Select Committee on Environmental Audit Minutes of Evidence



Annex E2

 

Consultation Paper: Procurement of Timber Products from "Legal & Sustainable Sources" by Government & its Executive Agencies

 

INTRODUCTION

  Michael Meacher announced on 28 July 2000 that all Government departments and their agencies would be required to actively seek to buy timber and timber related products from legal and sustainable sources. The full text of Meacher's original statement detailing the government's commitment can be found at: http://www.press.dtlr.gov.uk/pns/DisplayPN.cgi?pn—id=2000—0516

  Already this policy has begun to be implemented in central Government departments and their executive agencies, and an inter-departmental buyers group has been established to advise on and monitor performance. However, it is now clear that Government buyers need clearer central guidance and advice. To address this need the Department for the Environment, Food and Rural Affairs, acting on behalf of all Government departments and their agencies, has commissioned consultants Environmental Resources Management (ERM) to assess the diverse range of current Government procurement practices, and to recommend methods for implementation, including assessment of claims of sustainable management.

  ERM is currently in the middle of the study having undertaken a review of current procurement practices and considered ways of assessing claims of sustainable forest management. Thus we are by no means presenting a 'fait accompli' or the final results of the study and this consultation paper should not be viewed as such. The principal aim of this consultation exercise is to obtain stakeholder input on next steps via constructive stakeholder dialogue on the difficult issue of how to assess claims of sustainable forest management and subsequently apply this within the procurement process.

  The paper is divided into three sections:

    —  Framework for the discussion including the legal, institutional and market environments in which procurement operates.

    —  Assessing compliance with government policy.

    —  Bridging the gap—implementation of government policy.

  The first section provides the necessary context for the discussion and is not itself the subject of formal consultation.

FRAMEWORK FOR THE DISCUSSION

  There are a number of factors which place boundaries around the scope, content and timing of the actions taken to implement the government's commitment. It is imperative that consultees' responses are provided within this framework in order to enable constructive discussion and end up with a solution that is practically feasible and can be implemented. The three main factors or 'constraints' are therefore presented here for information and should not be a focus of discussion:

    —Public Procurement Regulations.

    —Current Availability/Supply of Certified Products.

    —Government Procurement Structures & Operations.

Public Procurement Regulations

  The purpose of this section is to remind consultees of the wider context of Government procurement policy within which the Government's timber procurement policy has been set. As per the other "constraints" outlined in 1.2.2 and 1.2.3 it is not subject to formal consultation; it simply records The regulatory and policy framework within which Government buyers must work.

  Procurement is an economic activity but can be a tool for implementing policy aims provided a Contracting Authority's does not seek to introduce requirements that go beyond those justified by the nature of the particular contract in question. Relevance to the contract is a theme that applies at all stages of the procurement process. However, as will be clear from the following statements, authorities are, by and large, free to buy what goods and services they want. How they buy them is subject to public procurement directives which are enshrined in UK regulations.

  There are distinct stages in any competitive public procurement process.

    —  Identification of need and definition of requirements (what is wanted).

    —  Specification of technical details.

    —  Selection of suppliers to invite to tender.

    —  Evaluation of offers and contract award.

    —  Execution of contract.

  The first and last of these bullet points are not subject to the Regulations but are subject to the Treaty of Rome principles that contracts must not be harder to perform by foreign suppliers than UK ones.

  Requirements of EC Public Procurement Directives and UK Law are as follows, their implications for timber procurement are highlighted in italics:

    —  Contracting authorities are free to define the subject matter of the contract in the way that they consider to be the most environmentally sound.

    —  Contracting authorities have a great deal of freedom to define the contract specifications, which include the characteristics required to ensure that the product or service fulfils the use for which it is intended. However, such specifications must not be discriminatory, should allow for equivalent means to meet the underlying requirement and must adhere to the rules on technical specifications, in the directives, as appropriate. Authorities cannot therefore require timber to be produced from trees grown in particular locations nor can they require evidence of sustainable forestry to be limited to one or more certification schemes. Authorities can however define their sustainability criteria and indicate certification schemes that would be accepted as suitable proof of meeting those criteria. Authorities can also indicate the criteria that may apply to alternative forms of acceptable evidence.

    —  Specifications can include production processes. The production process covers all requirements and aspects related to the manufacturing of the product which "contributes to the characterising of the products without being necessarily visible in the end product." Authorities can therefore specify the manner in which trees are grown and harvested. They must be able to justify the criteria for defining legal and sustainable sources as a contribution to the characteristics of the purchased product.

