In response to an Executive Order, the FAR Council has recently proposed to amend the FAR in an effort to ensure that major federal procurements will minimize the risk of climate change. And DoD, GSA, and NASA sought the public’s input on the issue. Let’s take a closer look.
The FAR Council issued an advance Notice of Proposed Rulemaking on October 15, 2021, which covers the second case (FAR Case No. 2021-016, Minimizing the Risk of Climate Change in Federal Acquisitions) the FAR Council has opened in response to President Biden’s May 20, 2021, Executive Order (E.O. 14030, Climate-Related Financial Risk).
The E.O. addressed the increasing risks that climate change impacts are posing to financial assets, companies, communities, workers, and the Federal Government. It said:
The failure of financial institutions to appropriately and adequately account for and measure these physical and transition risks threatens the competitiveness of U.S. companies and markets, the life savings and pensions of U.S. workers and families, and the ability of U.S. financial institutions to serve communities.
To further the administration’s goals, section 5(b) of the E.O. required the following:
(b) The Federal Acquisition Regulatory Council, in consultation with the Chair of the Council on Environmental Quality and the heads of other agencies as appropriate, shall consider amending the Federal Acquisition Regulation (FAR) to:
(i) require major Federal suppliers to publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets; and
(ii) ensure that major Federal agency procurements minimize the risk of climate change, including requiring the social cost of greenhouse gas emissions to be considered in procurement decisions and, where appropriate and feasible, give preference to bids and proposals from suppliers with a lower social cost of greenhouse gas emissions.
Currently, FAR subpart 23.8 (and the corresponding clauses in FAR part 52) provides some coverage of greenhouse gas emissions. And the first case the FAR Council opened in response to this E.O. (FAR Case No. 2021-015, Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk) implemented section 5(b)(i), directed at “major Federal suppliers,” requiring them to “publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets.”
The instant Proposed Rulemaking (FAR Case No. 2021-016), implements section 5(b)(ii), which is instead directed at Federal procuring agencies. In the FAR council’s own words:
The E.O. states that the Federal Government should lead by example by appropriately prioritizing Federal investments and conducting prudent fiscal management. One critical lever is ensuring that the Federal Government manages climate-related financial risk within its own procurement activity, while also leveraging its scale as the Nation’s largest spender to speed the adoption of key assessment, disclosure, and mitigation measures across the private sector.
Thus, DoD, GSA, and NASA sought public comment in response to the following questions:
(a) How can greenhouse gas emissions, including the social cost of greenhouse gases, best be qualitatively and quantitatively considered in Federal procurement decisions, both domestic and overseas? How might this vary across different sectors?
(b) What are usable and respected methodologies for measuring the greenhouse gases emissions over the lifecycle of the products procured or leased, or of the services performed?
(c) How can procurement and program officials of major Federal agency procurements better incorporate and mitigate climate-related financial risk? How else might the Federal Government consider and minimize climate-related financial risks through procurement decisions, both domestic and overseas?
(d) How would (or how does) your organization provide greenhouse gas emission data for proposals and/or contract performance?
(e) How might the Federal Government best standardize greenhouse gas emission reporting methods? How might the Government verify greenhouse gas emissions reporting?
(f) How might the Federal Government give preference to bids and proposals from suppliers, both domestic and overseas, to achieve reductions in greenhouse gas emissions or reduce the social cost of greenhouse gas emissions most effectively?
(g) How might the Government consider commitments by suppliers to reduce or mitigate greenhouse gas emissions?
(h) What impact would consideration of the social cost of greenhouse gases in procurement decisions have on small businesses, including small disadvantaged businesses, women-owned small businesses, service-disabled veteran-owned small businesses, and Historically Underutilized Business Zone (HUBZone) small businesses? How should the FAR Council best align this objective with efforts to ensure opportunity for small businesses?
Though the public comment period ended December 14, 2021, you can still contact Ms. Jennifer Hawes, Procurement Analyst, at 202-969-7386 or by email at email@example.com, for clarification of the content of this Proposed Rulemaking.
At this time, there have been no further updates on the outcome of this case or this Proposed Rulemaking. But be sure to keep an eye on the SmallGovCon blog for updates on this topic, as it could have a significant effect on the future of Federal procurements!
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