Published 2022-07-07

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Knowledge and requirements will contribute to more circular public procurement

Public procurements in Sweden are responsible for about one fifth of Swedish GDP and, if properly used, can play a significant role in achieving a more sustainable and circular society. At one of Mistra’s seminars in Almedalen “Fit for the future. Is public procurement the key to a more sustainable and circular society”, Ida Karkiainen, Minister for Public Administration, highlighted the importance of knowledge and requirements.

There is huge potential for a circular economy in public administration, but there are also many challenges that need to be recognised and dealt with. Margo Enthoven, postdoc at the Stockholm School of Economics and Mistra’s Misum research centre, has examined these challenges in her research: the circular, the organisational and the legal challenges.

Margo Enthoven

“Achieving an overall perspective on circularity is difficult, as procurement officers are often only included in a small part of the loop, with procurement often being regarded as purchasing something. But a circular economy also involves production, use, and what happens when we dispose of items. These are often not included in the procurement process, and they also increase complexity for procurement officers, who need more knowledge for every procurement process.

“Another problem they have seen in the research in that publicly run organisations have many silos, with no direct communication between procurers and users. For example, for clothing in the healthcare system, there are no discussions between the procurer and healthcare staff. This makes it difficult to link together knowledge and needs, the market with sustainability. In addition, the legal system is designed to create distance between the suppliers and procuring parties,” says Enthoven.

“This is a good thing, because it prevents corruption, but it makes it difficult to communicate with the market, to see new innovations, and also means there is little room for dialogue in procurement processes. The legal frameworks also lead to limitations on the circular economy. Another example is that procurement is for a maximum of four years, so the market incentive is to produce products that last for four years.”

Minister for Public Administration Ida Karkiainen believes that the biggest challenge in achieving circular procurement is the creation of fit for purpose purchasing organisations. By this, she means an organisation and a purchasing function that talks to the people who will use the products.

Ida Karkiainen

“Creating that organisation is a way off, but we are getting there, and the state is providing support and encouragement. I also think that setting requirements is an issue, as there are still many people working in public procurement who believe that the lowest price applies to everything and are unsure about the rules and what demands can be placed. We have work to do here to show the potential in the regulatory framework. From the Government’s side, we have produced a proposal on stricter legislation so that climate requirements must be stated, not just should be stated,” says Karkiainen.

Inger Ek, Director-General of the National Agency for Public Procurement, believes that the issue in dealing with challenges is largely about changing behaviours. More focus is needed on investigating needs and the life cycle perspective on each occasion.

“We also need to leave behind short-term budgetary thinking and think further than one term in office. There must also be policy demands and requirements that contribute to changed behaviour and changed business models.”

Inger Ek also says that there is a need for increased competence about what circularity is and the attitudes to it in the public sector.

Martin Kruse, Chair of Sveriges Offentliga Inköpare (SOI – Sweden’s Public Purchasers), highlights the importance of more research in the area for achieving change.

Nor is it just about procurement, according to Ek. It is about cooperation between competences and changing the view of the system, because procurement is part of other systems. The National Agency for Public Procurement has recently received an additional commission from the Government, on circular and fossil-free procurement. Ek also sees a need to work more on knowledge dissemination linked to criteria and strategic governance.

“There are things to be learned here from business,” states Ida Karkiainen, “Even if the circumstances are different.”