Fostering Sustainable Public Procurement

We are what we buy, but what about what our government buys?

In the age of consumerism, our personal values and identity become synonymous with the types of products and services we purchase and consume.1 Individual consumers are purchasing eco-friendly, fair trade, ethically produced goods as a way of expressing their personal values.

Buying a dishcloth made of recycled fabric from your local farmer’s market has become just as much a way of showing that you care about the environment, labor rights, and supporting small business… as that you needed a new dishcloth. 

Let’s apply this perspective at a governmental level. What do our governments’ procurement processes and choices say about citizens’ values?

Governments buy a lot more than dishcloths. They buy paper, computers, medical supplies, lawnmowers, catering services, and a whole host of other diverse goods and services as part of their normal operations. All this buying adds up and makes public procurement one of the world’s largest business sectors. Public procurement is said to account for approximately 12% of GDP in OECD countries and 30% of GDP in developing countries.2 The bottom line (no pun intended) is that governments around the world wield huge purchasing power, and that power can determine what types of goods and services are on the market and how they are produced.

Governments and sustainable public procurement (SPP)

Imagine if governments across the world made the commitment to purchase only goods and services that demonstrated the value they placed on the environment, labor rights, and economic development. The positive impact of this commitment would be enormous in terms of advancing these causes. It is this impact that has inspired everyone from environmental and labor rights activists to the United Nations to call for governments to practice sustainable public procurement (SPP).3

What is Sustainable Public Procurement (SPP)?

SPP requires that governments consider and balance the social, environmental, and economic implications of their procurement processes and choices.4 This could mean that governments prioritize contracts where the purchased goods, whether they be paper or printers, are produced in a sustainable way. It could also mean governments give preference to service providers that hire local workers and pay fair wages when contracting out government services. The fundamental feature of SPP, which differentiates it from standard public procurement, is the recognition that social and environmental factors should be considered when deciding what, how, and from whom, the government is purchasing goods and services.

There are numerous challenges to implementing SPP. Some are legal and political in nature, while others are behavioral. This article focuses on the latter. 

Behavioral factors in SPP

We often think of government as a huge machine in which individual civil servants and bureaucrats are mere cogs. But government workers are not cogs: they are human beings and are prone to the same behavioral biases as the rest of us. This includes government procurement officers (i.e. the people who decide what the government buys, and from whom). 

Procurement officers are influenced by behavioral factors when making decisions about who wins government contracts to provide a certain good or service. Let’s take a look at what this means for SPP. 

The impact of affective commitment to change

Affective commitment to change can be understood as someone’s willingness and desire to change their behavior to demonstrate their personal belief in the benefits of this change or in the underlying goal this change supports.5

Research suggests that individual procurement officers’ affective commitment to SPP matters. A Dutch study of national procurement officers found that when officers believed they could make a positive social and/or environmental difference by implementing SPP, they were more likely to do so, even when SPP was not made mandatory.6 If procurement officers identify with the causes behind SPP (the environment, labor rights, etc.) and believe that their purchasing decisions can tangibly advance these causes, they are more likely to make choices that align with SPP.

This same study also found that when procurement officers were given information about ways they could show support for sustainable procurement, they were more likely to make purchasing decisions that demonstrated SPP (although this effect was not as strong). This means that SPP can be encouraged simply by sharing information about what SPP looks like with those responsible for the procurement process. 

The impact of cognitive biases

Research also suggests that when procurement officers make purchasing decisions, they are influenced by several behavioral biases. 

A study was done to determine how government procurement officials decide which selection criteria to prioritize when awarding government contracts, with a focus on environmental criteria.7 The authors found that there were four common behavioral biases that influenced their decision-making processes. These were familiarity bias, availability bias, the social proof/bandwagon effect, and satisficing.

Let’s take a closer look at how these biases work, using some illustrative examples (warning: do not read on an empty stomach), and how they might influence SPP. 

Familiarity bias

Familiarity bias is a preference for something you are already familiar with. For instance, this bias could lead you to order the same meal at your favorite restaurant without really considering other menu items.

The authors of the study found that the same principle applied to government procurement officers only instead of ordering the same meal, they were more likely to rely on the criteria listed in past procurements to determine current and future procurement criteria. This means that future SPP could depend on whether past procurement contracts outlined sustainable criteria and practices.

Availability bias

Availability bias describes how we make decisions based on information that comes to mind most easily. To go with the same metaphor, this could mean that you base your choice of what to order for take-out on what fast food commercial you saw most recently, rather than searching the internet for new restaurants and their menus.

The study found that procurement officers relied mainly on pre-existing national/multi-national guidelines to guide their decisions. SPP may be hindered if existing guidelines do not consider the social and environmental impact of procurement as procurement officers are less likely to seek out new information beyond these guidelines.

The bandwagon effect

The bandwagon effect, or social proof, is preferring to copy others or adopting a certain behavior simply because it is popular. This could mean ordering the same unicorn cake you see promoted on social media by celebrities and Instagrammers simply because everyone else seems to be doing it. It does not even matter that you don’t even like unicorns; you order a unicorn cake because it’s the cool thing to do.

The study found that procurement officers purposefully modelled their decision-making processes and selection criteria on what they saw other authorities doing. Procurement authorities may hesitate to engage in SPP if other authorities are not doing so. Basically, SPP might have to become the equivalent of unicorn cakes for government procurement officers to be interested in adopting it as part of their procurement processes.

Satisficing

Satisficing refers to searching through your options until you find one that is “good enough” which you will settle for. This is like when you choose from the pre-made snacks in the glass display case at your local café, and when they offer to bring you more choices from the back you refuse because you have already settled on a choice that is “good enough.”

The study found that procurement officers looked through bids until they found one that fit the criteria “well enough” and then stopped looking for a better fit. What this means for SPP is that there may be contract bids which better align with SPP, but are missed by officials because they are presented later in the contract search process. 

The future of SPP

The influence of affective commitment and behavioral biases on the decision-making processes of procurement officials needs to be considered by supporters of SPP. There are both challenges and opportunities that result from the behavioral factors discussed in this article. Acknowledging them is the first step towards addressing the important role that individual government procurement officers play in facilitating SPP.

The decisions civil servants/bureaucrats make about the types of goods and services governments choose to buy, and how they are produced, can make an impact in advancing global social and environmental causes. If citizens want their governments’ buying behavior to reflect values such as concern for the environment, labor rights, and support for local economic development, then they need to start paying attention to this area of research.

Public procurement may not be glamorous…but it can be sustainable (and trust me, that’s even more satisfying then buying that dishcloth made of recycled fabric from your local farmer’s market).

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