recommendations to all forty-seven product groups. The recommended modifications have the following positive effects on innovations.  Ascertaining the use of existing, innovation stimulating, discretionary award criteria.  The existing sustainability criteria become more functional due to the semi-compensatory nature of the recommended model.  Facilitating purchasing authorities to award on Most Economical Advantageous Tender (MEAT).  One single score for sustainability provides prospect to lay down ambitious future goals for the total sustainability of products.  Facilitating ambitious purchasing with a method that can be adapted to higher sustainability ambitions.  One single score for sustainability creates an excellent parameter to create incentives for continuous sustainability improvement throughout long-lasting (framework) contracts.
Item Type:Essay (Master)
Clients:
Dutch Ministry of Housing, Spatial planning, and the Environment
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Industrial Engineering and Management MSc (60029)
Link to this item:http://purl.utwente.nl/essays/60725
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