Until recently, the federal government did not devote much attention to the environmental attributes or consequences of the products and services it purchased. Companies selling either commercial or non-commercial items to agencies didn't have an incentive to "green" their products or services, nor did companies offering green products or services see significant growth opportunities in the federal market. However, that is beginning to change, due in part to a 2007 federal policy statement and several new procurement rules that encourage or even require the government to buy environmentally friendly products and services. In January 2007, President Bush issued Executive Order 13423 that directed federal agencies to improve their environmental, transportation, and energy-related activities through improving energy efficiency, increasing the use of renewable energy sources, reducing water consumption, reducing the use and disposal of toxic and hazardous chemicals, and reducing fleet vehicle consumption of petroleum products. The order specifically addressed government acquisition practices and directed agencies when procuring products and services to seek the acquisition of sustainable environmental practices, including bio-based, environmentally preferable, energy-efficient, water-efficient, and recycled-content products. To implement the order, the Office of Federal Procurement Policy in January issued a draft policy addressing, in part, federal acquisition of "green" products and services. This policy would require agencies to identify opportunities and give preference to green products and services, including alternative fuels and alternative fuel vehicles, bio-based products, Energy Star and Federal Energy Management Program-designated products, recycled-content products, renewable energy, and water-efficient products. It also proposes guidance for product or service substitution policies, listing of green products in federal catalogues and online ordering systems, and application of green requirements in service contracting.
Although the OFPP policy statement is still in draft form, agencies have already issued a number of procurement rules implementing the intent of the executive order. Two new rules focus on improving the government's energy efficiency. Government agencies are now required, when acquiring energy consuming products, to purchase products meeting Energy Star or Federal Energy Management Program standards for energy consumption. Also, agencies are now required to use the Electronic Products Environmental Assessment Tool (EPEAT) when acquiring computer products, such as desktops, laptops, and monitors. EPEAT is a system used by both the government and commercial sectors that allows users to evaluate and compare the environmental attributes of personal computer products. It also identifies a set of performance criteria for the design of these products. The government's focus on acquiring energy efficient products will only be increasing. For example, the Environmental Protection Agency recently announced an intention to develop a method to rate the energy efficiency of government data centers, and the General Services Administration has announced its intention to help agencies "go green" by encouraging agencies to purchase energy efficient information technology products. These two new rules should present a real opportunity for contractors whose products already meet these standards to increase their sales to the government. They also present a chance for companies who are involved in making energy efficient products, or improving the energy efficiency of products, to partner with government contractors or sell directly to the government. However, the rules will also have certain compliance risks for contractors. For example, the rule requiring the purchase of Energy Star or FEMP-rated products will be implemented via a contract clause that puts the responsibility on the contractor to ensure that the products being delivered meet the standards. Similarly, when the EPEAT requirement applies to a government purchase, contractors will be required to ensure that their products meet at least the EPEAT bronze designation. Because government specifications often require unique features or capabilities beyond normal commercial requirements, companies bidding on government contracts will need to ensure their products, as customized to the government specifications, continue to meet the standards. The focus on environmental issues in government contracting will continue and will expand to areas beyond energy efficiency and bio-based products. This presents an opportunity for companies with green products or services to establish a presence, or expand their presence, in the federal market. It provides an incentive for companies to develop greener products and services for sale to the government. At the same time, it presents additional contracting risks of which companies must be aware before entering into contracts with the government. J. Catherine Kunz (ckunz@crowell.com) is a partner in Crowell & Moring LLP's Government Contracts Group.