Revised Sustainability Risk Assessment (SRA) templates 2014

Value Wales Policy VWPolicy@wales.gsi.gov.uk

Sustainability Risk Assessment (revised) 2014

Introduction – Drivers;

Instructions for use;

• SRA ‘walkthrough’

• Any Questions?

• Background - Explaining the Life Cycle thinking approach

Contract Header Details

Demand Review

Risk Assessment & Action Planning

Key Life Cycle Impacts

Monitoring and Reporting

• Designed to help ensure that economic, social & environmental issues are assessed, understood and managed in public procurements.

Background

• Developed in 2008 - 9 with Environment Agency Wales

• Based on a 'life cycle thinking' approach

• To support ‘Opening Doors’ charter commitments

• Separate templates for Goods (Products) and Services

• No template for Construction

• Wales Procurement Policy Statement, Dec 2012 – Principle 3 requiresa) Use of the SRA in procurement planning

b) Reporting of information generated

• The SRAs incorporate all key procurement policies so using them will strengthen compliance with the WPPS.

RE-USE / RE-SELL

Background - Life Cycle thinking approach?

RE-CYCLE

Fossil fuels

Water

CO2 emissions

Waste

Inequality

Unemployment

Exploitation

LESS

SRA approach - Basic principles

Renewable energy

Recycled products

Employment

Equal opportunities

Regeneration

Fair & ethical trade

MORE

Applying the SRA approach in complex procurements or projects

• Identify key elements or major components to apply SRA to

e.g. construction project - steel / timber frame; flooring e.g. stationery contract – printer / copier paper; pencils

Introduction (sheet 1)

Wales Procurement Policy Statement • Principle 3 Economic, Social & Environmental ImpactWales Procurement Policy Statement – Principle 3

Welsh Government will; • Provide tools such as the Sustainable Risk Assessment to ensure

that procurement decisions take account of long term impact on the combination of benefits

Wales Procurement Policy Statement – Principle 3

Defined procurement in Wales as: ‘’the process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment’.

Wales Procurement Policy Statement – Principle 3

The Welsh public sector will: • apply these tools appropriately in their decision making process• Use the information generated by these tools to inform the annual

returns to be required under the SD Bill (now Future Generations Bill)

Wales Procurement Policy Statement – Principle 3

Defined ‘value for money’ in Wales as: ‘‘…the optimum combination of whole-of-life costs in terms of not only generating efficiency savings and good quality outcomes for the organisation, but also benefit to society and the economy, whilst minimising damage to the environment.’

Instructions for use (sheet 2)

Why have the templates been revised and updated?

• Initially developed in 2009 needed updating• Response to feedback from SRA training and users• To allow prioritisation of ‘risks / opportunities’• To prompt consideration of opportunities to act to address

sustainability concerns at various stages in the procurement process, not just the in the specification.

Explaining the 4 step process

Step 1: Contract Header Details

Step 2: Demand Review

Step 3: Key Life Cycle Impacts

Step 4: Risk Assessment and Action Planning

• Issues to be considered• Risk Assessment• Mitigation measures (what to do) and• Stage in procurement process (when)

Monitoring and Reporting

SRA Usage Register Template at Appendix 1

Step 1 Contract Header Details (sheet 3)

These details used in the SRA usage register Appendix 1

Step 2: Demand Review (sheet 4)

Reducing and re-using are the most effective routes to sustainability and cost reduction.

7 questions to identify opportunities to eliminate or reduce the need for purchases.1) Is there an opportunity to not buy this at all? E.g. re-use something else, or do

without 2) Can you re-think the need? E.g. change to a managed service or outsource -

could your IT be hosted by a specialist external organisation or do you want to own and operate your own IT servers?

3) Are you buying as little as possible? E.g. double check the quantities required for any contingencies and ensure that you buy the minimum amount possible, remember storage can be a significant cost to manage

4) Have there been any technological advances / innovations that would offer you a better outcome? E.g. a multifunctional product that can scan, copy and print rather than 3 separate machines?

5) Can you improve the efficiency of the purchasing process, e.g. electronic solutions and use of eTender Wales tools (more information on the Procurement Route Planner (http://prp.wales.gov.uk/)

6) Does your organisation have any policies / commitments to support environmental / socio-economic issues that you need to take into account when planning this purchase?

7) Does your organisation have any policies/ commitments regarding the Welsh language that you need to take into account when planning this purchase?

‘Pop up’ commentary boxes used throughout the SRA templates to assist users

Considering the Welsh Language

Question 7 Does your organisation have any policies/ commitments regarding the Welsh language that you need to take into account when planning this purchase?