    —  In the absence of European, international or other relevant standards covering the required environmental aspects, or where a higher level of environmental protection is required, contracting authorities can define their specifications related to environmental performance in line with Eco-label criteria and may indicate that products having Eco-label certificates are deemed to comply with the requirement. Eco-label criteria include: performance of the product; materials contained within the product; production processes; and recycling. But, again, the contracting authority must allow for means, other than the Eco-label certificate itself, to demonstrate the required performance. An Authority may indicate certification schemes that would be acceptable evidence of meeting specified requirements but not to the general exclusion of other evidence not identified within the tender documents. Authorities may require that any evidence of sustainable and legal sources that does not fall within the examples of acceptable schemes notified at tender invitation be independently confirmed as meeting the relevant criteria set out in the technical specification.

    —  Candidates can be excluded from participating in a public contract where they have been convicted of an offence relating to the conduct of their business or have committed an act of grave misconduct in the course of their business. This can include relevant environmental issues. Authorities may decline to invite suppliers who have breached regulations relating to timber harvesting and trade.

    —  In selecting candidates, references, which can be requested by a contracting authority to demonstrate a required level of technical capacity, can relate to environmental aspects. As a pre-tender selection criterion an Authority may require evidence of suppliers' track records in similar contracts for the supply of wood products derived from sustainable and legal sources.

    —  Environmental management systems such as those certified against the international standard ISO 14001 or the EU Eco-Management and Audit Scheme (EMAS), can also be relevant as a means of proof of technical capacity. However, in order to be relevant, the management system should provide evidence relevant to the subject or performance of the particular contract.

    —  At the contract award stage, any environmental criteria must serve to identify the "most economically advantageous tender". The criteria must provide an economic advantage to the contracting authority. An economic advantage need not have a monetary value but must relate to the specified requirements. When comparing potentially acceptable bids Authorities may only consider bids that comply with the minimum standards set for sustainable and legal sources. Bids that exceed minimum requirements may be scored higher than those that just pass but only if the higher standards offered are relevant to the requirement and are objectively assessed as providing an additional economic benefit to the Authority. Bids that do not meet the minimum requirements must be deemed non compliant and eliminated from the competition.

    —  Another approach is to allow one or more variants to the standard specification so that bidders can offer alternative specifications giving higher standards of performance.

    —  Contracting authorities have the possibility to include relevant environmental factors in the contract clauses necessary to perform the contract. The EC procurement directives do not cover contract clauses, but Treaty principles and case law still apply—notably that the clauses must be non-discriminatory.

UK GOVERNMENT PROCUREMENT POLICY

  All public procurement of goods and services, including works, is to be based on value for money (vfm), having due regard to propriety and regularity. Vfm in procurement is defined as "the optimum combination of whole life cost and quality (or fitness for purpose) to meet the customer's requirement". This ability to meet the customer's requirement enables departments to specify sustainable and legal timber even if they have to pay more to acquire it.

AVAILABILITY/SUPPLY OF CERTIFIED PRODUCTS

  In his announcement, Michael Meacher noted that there is currently not enough timber that can be independently guaranteed to have come From sustainable and legal sources. Demand for certified timber currently exceeds supply. Notwithstanding EU Rules, if HMG contracts were to specify named independent certification schemes as the only acceptable evidence for sustainable and legal timber the market could only supply a fraction of its needs. It may well be a number of years before there is enough third party certified timber available to satisfy the majority of government's needs.

PROCUREMENT STRUCTURE & OPERATIONS

Procurement Structures

  There has recently been a shift in approach to procurement structures in Government departments and executive agencies with a move back towards centralisation, to counteract the decentralised approach of the past few years. His centralisation will eventually facilitate the implementation and monitoring of timber procurement policies, but at present it can lead to somewhat complex procurement structures, as illustrated by the MoD.

  In the majority of cases, each department or agency has a central procurement function. Within this function, personnel are typically (although not always) given responsibility for a particular product or group of products, meaning that different people are responsible for paper, furniture and construction timber. However, numerous other procurement personnel within the department/agency generally complement the central procurement function. For example, HM Prisons Service has a central Contracts and Procurement Unit (CPU) based in their head office in Corby, however, in addition each prison (of which there are 137 nationally) has its own procurement team.

Purchasing Routes

  One of the main roles of the central procurement function is to establish departmental or framework agreements either directly with suppliers or via OGC Buying Solutions. In these cases the OGC has a contract with the supplier and hence it is the OGC that establish the specification, terms and conditions etc. Departments or agencies then receive the OGC suppliers catalogue from which products are identified and purchased. The majority of departments and agencies surveyed used OGC contracts, albeit to varying degrees. In addition, executive agencies typically have close links with their sponsoring department and often opt to use departmental framework agreements (eg the Highways Agency uses DTLR framework agreements).

