April 11, 2022 - Acquisition Regulations

Sustainable Procurement FAR Case to Clarify FAR Part 23

Regulatory action around sustainable procurement and climate change continues to heat up. A recent Federal Acquisition Regulation (FAR) case on Sustainable Procurement takes another step towards implementing the Biden administration’s ambitious vision of leveraging federal procurement to confront the climate crisis. FAR case 2022-006 will implement portions of Executive Order (E.O.) 14057, on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, and OMB Memorandum (“OMB Memo”) M-22-06 on procuring of sustainable products and services. The FAR case will reorganize FAR Part 23 on Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace for consistency and clarity. The FAR case will also update the definition of a “biobased product” in agency affirmative procurement programs. A report on the draft proposed rule is due on May 18, 2022. Additional guidance from the Council on Environmental Quality (CEQ) is expected shortly and may set off a further round of FAR cases.

Here is the essential context:

  • Two FAR Cases Opened Last Year: The latest climate-related FAR case joins two open FAR cases from last year, which propose to implement different sections of E.O. 14030 on Climate-Related Financial Risk. FAR case 2021-015 anticipates implementing section 5(b)(i) of the E.O., directing the FAR Council to consider amending the FAR to require major federal suppliers to publicly disclose greenhouse gas emissions and climate-related financial risk while setting science-based reduction targets. A draft proposed rule is slated for internal FAR Council discussion on April 13, 2022. FAR case 2021-016 anticipates implementing section 5(b)(ii) of the E.O., and directs the FAR Council to consider amending the FAR to ensure that major agency procurements minimize the risk of climate change. An internal report on a draft proposed rule is due to the Defense Acquisition Regulations Council (DARC) on April 13, 2022.
  • E.O. 14057 Establishes Seven Sustainability Goals: To put the nation on a path to net-zero emissions by 2050, E.O. 14057 establishes seven government-wide goals. The goals are: (1) 100 percent carbon pollution-free electricity by 2030; (2) 100 percent zero-emission vehicle acquisitions by 2035; (3) a net-zero emissions building portfolio by 2045; (4) a 65 percent reduction in scope 1 and 2 greenhouse gas emissions; (5) net-zero emissions from federal procurement; (6) climate-resilient infrastructure and operations; and (7) a climate- and sustainability-focused federal workforce.
  • Lifecycle Costing & Emission Tracking: E.O. 14057 directs agencies to prioritize reused, refurbished, or recycled products; maximize cost-savings through full lifecycle cost methodologies; purchase products that contain recycled content, are biobased, or are energy- and water-efficient; and purchase EPA-identified or -recommended sustainable products and services to the maximum extent practical. The E.O. also directs agencies to pursue procurement strategies to reduce contractor emissions and embodied emissions in products acquired or used in federal projects, and tasked the General Service Administration with tracking greenhouse gas emissions by major federal suppliers.
  • OMB Guidance on Agency Targets and Third-Party Standards: OMB Memo M-22-06, which accompanies E.O. 14057, directs agencies on immediate actions and further requirements needed to comply with the E.O. In addition to guidance on establishing agency targets, the OMB Memo instructs the FAR Council to leverage existing third-party standards and systems in developing regulatory amendments. The OMB memo echoes the E.O. in stating that further “implementing instructions” and “recommended actions” will be issued by CEQ within 120 days of the E.O.’s issuance. That deadline is now at hand.

We will continue to monitor sustainable procurement developments affecting the government contractor as they unfold.