The importance of sustainable procurement in local government

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Setting the scene for sustainable procurement

Cllr Clyde Loakes – Deputy Leader and Climate and Air Quality, London Borough of Waltham Forest and Member of the LGA’s Improvement and Innovation Climate Working Group

Cllr Loakes opened the event by setting the current economic and political scene. Councils continue to bear the impact of budget and resourcing reductions and have been further stretched during the COVID-19 pandemic. Councils also have a key role in mitigating climate change. The decarbonisation agenda continues to pick up pace following the COP26 United Nations Climate Change conference and just before COP27, with councils declaring climate change emergencies. Progress is beginning to be made with strategies being taken into local delivery plans.

The importance of effective and sustainable procurement, underpinned by commissioning, has never been greater for local government.

The pressure to find greater efficiencies and reduce consumption, while striving to improve productivity and do all of this sustainably, is driving councils to look for different ways to deliver better outcomes for local people.

Councils are also having to deal with inflationary pressures – especially in the energy markets with soaring energy bills and supply chain issues with long lead-in times for delivery while being tasked to support the government’s levelling up agenda with local economic growth.

The webinar introduced our National Energy Category Strategy for Local Government 2022 – energising procurement – which has been updated to help councils optimise the way they procure and manage energy in today’s markets, focusing on the wide range of economic, environmental and social opportunities available to them. This is particularly pertinent with the current energy price crisis and councils’ efforts to minimise costs, generate income and maximise the benefits for their local communities through their energy procurement actions.

We also heard about successful green procurement projects, including Oxford City Council’s unique dynamic purchasing system (DPS) tailored for the fast-paced, innovative and ever-growing world of electric vehicle infrastructure.

And lastly, we heard from Dr Josh Pritchard, Deputy Director, Policy Unit at the Confederation of British Industry (CBI) who leads on procurement and who gave us a perspective from the private sector on how they are working with councils to mutually get the best socio-economic and environmental outcomes from the contracts you let.

National Energy Category Strategy for Local Government 2022 – energising procurement

Kelly Greer (Head of Research) and Steph Hacker (Senior Researcher) at The Association for Decentralised Energy

Kelly and Steph are members of the Association for Decentralised Energy (ADE) research team. Kelly worked on the original strategy in 2017, and Kelly and Steph have worked on the updated version.

To set the scene:

• UK councils collectively spend more than £680 million on energy every year.
• with resources tightening, energy security rising ever higher on the political agenda and councils being required to play a key role in tackling climate change, it is important to remember that energy is one of the largest controllable overheads in many council buildings and estates.
• We saw some relief from the announcements in Parliament from the last few weeks – a six-month freeze on energy prices for the public sector – but we still need more information. It is certainly not a time to relax and we need to look for the broader opportunities outlined in this strategy for councils to make savings and actively generate income through onsite generation and flexibility markets.
• The new strategy had new themes which were selected based on what councils are expected to consider as they go through the procurement process.
• The current economic and geopolitical context that councils and the UK find ourselves in is putting increased pressure on council resources. Energy security is high on the political agenda and councils are being asked to play a key role in tackling climate change.
• The intention was to frame the recommendations and case studies in the strategy with this in mind reflect the real issues that councils are facing and be realistic and applicable to council situations.

It is important to note that ADE considered the potential removal of the energy supply chapter in the strategy, given that it’s a very volatile market to be an energy supplier at present and we have seen the collapse of several council-owned energy supply organisations in recent times. However, the team stressed that councils shouldn’t discount the role that they can play with heat networks, which can support affordable heat for residents.

Also, a note on the structure – the ADE included key actions under each section of the report in addition to numerous case studies which formed the focus of this presentation.

Reducing energy demand

Councils can reduce the demand for energy in a variety of ways, by:

• monitoring energy consumption across the council portfolio and targeting areas for improvement
• engaging with council staff to ensure everyone understands energy-efficient ways of working and puts them into practice
• retrofitting energy efficiency measures across the council portfolio
• implementing energy performance contracts (EPCs)
• implementing energy efficiency procurement standards.

