Coupled with increasing concerns about the environment, the magnitude of federal spending on contracts has prompted numerous questions from Members of Congress and the public about the role of environmental considerations in federal procurement. These include: to what extent do agencies consider environmental factors when procuring goods or services? What legal authorities presently require or allow agencies to take environmental factors into account when acquiring goods or services? How are existing provisions authorizing agencies to consider environmental factors implemented? This report provides an overview, answering these and related questions. It does not address green building initiatives, energy-savings performance contracts, policy documents, agency-specific laws, or environmental laws of general applicability that effectively shape the products available for purchase. Beginning with President Obama's 2009 Executive Order on "Federal Leadership in Environmental, Energy, and Economic Performance," the Obama Administration has taken steps to promote consideration of environmental factors in federal procurement. Recently, for example, the General Services Administration (GSA) reported on plans to incorporate consideration of greenhouse gas emissions inventories into federal procurement decisions, and the Federal Acquisition Regulation was amended to require that contractors report on their purchases of biobased products under service and construction contracts. Certain such initiatives have prompted controversy, however. Some Members of Congress sought to restrict the Department of Defense's purchase of biofuels as part of the National Defense Authorization Act for FY2013, and some commentators have objected to GSA's use of the Leadership in Energy and Environmental Design (LEED) rating system for buildings. Fundamentally, federal procurement involves agencies acquiring the goods and services they need to carry out their missions. The vision for federal acquisition, as presented in the FAR, is "to deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives." Environmental objectives have historically constituted one of the "public policy objectives" to be furthered by federal procurement, and environmental interests were among the "competing interests" in the federal procurement system. However, they were arguably one among many, sometimes competing, policy objectives until the May 2011 amendments to the FAR articulated a "sustainable acquisition policy," which generally requires that agencies shall advance sustainable acquisition by ensuring that 95 percent of new contract actions for the supply of products and for the acquisition of services (including construction) require that the products are— (1) Energy-efficient (ENERGY STAR® or Federal Energy Management Program (FEMP)-designated); (2) Water-efficient; (3) Biobased; (4) Environmentally preferable (e.g., EPEAT-registered, or non-toxic or less toxic alternatives); (5) Non-ozone depleting; or (6) Made with recovered materials. While many of the products to be purchased under this policy (e.g., energy-efficient, biobased) were previously "preferred" in federal procurements, as discussed below, the policy could be said to create increased impetus for their purchase by requiring federal agencies to ensure that 95% of their new "contract actions" entail the acquisition of such products. However, even with the May 2011 amendments to the FAR, agencies would generally not be required to purchase energy-efficient, water-efficient, biobased, environmentally preferable, non-ozone depleting, or recovered-content products in any specific procurement. Rather, they are to ensure that 95% of their new contract actions generally involve such products. It is also important to note that the May amendments generally rely upon, rather than expand, existing legal authorities (discussed below) requiring or permitting agencies to prefer certain products based upon their environmental attributes. In addition, the amendments do not purport to address which "sustainable" product agencies should purchase when two or more different products—each of which agencies purportedly "must" purchase because of its environmental attributes—could meet agency requirements. Moreover, as agencies implement the requirement that 95% of their new contract actions entail the purchase of energy-efficient and similar products, questions could arise about the relationship between the sustainable acquisition policy and other long-standing federal procurement policies. For example, some small businesses that participated in a pilot project to reduce greenhouse gas emissions in the federal supply chain have reported being concerned that they might appear less "environmentally friendly" to contracting officers than competitors that travel shorter distances or can afford more fuel-efficient vehicles. Various legal authorities currently require or allow contracting officers to take environmental considerations into account when procuring goods or services. These authorities can be broadly divided into three categories: (1) "attribute-focused" authorities, generally requiring agencies to avoid or acquire products based on their environmental attributes (e.g., ozone-depleting substances, recovered content); (2) general contracting authorities, allowing agencies to purchase goods with certain environmental attributes when they have bona fide requirements for such goods; and (3) responsibility-related authorities, which require agencies to avoid certain dealings with contractors that have been debarred from government contracting for violations of the Clean Air Act or Clean Water Act. Numerous statutes, regulations, and executive orders enacted or issued since the mid-1970s authorize agencies to "prefer" certain products because of their environmental attributes. This generally means that agencies must purchase products with these attributes instead of competing products that lack them. However, the exact nature of the preference varies by product, as discussed below and illustrated in Table 1 and the Appendix . Because the attribute-focused authorities developed over time and through the actions of different branches of the federal government, they arguably do