Green Procurement: Overview And Issues For Congress

Green Procurement: Overview and Issues forCongressEric A. FischerSenior Specialist in Science and TechnologyApril 20, 2010Congressional Research Service7-5700www.crs.govR41197CRS Report for CongressPrepared for Members and Committees of Congress

Green Procurement: Overview and Issues for CongressSummaryEconomic and environmental concerns have contributed to rising interest in green procurement—a term used in various ways but that may best be described as acquisition of products and serviceswith smaller-than-average environmental footprints. Fully assessing a product or service requiresintegrated evaluation of cost, performance, and impacts for a set of green factors over all stages ofthe life cycle. Green building is an example of this approach. More generally, complexities andinformation gaps may constrict assessment options. However, where choices are comparative,partial assessments may often suffice. Because of such considerations, green procurement oftenemphasizes particular attributes, such as recycled content, energy efficiency, and waste reduction.Labeling and certification programs such as Energy Star, as well as other approaches, may beused to identify green products and services. While the use of green procurement appears to beincreasing nationally, the success of programs is often not clear. Barriers to broader adoptioninclude inadequate information among decisionmakers, lack of common implementationstandards, real and perceived cost obstacles, and market and technical uncertainties.As a major consumer of goods and services with significant potential impacts on theenvironment, including human health, the federal government could arguably influence theadoption of green procurement generally and the market for green products and services. Federalgreen-procurement efforts focus largely on acquisition of products, even though services accountfor about half of federal procurement spending. Various statutes, regulations, executive orders,and policy documents require or encourage the purchase of several types of products because oftheir environmental attributes. Agencies are required to purchase alternative fuels and alternativefuel vehicles, and products that are biobased, Energy Star and energy-efficient, EPEAT (a greentechnology labeling program), and that contain recycled content, but acquisitions may be exemptin specified circumstances. Agencies must consider purchasing alternatives to toxic and prioritychemicals and ozone-depleting substances, and environmentally preferable (EPP) products andservices. Only EPP and EPEAT attempt to provide an integrative approach, rather than addressingonly one or a few attributes, but they lack a specific basis in enacted statutes.The Office of Management and Budget (OMB) provides broad guidance through various policydocuments, as does the Office of the Federal Environmental Executive (OFEE), housed at theEnvironmental Protection Agency (EPA). For some kinds of attributes, procurement criteria areset by specific agencies. EPA, the General Services Administration (GSA), OFEE, and otheragencies have databases that help identify green products. OMB requires agencies to have greenprocurement plans and to report annually on their activities. Those reporting requirements appearto be largely qualitative, but quantitative reports are available for recycled-content andalternative-fuels products.Green procurement raises several policy questions, especially for federal acquisitions: (1) Whatare the most useful and appropriate policy goals for green procurement? (2) Are the legalauthorities and other means by which different green product and service initiatives have beenestablished the most appropriate for meeting policy goals? (3) How effectively is agencyimplementation and performance of green procurement being assessed? (4) How successful arecurrent programs and initiatives at meeting policy goals? (5) Are policies on the acquisition ofgreen services sufficient? (6) Are the policies and the methods of implementing them sufficientlyharmonized and integrated? (7) Are there significant gaps in the preferences for green productsand services? (8) Are there implementation methods not currently used by the federal governmentthat should be considered? (9) Is training of the acquisition workforce sufficient?Congressional Research Service

Green Procurement: Overview and Issues for CongressContentsWhat Is Green Procurement?.4Green as a Relative Concept.4Green Procurement and Environmentally Preferable Purchasing.7Life Cycle Stages .8Research and Design.9Raw Materials Acquisition .9Manufacturing . 10Distribution. 10Operation and Use . 11Disposal or End of Life . 11Green Factors. 12Inputs. 12Effects . 15Evaluation Criteria . 16Impact. 16Cost . 16Performance. 17Life Cycle Analysis. 17Implementing Green Procurement . 20Labeling and Certification. 21Price and Cost Policies. 22Other Approaches . 23Measuring Success. 23Barriers to Broader Adoption of Green Procurement Practices. 25Incomplete and Imperfect Information . 25Lack of Common Standards . 25Real, Perceived, and Hidden Costs . 26Market and Technical Uncertainties. 26Federal Green Purchasing Initiatives . 26Market-Focused Programs. 27Agency-Focused Initiatives . 27Preferences for Green Products and Services . 28Federal Performance in Green Procurement. 34Issues for Congress . 39Green Procurement Policy Goals. 40Green Procurement Policy Instruments. 41Performance Assessment . 41Program Evaluation . 42Acquisition of Services . 42Integration and Harmonization of Green Procurement Initiatives . 43Possible Gaps in Current Preferences . 43Additional or Different Implementation Mechanisms . 44Training of the Acquisition Workforce. 44Congressional Research Service

