The problem is process: Reframing the federal cleantech procurement challenge

January 12, 2022

By: Teslin Augustine, John McNally, Harshini Ramesh

Since the federal government first committed to adopting green procurement practices in 1992, the results have been disappointing. Public procurement’s vast potential to support Canada’s environmental and innovation goals is well-understood, and more is needed to help realize that in practice. This blog draws on findings from our newest report: Buying Better - Leveraging federal procurement to drive demand for Canadian cleantech. It explores why green procurement remains a challenge, and how adopting an alternative perspective may be the key to unlocking its vast potential to support purchasing more Canadian clean technologies (“cleantech”).

Progress in the last 30 years

The federal government first committed to adopting green procurement practices in 1992, through the Code of Environmental Stewardship.^[1] Three decades later, research finds that the integration of environmental considerations in public procurement has been “superficial.”^[2] Green considerations are often not explicitly considered as an evaluation criterion for qualifying bids, and when considered, are not given adequate weightage while awarding contracts.

In fairness, some progress has been made towards reducing the environmental impact of public procurement. Notably, in 2006, the Policy on Green Procurement was adopted, which explicitly introduced environmental and sustainability considerations into procurement spending. More recently, the Greening Government Strategy identified green procurement as a strategy to reduce emissions from government operations to net-zero by 2050. The fact, however, remains that progress on green public procurement has been staggered and limited.

The limited progress made on procuring environmentally preferable goods and services has been studied a fair bit. Little attention has, however, been given to how we can put in place processes that will ensure that procurement advances Canada’s environmental targets. Additionally, little focus has been given to how these changes in procurement practices can support Canadian cleantech, whose environmental benefits are needed to drive progress towards climate targets.

Procurement as the Outcome of Formal Decision-making Processes

It is somewhat surprising that a process-centric approach to addressing Canada’s green procurement challenge hasn’t received more attention. At their core, procurement decisions are the outcome of formal decision-making processes. Procurement decisions are made by individual actors within the confines of the structural factors and the process design surrounding procurement.

Federal procurement, for example, follows a series of prescriptive, well-defined, and somewhat complicated processes governed by regulations, legislation, directives, and other rules. Any individual operating within this system, such as a procurement officer, is bound to follow these rules, and to ensure that procurement occurs within the confines of what is permissible and allowed. This makes supporting green innovations and ideas difficult, if purchasing them does not align with the way that the system makes decisions, and reduces the likelihood that any one individual can drive change within the whole system. Given this reality, there is a need to consider potential solutions that focus on changing the process of decision-making or purchasing, to improve federal procurement’s cleantech performance.

Systems change, one step at a time

A process-centric approach to making Canada’s procurement systems more adept at buying environmentally-friendly and innovative goods and services helps identify specific areas of intervention that could have an inordinately positive impact on greening procurement. It is also in some ways the first step to the larger systems changes that procurement advocates hope to see.

Advocates have called for overhauling Canada’s existing procurement system and replacing it with an outcome or solutions-based model. This is an exciting idea and could bring about a large and sustained increase in green procurement. A systems-level change, however, takes time, requires enormous political will, requires negotiating between competing interests and power centres, and could also mean revamping administrative capacities of implementing bodies. Typically, systems are overhauled after an external shock to the system (e.g., radical technology changes or a disaster), or after an election. Even assuming a systems-level change takes place in the manner advocates call for, its impact is uncertain and would not occur for some time, thereby standing in the face of meeting Canada’s 2030 climate targets.

If and until such time federal procurement systems can be completely overhauled, a process-centric approach helps us identify and address inefficiencies in the current system through incremental changes or policy tweaks that can be implemented right away. It also holds the immense promise of providing policy learnings and wins that will ultimately help us design the systems we wish to create in a practicable and incremental manner. 

What policy solutions can overcome bottlenecks inhibiting federal green procurement?

Smart Prosperity Institute’s report uses cleantech as a case study and lens for an in-depth analysis of the processes, actors and policies shaping Canada’s federal procurement system. It identifies the systemic attributes (design, cultural and procedural) of the procurement system and makes five recommendations on policy tweaks that can significantly increase the federal government’s procurement of clean, green, and innovative goods and services.

Learn more about leveraging federal procurement to drive demand for Canadian cleantech - register now for Smart Prosperity Institute’s January 26th event on Public Procurement of Cleantech in Canada – Can we solve the challenge?