  The procurement personnel who are spread throughout the department/agency are typically free to choose whether they procure from the central contracts or via their own sources. Assuming that the central contract offers a quick, hassle free and value for money option then the majority of procurement will occur via the framework contracts/agreements. However, in all cases some purchases will fall outside the scope of these contracts; these typically consist of one-off purchases for small volumes or can cover larger volumes where the product is not available via the framework contract or where procurement personnel do not think the framework contract offers best value. The central procurement personnel interviewed as part of Task 1 of the study generally estimated that 80-90 per cent of spend was captured by framework contracts, although we do not have data to support this.

  Obtaining information about the volume and nature of procurement that falls outside the scope of framework contracts/agreements is extremely difficult. In the majority of cases, the central procurement function does not track spend outside the framework contract and has little power to do so beyond a request for voluntary reporting. Hence it is generally not possible at present to obtain information from the central procurement function about purchases of timber products that occur outside the framework contracts. However, the gradual introduction of electronic information management tools and e-procurement may enable this information to be sought in the medium-term future.

Practicalities

  There are three main aspects that need to be taken into consideration regarding the implementation of government policy on timber procurement:

  Firstly, procurement structures and routes within government and its executive agencies are rarely simple. Decentralisation has meant that there is no single central procurement function that covers all timber procurement within a department or agency. Thus although the majority of spend can be captured via the central function, capturing the rest may be a longer-term process. In addition, implementation needs to cover both direct procurement of timber products and indirect procurement by major service providers ie construction companies and office providers, as this is a growth area.

  Secondly, procurement officers are not and cannot be expected to become experts in sustainable forest management principles. Often, in the central procurement function different people are responsible for the procurement of paper, furniture and construction timber. In addition, each department/executive agency will have other procurement personnel located outside the central function who decide whether to use the framework contract or find their own suppliers. As a result all these buyers will need training and clear guidance on the documentary evidence they will be expected to assess. It is not practical to consider that this training will enable procurement officers (or even the growing network of departmental environmental managers) to obtain the detailed sector knowledge required to adequately assess, by themselves, all forms of evidence they may receive.

  Thirdly, information on the types of timber products procured and spend data is not as easily obtainable as might be imagined. In terms of monitoring implementation of government policy, existing accounting and data information systems are at present rarely able to provide information on the types of timber products procured and spend data, let alone track evidence of sustainable sourcing. This is for the following reasons:

    —  The existence of IT systems that automatically and comprehensively collate data on all procurement activities should not be taken as a norm. Spend and other data is not always tracked electronically and data is sometimes collected by requesting summary information directly from the suppliers, rather than using integrated internal systems to track spend as it occurs.

    —  Personnel in the central procurement unit were highly unlikely to have volume, spend or type data for procurement undertaken outside the central framework contracts. Data is typically only centrally collated for those contracts that are under the direct control of the central procurement function. Hence information on local procurement and procurement under outsourced service contracts, eg for construction projects, is rarely captured.

    —  Data is not always broken down into timber products. For example, spend data may cover furniture as an entire category, similarly paper may be monitored within a larger category covering all stationary as was the case at the Highways Agency.

  Although this situation will change with the move back towards more centralised procurement control and the introduction of electronic information management tools and e-procurement, the current limits need to be taken into account regarding the implementation and monitoring of timber procurement policies.

Additional findings from Task 1—Procurement Operations

  In addition to the ``constraints'' outlined above, Task 1 resulted in the following key points which also need to be borne in mind when implementing the government's commitment on timber within procurement operations.

  Three suppliers re-occurred within our small sample of government departments and executive agencies during Task 1. Given the constraints on expertise and personnel, we suggest that these key suppliers should be addressed centrally rather than via individual departments or agencies which would lead to significant duplication of effort. It would therefore be worthwhile:

    —  Targeting these suppliers at an early stage of the implementation plan ie as a ``quick win''.

    —  Centrally assessing the assurances these suppliers are able to provide regarding sustainable forestry management and timber sourcing, rather than this task being undertaken by individual departments/agencies.

    —  Discussing reporting and tracking options directly with these suppliers, again via a central point rather than individually by departments and agencies.

  In addition, there is a need to target the OGC as one of the most influential players to ensure that appropriate clauses are included in contracts with timber product suppliers and monitoring and reporting requirements are both put in place and communicated to those departments/agencies accessing the contracts.

  It is important that the advice given to procurement personnel relating to sourcing timber products from ``legal and sustainable sources'' is integrated into other relevant schemes such as Construction Line and the government initiative on recycled paper to ensure that personnel are not faced with conflicting initiatives.

  Executive agencies typically have close links with their sponsoring department and often opt to use departmental framework agreements (eg the Highways Agency uses DTLR framework agreements). In addition however, they also look to the department for procurement advice, environmental policies and ``environmental'' procurement clauses—hence this should be considered as a useful information channel.

