As many know, a prominent goal of President Biden’s administration has been to promote green initiatives, and help reduce America’s carbon footprint. That initiative has now found its way to federal contracting. In a recent final rule, the FAR is being updated to facilitate federal contracting’s move, closer to net-zero emissions. This FAR update, updates and sets requirements for agencies to procure “sustainable products and services”, outlines what those products and services actually are, and places new expectations on contractors.
On April 22, 2024 a final rule was published in the federal register to amend the Federal Acquisition Regulation (“FAR”) to “focus on current environmental and sustainability matters and to implement a requirement for agencies to procure sustainable products and services to the maximum extent practicable.” Specifically, this FAR update was conducted in direct response to Executive Order (E.O.) 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability. This E.O. focuses on how the Government itself can help promote sustainability and reduce its emissions, and multiple memorandums following it have helped further clarify the E.O.’s aims. The Final Rule sums up the E.O.’s goals as federal agencies should “reduce emissions, promote environmental stewardship, support resilient supply chains, drive innovation, and incentivize markets for sustainable products and services by purchasing sustainable products and services in accordance with relevant statutory requirements, and, to the maximum extent practicable, as identified or recommended by the Environmental Protection Agency (EPA).” With the goals of the E.O. in mind, let’s look at a quick rundown of the changes to the FAR that will go into effect May 22, 2024.
In line with that Executive Order and its directions, this final rule updates the FAR as follows:
- Dedicates FAR Part 23 to “environmental matters” by moving certain content to it, including drug-free workplaces content.
- Consolidates/updates already existing environmental purchasing program requirements into FAR SubPart 23.1.
- Dedicates FAR SubPart 23.2 to “energy savings performance contracts.”
- Consolidates requirements related to hazardous and radioactive material in FAR SubPart 23.3.
- Consolidates/updates Federal facility and pollution prevention requirements in FAR SubPart 23.4.
- Redesignates FAR SubPart 23.8 as FAR SubPart 23.5.
- Adds a definition of ‘‘sustainable products and services’’ to FAR 2.101 (we discuss this further below)
- Creates a new “omnibus” contract clause at FAR 52.223–23, Sustainable Products and Services, discussing Government requirements for sustainable products and services. (we discuss this further below as well)
- Makes other conforming changes throughout the FAR to align with revisions within FAR Part 23.
- Updates agency requirements at FAR 36.104(b)(1) for construction and architect-engineer contracts to align with “CEQ’s Guiding Principles for Sustainable Federal Buildings and Associated instructions.”
- Removes certain contractor reporting requirements in the FAR 52.223–11, Ozone Depleting Substances and High Global Warming Potential Hydrofluorocarbons; FAR 52.223–12, Maintenance, Service, Repair, or Disposal of Refrigeration Equipment and Air Conditioners; and
alternates to FAR 52.223–5, Pollution Prevention and Right-to-Know Information. - Finalizes the interim rule published under FAR Case 2010–001.
This seems like a pretty exhaustive list, but much of it is done in order to help make it easier to find applicable provisions (many now under FAR Part 23), and amend FAR provisions so they are consistent across the board. The crux of these updates is that, once this rule goes into effect, agencies will need to prioritize procuring what the FAR deems is “sustainable products and services.” So, that definition is quite crucial.
The definition of “sustainable products and services,” in updated FAR 2.101 is: products and services “that are subject to and meet . . . applicable statutory mandates and directives for purchasing” and “Required EPA purchasing programs.” Naturally, the next question is, what are these statutory mandates, and EPA purchasing programs. The definition provides:
- “Applicable statutory mandates and directives for purchasing” include, but are not limited to: products containing recovered material designated by the EPA; energy and water efficient products certified by “Energy Star” or FEMP; biobased products meeting Department of Agriculture’s “BioPreferred” program; and items meeting EPA’s SNAP program.
- “Required EPA purchasing programs” are: “WaterSense” labeled products or services; “Safer Choice” certified products; and products or services that meet “EPA Recommendations of Specifications, Standards, and Ecolabels” as of October 2023.
The Final Rule also states that under these updates, when agencies look at procuring sustainable products and services, the agency should consider “life-cycle costs” of the product when considering if the sustainable product or service can be procured at a reasonable price. Additionally, solicitations will identify the “sustainable products and services” (along with details about programs etc.) that the agency sees as “applicable to the acquisition.” So, once the FAR updates go into effect, agencies will be responsible for identifying clearly the “sustainable products and services” it sees as applicable to the solicitation.
Under the FAR update, contractors will soon also face new requirements. Contractors “must provide sustainable products and services, including products that meet the definition of sustainable products and services” if the product or service meets the following four criteria: 1.) the product or service is delivered to the Government; 2.) the product or services are furnished for Government use; 3.) the product or service are “incorporated into the construction of a public building or public work”; and 4.) the product or service are used by the contractor “in performing services under a Government contract where the cost of the products is a direct cost to the Government.” Also, “contractors performing management and operation of Government-owned facilities are required to use products that meet the definition of sustainable products and services to the same extent that an agency would be required to comply if an agency operated or supported the facility.”
In line with all of this, is the new “omnibus” contract clause found at FAR 52.223-23. This FAR clause discusses the definition of “sustainable products and services” explained earlier from FAR 2.101, while laying out the requirements placed on parties also explained above in this blog post. This FAR clause makes it clear that the “sustainable products and services” must meet the standards laid out “at time of quote or offer submission” and must meet “the EPA Recommendations of Specifications, Standards, and Ecolabels” as of October 2023. This FAR clause closes by providing a “Green Procurement Compilation” website which has a “list of sustainable products and services and sustainable acquisition guidance.” The FAR suggests contractors review this site.
This is certainly not the first time that federal contracting has received an update aimed at helping curb emissions (see our blog on greenhouse gas regulations here), nor would we expect it to be the last. However, this final rule does shift how solicitations will look going forward, and what contractors need to keep in mind when proposing products or services. Contractors should expect to start seeing solicitations discuss “sustainable products and services” while incorporating FAR 52.223-23. Those same contractors need to also be prepared to address in their proposal and performance, how they will provide those specific sustainable products and services. This FAR update’s final rule is quite large. This update had 52 respondents send in comments on its proposed rule and 23 respondents send in comments on its interim rule prior to this final rule. As such, there is some great detail within the final rule that we encourage contractors to review when they have time. We here at SmallGovCon will of course keep you updated on any new FAR changes, and you should expect to see the changes discussed here to go into effect on May 22, 2024.
Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919.
Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.