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How Can Public Procurement in Canada’s Trade Agreements Contribute to Sustainable Development?

Imagine this: A municipality pledges to make all of its buildings carbon-neutral by 2050.

To do so, it needs to invest in renovations using the most innovative, energy-efficient solutions available. The procurement department, however, has limited capacity to work through the complexities of the procurement process and has no expertise in energy efficiency. Municipal budgets are tight. Many local start-ups are developing innovative solutions for efficient, clean energy in infrastructure projects, but there’s legal uncertainty about whether and how the municipality can buy these solutions. So plans stall.

Sustainable public procurement workshop
Understanding the barriers to sustainable public procurement is a vital step for governments wanting to use their purchasing power for good.

Although the momentum around sustainable public procurement (SPP) is growing, implementation is still difficult. Understanding what is holding back action is a big first step.

First of all, what is SPP?

SPP is about delivering the best value for taxpayer money when buying goods, services and public works. It means moving away from buying based only on the cheapest price, and instead incorporating other socioeconomic, social and environmental values. SPP has different layers, and they differ in the way they are regulated.

Green procurement is an environmentally friendly approach to SPP: it entails buying products, infrastructure and services that have a low-carbon footprint and that reduce impacts on biodiversity, decrease greenhouse gas emissions, and reduce pollution and pressure on natural resources.

Social procurement encourages buying products, infrastructure and services that take into account working conditions, gender equality and respect for human rights throughout their operations and production processes.

Socioeconomic procurement is when procurement is directed at or reserved for specific economic actors, such as small and medium-sized enterprises, women-owned businesses, Indigenous groups and businesses employing disadvantaged groups, such as visible minorities or people with disabilities. This approach is meant to economically empower these groups and better integrate them in the economic system.

What do trade agreements say about SPP?

Over the years, international trade agreements have increasingly begun to cover public procurement between countries. For example, the World Trade Organization Agreement on Government Procurement (WTO GPA) is now a plurilateral agreement between 15 WTO members, including the European Union, with its 28 member states. The Comprehensive Economic Trade Agreement (CETA) between Canada and the EU has very broad coverage when it comes to public procurement, down to the level of municipal and provincial procurement in Canada.

Procurement chapters in these agreements are not very explicit when it comes to SPP, yet procurers are still often reluctant to move forward with SPP because of them.

The WTO GPA, revised in 2012, has made a significant step forward in promoting award methodologies going beyond the lowest price and in including technical specifications including references to the environment. However, other clauses can be read and interpreted in light of SPP and sustainable development more broadly.

How is Canada implementing SPP?

Canada has a few different initiatives to ensure public procurement becomes a strategic driver of innovation and of a low-carbon economy.

The Centre for Greening Government, under the Treasury Board Secretariat, focuses on reducing greenhouse gas emissions in the federal building stock and fleet through green public procurement. It also issued Canada’s Green Procurement Policy in 2006, which aims to consider the environment in various procurement activities, from planning to maintenance to disposal.

In 2018, the Canadian government also launched a one-year pilot project encouraging more women-owned or women-led businesses to supply catering services in the Atlantic Region.

Sustainable public procurement workshop
A recent workshop in Ottawa, Canada offered policy makers recommendations to help different levels of government improve the sustainability benefits of their procurement processes.

How is IISD contributing to the dialogue?

Our new paper, Canada’s International Trade Obligations: Barrier or Opportunity for Sustainable Public Procurement?, explores these issues in detail.

We recently hosted a workshop in Ottawa, Canada, to speak with government officials about public procurement as a driver of Canada’s low-carbon economy and cleantech industry, highlighting findings from our report. Key recommendations from the workshop include:

  • Linking procurers and suppliers more directly on SPP opportunities
  • Aligning SPP approaches across governments
  • Accelerating development of a national database on life-cycle assessmentI
  • Incorporating social policy considerations directly and explicitly into trade laws that would include references to workers’ rights and fair labour conditions, and participation of specific economic actors, such as Indigenous communities and women-owned enterprises
  • Including environmental specifications, encouraging transparency and opening competition for the tender process
  • Instituting pilot or demonstration projects to raise awareness of SPP opportunities and approaches
  • Focusing on military spending under the Department of National Defence, as top government procurer.

What do we recommend to policy-makers?

Returning to our example from earlier, the municipality could:

  • Hold targeted dialogues with suppliers and procuring authorities to ensure each knows how they can actually work together in pre-procurement phases to inform the procurement process in a transparent way
  • Create accessible tool kits for municipalities on how to evaluate and utilize SPP in their procurement needs and processes
  • Translate and incorporate specific texts and clauses referencing municipal SPP procurement and distribute them to Canadian municipalities.