SUSTAINABLE PUBLIC PROCUREMENT: THE SOCIO ENVIRONMENTAL STAMP USE IN A CAMPUS OF THE UNIVERSITY OF SÃO PAULO

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1 SUSTAINABLE PUBLIC PROCUREMENT: THE SOCIO ENVIRONMENTAL STAMP USE IN A CAMPUS OF THE UNIVERSITY OF SÃO PAULO AUTHORS: LUCIANA ROMANO MORILAS UNIVERSITY OF SAO PAULO FLAVIO PINHEIRO MARTINS UNIVERSITY OF SAO PAULO - FEA/RP - SCHOOL OF ECONOMICS, BUSINESS ADMINISTRATION AND ACCOUNTING AT RI

2 Sustainable Public Procurement: The Socio Environmental Stamp use in a campus of the University of São Paulo Abstract In Brazil, the state has the legal obligation of purchasing products and services by public procurement, whose purposes include promote sustainable development. In this paper, we analyse the frequency the University of Sao Paulo, Campus of Ribeirão Preto (USP/RP) uses the Socio Environmental Stamp in the State of Sao Paulo E-Procurement Portal (BEC/SP), checking its efficiency. Due to the purchase power the State represents, it could influence largely the supply chain, boosting the implementation of environmentally responsible business practices (SARKIS, 2006). We organized a database with the eletrocnic reverse auctions conducted at USP/RP at the Price Registration System during May 2017, which led to 14 contests. The results show 14% of the bidded itens had the Socio Environmental Stamp, meaning the acquisition of R$ ,88 (ca. US$72,700) in certified products, representing 35,13% from all the auctions. But further analysis show, despite the high values, they do not include many products indicating the catalogue could be more diverse in products but also in indicating different alternatives to the possibly bidded items. Keywords: Sustainable Public Procurement, Green Public Procurement; bidding; public auction; E-Procurement.

3 Aim of submission In Brazil, the Public Procurement is regulated by the Public Bidding Regime, established in Law 8.666/1993, whose purposes are: Guarantee isonomy, obtain convenient proposals and promote sustainable development. According to Zhu et al (2013), industrialized countries spend over 10% of the Gross Domestic Product in public procurements. Given this high purchase power, it can influence the market and foster good practices coordinating national development, beyond materialising the acquisitions. Focusing on the sustainability purpose, we analyse the frequency the University of Sao Paulo, Campus of Ribeirão Preto (USP/RP) uses the Socio Environmental Stamp in the State of Sao Paulo E-Procurement Portal (BEC/SP), checking its efficiency. Theoretical background The model of corporate social and environmental responsibility has grown steadily since the Summit in 1992, influenced by the increase in regulatory devices and the proactivity of a few large corporations to incorporate the environmental criteria into their activities. In this context, the dissemination of environmental purchasing practices has the objective to booster environmental and operational performance gains in the process of acquiring services and products. In a wider view, the green purchasing is part of the philosophy of greening the supply chain and is critical to fulfil the implementation of environmentally responsible business practices (SARKIS, 2006). Green Public Procurement and the Brazilian reverse bidding system The concept of Sustainable Public Procurement (SPP) or Green Public Procurement (GPP) is defined by the UK Sustainable Procurement Task Force Report as (...) a 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. (FORCE, 2006). Situated in the wider context of promoting Sustainable Consumption and Production (SCP), the SPPs aim to reduce the State ecological footprint as well to stimulate downstream the supply chain, suggesting the market that public administration will destine its funds to the companies committed with the sustainable development. The potential impact of the SPPs practice was evidenced by a study called "Relief", promoted by the ICLEI - Local Governments for Sustainability in Europe, which found out that a changing purchases of common wheat for an organic alternative would reduce the effects of water eutrophication equivalent to that produced by 2 million people, due to the reduction of pesticide use. The same study also showed that the contracting of sustainable forms of energy by public power could contribute in Europe

4 with up to 18% of the greenhouse gas emission reduction limits agreed in the Kyoto Protocol (BIDERMAN et al, 2008 ) Customers and others stakeholders increase the pressure upon the organizations to make a commitment to the environmental cause. In this hype, green procurements have spread worldwide Governments at all levels (city, country, state and national) and in many locations (from Santa Monica, CA, to Belfast, Northen Ireland, UK) have adopted environmental purchasing; many governments, including the US government through Executive Order 13101, give preference to suppliers that further the goals of environmental purchasing(sarkis, 2006, p. 380). In the Brazilian bidding system, usually the contracting price is the most relevant aspect, in many cases the only one; In the other hand, the promotion of sustainable bids makes the environmental criteria an aspect to be considered in contracting. It is essential to understand that sustainability promotion does not defile the criterion of price, or the application of public resources. The public sector needs to procure sustainably because that is the only way that we can be sure to offer real value for money over the longer term. A false choice is often posed between value for money or efficiency and sustainability. A number of examples of public sector decisions being made purely on the basis of upfront costs were presented to and considered (...) These demonstrated false economy, in direct contrast to existing rules and results in an economic burden borne by taxpayers and the private sector. In effect, Government is wasting taxpayers money if it fails in this duty. Unsustainable procurement is not good stewardship of taxpayers money. (DEFRA, 2006, p. 10) Influenced by the World Summit on Sustainable Development, Rio +10, the state of Sao Paulo developed a methodology for defining environmental and social criteria to be adopted in public budget application, which was materialised by the Law /05 (SÃO PAULO, 2014). This Law implemented the Socio Environmental Stamp, a quality certification issued by the Environment Secretary together with the State Treasury to the products and services that meet the pre-established criteria of sustainability (BEC/SP, 2017). The referred certification is used in the Socio Environmental Catalogue at BEC/SP, a computer-based system for buying goods where the São Paulo Public Administration entities carry out their bids. Each public institution is competent to define the characteristics of the goods to be auctioned, according to the listed codes, that may be conventional or hold the Socio Environmental Stamp. Methodology

