”How can Public Procurement help improve public sector services, solve societal challenges and spur innovation? ”

Comments by Anders Wijkman, Chair of the Swedish Gvt Inquiry on Public Procurement, at Nordic Health Arena on May 22nd, 2013

Public Procurement Review – main findings

• Lack of leadership and strategy• Legal perspective too dominating• Opp:s for negotiation and dialogue limited – prevents innovative

solutions to surface• Skills lacking among PP responsibles • Data and statistics lacking • Uncertainty about what social and environmental claims can be put• Impact studies on impact of PP envi and social claims few and far

between• Quality criteria often lack precision; Monitoring is poor• Lowest price vs Quality; Life-cycle thinking is rare• Too many court cases

Swedish Inquiry Report addresses major problems

• Gvt develop a National Strategy to be approved by Parliament; Strategies at County/Municipal level as well

• PP-responsibles should be member of Management Teams• Make PP rules simpler and flexible• Increase threshold for Direct Procurement• Priority given to Negotiation and Dialogue – thereby opening the door for

innovation• Partnerships for Innovation • Priority given to Quality work + Monitoring • Court reviews concentrated to fewer courts• Strengthen PP support and guidance • Develop further GPP criteria, incl LCA• Public Sector lead role in innovative solutions• Nordic cooperation on GPP + social criteria, incl monitoring

Environmental and social requirements do make a difference

• General policy instruments to prefer – but often difficult to obtain; here PP can complement well

• In spite of limited impact studies, a general conclusion can be drawn: GPP is a good instrument to help reach environment goals Studies re the impact of social requirements in procurement

contracts are fewer, but what we know is positive • GPP has potential to be a major driver of innovation• GPP often offer financial savings, in particular when based on LCA• SMEs often benefit from GPP• Important not to ”overburden” contracts with too many parallel

demands

Major future challenges• World population likely to reach 9 Billion in 2050• 3 Billion new middle-class consumers in 2030• 50-100 % increase in demand for food, energy, water, steel,

cement etc until 2030• Climate change likely to make food production increasingly

difficult in large regions• Prices for energy and key commodities likely to increase • Resource-constrained world• Unemployment, not least among the young • Equal rights and opportunities• Aging population

Global Warming did not stop in 1998

- as many deniers claim

7Source: Skeptical Science, Church et al 2011

Climate

Real commodity prices, 1980-2011*

0

50

100

150

200

250

300

1980 1985 1990 1995 2000 2005 2010

Energy Metals & Minerals Agriculture

Note: 2011 is Jan-Feb average

In a resource-constrained world

• Competition for water, land, energy and materials will be fierce

• Investments in resource-efficient infrastructure and renewables must have top priority

• Recycling and reuse will be KEY• R&D must be aiming at sustainable innovation• Move towards a circular economy crucial

Role of Public Policy critical

• To address market failures and to provide public goods• A mix of regulation and economic instruments will be needed

at international, regional and national levels• Global governance a failure; EU gives some hope• Individual nations can and must do a lot • PP represents roughly 20 % of the economy• In many areas Public Sector major actor• PP can be a very useful tool, not least to stimulate innovative

and/or transformative solutions• The new PP Directive is more flexible and allows for

negotiation and innovation partnerships

Different levels of ambition for GPP

• Replacing products of poor environmental performance

• Incremental change within existing technologies

• Innovative solutions – radically improved products

• Transformative solutions – replacing products with services and/or minimum 80% reduction in energy/material demand (Factor 5)

Social policies can be advanced

• Human rights – as well in Third Countries • Anti-discrimination• Accessibility for people with different

handicaps• A better work environment• Employment opportunities• Engaging non-profit sector offers special

opportunities – home for elderly etc

二十一世纪新前线21st Century Frontiersइक्की�सवी� सदी की� स�मा�एं�

Present Green Strategies are insufficient; IEA WEO 2011 was dynamite but did not cause much alarm:

2017The world is locking itself into an unsustainable energy future which would have far-reaching consequences

二十一世纪新前线21st Century Frontiersइक्की�सवी� सदी की� स�मा�एं�

http://ec.europa.eu/environment/ecoap/about-eco-innovation/policies-matters/eu/20121015-potocnik-eco-innovation-requires-systemic-rethink_en.htm

Eco-innovation should go beyond incremental environmental improvements and efficiency gains, and aim at “breaking out of locked-in systems and thinking”

.Environment Commissioner

Janez Potocnik

Transformative solutions are very much needed

• Defined as a reduction in energy- and material consumption of minimum 80 % (Factor 5)

• Examples could be - substituting physical meetings and travel with virtual meetings - zero-energy buildings - reducing mobility through band-with - business models built on HQ-service and leasing, instead of a

constant stream of new products – thereby facilitating recycling and reuse and promoting product life extension

• Public Procurement can help bring such solutions to the market

Transformative solutions already emerging

二十一世纪新前线21st Century Frontiersइक्की�सवी� सदी की� स�मा�एं�

http://www.transformative-applications.net/UnderstandInfrastructure/index.html

Promising initiatives

• The Legal, Financial and Administrative Services Agency is running a pilot project for transformative solutions – Indian Gvt has joined the effort

• Swedish Agency for Economic and Regional Growth Initiative for ”transformative clusters”

• Vinnova on Innovation• Nordic Innovation• The Nordic Built Charter• Potential for transformative solutions is significant and the

role of PP is critical• The health sector should be no exception