• Inclusion of a 'decision report' requirement

‘Welsh Language Board Guidance Contracting out public service contracts and the Welsh Language - Advice under Section 3 Welsh Language Act 1993 (2011)’,advises that 'it would be good practice to prepare a short decision report explaining why any Welsh language requirements that are proposed to be included are considered necessary.’ and ‘..if the contracting body takes the view that no Welsh language requirements are necessary, it would also be good practice to set out the reasons and evidential base for a decision in these terms.’

Pages 90-91 paragraphs 13 & 14

Identifying the key impacts in the life cycle of the goods / products

4 stages in the life cycle

• What are the KEY raw materials?• What are the KEY issues in manufacture?• What are the KEY issues for you to manage in use?• What are the KEY issues for you to manage at end of life / disposal?

Step 3: Key Life Cycle Impacts (sheet 5)What are the KEY ISSUES IN MANUFACTURE?Please review and delete / add additional impacts as necessary• Plant & machinery• Utilities (electricity, gas, water)• Emissions (to air, land or water)• Noise• Packaging (transit and product packaging)• Chemicals & Oils• People (ethical considerations, sub-contracting, employment

conditions, labour law, fair payments, Project Bank Accounts, blacklisting and equality of opportunity, etc.)

• Health & Safety (does the industry or process have a poor H&S reputation?)

• Suppliers (inc. developing world supply chain)• Waste

What are the KEY ISSUES END OF LIFE / DISPOSAL?Please review and delete / add additional impacts as necessary• Storage • Re-use options (sell on the pre-owned market; donate to

schools, charities etc)• Recycling options (inc. paints, synthetic cloth / fibres)• Aggregates (inc. sand, gravel, rock, bricks etc)• Glass• Agricultural products (inc.cotton, palm oil, food commodities,

timber etc)• Supplier take back - product or packaging( do WEEE

regulations apply to product) • Bio-degradability • Hazardous substances• Health & Safety (e.g. are there manual handling issues?; do

COSHH regualtions apply?; will you need to provide personal protective equipment (PPE)?

What are the KEY ISSUES IN USE?Please review and delete / add additional impacts as necessary• Storage• Maintenance • Utility use (electricity, gas, water)• Equality & Diversity • Consumables • Packaging • Health & Safety (e.g. are there manual handling issues?; do

COSHH regualtions apply?; do Food safety regulations apply?: will you need to provide personal protective equipment (PPE)?

• Records / Data Sheets / Information• Training (need for end users or awareness raising for staff in

general?) • Waste

What are the KEY RAW MATERIALS?Please review and delete / add additional impacts as necessary• Plastic• Steel / Metals• Chemicals & Oils (inc. paints, synthetic cloth / fibres)• Aggregates (inc. sand, gravel, rock, bricks etc)• Glass• Agricultural products (inc.cotton, palm oil, food commodities,

timber etc)• Utilities (electricity, gas, water)• People (ethical considerations, sub-contracting, employment

conditions, labour law, fair payments, Project Bank Accounts, blacklisting and equality of opportunity, etc.)

• Health & Safety

What is Step 3: ‘Key Life Cycle Impacts’ intended to do? It is designed to offer a structured approach to help you get a broad understanding of the product(s) or services in question and the issues that feature at each stage in its life cycle.

It should help you to highlight the key features of the product or service that are linked to economic, social or environmental dimensions at each stage of its ‘life cycle’, for example; • Are raw materials used, from non-renewable sources?• Are there concerns about the safety or exploitation of workers?• Will the product run on electricity, oil or gas? • Will the product produce waste or generate emissions?• Does it contain hazardous materials?

Whether and how these can be addressed is examined at Step 4 the action planning stage that prompts you to think about the level of risk that needs to be managed or the opportunities to act to maximise beneficial outputs and outcomes and how these might be prioritised.

What do I do about all this?

Remember, at this stage you are just developing a broad understanding of the product(s) or services in question. While several issues my be relevant you should find you can identify the main ones – is the product power hungry?, are waste or emissions produced? are there obvious environmental concerns? potential for exploitation / hazards for people involved?

How you will act to avoid, eliminate or manage these issues will be dealt with in the next Step 4 Risk Assessment & Action

Step 4: Risk Assessment & Action Planning (sheet 6)

3 stages• Issues / mitigation measures to consider• Risk Assessment• Mitigating Action - Where to address the issue in the

procurement cycle?

This section poses as series of potential sustainability issues for you to consider.

