Public procurement represents approximately 21 percent of GDP
The country, public procurement represents approximately 21 percent of the Gross Domestic Product (GDP) or around 60-70 percent of annual government budget.
The GPP Bhutan project’s research revealed that in the 10th FYP period (2008-2013), the highest government expenditure was on works. The top ten Object Codes (OBCs) account for 86.2 percent of the total procurement of the plan period with expenditure worth Nu. 18.8 billion. The top three highest spending OBCs account for 66 percent of the total procurement worth of Nu.14.5 billion, all of which fall under the works category –buildings, roads and other structures.
According to the Checklist for Implementing Green Public Procurement in Bhutan June 2017, a cross-sectoral strategy for sustainable industrial competitiveness the GPP Bhutan project which is an EU-funded project under its Europe Aid SWITCH-Asia Program aims to establish a strategic approach to scaling-up public demand for environmentally and socially preferable goods, services and infrastructure in Bhutan.
The project seeks to promote value-for-money across the asset lifecycle rather than simply at the point of purchase, in order to reduce the negative environmental impacts and maximize social ben-
efits of consumption and production.
GPP is the purchasing of goods, services and infrastructure in a way that maximizes value-for-money across the lifecycle. This requires that public entities maximize positive impacts and minimize negative impacts from economic, social and environmental perspectives along the lifecycle of goods, services and infrastructure.
The Checklist for Implementing GPP Bhutan June 2017 also stated that GPP generates multiplier benefits. When governments spend money on goods, services and infrastructure, the initial spending is important, but so is the way the money is re-spent and circulated in the economy.
Multiplier benefits occur when spending on public procurement ripples through local and regional economies, strengthening them and generating social and environmental benefits beyond the initial purchase transaction.
GPP can also help governments tackle persistent challenges, such as unemployment, insufficient skill bases, poor connectivity, and limited industrial diversity. The multiplier effects of GPP can regenerate societies and economies by creating local employment and business opportunities and multiplying the cash in the local economy.
The Checklist for Implementing GPP Bhutan June 2017 further stated that if procurers are legally mandated to buy green, actually doing so becomes much easier. It legitimizes the time, effort and money spent by procurers on consulting with environmental specialists, suppliers and stakeholders, and designing specification and award criteria that will crowd in the key multiplier benefits: the wider commercialization of green goods/services across the domestic market.
The exact provisions on green and sustainable procurement are also important to delineate areas of priority focus. For example, procurement laws that mandate that procurement decisions be based on lifecycle impacts, costs or benefits allow procurers to cast the net wide and invite suppliers to propose a range of environmental and social improvements that are in line with the sustainable development priorities of the domestic economy.
On the other hand, laws that expressly mandate particular characteristics such as energy efficiency or recycled content, or mandate business with minority-owned enterprises make specification and award criteria design that much easier, because procurers will know where to focus. Some procurement laws might also encourage the purchase of eco-certified and eco-labeled items; in this case, tenders will need to be designed based on the relevant certification and labeling criteria.
While Bhutan’s existing legal framework for procurement does not mandate that procurement decisions be based on lifecycle impacts, there are a number of provisions that directly provide for the implementation of GPP in Bhutan – as regulated through the Procurement Rules and Regulations (PRR), the Standard Bidding Documents (SBDs) for Goods and Works and other regulatory and operational documents.