  Within several departments such as DTI and DTLR, the implementation of a formal Environmental Management System has been a driving force behind assessing the environmental performance of suppliers and ensuring that documentary evidence is sought and put on file to demonstrate compliance with timber procurement clauses. As more departments and agencies are encouraged to adopt EMSs, this tool should be used to incorporate procedures for monitoring suppliers and obtaining documentation on timber sourcing.

  Given the move towards e-procurement with several pilot projects on-going, there is a need to issue at least indicative guidance on likely reporting requirements extremely rapidly so such requirements can be built into IT systems from the start rather than retro-fitted.

Assessing compliance with the government's policy

  The principal aim of this consultation exercise is to enable constructive stakeholder dialogue on the difficult issue of how to assess claims that timber products are from sustainably managed forests in line with the government's commitment and subsequently how to apply this within the government's procurement process—bearing in mind the constraints outlined in Chapter 2.

  In terms of assessing claims, there are two main questions that need to be resolved:

    —  Timber and timber products are to be sourced from legal, sustainable sources—how are ``sustainable sources'' to be defined in the context of the government's commitment?

    —  Suppliers should be able to provide evidence that the product complies with the government's definition of sustainable sources—what chain of custody or verification requirements are needed?

Sustainable Sources—defining the Government's commitment

  The government's policy expands on its commitment towards legal and sustainable sources by reference to CITES and to management that sustains the forest's biodiversity, productivity and vitality and prevents harm to other ecosystems and indigenous or forest dependent people. Compliance with CITES and with the laws of the country in which the source forests are situated is generally auditable without further elaboration. Compliance with broad principles of sustainable forest management is not auditable without detailed elaboration.

  There is broad agreement on the key components of sustainable forest management. The definition adopted by the European Forestry Ministers Conferences on the Protection of Forests in Europe is:

    "The stewardship and use of forests and forest lands in a way, and at a rate, that maintains their biodiversity, productivity, regeneration capacity, vitality and their potential to fulfil, now and in the future, relevant ecological, economic and social functions, at local, national, and global levels, and that does not cause damage to other ecosystems."

  This definition has been fleshed out in criteria and indicators that give it practical meaning. Parallel initiatives in other regions of the world have developed their own sets of criteria and indicators. There is a high degree of accordance between them and it is therefore reasonable to conclude that governments agree on the management processes and outcomes that constitute sustainable forest management. The purpose of these regional sets of criteria and indicators is to monitor progress towards sustainable forestry at a national and regional level. They provide a sound basis on which to develop management objectives and best practice at the forest level, but they are not auditable at the forest level without further elaboration.

Evidence of legal and sustainable

  The government's commitment expresses a preference for documentary evidence that has been independently verified. The different forms of evidence that suppliers might provide can be divided into three groups:

A.  Third party schemes with specific criteria for forest management

    —  Label or declaration issued under the authority of a forest certification scheme eg FSC, PEFC.

    —  Eco-label eg EU Eco-label, Nordic Swan, German Blue Angel.

    —  Label or declaration issued under the authority of a producer group scheme[1].

B.  Registered (independently certified) environmental management system maintained by the supplier

    —  EMAS, ISO 14001.

C.  Other forms of evidence

    —  Declaration by the supplier of compliance with government policy accompanied by independent verification of this declaration by a third party.

    —  Declaration by the supplier of compliance with government policy supported by various documents including their own internal procedures and those of suppliers at different points in the supply chain. These documents could be in various languages.

    —  Declaration by the supplier of compliance with government policy but with no supporting evidence or independent verification.

Assessing the Evidence

  So, how should these various forms of evidence be assessed?

GROUP A

  For third party certification schemes with specific forest management requirements (forest certification schemes, eco-labels), we have devised a set of assessment criteria which are presented on the next page. We took as our starting point a number of recent studies that have proposed criteria for evaluating schemes or for comparing schemes with a view to mutual recognition. Our analysis of these studies, which is presented in Annex A, shows that the generic guidelines published by the International Organisation for Standardisation (ISO) cover most of the criteria proposed for all elements of forest certification and product labelling schemes except for the scope and content of forest certification standards. The relevant ISO guidelines therefore provide a threshold level for all of those other elements, with the possibility of including additional criteria if they are relevant and appropriate to the government's timber procurement policy.

  Inter-governmental agreements on forests provide a reference point for the criteria for scope and content of forest certification standards, in particular the Forest Principles and Agenda 21, the proposals of the Inter-governmental Panel on Forests and Inter-governmental Forum on Forests, and the criteria and indicators developed by regional initiatives such as the European Forestry Ministers Conferences.

  The criteria presented below can be applied once to any third party scheme and all products from schemes that conform to the criteria would be accepted. Schemes will only require reassessment if they are altered or updated. The criteria might need to be adapted for producer groups depending on their certification procedures.

