Environmental sustainability in the source stage
Step 4: Approach the market
- Develop tender evaluation criteria
- Consider environmental sustainability conditions of tender
- Develop environmental sustainability contract clauses
- Prepare tender documents and evaluation plans
Step 4 provides guidance on how you prepare tender documents including the tender evaluation criteria, conditions of tender and contract clauses.
Develop tender evaluation criteria
Developing environmental sustainability tender evaluation criteria is a necessary first step before you approach the market. For high value contracts you should consider multiple criteria. For smaller projects you may choose to adopt only one or 2 criteria.
buy NSW provides a list of recommended evaluation criteria that can be used as a starting point.
Whole-of-life cost and environmental sustainability are 2 of the recommended criteria. buy NSW provides guidance on developing and assessing tender evaluation criteria.
Use Activity 1 within Template 5 – Environmental Sustainability Evaluation XLSX, 161.85 KB to develop environmental sustainability evaluation criteria.
Consider environmental sustainability conditions of tender
You can choose to include environmental sustainability conditions of tender which are beyond the current requirements of NSW Government prequalification schemes (for example, evidence of an environmental management system).
New conditions of tender can be developed at the organisational level or tailored specifically to the goods or services being procured. You should request that tenderers respond to these conditions in their tender submission so that you can assess compliance using a simple yes, no or partial response. Refer to Activity 2 in Template 5 XLSX, 161.85 KB.
Develop environmental sustainability contract clauses
Your tender documents need to specify actions and contract clauses for environmental sustainability that are to be complied with throughout the contract. It's a necessary procurement mechanism to deliver specified outcomes. These clauses need to align with your KPIs and tender evaluation criteria defined in plan stage step 3 and source stage step 4.
Contract clauses can cover a range of sustainability actions including:
- required environmental sustainability obligations
- compliance with guidelines
- prescriptive requirements or specifications to be followed, for example, particular equipment or material properties
- performance outcomes to be demonstrated by the supplier
- targets for different environmental performance measures or KPIs, for example, percentage of material sourced from recycled content or a reduction in greenhouse gas emissions
- reporting and evidence requirements for monitoring supplier performance throughout the contract period
- areas for further investigation or analysis (which can be particularly useful to drive innovation in the absence of commercially proven technology)
- financial incentives or abatements (for example, bonus payments for the implementation of innovative solutions, or exceedance of contract targets).
When developing contract clauses, you should make sure:
- terminology is consistent with the buy NSW suite of contract templates
- they are unambiguous and obligations are clear
- high priority environmental objectives are included (as defined during the plan stage)
- reporting processes for compliance are clear for the supplier
- any reporting requirements against specific KPIs or targets are included
- that they allow for fair competition.
You also need to be clear about the outcomes that your agency wants to achieve and how they'll be delivered. If you're not sure of the best way to deliver an environmental outcome, you may invite the tenderers to offer solutions.
Getting evidence of compliance with contract clauses is important in avoiding 'greenwashing', where organisations make unsubstantiated claims about their environmental sustainability.
Use Template 6 – Environmental sustainability model clauses DOCX, 246.71 KB to help you in developing contract clauses.
- Communicate context of environmental objectives to help tenderers understand the desired outcomes.
- Use simple and clear language that communicates the action required and avoids ambiguity.
- Define key terms and provide examples for complex concepts.
- Use sub-clauses to separate multiple requirements.
- Clearly define responsibilities of each entity if required.
- Include timeframes, milestones, and quantifiable performance metrics where possible.
- Seek legal review of new clauses.
Prepare tender documents and evaluation plans
Environmental sustainability-related contract clauses, KPIs and tender evaluation criteria should be embedded in your tender documents. buy NSW provides a range of resources for preparing tender documentation. Tender submission documents should address the following aspects.
Meeting sustainability requirements
Tender documents need to require the tenderer to demonstrate how they intend to achieve the environmental sustainability requirements. The tender also needs to clearly explain how the compliance will be assessed, for example, use of pass or fail criteria to assess conditions of tender.
Demonstrated experience and expertise
Tender documents should require a tenderer to demonstrate their experience and expertise in delivering services with similar environmental sustainability requirements and objectives.
Alternative options
Tender documents may provide for alternative options that tenderers can offer to enhance environmental sustainability outcomes.
Whole-of-life cost considerations
Whole-of-life cost considerations should be requested if relevant. This includes requesting specific data from tenderers or requesting them to complete the whole-of-life cost calculator.
Reporting requirements
How the tenderer intends to report against environmental sustainability KPIs.
This case study details how Digital.NSW integrated environmental sustainability into their procurement of hardware for all of government.