Case studies

• Partnership between Demand Logic and Avison Young to use building analytics to support their property management offering at Brindley Place. Demand Logic successfully deployed a data acquisition device (DAD). The DAD connects to the heating, ventilation, and air conditioning (HVAC) systems via the building management system (BMS) – to collect data. During the following weeks, energy savings actions were identified and completed by the proactive Avison Young site team improving energy efficiency, occupier comfort and mechanical effectiveness with building analytics.
• Stroud District Council is working on cutting the carbon footprint of their buildings. The council also plans to replace gas boilers with heat pumps at two of its biggest buildings, including its headquarters, with an estimated annual saving of up to 156 tonnes of carbon dioxide emissions across the two sites.

Energy generation

The UK’s energy sector, in particular the electricity sector, is experiencing a period of unprecedented change.

This section recognises that there are several options for generating energy at a local level and the role the council plays in delivering this. For example, through:

• electricity generation from photovoltaics or wind turbines
• heat pumps (at an individual building level)
• low carbon heat networks and district heating systems, generating energy across multiple buildings through:
• large-scale heat pumps
• energy from waste, which involves the recovery of renewable energy in the form of electricity and / or heat from the controlled incineration of residual waste or anaerobic digestion
• recovery of heat from water, for example, from canals, waste water treatment plants and mine water
• recovery of heat from data centres
• combined heat and power (CHP) (please note that CHP is a technology that currently relies largely on gas and although gas use for heating will be phased out of the market as part of heat decarbonisation, other fuel sources for CHP are being developed).

Case studies

• Cambridgeshire County Council is aiming to make all the buildings it owns and operates fossil fuel-free by 2025. It’s doing this through a range of opportunities, including developing its ambitious solar energy projects.
• Demonstrating community benefits Warrington Borough Council has piloted the use of community municipal bonds, a fundraising tool for local authorities, to fund renewable energy projects. Community municipal bonds allow councils to raise money directly from residents. More than 500 investors contributed to the bond, with an average individual investment of £1,921. The bond was structured as a five-year investment with a 1.2 per cent return rate, making it competitive with high street savings and investment opportunities.

Energy storage

Energy storage can take the form of battery storage or electricity or storage of heat in a thermal store. Energy stores are emerging technologies and payback periods are currently long – but expected to fall rapidly in the next few years, making this technology an attractive option for councils with their own generation assets.

Case studies

• South Somerset District Council owns one of the largest council-owned battery storage installations, totalling 40MW. The batteries store excess renewable energy production at low usage periods, which would otherwise be wasted, and resupply it to the grid when needed at peak times. The council, working with Kiwi Power, uses the batteries to provide balancing services to the National Grid thus generating revenue for the council.

Energy procurement

After reducing energy demand through energy efficiency retrofit and behaviour change activities and maximising the amount of energy that can be generated and stored on the council’s estate, the final step is to procure the remaining energy needed from external suppliers.

Councils, and the wider public sector in general, have huge buying power and are also highly desirable customers for suppliers given the guarantee and reliability of payment, something that many businesses cannot offer.

Case studies

London Borough of Islington Council offers a range of energy services to customers from a range of sectors. One of these is an independent purchasing service using buying techniques to deliver value for money. This includes:

• detailed market analysis to identify the best time to purchase
• obtaining lowest prices from a panel of vetted suppliers
• varying contract lengths and offering fixed or flexible purchasing
• varying buying strategies according to clients’ appetite for risk or price certainty
• negotiation with suppliers around terms and conditions
• aggregated gas purchasing
• standalone energy purchasing or combined with site visits, energy audits and efficiency recommendations
• supply of energy management data or internal reporting
• assistance with invoice disputes.

Adding external clients to the council’s main contract has benefits for both the council, in terms of fee income, and for the clients in terms of potentially better prices by being part of a larger contract and reducing management costs compared with separate, individual procurements.