 PROPOSED CRITERIA FOR ASSESSING THIRD PARTY CERTIFICATION SCHEMES

Chain of custody certification

    —  1.  The certification body's organization, systems and procedures shall conform to ISO Guide 62: 1996 (EN 45012: 1998) General requirements for bodies operating assessment and certification/registration of quality systems.

    —  2.  The certification body shall be accredited by a national or international organization whose organization, systems and procedures conform to ISO Guide 61 General Requirements for Assessment and Accreditation of Certification Bodies.

    —  3.  National accreditation organisations shall be affiliated to the International Accreditation Forum. International accreditation organisations shall be affiliated to the International Social and Environmental Accreditation and Labelling Alliance.

Forest certification standard

    —  4.  Process requirements:

        — 4.1  The process of developing the standard shall have conformed to ISO/IEC Guide 59: Code of Good Practice for Standardisation.

        — 4.2  The decision-making procedures of the body responsible for the standard shall provide for a fair distribution of the total voting power among the interests that participate.

    —  5.  Content requirements:

        — 5.1  The standard shall require compliance with the laws and codes of practice of the country in which the forest is situated and that are relevant to the management of forests and the mitigation of impacts of forest management on people and the environment.

        — 5.2  The standard shall address the aspects of forest management addressed by relevant international protocols such as the Forest Principles[2] and the criteria and indicators for sustainable forest management such as have been published by the European Forest Ministers Conferences[3] and parallel processes in other regions of the world.

  Principles2 and the criteria and indicators for sustainable forest management such as have been published by the European forest Ministers conferences3 and parallel processes in other regions of the world.

 

  What are your Views on the Proposed Criteria Presented on the Previous Page?

 

  Are there other criteria that we have not considered in Annex A? What would be the rationale for including them?

 

  In addition we propose the following approach to the different percentages of certified virgin fibre and recycled fibre in products that will be offered by suppliers and the different ways in which percentages are calculated:

 

    —  Assuming that competition between suppliers has the effect of forcing up the percentage it is not necessary for the government to set a threshold percentage. Exercising a preference for the product with the highest combined percentage of certified virgin fibre and recycled fibre will be sufficient.

    —  Units of product, batches and continuous processes of manufacturing a single product line can be considered equivalent if the verifiable percentage of wood from certified forests is equal. When the verifiable percentage is based on any other unit of manufacture, the product should be given no more weight than one that contains no verifiable percentage.

  What are your Views on this Approach Towards Different Percentages of Certified Virgin Fibre?

 

Group B

  Registered environmental management systems (EMS) could be deemed acceptable evidence if they identify wood purchasing as a significant environmental aspect and specify procedures for ensuring that source forests are being managed legally and sustainably. However, each supplier's system would have to be evaluated individually to ensure that the supplier's procedures guaranteed that the source was legal and sustainable. The evaluation would need to be reviewed at the same intervals as monitoring by the certification body—typically annually—to ensure that the system was being implemented effectively. Following a positive evaluation, all supplies covered by the EMS could be deemed acceptable until the EMS was reviewed.

  The procedures specified by the EMS would have to include verification of chain of custody to a legal and sustainable source. The scope and content requirements applied to forest certification standards could be taken as the benchmark for legal and sustainable (see paragraph 5 of the proposed criteria on the previous page). Verification procedures would vary between one company and another. Some EMSs might be based on uncorroborated statements by intermediate suppliers, on documentary and/or site inspections by the company or someone acting on their behalf, or on third party certification. In order for EMSs to provide an equivalent degree of assurance to forest certification schemes and eco-labels, the verification procedures would have to have equivalent veracity. This would rule out uncorroborated statements, but documented checks made by the company, an agent of the company, or a third party might be acceptable. If registered EMSs were to be considered acceptable as evidence of compliance with the government's policy, separate, clearly defined criteria would be needed in order to assess them fairly and consistently.

 

Group C

  Other forms of evidence might be acceptable if its content allowed purchasers (or someone acting on their behalf) to verify chain of custody to a legal and sustainable source. However, the practical implications for purchasers could be enormous, with evidence perhaps comprising many documents arising from different points in the chain from forest to supplier and in different languages.

  Suppliers may offer labels or declarations of origin as evidence and these may or may not be supported by independent verification. The stated origin might be the source forests or the country or countries in which the source forests are situated. We suggest that such labels or declarations should not be accepted as evidence because they do not necessarily guarantee legality and sustainability.

Possible solutions

  It is clear that it will be very difficult to assess different forms of evidence of legal and sustainable on an equivalent basis. The consultants have come up with the following options:

    —  Only accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria);

    —  Accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria) and require mandatory third party verification of B and C types of evidence;

    —  Accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria), accept other forms of evidence that suppliers state comply with government and tender requirements. Government to commission random audits of B and C types of evidence using independent verifiers post-award stage;

    —  Accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria), accept other forms of evidence that suppliers state comply with government and tender requirements at face value.