While it will help you to identify & prioritise the issues & steps to minimise the sustainability impacts of your purchase you also need to keep in mind the context of the contract or framework in question. Parameters such as… • Value and scope of the contract (geographical extent and number of

stakeholders), • Market conditions, • Length and nature of supply chains and • The contracting authorities influence over the market. ….will all need to be considered when determining what is reasonable and practicable and where in the procurement process actions will have the best effect.

Step 4: Risk Assessment & Action Planning (sheet 6)Stage 1: Issues / mitigation measures to consider

Issues to consider

Goods SRA = 19 issues / questions Service SRA = 21 issues / questions

For example:

• Is there an eco-label / product / supplier declaration associated with this product?

e.g. EU Flower, FSC (timber), Energy Star,

• Can you do anything to improve the transportation impacts associated with the delivery of this product?

Is the Issue relevant to this product? Yes / No / Unsure

If 'unsure' at this stage take steps to find out

For example: • Internet search, • Refer to colleagues• Refer to support agencies e.g. Welsh

Government; Carbon Trust, WRAP etc

Sustainability Risk or Opportunity addressed by this issue

Each ‘Issue to consider’ has a ‘pop up’ commentary box to help you to make the link between the issue / question and the goods / products being procured and the underlying sustainability risk that links them.

For example if you are buying cleaning products what is the relevance of asking ‘Is there an eco-label / product / supplier declaration associated with this product?’

The sustainability risks eco-labels are designed to address are summed up as broadly environmental risks such as Resource / Energy / Fuel efficiency; Greenhouse Gas (CO2 Emissions) linked to energy / fuel production and consumption. As they focus on accrediting products that meet high environmental standards selecting products that carry eco-labels also offer opportunities to support and encourage innovation in Eco-designed products and production methods.

Reason for Yes / No.If the issue is relevant to this procurement state whether it represents a risk to be managed or an opportunity to be taken.

Document your reasoning / relevant information and source

For example, • if you find that there is a relevant eco-label record the name of the label and source (e.g weblink) • If colleagues have been able to help name them and note the location of any supporting

documentation they may used • If information has been provided by a support agencies e.g. Welsh Government; Carbon Trust,

WRAP etc. note the content of the advice and filed location of any email or guidance document referred to

Step 4: Risk Assessment & Action Planning (sheet 6)Stage 2: Risk Assessment

Risk Assessment – Significance (Risk Score)

Significance / Risk Score that applies to this product purchase is the product of the assessment of the Magnitude x Probability.

Both a 'risk score' and a RAG (red / amber / green) status is shown in the Significance column.

The RAG "Traffic light" helps to clearly prioritise the issues that need to be addressed, red being highest priority to green, lowest priority.

Risk Assessment

If the you have answered ‘Yes’ to the question ‘Is the issue relevant to this product’ at stage 1 ‘Issues / mitigation measures to consider’, whether this is because you consider there is a risk that needs to be managed or an opportunity to improve sustainability outcomes, you will need to complete the stage 2 Risk Assessment

Risk Assessment - Magnitude

Magnitude is your assessment of the likely size of the adverse impact (risk) or benefit (opportunity) of the sustainability issue being considered over the lifetime of the contract or framework in question.

For example - if purchasing Laptops the key sustainability impact will be energy usage over the lifetime of the product. Magnitude is determined by considering - the duration of the effect (short, medium, long-term)- how far will impact spread or have influence (local, regional, national, global)- the percentage of population affected.

Decide on the 'magnitude' for the issue in question by selecting from High, Moderate or Low in the drop down menu offered when you click on the cells in the Magnitude column.

Risk Assessment – Probability

Probability is your assessment of the likelihood of the impact occurring over the lifetime of the contract or framework in question related to the goods / products under consideration.

This is your assessment of the 'probability' of the impact or benefit of the Key Issue to consider

Once you have decided on the 'probability' for the issue in question select from High, Medium or Low in the drop down menu that appears at the bottom of the cell when you click on it.

Stage 3: Mitigating Actions

Key Performance Inidcators (KPIs)

After specific sustainability risks and opportunities have been identified in connection with the contract it is important to monitor benefits and manage the risks with KPIs.

Intelligent use of KPIs will ensure that sustainability issues identified and built into the contract are turned into real outputs and outcomes. They help maintain the focus of both the client contracting authority and contractor on the desired outcomes.

Having set KPIs and targets it is essential that suppliers are encouraged to own the issues and asking for regular reports on these will ensure other pressures don't relegate sustainability concerns identified in this planning process.

