The 7 steps of the circular procurement process

2. Circular ambitions

What are your circular ambitions?

Determining your organization’s circular ambitions or the potential circular impact of a specific procurement project isn’t always easy. To assist with this, consult the circular ambition chart. This chart outlines various circular goals along with procurement strategies to help achieve them.For a greater chance of success, we recommend committing to multiple goals and applying a range of strategies for each objective. It’s also a useful tool to get a conversation started within your organisation.

• Why do we want to commit to circular procurement?
• How does this tie in with our other sustainability ambitions?
• What does this mean for our organisation?
• What are our ambitions?
• What goals are achievable in the short and long term?
• What strategies are we going to deploy here?
• Who should we involve?

Many internal departments can contribute to a circular procurement project, including management, the internal customer, the procurement team, CSR managers, financial experts, the legal department, logistics, and communication managers, among others. It’s important to identify early on which internal stakeholders are most relevant to involve in your specific project and product group.

4. Specifications and award

How can we embed our circular wishes and needs in the contract documents?

After an extensive market dialogue, determine the scope of your project:

• Are you looking for a product or a service?
• Is the TCO included?
• Are repairs and maintenance also recorded?
• What is the residual value at the end of use? What agreements are possible?
• What contract duration makes sense?
  Take into account the functional lifespan of your product.
  If necessary, ask the market about the realistic return on investment.
  This can help you when you want to encourage suppliers to accept a longer contract duration than normal. It’s useful to include conditions of termination or performance bonuses. You can also opt for shorter contracts with renewal options.
• Is innovation or a development process desirable or necessary?

Match the choice of your procurement procedure with the goals you want to achieve with your circular procurement project. Think about negotiation opportunities or innovation processes, for example.

Selection criteria are embedded to guarantee the competence of the contractor. However, it’s not easy for circular providers, often SMEs and startups, to present a lot of experience and references. In order not to exclude these providers, you could use alternative selection criteria:

• A descriptin of the provider’s technical equipment and the measures taken to safeguard quality, and its study and research possibilities
• An indicatin of supply chain management systems and the tracking systems that the provider can apply when executing the contract
• An indicatin of the environmental management measures that the provider can apply when executing of the contract

Then, formulate what you want to purchase and the requirements this has to meet. It’s best to describe the technical specifications in terms of function as much as possible, rather than in terms of technical characteristics. This offers the market more flexibility to come up with circular solutions, and to offer the most recent innovations. Clearly distinguish criteria and requirements. Use the circular ambitions that you specifically noted for the product group as a starting point.

It’s recommended that the  award criteria aren’t assessed solely on price. Public procurement law allows Life Cycle Cost to be included under 'costs', which can have a positive impact on circularity. A growth path can also be included in the award criteria. Both the client and the contractor can ask for something to be realised during the contract duration, such as something not yet possible at the start of the agreement.
For the assessment, give priority to the following:

• Quantitative: objective and measurable criteria. For example, the percentage of recycled content
• Qualitative: a worded, well-motivated assessment of a proposal by the applicant, such as a plan of action
• A combination of both: you can quantitatively assess what can be unambiguously measured and checked, and qualitatively assess the other criteria.

Make sure you provide some direction or factors that need to be considered, as this will allow you to compare and assess the various proposals better.

Naturally, the weighting of the criteria is also important here. The price-quality ratio depends on the product or service category, but also determines the impact you can achieve.

Contract execution requirements can be imposed unilaterally. Here, you can include aspects such as take-back, end-of-lifespan provisions, or packaging upon delivery. Make sure that what you ask for is always feasible. A growth trajectory can also be included here.

Inspiration and specific examples:

• https://www.mvicriteria.nl/en
• https://ec.europa.eu/environment/gpp/eu_gpp_criteria_en.htm
• circular procurement cases
• Circular suppliers

Given the time it takes to develop tools, websites and reports on circular criteria, the best place to find the latest information and trends is from your dialogue with the market.

It also makes sense to include your circular ambitions in the contract documents. This immediately makes your organisation’s circularity aims clear.

Public authorities must ensure that their use of the criteria, like all requirements in tender documents, respects the laws and principles which apply. The following principles should be taken into account when using GPP criteria:

• Transparency: all bidders should be informed in the same way, at the same time; environmental requirements should be specified as clearly as possible, in order to enable objective comparison of offers.
• Non-discrimination: social and environmental criteria cannot be introduced in order to give an advantage to local or national suppliers.
• Link all requirements with the subject matter of the contract: contracting authorities cannot, for example, require a vehicles’ supplier to use recycled paper in its administration or to serve organic food in its canteen. 
• Equivalent standards: contracting authorities should always explicitly recognise and accept products complying with equivalent environmental specifications (as attested under equivalent certifications or schemes).

Source: https://www.preston.gov.uk/makingspendmattertoolkit

6. End of use

How can we ensure maximum value retention at the end of use?

The end-of-use phase is crucial for realizing the circular potential of a product, even when it is part of a provided service. Ideally, agreements regarding this phase should be outlined in the contract from the outset. However, these agreements must be actively followed up and facilitated, which is not always standard practice in procurement processes.

It’s also important to critically assess the periods of use. Is the product truly no longer usable, or are these simply depreciation periods or established habits? What parameters determine whether the quality is insufficient for continued use of the product?

The end-of-use does not necessarily signify the end of a product’s lifespan. First, explore opportunities for valorizing the products: can recovery, internal or external reuse, or refurbishment extend their lifespan? If further use is not feasible, strive to retain the value of the components and materials as much as possible, potentially in collaboration with the supplier or a specialist processor. Transparency regarding the subsequent lifecycle is essential to ensure circularity.

If products or materials have sufficient residual value, they can be financially valorized through buyback or buy-sell models. These options can also be incorporated into the contract and the business case for circular procurement.