  Mandatory verification: one option is to require any evidence that does not fall within the examples of acceptable schemes notified at tender invitation (ie all evidence in groups B and C) to be independently verified as meeting the relevant criteria set out in the technical specification. A supplier could commission appropriately qualified independent bodies to verify their evidence in relation to the criteria set for legal and sustainable. The effect could be to encourage more certification without limiting the competition and reduce uncertainty among potential suppliers as to whether they comply with the government's policy when they submit their tender.

  Random audits: An alternative to mandatory third party verification would be to accept suppliers' claims at face value but carry out random audits using independent verifiers paid for by the government. This could be envisaged at various stages in the tender process but it is arguably most effective to conduct random audits of awarded contracts.

  An interesting point to note in relation to both these options is what action should be taken if verification reveals only partial compliance with the criteria or ``grey areas''. One option is for suppliers to be given the opportunity to provide further information to address any anomalies highlighted by the verifiers. If these remained unresolved it could either then lead to breach of contract and termination or exclusion from the tender process or could highlight areas for improvement that could be incorporated into on-going contract management, depending on the severity of the anomalies. Although practical, the problem with this approach is that care would need to be taken to ensure that this does not provide greater flexibility in some cases than others. For example some third party certification schemes may be deemed unacceptable if they do not fully meet the criteria and so the same approach needs to be applied to other forms of evidence in the interests of fairness.

  Only accept certification and labeling schemes: options incorporating verification of B and C type evidence would have to ensure that verification occurred in accordance with certain guidelines in order to ensure veracity, fairness and consistency and to allow the government to break the contract if it was found post-Award that the claim of legal and sustainable could not be substantiated. This brings us full circle to specifying criteria for credible third party verification of legal and sustainable and to the possible conclusion that the only practical way of verifying compliance with the government's policy is through labels or declarations issued under the authority of credible forest certification or eco-labelling schemes. A conclusion that does not necessarily fit with public procurement regulations.

    —  The standard shall specify the outcomes that forest management is required to achieve in relation to each aspect that the standard addresses.

    —  The standard shall specify management system requirements that ensure that: full account is taken of the forest's use and non-use values in determining management objectives and actions; full account is taken of the potential impacts of management on those values; management objectives and actions adapt to changes in values and to the impacts of management.

Certification of forest management

    —  The certification body's organisation, systems and procedures shall conform to ISO Guide 62: 1996 (EN 45012: 1998) General requirements for bodies operating assessment and certification/registration of quality systems.

    —  The certification body shall be accredited by a national or international organization whose organisation, systems and procedures conform to ISO Guide 61 General Requirements for Assessment and Accreditation of Certification Bodies.

    —  National accreditation organisations shall be affiliated to the International Accreditation Forum. International bodies shall be affiliated to the International Social and Environmental Accreditation and Labelling Alliance.

  Face value: at the other end of the scale, an alternative option is simply to take suppliers' claims of compliance with government policy and the tender specifications at face value. Only if there was any reason to doubt the claim would verification or an investigation be commissioned. This is likely to be the lowest cost option to the government but also the least reliable as it puts the onus on suppliers to comply with their legal obligations.

  What are your views on the options presented here?

    —  Only accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised (or some other criteria).

    —  Mandatory third party verification of claims.

    —  Random audits of suppliers' claims after tenders have been awarded, using independent verifiers paid for by the government.

    —  Accept suppliers' claims at face value.

  Are there other options that the government could consider?

  Non-Legally Binding Authoritative Statement of Principles for a Global Consensus on the Management, Conservation and Sustainable Development on All Types of Forests. www.un.org/esa/sustdev/iff-ifpd.htm.

  1  Pan-European Criteria, Indicators and Operational Level Guidelines for Sustainable Forest Management. Resolution L2 of the Ministerial Conference on the Proetection of Forests in Europe. www.minconf-forests.net/MCPFE-Resolutions/MCPFE-Resolutions-Third.html.

  What are your views on the proposed criteria presented on the previous page?

  Are there other criteria that we have not considered in Annex A? What would be the rationale for including them?

  In addition we propose the following approach to the different percentages of certified virgin fibre and recycled fibre in products that will be offered by suppliers and the different ways in which percentages are calculated:

    —  Assuming that competition between suppliers has the effect of forcing up the percentage it is not necessary for the government to set a threshold percentage. Exercising a preference for the product with the highest combined percentage of certified virgin fibre and recycled fibre will be sufficient.

    —  Units of product, batches and continuous processes of manufacturing a single product line can be considered equivalent if the verifiable percentage of wood from certified forests is equal. When the verifiable percentage is based on any other unit of manufacture, the product should be given no more weight than one that contains no verifiable percentage.