Like all good management data KPIs set around sustainability risks or opportunities should be used to inform future contracts and ensure all the benefits resulting from the performance of the contract are captured and not just those that are easily monetised.

Specifications

Specifications provide the most effective means of designing-in sustainability.

The EU Procurement Directives are primarily interested in the procurement 'process' - how you procure, not what you procure.

Provided that you don't use specifications to get around the core principles or fair, open, transparent and non-discriminatory competition you can specify anything you want. Consequently, specifications provide the most effective means of designing-in sustainability as any products or services to be supplied under the contract will have to meet the sustainability standards required.

If is of course important to market test specifications prior to issuing your ITT to ensure they are affordable and deliverable by the marketplace.

Suggested 'minimum' & push the boundary' actions

This column offers a series of suggestions for potential minimum or more stretching ‘push the boundary actions’.

These suggestions are not exhaustive and advice should be taken on a contract by contract basis.

Step 4: Risk Assessment & Action Planning (sheet 6)

Tender Evaluation

As with the Selection stage, while useful the Tender Evaluation is less effective than the use of a clear specification to influence sustainable outcomes. Tender Evaluation needs to be followed up by good contract management to ensure contractors live up to the statements made in their tenders supported by appropriate KPI's.

The Tender Evaluation stage is a key stage in the procurement process as it is the opportunity to ask probing questions about the sustainability issues relating to the contract in question and to draw out how bidders propose to manage those issues in the delivery of the contract.

The main issue with the Tender Evaluation stage is that sustainability issues have to be balanced with other evaluation criteria. Sustainability must be weighted against cost and other criteria, such as quality. The relative weighting of sustainability criteria should be as high as possible.

Suggested 'minimum' and push the boundary' actions

For example, if you have identified that there is an eco-label / product / supplier declaration associated with this product;

Suggested minimum actions

• Use eco-label product standard were it is widely available or equivalent as an alternative / variant in the contract and evaluate as an option.

• For organisations covered by the Energy Efficiency Directive check whether the products concerned are listed under Article 6 of Energy Efficiency Directive and if so specify as required (further guidance available on the Procurement Route Planner (PRP) http://prp.wales.gov.uk/)

Suggested 'push the boundary' actions

• For organisations not covered by the Energy Efficiency Directive check whether the products concerned are listed under Article 6 of Energy Efficiency Directive and if so specify as required (see PRP for guidance http://prp.wales.gov.uk/)

• For products not covered by the Energy Efficiency Directive Article 6, check market availability of product to the eco-label / product or supplier declaration standard, if there is a reasonable choice, specify this product standard or equivalent in the contract

Contract Management

Without good contract management the identification of sustainability risks and well crafted specifications and tenders will not maximise the benefits of this approach. There will always be opportunities for both the contracting authority and the supplier to benefit from experience and innovations over the life of the contract.

note any templates or tools that will help the contract manager to maintain a focus on and track the sustainability outputs and outcomes e.g. The Community Benefits Measurement Tool

Supplier selection (pre-qualification)

While a useful mechanism to support the selection of suppliers with appropriate capability, experience and a positive ethos with regards to sustainability issues, the Selection stage is less effective than the use of a clear specification or good contract management.

If the contract in question is identified as having particular environmental risks or social issues associated with its delivery or relies on a sector / market with known environmental risks or social issues then the supplier selection stage is a useful mechanism to ensure only suppliers / contractors with the relevant understanding of the issues, accreditations and experience are selected.

Supplier Qualification Information Database – SQuID The SQuID approach has been developed to help public sector bodies in Wales manage the selection and short-listing stage. As approximately 99% of all businesses in Wales are classified as SMEs it is critical that a risk based approach is adopted to supplier selection to ensure that the costs of participating in a public procurement are proportionate and, wherever possible, do not inhibit SMEs participation.

Monitoring and Reporting

Purpose of this templateThe template below is provided to help contracting authorities monitor and report SRA usage for both the goods and services templates.

Why is it needed?Wales Procurement Policy Statement - Principle 3 Economic, Social & Environmental Impact, places an expectation on contracting authorities to monitor contracts on which the SRA for goods or services are used..

Where and when do I need to send a report?Organisations should submit a return on this template on a quarterly basis to Value Wales VWPolicy@wales.gsi.gov.uk

Value Wales will compile aggregated reports on SRA usage.

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Any Questions?

Sustainability Risk Assessment (revised) 2014

Any questions you may have about the SRA process or the templates themselves can be sent to the Value Wales Policy mailbox at;

VWPolicy@wales.gsi.gov.uk