GSA Issues Recommendations for Reducing Contractor Emissions

Continuing the Obama Administration's emphasis on increasing energy efficiency and reducing greenhouse gas emissions, the General Services Administration (GSA) issued on July 8, 2010, its Recommendations for Vendor and Contractor Emissions regarding the feasibility of using reporting requirements and procurement preferences to reduce federal greenhouse gas emissions.  The recommendations were required by Section 13 of the President's October 8, 2009, Executive Order 13514-Federal Leadership in Environmental, Energy, and Economic Performance.  74 Fed. Reg. 52,117 (Oct. 8, 2009).

The Executive Order instructed GSA, in coordination with the Department of Defense (DoD), the Environmental Protection Agency (EPA), and other key agencies, to issue recommendations regarding how to track and reduce "scope 3" greenhouse gas emissions, a specific category of emissions related to the supply of products and services to the Government.  In so doing, GSA was to consider the potential effects of its recommendations on the contractor community, including small businesses and other socioeconomic programs.

GSA's recommendations respond to four key questions presented in the Executive Order that specifically inquire as to the feasibility of: 

• "requiring vendors and contractors to register with a voluntary registry or organization for reporting greenhouse gas emissions";
• "requiring contractors to . . . develop and make available" their greenhouse gas inventory and a description of efforts to mitigate greenhouse gas emissions, whether as part of the Central Contractor Registration (CCR) or another tracking system;
• using federal "purchasing preferences or other incentives for products manufactured using processes that minimize greenhouse gas emissions"; and
• pursuing other options for "encouraging sustainable practices and reducing greenhouse gas emissions." 

77 Fed. Reg. at 52,124.  For the first question, GSA concludes that requiring registration with a reporting organization is feasible, but not necessary.  Specifically, as long as suppliers make their emissions information available to the Government, the storage location is not material. 

With respect to the second question, GSA finds that voluntary disclosure of emissions data is feasible.  Disclosure may not be entirely "voluntary," however, as GSA asserts further that suppliers should make their emissions inventories available to the Government and "voluntarily disclose emissions data upon request."  Recommendations at 11 (emphasis added).  GSA notes that contractors may be hesitant to report about their mitigation efforts, however, as that information may be considered proprietary.  Instead, GSA suggests that agencies collect this data through the procurement process to ensure that the information is protected as procurement sensitive information.

Because calculating greenhouse gas inventories and collecting data remains an emerging field, GSA recommends that a disclosure program be implemented in a phased approach according to supplier and agency capabilities, a solution that would also help small businesses and other programs develop inventories and collect emissions data.  Ultimately, inventories should use approved reporting standards for collecting, calculating and managing emissions data, provide for verification of data by a certified third party, and allow Government-wide access.  The report notes that while using CCR to collect emissions data is technically feasible, there may be other systems better suited for the role.  GSA refrains from commenting further, however, recommending instead that other issues be addressed first, including whether and how such information will be used in best value trade-off determinations.

Third, GSA finds technically feasible but currently unworkable the idea of using Government purchasing preferences for low greenhouse gas suppliers.  According to GSA, it is possible to institute purchasing preferences for low greenhouse gas products and suppliers akin to those employed for socioeconomic procurement programs.  Indeed, as noted by the report, FAR Part 15 previously included language requiring environmental objectives to be considered in the source selection decision.  See FAR 15.605(B)(1)(iv)(1995 & 1997).  GSA observes that adding sustainability as an evaluation factor may increase the time necessary to award a contract and may not effect the type of market change envisioned by the Executive Order, but asserts that selecting suppliers or products with lower emissions will help agencies reduce their emissions.  Nevertheless, GSA notes that purchasing preferences cannot be applied effectively until accepted emissions product and supplier standards are available.  Accordingly, GSA recommends the identification of standards, as well as the modification of the FAR, to enable the development of a functional preferential purchasing system.

Finally, the recommendations detail several possible outreach and incentive programs to encourage sustainable practices among contractors, and small businesses and socioeconomic programs in particular.  GSA cautions that coordinating and implementing Government-wide programs will require increased time and resources.

The recommendations conclude by outlining a suggested phase-in path forward.  The first phase, covering fiscal years 2011 to 2012, contemplates conducting outreach and identifying the criteria for approved registration and reporting systems.  GSA also recommends revising the FAR and training the acquisition workforce during this phase.  Recommendations for action during the second phase, spanning fiscal years 2012 to 2016, are more general, building on anticipated advancements in the field of supply chain management and sustainability.

Wiley Rein is available to offer advice on these recommendations and other aspects of contractor emission reduction efforts.

For more information, please contact Kara M. Sacilotto at 202.719.7107 or ksacilotto@wileyrein.com.