  What are your views on this approach towards different percentages of certified virgin fibre?

Group B

  Registered environmental management systems (EMS) could be deemed acceptable evidence if they identify wood purchasing as a significant environmental aspect and specify procedures for ensuring that source forests are being managed legally and sustainably. However, each supplier's system would have to be evaluated individually to ensure that the supplier's procedures guaranteed that the source was legal and sustainable. The evaluation would need to be reviewed at the same intervals as monitoring by the certification body—typically annually—to ensure that the system was being implemented effectively. Following a positive evaluation, all supplies covered by the EMS could be deemed acceptable until the EMS was reviewed.

  The procedures specified by the EMS would have to include verification of chain of custody to a legal and sustainable source. The scope and content requirements applied to forest certification standards could be taken as the benchmark for legal and sustainable (see paragraph 5 of the proposed criteria on the previous page). Verification procedures would vary between one company and another. Some EMSs might be based on uncorroborated statements by intermediate suppliers, on documentary and/or site inspections by the company or someone acting on their behalf, or on third party certification. In order for EMSs to provide an equivalent degree of assurance to forest certification schemes and eco-labels, the verification procedures would have to have equivalent veracity. This would rule out uncorroborated statements, but documented checks made by the company, an agent of the company, or a third party might be acceptable. If registered EMSs were to be considered acceptable as evidence of compliance with the government's policy, separate, clearly defined criteria would be needed in order to assess them fairly and consistently.

Group C

  Other forms of evidence might be acceptable if its content allowed purchasers (or someone acting on their behalf) to verify chain of custody to a legal and sustainable source. However, the practical implications for purchasers could be enormous, with evidence perhaps comprising many documents arising from different points in the chain from forest to supplier and in different languages.

  Suppliers may offer labels or declarations of origin as evidence and these may or may not be supported by independent verification. The stated origin might be the source forests or the country or countries in which the source forests are situated. We suggest that such labels or declarations should not be accepted as evidence because they do not necessarily guarantee legality and sustainability.

Possible solutions

  It is clear that it will be very difficult to assess different forms of evidence of legal and sustainable on an equivalent basis. The consultants have come up with the following options:

    —  Only accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria).

    —  Accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria) and require mandatory third party verification of B and C types of evidence.

    —  Accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria), accept other forms of evidence that suppliers state comply with government and tender requirements. Government to commission random audits of B and C types of evidence using independent verifiers post-award stage.

    —  Accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised in Annex A (or some other criteria), accept other forms of evidence that suppliers state comply with government and tender requirements at face value.

  Mandatory verification: one option is to require any evidence that does not fall within the examples of acceptable schemes notified at tender invitation (ie all evidence in groups B and C) to be independently verified as meeting the relevant criteria set out in the technical specification. A supplier could commission appropriately qualified independent bodies to verify their evidence in relation to the criteria set for legal and sustainable. The effect could be to encourage more certification without limiting the competition and reduce uncertainty among potential suppliers as to whether they comply with the government's policy when they submit their tender.

  Random audits: An alternative to mandatory third party verification would be to accept suppliers' claims at face value but carry out random audits using independent verifiers paid for by the government. This could be envisaged at various stages in the tender process but it is arguably most effective to conduct random audits of awarded contracts.

  An interesting point to note in relation to both these options is what action should be taken if verification reveals only partial compliance with the criteria or ``grey areas''. One option is for suppliers to be given the opportunity to provide further information to address any anomalies highlighted by the verifiers. If these remained unresolved it could either then lead to breach of contract and termination or exclusion from the tender process or could highlight areas for improvement that could be incorporated into on-going contract management, depending on the severity of the anomalies. Although practical, the problem with this approach is that care would need to be taken to ensure that this does not provide greater flexibility in some cases than others. For example some third party certification schemes may be deemed unacceptable if they do not fully meet the criteria and so the same approach needs to be applied to other forms of evidence in the interests of fairness.

  Only accept certification and labeling schemes: options incorporating verification of B and C type evidence would have to ensure that verification occurred in accordance with certain guidelines in order to ensure veracity, fairness and consistency and to allow the government to break the contract if it was found post-Award that the claim of legal and sustainable could not be substantiated. This brings us full circle to specifying criteria for credible third party verification of legal and sustainable and to the possible conclusion that the only practical way of verifying compliance with the government's policy is through labels or declarations issued under the authority of credible forest certification or eco-labelling schemes. A conclusion that does not necessarily fit with public procurement regulations.

  Face value: at the other end of the scale, an alternative option is simply to take suppliers' claims of compliance with government policy and the tender specifications at face value. Only if there was any reason to doubt the claim would verification or an investigation be commissioned. This is likely to be the lowest cost option to the government but also the least reliable as it puts the onus on suppliers to comply with their legal obligations.