not represent a holistic framework for or ensure consistency in agencies' treatment of products or vendors on environmental grounds. A number of products are eligible for various preferences in federal procurement, discussed below, because of their environmental attributes. In some cases, the products and their attributes are defined fairly narrowly (e.g., plastic ring carriers, electric motors of 1 to 500 horsepower, solar hot water heaters), although generally not so narrowly as to be identified by brand name. These preferences are typically not incorporated in the FAR, which thus serves as only a partial guide to the products preferred because of their environmental attributes. In other cases, products and attributes are defined more broadly (e.g., biobased products, recovered-content products, etc.). These broader preferences are generally incorporated in Part 23 of the FAR. Many of these preferred products have their own definitions for purposes of federal procurement, as illustrated in the Glossary below. These definitions do not necessarily correspond to everyday or environmentalists' usage of these terms. Moreover, certain attributes which are currently widely discussed in environmental contexts (i.e., "green") are not presently defined for purposes of federal procurement and are not among the attributes in terms of which current preferences are stated. Some commentators have suggested that "green" products could be preferred under the existing authorities pertaining to "environmentally preferable products," which is probably the case in most circumstances. However, it is important to be clear that, absent changes in the law, any preferences given to such products are based on their being "environmentally preferable products," not "green products." The exact nature of the preference(s) given to products based upon their environmental attributes varies by product, but agencies could be required or encouraged to purchase products with the desired environmental attributes instead of competing products that lack these attributes; avoid or minimize purchases of products with certain attributes; draft specifications for goods or services so as to maximize the purchase and use of products with certain environmental attributes; develop "affirmative procurement plans" to maximize the acquisition of products with certain environmental attributes; insert clauses regarding the provision or use of designated products into certain service or construction contracts; use certain environmental considerations as evaluation factors when considering bids or offers; meet goals for the procurement of certain types of products; or report agencies' performance in acquiring preferred products to executive branch authorities, Congress or congressional committees, or the public. In a few cases, agencies are also required to use contract terms that obligate contractors to certify that they have provided designated products, or disclose information about certain environmental impacts of designated products. Table 1 illustrates which preferences generally apply to the major categories of preferred products included in the Glossary. These preferences are seldom absolute, however, not even when agencies are "required" to purchase products with certain attributes. There are several reasons for this. First, the requirements themselves are generally either conditional or subject to exemptions that allow agencies to purchase products without the desired attributes in certain circumstances. Any preferences that agencies give to alternatives to ozone-depleting substances must be "cost-effective," for example, while there are exemptions allowing agencies to purchase products that do not contain biobased content if biobased products cannot be acquired competitively within a reasonable time frame or do not meet reasonable performance standards. Agencies may also exempt certain procurements related to intelligence, law enforcement, or national security activities from the sustainable acquisition requirements under certain circumstances. Second, certain preferences apply only to procurements conducted in particular places, or whose price exceeds certain thresholds. Prior to the May 2011 amendments to the FAR, such preferences generally applied only to contracts for goods and service contracts involving the supply of goods or contractor operation of government-owned facilities. However, both the May 2011 amendments to the FAR and Executive Order 13514 arguably place increased emphasis on environmental considerations in the acquisition of services. Among other things, the May 2011 amendments to the FAR require that [t]he contracting officer shall (1) [s]pecify the [Environmental Management System] EMS directives with which the contractor must comply; and (2) [e]nsure contractor compliance to the same extent as the agency would be required to comply, if the agency operated the facilities and vehicles. While the FAR only requires agencies to incorporate the clause implementing these requirements in contracts for contractor operation of government-owned or -leased facilities or vehicles, certain provisions of Executive Order 13514 have broader applicability. These provisions allow reductions in greenhouse gas emissions resulting from changes in contractors' manufacturing processes, utility or delivery services, modes of transportation, or supply chain activities to count toward agencies' goals for reducing such emissions, and have been implemented in a way which suggests that agencies will take environmental considerations into account when contracting for services. However, their doing so would appear to entail the use of evaluation factors permissible under the general contracting authorities, discussed below, rather than the attribute-focused authorities discussed here. The Appendix provides an overview of the purchase requirements pertaining to the categories of products listed in Table 1 , including any conditions or limitations on these requirements or product-specific exemptions thereto. Such attribute-focused authorities generally would not unconstitutionally deprive vendors of competing products of due process or equal protection in violation of the U.S. Constitution. Because contractors lack