Energy supply

There have in the past been examples of councils playing a role in energy supply. This included councils who became fully fledged energy suppliers, or those that offered white label energy supply contracts. The general upheaval in the energy market has meant that this activity has fallen in popularity, but there remains an important role for councils in the supply of energy through heat networks.

The role councils play in heat networks varies, but policy is moving towards them having a greater involvement in heat network zoning and energy planning, as well as delivery of heat network development and operation.

Case studies

• East Cambridgeshire Council: in spring of 2022, Swaffham Prior – a village of 300 homes in east Cambridgeshire – inaugurated one of the first heat networks in an off-gas village. With no connection to the gas grid and 70 per cent of homes relying on oil for heating, Swaffham Prior Community Land Trust and Cambridgeshire City Council partnered to bring renewable energy to the village. Through the heat network delivery unit (HNDU) and capital borrowing from the council, £11.9 million was invested into a community heat network powered by thermal energy generated by ground source and air source heat pumps. This heat network has been a cost-effective, low carbon heating alternative which is expected to save around 47,000 tonnes of CO2 per year.
• Gateshead Energy Company is the operator of the Gateshead District Energy Scheme, both of which are owned by Gateshead Council. The scheme provides low-cost, low-carbon heat and power to homes, public buildings, and businesses across the centre of Gateshead. Becoming part of Flexitricity’s demand response network means the project will receive in excess of £60,000 per year over the next 15 years, simply by using its flexibility to smooth out peaks and troughs in national electricity demand.

Collaboration amongst public sector bodies across any – or all – of the themes discussed here can bring benefits. Sharing the workload of developing a new initiative can make action possible; understanding legislative drivers can ensure effective compliance; sharing expertise and information about both good and bad practice can improve quality; and grouping together for procurement can produce better value offers and begin to change the market.

Collaboration

One area for collaboration could be benchmarking pricing information between councils as without transparency it is very difficult for councils to know if they are getting a good deal. Historically, people have been wedded to their own professional buying organisation (PBO) and it has been difficult to know what offers are available. Therefore, collaboration and benchmarking across PBOs is key.

Collaboration happens most often between geographically close organisations. It can involve councils in different tiers (county councils collaborating with districts); it can also involve councils working with other public sector bodies (such as health trusts, higher education establishments, and the police and fire services). While partners can have different portfolios and energy spends, there will be joint working opportunities, and while several stakeholders involved in this project noted that ‘big is not always best’, working together can have its advantages.

Long-distance collaboration can and does also happen. Councils from different European countries may work together to share ideas and experiences, particularly in areas where action is relatively new to some of them.

If you have any queries or would like any further information, please email:

• Stephanie Hacker at [email protected]
• Kelly Greer at [email protected]

Tools to enable better electric vehicle infrastructure delivery

Krista Middleton, Innovation Project Officer for the Sustainability Cities Team, Oxford City Council



Setting the scene

From August 2021 to August 2022 there has been a 34 per cent increase in the number of charging devices across the UK. The electric vehicle (EV) market is rapidly and continually changing and growing. A full local electric vehicle infrastructure scheme (LEVI) grant (£450 million) is anticipated to launch in February 2023. 

Oxford City Council was one of the eight original Go Ultra Low Cities promoting electric vehicles, tackling air quality, and reducing carbon emissions. The council has a dedicated innovation team focusing on EV implementation. They installed their first chargepoint in 2017 and have installed over 80 chargepoints (including slow, fast, rapid on and off-street) to date. They also opened Europe’s most powerful EV charging hub, Energy Superhub Oxford in July 2022.

Creation of the electric vehicle (EV) dynamic purchasing system (DPS)

This began as a standard tender for Stage 2 of the Go Ultra Low Oxford on-street project using lessons learned from Stage 1. Tender compilation is a work-intensive process which would need to be repeated multiple times so the team decided to spend more time from the outset to create a future-proof tender solution could be used multiple times. This led to Oxford City Council’s unique dynamic purchasing system (DPS) which has been tailored for the fast-paced, innovative and ever-growing world of electric vehicle infrastructure.