Green Procurement: Overview and Issues for CongressFiguresFigure 1. Green Procurement Relative to Other Approaches .5Figure 2. Dimensions of Green Procurement and Relationships Among Major Elements . 19TablesTable 1. Federal Procurement Spending for FY2008 by North American IndustryClassification System (NAICS) Group ( Billions).3Table 2. Entities Responsible for Providing Guidance to Federal Agencies for GreenProducts and Services . 30Table 3. Types of Green Products Listed in GSA and EPA’s EPP Databases by PrimaryFocus . 32Table 4. Federal Procurement Spending for FY2008 by Department or Agency forSelected Industries . 34ContactsAuthor Contact Information . 45Acknowledgments . 45Congressional Research Service

Green Procurement: Overview and Issues for CongressIncreasing concerns about global warming, energy independence, and public health havecontributed to a rise in public interest in so-called “green” products and services, and thedevelopment of a “green” economy. 1 A number of federal programs and activities are relevantto that interest. In addition to well-known programs aimed at the public such as Energy Star (seetext box below), the federal government is itself a major consumer of goods and services,spending more than 500 billion per year on procurement (Table 1), with annual spendingincreasing significantly in recent years.2 Substantial proportions of those expenditures are ongoods and services with significant environmental impacts. For example, in both FY2008 andFY2009, more than half of the funds spent on manufactured goods was for transportationequipment, and more than 15% was for information technology and other electronics andelectrical products. Construction of buildings and other structures comprised 11% of spending inFY2008 and 7% in FY2009.3Those levels of expenditure imply that greater use of green procurement practices couldsignificantly reduce the environmental impacts of federal activities. Furthermore, federal policiesand practices relating to green procurement may have significant impact on the adoption of suchpractices by state and local governments and the private sector. They might also serve to stimulategrowth and innovation in green sectors of the national economy, potentially influencing theavailability of green products and services in the marketplace and the development of associatedindustries.Several relevant federal procurement requirements and programs have been established,beginning with a requirement enacted in the 1970s for federal agencies to purchase products withrecycled content. That requirement and some additional initiatives focus largely or entirely onfederal procurement, whereas others, such as Energy Star, a joint program of the EnvironmentalProtection Agency and the Department of Energy, were specifically designed to have a broadermarket focus. These two kinds of federal efforts, which may be called agency-focused andmarket-focused, respectively, are distinct but not completely independent. For example, EnergyStar originated as a market-focused program aimed largely at consumers, but it is now included infederal regulations relating to acquisition of energy-consuming appliances and even buildings.4Most of the federal initiatives focus on specific inputs or effects that a product might have, suchas energy use, recycled content, or toxicity. This approach can allow for fairly straightforwardimplementation of a given initiative, but it may also be criticized as not paying sufficient attentionto interactions or trade-offs among various factors. In addition, evaluating the effectiveness ofinitiatives in implementing federal green policy can be challenging.1See, for example, Joel Makower, State of Green Business 2010 (Greener World Media, February rted spending is total dollars obligated and in FY2008 represented an increase of 15% over FY2007 and 25%over FY2006 (data generated by CRS from the Federal Procurement Data System, FPDS-NG, https://www.fpds.gov).However, spending in the table for FY2009 was slightly lower than FY2008 (0.3%). FPDS-NG lists all actions valuedat over 3,000 on executive-branch procurement contracts. It is the only comprehensive source for data of this kind, butcommentators have repeatedly questioned the accuracy and completeness of its data. For more about FPDS-NG andconcerns about the quality of its data, see CRS Report RL34718, The Federal Funding Accountability andTransparency Act: Implementation and Proposed Amendments, by Garrett Hatch.3Construction is often treated separately from services. However, for simplicity of exposition, the term products andservices as used in this report means products, services, and construction unless otherwise indicated.4See 48 C.F.R. § 23.203 and 42 U.S.C. 17091.Congressional Research Service1