As the world’s single largest purchaser, the US federal government has the potential to play a significant role in addressing climate change. It can leverage its $700 billion annual expenditures on goods and services and lead by example in purchasing sustainable goods and services. To assist the United States in meeting President Biden’s goal of achieving net-zero emissions from federal operations and procurement by 2050, the Federal Acquisition Regulatory Council (FAR Council) adopted a sustainable products and services procurement rule that modernizes federal sustainable purchasing standards. The rule, published on April 22, directs federal agencies to prioritize the purchase of American-made sustainable products and services. This post highlights the key elements of the new rule and examines how the final rule pulled back from an explicit statement relating to the purchase of American-produced goods. It also looks at the status of development of federal green procurement rules.
The FAR Council’s final sustainable procurement rule, issued on April 22, dedicates part 23 of the Federal Acquisition Regulation (FAR) to environmental matters, adds a definition of ‘‘sustainable products and services,’’ and updates the definition of biobased products. It directs agencies to follow the Environmental Protection Agency’s Recommendations of Specifications, Standards, and Ecolabels for Federal Purchasing, which were in effect in October 2023. These Recommendation identify over 40 recommended environmental standards and ecolabels across 34 product and service categories. They are intended to assist purchasers identify products and services that address environmental and human health issues across the lifecycle, including energy and water efficiency, chemicals of concern, and plastic use and reduction. (The rule’s effective date is May 22, 2024.)
The White House estimates that increasing the purchase of sustainable products and services will reduce the emissions associated with the federal supply chain. Those emissions are estimated to be more than twice as large as the emissions from operating the federal government’s buildings and vehicles.
The rule directs federal agencies to procure sustainable products and services to the maximum extent practicable. While it does not explicitly require the procurement of domestic goods, that is intended. In touting the new rule, the White House emphasized its dual purpose: to use the federal government’s purchasing power “to advance American manufacturing and build sustainable Federal supply chains.”
The focus on American-made products is also evident from the development of the rule. The FAR Council initiated the rulemaking with the publication of a proposed rule for public comments in August 2023. The proposed rule stated explicitly that contracting officers had to procure sustainable products and services unless doing so would conflict with a statute, executive order, or regulation that imposes domestic manufacturing and content requirements, such as the Buy American Act and the Berry Amendment. This language was removed in the final rule, but its aim has not been eliminated.
In the final rule, the FAR Council described the domestic content provision in the proposed rule as highlighting that agencies had to ensure that “procuring certain sustainable products and services does not conflict with statutory or regulatory domestic manufacturing and content requirements.” It then explained that since the final rule “already includes a process by which agencies consider whether sustainable products and services meet reasonable performance requirements, which would include those dictated by statute or regulation[,] … no additional guidance is necessary.”
The FAR Council was more explicit in its response to a question on the proposed rule that asked how the government would approach a situation where a foreign product is more sustainable than a domestically produced product, and the acquisition is subject to the Buy American Act. The Council responded that the final rule directs agencies to procure sustainable products and services “that meet applicable statutory and required EPA purchasing program requirements.” It then added that agencies should continue to follow FAR subparts 25.1 and 25.2, which prescribe application of the Buy American Act.
This approach raises several questions. One is the extent to which agencies prioritize American-made products over products that are more sustainable but foreign-made. Another is whether prioritizing the purchase of domestic products will undermine the administration’s sustainability goals. Finally, will US trading partners object to this approach?
On a related issue, the US is engaged in two rulemaking procedures to take into account greenhouse gas (GHG) emissions in federal procurement as directed by an executive order on Climate-Related Financial Risk. According to the report of Open FAR Cases as of April 26, 2024, both cases were pending. In one, the Office of Management and Budget was reviewing a proposed draft rule that would amend the FAR to ensure that major agency procurements minimize the risk of climate change. The second case concerns a proposed rule, published in November 2022, that would require major federal suppliers to publicly disclose the GHG emissions and climate-related risks in their products and set science-based reduction targets. The deadline for the preparation of a report on the public comments on the proposed rule and a draft final FAR rule has been extended to May 22, 2024. (That report was initially due in April 2023.)