This adaptive take on a procurement framework offers greater flexibility enabling access to nascent technology as well as the best business models. The DPS spans the entire breadth of electric vehicle (EV) implementation from turnkey services to consultancy and offers potential tender award times as quick as ten days.

What is the dynamic purchasing system (DPS)?

The DPS is an electronic system which suppliers can join at any time to any number of distinct service lots, provided stringent quality and compliance criteria are met. An 'open market' solution, the DPS is designed to give buyers access to a pool of pre-qualified suppliers who have already signed up to a comprehensive set of contractual and technical terms and conditions, that are local electric vehicle infrastructure (LEVI) and on-street residential chargepoint scheme (ORCS) ready. This ensures the 'further competition' process is less onerous to compile, with tender to award times as quick as ten days.

Unlike a traditional framework for the supply of goods, works or services where, once suppliers are accepted, the framework is fixed, the DPS offers flexibility to add and remove suppliers over the duration of the DPS lifetime. This enables access to nascent technology as suppliers ebb and flow within the market as well as the best business models.

Key features of the DPS

As a procurement tool, it has some aspects that are similar to a traditional framework agreement, but the key features are as follows:

• suppliers may join the DPS at any point during its validity if they satisfy the selection requirements and none of the grounds for exclusion apply
• contracting authorities must not impose any limit on the number of suppliers that may join a DPS
• existing suppliers can be removed due to poor performance
• suppliers may reapply, if previously not accepted, at any time during the term of the DPS.

Benefits

The benefits of using this DPS include:

• pre-qualified suppliers are all compliant with local electric vehicle infrastructure (LEVI), on-street residential chargepoint scheme (ORCS) and Office for Zero Emissions Vehicles (OZEV) standards
• pre-agreed terms so no expensive legal costs
• suppliers can apply and reapply at any time
• all solutions are smart and interoperable – LEVI- and ORCS-ready
• writing tenders more straightforward
• business model agnostic – (direct award not permitted)
• rapid 10-day procurement process possible
• no Alcatel process period needed
• nine distinct lots including battery storage and a consultancy lot – for EV strategy work and project management staff
• numerous high-quality suppliers already DPS members – both big and small
• free for the public sector to use (the supplier pays a small percentage to use DPS but only when awarded a call-off contract)
• the dynamic system means new suppliers can be on-boarded monthly, ensuring that the latest technical solutions, business models and approaches are available.

Lots

• LOT 1 – end-to-end / turnkey services – all goods, works and services to provide and operate a smart EV charging estate
• LOT 2 – network operation – back-office system, payments and customer service of a supplier’s own and / or adoption of legacy charging estate – option of a 'concession contract' arrangement
• LOT 3 – maintenance and inspection services
• LOT 4 – installation, construction, commissioning – of smart-charging or energy storage solutions
• LOT 5 – supply – of one or more smart-charging technologies
• LOT 6 – roaming services / electric mobility service providers (eMSPs) – services that give EV drivers access to a network of charging stations
• LOT 7 – consultancy – expertise in project management, research, subject matter expertise e.g. location planning and feasibility, grant funding application support 
• LOT 8 – EV energy storage and capacity management – solutions and other infrastructure to support EV charging
• LOT 9 – e-car club EV charging solutions – for the operation and maintenance of chargers directly with car club companies.

Progress to date

Progress to date includes:

• 32 suppliers enrolled
• consistent flow of supplier applications
• interest from 42 public sector bodies
• 23 access agreements signed
• seven further competitions – three internal and four external
• three contract awards so far
• GO Awards 2022 finalists.

Further information

If you would like to learn more about this work, the following further information from Oxford City Council may be helpful:

• electric vehicle – DPS
• lots – DPS
• information for suppliers – DPS
• frequently asked questions for suppliers – DPS
• information for local authorities – DPS
• frequently asked questions for local Authorities – DPS
• approved supplier list – DPS.