Meet Digital.NSW, the team behind the recent update of 2 all-of-government agreements (AoGA): ICT End User Devices and Services, C9826EUC, and Print and Imaging Devices and Services, C9827PID. They wanted to make sure that the electronic hardware they bought for the government was not only high-quality and cost-effective, but also reduced the government’s impact on the environment. They knew that electronic waste is a growing problem, and that they had an opportunity to reduce its impact on the planet.
The EPEAT solution
Digital.NSW decided to use a global standard called EPEAT to measure the environmental performance of the hardware they procured. EPEAT rates products on criteria such as energy efficiency, recyclability, and use of hazardous materials. They required the suppliers to have silver or gold EPEAT certifications for their hardware, including desktops, notebooks, tablets and monitors.
The outcome – circularity and the life cycle
Digital.NSW also required the suppliers (that are original equipment manufacturers) to calculate the circularity and the life cycle cost of their products as a contract requirement. The circularity metric, material circularity indicator (MCI), is used to consider factors such as the durability of the product, the proportion of recycled materials used and how much of the product can be reused or recycled at the end of its life. Life cycle cost is the total cost of owning a product, including its purchase, maintenance, operation and end-of-life.
By collecting and publishing this data internally, Digital.NSW will help government agencies make informed decisions about their purchasing throughout the contract.
Sustainable procurement making a difference
By incorporating environmental sustainability into their contract, Digital.NSW enhanced value for money, and contributed to the government’s goals of reducing greenhouse gas emissions and waste. They also required suppliers to maintain an environmental management system and to minimise the environmental impact of their packaging. This case study shows how environmental sustainability can be incorporated into a high-value procurement process.
Step 5: Select suppliers
- Clarify responses with tenderers (if required)
- Use your evaluation criteria to score the submissions
- Update your whole-of-life costing
Step 5 provides guidance on how you can address environmental sustainability when evaluating tender submissions and selecting the supplier.
Clarify responses with tenderers (if required)
At this stage there is the opportunity to seek clarification with tenderers on how they intend to achieve the environmental sustainability requirements if necessary. This is particularly important if a tenderer has included in their tender submission any alternative options without clearly explaining how the objectives will be met. You should check for compliance with environmental sustainability conditions of tender and consider whether tender submissions have demonstrated that contract requirements will be met.
Use your evaluation criteria to score the submissions
The tender evaluation criteria you developed in source – step 4 should now be used to assess and score your tender submissions.
Use Template 5 – Environmental Sustainability Evaluation to assess and score tender submissions against your procurement’s environmental sustainability criteria.
The results should be incorporated into the overall tender evaluation template being used to assess all your tender evaluation criteria (for example, quality, organisational experience, whole-of-life costs). This allows environmental sustainability to be assessed together with other tender evaluation criteria.
Update your whole-of-life costing
Where whole-of-life costing is being used to assess procurement options submitted by the tenderer, we encourage you to update your earlier whole-of-life costing with data provided by tenderers. Refer to Consider whole-of-life costing in plan – step 2 and prepare tender documents and evaluation plans in source – step 4.
Step 6: Negotiate and award the contract
- Review the contract against the accepted submission.
- Inform successful tenderer and provide feedback.
- Inform unsuccessful tenderers and provide feedback.
Step 6 involves finalising the contract with your chosen supplier. It is also an opportunity to provide feedback to the successful tenderer and unsuccessful tenderers on the environmental sustainability aspects of their response.
Review the contract against the accepted submission
You may want to consider amending the contract if the supplier’s proposal includes an alternative bid. This is important if the preferred tenderer is offering value-adding alternatives or additional options that will improve environmental sustainability outcomes.
The contract should reflect the accepted submission from the tender, so that the commitments can be properly managed throughout the contract.
Inform the successful tenderer and provide feedback
When you inform the successful tenderer, it is an opportunity to provide feedback to them on the importance of their proposed environmental sustainability commitments. Provide the feedback to reiterate that environmental sustainability is a key element of the contract, show them where they performed well and where improvement is possible.
Inform unsuccessful tenderers and provide feedback
You need to provide feedback to unsuccessful tenderers so that they understand how they can improve their submissions for future tenders. Feedback may include emphasising the importance that environmental sustainability played in the award of the successful tenderer; where the unsuccessful tenderer performed well and where they can improve.
Templates supporting the source stage
Use Template 5 to develop your environmental sustainability tender evaluation criteria and scoring system. The template also provides a process for you to review the compliance of tender responses against your environmental sustainability conditions of tender.
Use Template 6 to develop contract clauses to deliver your environmental objectives. You start with:
- prioritising the environmental objectives
- reviewing model contract clauses
- identifying the most appropriate ones
- defining contract clauses.