  What are your views on the options presented here?

    —  Only accept labels or declarations issued under the authority of a forest certification or eco-labelling scheme that conforms to the criteria that we have devised (or some other criteria).

    —  Mandatory third party verification of claims.

    —  Random audits of suppliers' claims after tenders have been awarded, using independent verifiers paid for by the government.

    —  Accept suppliers' claims at face value.

  Are there other options that the government could consider?

Bridging the gap

  As already discussed, it is likely to be some time before there are enough supplies from verified legal and sustainable source to allow the government to meet its commitment. In the mean time some suppliers will be able to provide evidence that offers some degree of assurance. Some products may have certification under a scheme that falls short of whatever criteria are decided upon. Other products may be supplied with documentary evidence that provides assurance of legality though not of sustainability. The government has three options: it could disregard all such evidence; it could attempt to differentiate degrees of assurance; it could set lower threshold criteria for legal/sustainable and/or for forest certification and eco-labelling schemes.

  Disregard all other evidence: the problem with this approach is that it lumps together supplies from sources known to be legal though not necessarily sustainable with illegal sources; and supplies from companies committed to developing the supply of certified products with supplies from companies with no such commitment. i.e. there is no differentiation in the way these supplies are considered as they are in effect treated as equivalent.

  Differentiate degrees of assurance: this does not appear to be an option under EU procurement rules because bids that do not meet the minimum requirements must be deemed non compliant and eliminated from the competition.

  Set lower threshold criteria: for example, a less demanding definition of legal and sustainable, or procedures for chain of custody and forest management certification that gave a lower, but some, degree of assurance. The government might then be able to use the provisions in EU procurement rules that allow bids that exceed minimum requirements to be scored higher than those that just pass. Whether this option would be acceptable or not would depend on the interpretation of the stipulation that the higher standards offered must be relevant to the requirement and provide an additional economic benefit to the Authority.

  What are your views on the options available to the government:

    —  Set threshold criteria that a high proportion of available supplies will be known to fail for some time to come.

    —  Set lower threshold criteria that will allow the government to differentiate levels of legal/sustainable and degrees of assurance?

  Are there other options?

Implementation by Government Procurement Officers

  Buyers will need training and clear guidance on the documentary evidence they will be expected to assess. As discussed in section 2.3 it is not practical to consider that this training will enable procurement officers (or even the growing network of departmental environmental managers) to obtain the detailed sector knowledge required to adequately assess all forms of evidence they may receive.

  It is clear that the assessment of group a evidence should be done centrally and the results disseminated to procurement officers. This only needs to be undertaken once initially and then reassessments commissioned if a scheme is altered or updated. There are a number of options to achieve this: schemes could be responsible for notifying the government of changes, the government could establish a regular monitoring function to identify changes, or a study could be commissioned annually or six-monthly to review any changes. The assessment itself could be undertaken either by a civil servant with the relevant expertise and knowledge, by consultants or potentially even by other parties. It is envisaged that the criteria would be freely available and hence the schemes could undertake a self-assessment, counteracted by an NGO assessment to see if the results matched.

  If evidence in the form of types B and C and Declarations of Compliance from suppliers are not to be taken at face value then there is clearly a need for Procurement Officers to have access to a point of expertise, to whom they can refer such types of evidence for individual assessment. The expert(s) would need to be able to provide a rapid response. Options include establishing a point of expertise within ogc or defra, or using consultants via a framework contract to enable officers to call for assistance when needed. Ideally the expertise needs to come from as unbiased and independent source as possible.

  What is your view on the idea of establishing a central point of expertise for assessing forest certification and eco-labelling schemes and providing guidance and advice to procurement officers?

  Who should undertake this role?

  What other options are available?

Next Steps in the Study

  Obviously the immediate next step will be to consider how the responses from the consultation exercise affect the study's findings to date and are incorporated into future tasks. Our next task is then to develop guidance for Procurement Officers and monitoring requirements. This guidance will need to take into account all of the above issues and cover the following stages in the procurement process:

Specification of technical details

    —  definition of the Government's criteria for timber from "legal and sustainable sources" and acceptable forms of evidence;

    —  any criteria that may apply to alternative forms of acceptable evidence;

    —  requirement for independent verification (or not);

    —  use of variance;

    —  requirements for service providers as distinct from product providers.

Selection of suppliers to invite to tender

    —  authorities may decline to invite suppliers who have breached regulations relating to timber harvesting and trade;

    —  as a pre-tender selection criterion an authority may require evidence of suppliers' track records in similar contracts for the supply of wood products derived from sustainable and legal sources.

Evaluation of offers and contract award

 
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