Dr Josh Pritchard – Deputy Director, Policy Unit, Confederation of British Industry (CBI)

The CBI represents about 200,000 businesses which is about a third of the private sector workforce and his team focuses on transport, construction and public sector procurement. The team work closely with the Cabinet Office and Downing Street.

Businesses have identified the following three broad themes where the private sector and local government can come together to mitigate climate change:

• early engagement – lay out your priorities that you want in this space (Suppliers like information, it helps them align their strategies to yours, it helps build their offer and strategies. Many of them will want you to be really clear about what you are doing, what you want to be doing. They will research and trawl through websites to build up information to use in their tender submissions.)
• understand their strengths and weaknesses – understand the market, the art of the possible, makes it easier to align your efforts to work together
• the best possible outcomes are achieved through partnerships and collaboration – outcomes come more naturally when there’s longer term strategic thinking in the decision process.

Incorporating best practice

Procurement decisions are being pulled in multiple directions – price, value, and so on. Tell business what it is you want, be clear – if it’s social value, be explicit, clear and upfront as to what exactly you want.

What value are you prioritising?

71 per cent of suppliers surveyed said they were being asked to demonstrate socio-economic and environmental social value in under 1000 words – this is simply too difficult.

Try not to be prescriptive – successful projects are those where they’ve provided the outcome they’re looking for and let the delivery be co-designed, going on the journey together.

Social value

The best approach to social value is having everyone on board from the start with buy-in from both parties.

Try and be consistent when you’re measuring and evaluating these bids, they want to help you make the right decision, but frustration is borne out of inconsistency in the tender process – this can often lead to supplier withdrawal.

The private sector wants to work with local authorities to achieve the best outcomes as possible, so:

• try to focus on delivery as well as promises
• the best ones are the ones who look at the best solution, don’t always go for the bigger, shinier solutions that aren’t deliverable
• be realistic
• collaboration and partnerships are to be strived for, we are not your adversaries
• it’s not always the most profitable market – the majority are working with you because they want to, try and work with them
• learn from the positives and the negatives – don’t change things for change’s sake and look to retain the positives.

And a final closing comment – engage with CBI regional teams, engage with suppliers, bring them along on this journey.

Questions and answers

Is the Re:fit programme still up and running and can you tell us a little bit about it? And, do you have examples from councils who have retrofitted their own council housing or estate?

The new Re:fit 4 energy performance contracting framework has just been launched, running for the period up to April 2024. The Re:fit energy performance contract framework may offer your team a unique opportunity to make a step change in the operational and value for money performance of your entire asset base. Public authorities may use the Re:fit framework for the accelerated development and delivery of long-term capital programmes capable of delivering short term and strategic benefits to minimise carbon footprints whist improving the performance of existing and newly created assets.

The framework, facilitated by a multidisciplinary team with knowledge of wider energy and carbon performance improvement across legal, technical, and financial disciplines has supported clients to secure service providers to develop key projects including:

• commencement of works for Anglia Ruskin University to deliver in excess of £100,000 of guaranteed annual energy cost savings, delivering projects across the estate saving in excess of 250 tonnes of CO2 per year
• projects for Newport City Council across its estate initially to deliver guaranteed annual energy savings in excess of £100,000 whilst saving 396 tonnes of CO2 per year across the whole estate including corporate buildings and schools.

Housing retrofit is complex, but one of the many actions required to achieve net zero carbon targets in each locality. Local Partnerships were commissioned by BEIS to produce the Local Authority Housing Retrofit Handbook to provide practical advice to local authorities in England. It brings existing resources together in one place and gives a suggested order in which to work through this material, signposting good practice across various steps in the retrofit process. If you want to speak to someone in the RE:FIT team please email [email protected]

Have you got any quick tips on how we best go about reducing energy consumption?

Councils can reduce demand for energy and energy consumption in a variety of ways, by:

• monitoring energy consumption across the council portfolio and targeting areas for improvement
• engaging with council staff to ensure everyone understands energy efficient ways of working and puts them into practice
• retrofitting energy efficiency measures across the council portfolio
• implementing energy performance contracts (EPCs)
• implementing energy efficiency procurement standards.