As the world’s single largest purchaser, the US federal government has the potential to play a significant role in addressing climate change. It can leverage its $700 billion annual expenditures on goods and services and lead by example in purchasing sustainable goods and services. To assist the United States in meeting President Biden’s goal of achieving net-zero emissions from federal operations and procurement by 2050, the Federal Acquisition Regulatory Council (FAR Council) adopted a sustainable products and services procurement rule that modernizes federal sustainable purchasing standards. The rule, published on April 22, directs federal agencies to prioritize the purchase of American-made sustainable products and services. This post highlights the key elements of the new rule and examines how the final rule pulled back from an explicit statement relating to the purchase of American-produced goods. It also looks at the status of development of federal green procurement rules.
The FAR Council’s final sustainable procurement rule, issued on April 22, dedicates part 23 of the Federal Acquisition Regulation (FAR) to environmental matters, adds a definition of ‘‘sustainable products and services,’’ and updates the definition of biobased products. It directs agencies to follow the Environmental Protection Agency’s Recommendations of Specifications, Standards, and Ecolabels for Federal Purchasing, which were in effect in October 2023. These Recommendation identify over 40 recommended environmental standards and ecolabels across 34 product and service categories. They are intended to assist purchasers identify products and services that address environmental and human health issues across the lifecycle, including energy and water efficiency, chemicals of concern, and plastic use and reduction. (The rule's effective date is May 22, 2024.)
The White House estimates that increasing the purchase of sustainable products and services will reduce the emissions associated with the federal supply chain. Those emissions are estimated to be more than twice as large as the emissions from operating the federal government’s buildings and vehicles.
The rule directs federal agencies to procure sustainable products and services to the maximum extent practicable. While it does not explicitly require the procurement of domestic goods, that is intended. In touting the new rule, the White House emphasized its dual purpose: to use the federal government’s purchasing power “to advance American manufacturing and build sustainable Federal supply chains.”
The focus on American-made products is also evident from the development of the rule. The FAR Council initiated the rulemaking with the publication of a proposed rule for public comments in August 2023. The proposed rule stated explicitly that contracting officers had to procure sustainable products and services unless doing so would conflict with a statute, executive order, or regulation that imposes domestic manufacturing and content requirements, such as the Buy American Act and the Berry Amendment. This language was removed in the final rule, but its aim has not been eliminated.
In the final rule, the FAR Council described the domestic content provision in the proposed rule as highlighting that agencies had to ensure that “procuring certain sustainable products and services does not conflict with statutory or regulatory domestic manufacturing and content requirements.” It then explained that since the final rule “already includes a process by which agencies consider whether sustainable products and services meet reasonable performance requirements, which would include those dictated by statute or regulation[,] … no additional guidance is necessary.”
The FAR Council was more explicit in its response to a question on the proposed rule that asked how the government would approach a situation where a foreign product is more sustainable than a domestically produced product, and the acquisition is subject to the Buy American Act. The Council responded that the final rule directs agencies to procure sustainable products and services “that meet applicable statutory and required EPA purchasing program requirements.” It then added that agencies should continue to follow FAR subparts 25.1 and 25.2, which prescribe application of the Buy American Act.
This approach raises several questions. One is the extent to which agencies prioritize American-made products over products that are more sustainable but foreign-made. Another is whether prioritizing the purchase of domestic products will undermine the administration's sustainability goals. Finally, will US trading partners object to this approach?
On a related issue, the US is engaged in two rulemaking procedures to take into account greenhouse gas (GHG) emissions in federal procurement as directed by an executive order on Climate-Related Financial Risk. According to the report of Open FAR Cases as of April 26, 2024, both cases were pending. In one, the Office of Management and Budget was reviewing a proposed draft rule that would amend the FAR to ensure that major agency procurements minimize the risk of climate change. The second case concerns a proposed rule, published in November 2022, that would require major federal suppliers to publicly disclose the GHG emissions and climate-related risks in their products and set science-based reduction targets. The deadline for the preparation of a report on the public comments on the proposed rule and a draft final FAR rule has been extended to May 22, 2024. (That report was initially due in April 2023.)