5 With the analysis of the bidding public reports in BEC/SP, a procedure data bank was organized. The public bidding regime has a list of bidding modalities, suitable for different kinds of procurement needs. The most popular of its modes is the electronic reverse auction, the pregão eletrônico, which is usually associated with the Price Registration System (PRS). The PRS is not a bidding modality, but a legal tool used to foster the efficiency of the public procurements by reducing the supply chain leadtime. The bidding modality selected for this paper was the Electronic Auction for the Price Registration System (PRS), once this procedure involves a higher administrative planning. The current PRS data for May 2017 in USP/RP was collected, coming up to 14 contests. The analysis identified the incidence of the Socio Environmental Stamp codes, the use of the uncertified code in opposition to the conventional ones, the variation of bidded products, the figures involved, the average percentage of economy and the existence of certified codes able to replace the conventional / uncertified goods. Results and implications Results indicate that the Socio-Environmental Stamp use at USP/RP is adequate and aligned with the objectives of the State Program for SPP, which estimates that, by 2020, 20% of the items acquired should follow environmental criteria (SÃO PAULO, 2014). From the bidded items, 14% had the Socio Environmental Stamp, meaning the acquisition of R$ ,88 (ca. US$72,700) in certified products, representing 35,13% from all the auctions. This result may be seen as satisfactory, considering the amount of money involved. Nevertheless, analysing deeper into the numbers, we realize the amount was impacted by only one of the bids, which had the negotiated value of R$ 225,333.60, representing 31.11% of the 35.13%. Compared to the total, the amount of certified codes used may be considered low: only 3 from 33 were certified. It is remarkable that in greater part there were no certified substitutes for the conventional products, only 10% of the conventional codes used had a sustainable substitute. Chart 1: Sustainable versus Conventional Product Codes

6 The comparison in the charts highlights the low diversity of the catalog compared to the variety of items purchased by the institution. From the sample analysed here, only one of the bids may be classified as 100% sustainable, while all the others presented mixed items - certified and uncertified. These results indicate the catalog could be more diverse, and that the institution could indicate the Government the lack of sustainable options for the acquisitions, aiming at the improvement and registration of new suppliers able to receive the Socio-Environmental Stamp. They also indicate the institution could think systematically, focusing in replacing or reconfiguring the items in favour of necessity rather than focusing on the product. For example, the need for paper towel, which has no green alternative in the catalogue, could be replaced by the need to dry hands which could be achieved by a hand dryer, an environmentally safer product. Although the works developed by the São Paulo Bureau are commendable and constitute a benchmark for Brazilian Bidding System, numbers indicate is much work to be done to really incorporate the environmental practices at the public administration supply chain. References BEC/SP, FAQ, Available at < Acess: 14.may BIDERMAN, Rachel et al. Guia de compras públicas sustentáveis: uso do poder de compra do governo para a promoção do desenvolvimento sustentável. GVces, BRASIL. Decreto nº 7.746, de 05 de junho de Regulamenta o art. 3º da Lei no 8.666, de 21 de junho de 1993, para estabelecer critérios, práticas e diretrizes para a promoção do desenvolvimento nacional sustentável nas contratações realizadas pela administração pública federal, e institui a Comissão Interministerial de Sustentabilidade na Administração Pública CISAP. Brasília, DEFRA - Department for Environment, Food and Rural Affairs, Procuring the Future Sustainable Procurement National Action Plan: Recommendations from the

7 Sustainable Procurement Task Force. London: Crown. Retrieved from < FORCE, Sustainable Procurement Task. Procuring the future. Sustainable Procurement Task Force, London, SARKIS, Joseph (Ed.). Greening the supply chain. Springer Science & Business Media, SÃO PAULO (Estado). Coordenadoria de Planejamento Ambiental. Programa estadual de contratações públicas sustentáveis - Relatório 2012/2013, Available at Acess: 14.may ZHU, Q.,GENG, Y., SARKIS, J., Motivating green public procurement in China: an individual level perspective. J. Environ. Manage. 126,

8 Presenters Profile Luciana Morilas is a professor at the School of Economics, Business Administration and Accounting at Ribeirao Preto at the University of Sao Paulo (FEA-RP/USP), where she teaches different law courses for the Business Administration Students: International, Tax and Business Law. She is a bachelor in Linguistics and Literature and also in Law. She has also the Masters and Doctors degree in Linguistics, with emphasis on Portuguese Description and has worked with Forensic Linguistics. On her doctorate thesis, she has worked with argumentation in juridical discourse, connecting linguistics and law. She researches law applied to business, international law, the right to pursuit of happiness and its implications to organizations. Flavio Pinheiro Martins is graduating in Business Administration at the School of Economics, Business Administration and Accounting at Ribeirão Preto at the University of Sao Paulo FEA-RP/USP. He has worked with public procurement for 7 years at the University of São Paulo and researches especially the effects of public bids on the efficiency of public management.