Have you got any advice on the use of brokers – a number of our schools get approached by them and they seem to be offering amazing deals?

Anecdotal evidence suggests that smaller councils and other smaller public sector organisations may not achieve best value from contracts through brokers. These smaller organisations are also targeted by brokers and there is pressure from brokers for councils to ‘buy today’ resulting in councils not fully understanding the contracts before entering into them. Smaller councils should therefore consider using PBOs to fulfil their energy contracts, or at least benchmarking their broker’s offer against the PBO offering.

What does the DPS cover – purchase and lease of EVs, EV charging infrastructure? Does it include maintenance of chargepoints or if they are damaged, and so on?  Also, does it matter how many chargepoints you want to install? Does it need to be a large bid or can it be ad hoc, that is, two or three at a time?

The DPS has nine distinct lots ranging from turnkey solutions to maintenance to consultancy. The DPS is designed for public sector bodies of all sizes as such, a project of any size can be run through the DPS.

Do the pre-agree terms include asking for the suppliers’ net zero targets and plans to ensure the companies are working to be net zero?

While enrolment on the DPS requires evidence of social values and a commitment for all EV provisions to use 100 per cent renewable energy for their supply of EV solutions with an identifiable source, further details of suppliers’ net zero targets can be requested during each project tender.

What is the geographic spread of suppliers?

The suppliers on the DPS range from large national and multi-national companies to more localised suppliers. Suppliers, providing they meet the requirement of the DPS, can be enrolled in as little as two weeks.

Is there any danger in these times of high inflation and uncertainty of funding for councils that they might have to reprioritise the work they are doing on sustainable procurement projects? Or does it mean that the opposite applies – that sustainable procurement is more important?

In the current climate, sustainable procurement is proving to be more essential than ever, with innovation playing a key role in ensuring adaption during these uncertain times.

Do you see any let-up in energy price rises, the wholesale prices seem to spike on a daily basis – is there any intelligence as to when this volatility might calm down?

Some headline figures and issues the energy market has experienced include:

• electricity and gas commodity prices have doubled and are up 700 per cent over the four-year period
• in Quarter 1 of 2022, the Russian invasion of Ukraine had a massive effect on prices
• gas storage has been an issue since winter 2021 (delayed start of Nordstream 2)
• Nordstream 1 issues as well – leaks / sabotage in Nordstream 1 and 2 – no supply through either pipeline
• lack of gas storage has had a big impact
• maintenance plans / disruption – calendar of events are pre-planned throughout the summer which we are coming out of now – supply should increase during the winter months
• bullish factors – nuclear maintenance in France and strikes affecting the market.

What else has the Go Ultra Low Cities group achieved together so far, and how?

One of the main findings of the Go Ultra Low Cities scheme was the importance of knowledge- and idea-sharing between local authorities. This finding resonates through the DPS by providing opportunities for Oxford City Council to share our learnings with other local authorities. We hope to expand on this potential in the future.

Further information

If you would like to learn more about this work, the following further information may be helpful:

• National Energy Category Strategy for Local Government 2022 – energising procurement | Local Government Association
• Sustainable procurement – delivering local economic, social and environmental priorities | Local Government Association
• National Procurement Strategy for Local Government in England 2022 | Local Government Association
• National Procurement Strategy for Local Government in England 2022 – toolkit | Local Government Association
• Social value – achieving community benefits | Local Government Association
• Climate change hub | Local Government Association
• Greenhouse Gas Accounting Tool | Local Partnerships and Local Government Association
• Decarbonising transport action learning sets | Local Government Association
• Local retrofit action planning training | Local Government Association
• Climate action – the green economy | Local Government Association
• Re:fit programme | Local Partnerships
• Electric vehicle dynamic purchasing system (DPS) | Oxford City Council
• Association for Decentralised Energy (ADE)
• Race to zero – driving the UK's sustainable future | Confederation of British Industry (CBI).