property rights in prospective government contracts, they generally are not deprived of due process when the government opts to buy goods and services other than those they provide. Similarly, because distinctions between vendors based on the environmental attributes of their products do not involve "suspect classifications," such as race or sex, or the exercise of fundamental rights, a court would probably not find that vendors whose products lack the desired environmental attributes are denied equal protection. Absent a suspect classification or fundamental right, a party challenging a government program on equal protection grounds must show that the program is not rationally related to a legitimate government objective by "negativ[ing] every conceivable basis which might support" the program. Such challenges frequently fail because rational basis review is a deferential standard of review and "serves to invalidate only 'wholly arbitrary acts.'" Regulations or executive orders that mandate certain forms of preferential treatment for products or vendors based on environmental considerations could, however, potentially violate both procurement integrity regulations and the Competition in Contracting Act (CICA) of 1984. Subpart 3.1 of the FAR requires that "Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation , with complete impartiality and with preferential treatment for none." CICA is arguably even more stringent, requiring that contracts be awarded through "full and open competition" unless (1) a small business set-aside is used; (2) one of seven circumstances exist that permit other than full and open competition (e.g., sole-source, urgent and compelling need); (3) the simplified procedures for "small purchases" (generally, less than $150,000) are used; or (4) agencies use procedures "otherwise expressly authorized by statute ." Thus, while Subpart 3.1 of the FAR would permit "preferential treatment" under the authority of a regulation, CICA would generally prohibit such treatment if it resulted in other than "full and open competition." These two provisions, taken together, could effectively require that certain proposed "preferences" for products or vendors based on environmental considerations originate in statute (e.g., set-asides and, potentially, price evaluation preferences). Among the major attribute-based preferences, the only one not currently based in statute is that for environmentally preferable products. However, where such products are involved, agencies must "[e]mploy acquisition strategies that … maximize the utilization of environmentally preferable products and services (based on EPA-issued guidance)" and require contractors operating or providing support services at government-owned facilities to establish "program[s] to promote cost-effective waste reduction in all operations and facilities covered by th[e] contract." These types of preferences are unlikely to violate Subpart 3.1 or CICA because they do not favor certain products or vendors in the source selection process and, thereby, impermissibly restrict competition. In addition to the attribute-specific authorities, there are also general contracting authorities that would allow agencies to purchase products based on environmental considerations in certain circumstances. While CICA would arguably not allow agencies to prefer certain products or vendors across the board without statutory authority, it provides explicit statutory authority for agencies to define their requirements based on their needs. Thus, if there were a situation where an agency required a product with specific environmental attributes, the agency could generally draft its solicitation so as to obtain that product because CICA provides them with explicit statutory authority to do so. Agencies' specifications articulate their requirements to prospective contractors and form the basis upon which agencies select contractors. Only bids or offers that conform to agency specifications or statements of work are deemed "responsive" and could form the basis for the award of a government contract. Although requirements tied to environmental attributes could potentially be used in procurements conducted by sealed bidding or negotiated procurement, there are other aspects of negotiated procurement that some commentators have suggested could be more congenial to consideration of environmental attributes. While agencies using sealed bidding award contracts on the basis of price alone (i.e., to the lowest-priced qualified responsible bidder), agencies conducting negotiated procurements use agency-determined evaluation factors in selecting the contractor. Certain uses of evaluation factors based on environmental considerations have been upheld by the Government Accountability Office (GAO) in bid protests. In Sunshine Kids Service Supply Company , for example, the GAO upheld an agency's award of a contract based, in part, on consideration of the vendors' "environmental stewardship," while in Future Solutions, Inc. , it upheld a similar award based, in part, on consideration of the vendors' recycling programs for toners and cartridges; use of green delivery vehicles; and implementation of environmental management systems. However, although agencies' use of evaluation factors tied to environmental considerations has been generally upheld, agencies are subject to certain limitations in the use of such factors, the most significant of which is arguably that evaluation factors must "represent [a] key [area] of importance and emphasis … and [s]upport meaningful comparison and discrimination between and among competing proposals." In other words, any evaluation factors based on environmental considerations would have to be related to the goods or services being acquired. Additionally, agencies must also generally consider price or cost, past performance, and the quality of the product or service as evaluation factors in every procurement. This means that any environmental factors would be one among many—possibly competing—factors on the basis of which the award is made. Similarly, while some commentators have suggested that the focus on "best value" in negotiated procurements would result in de facto preferences for products with desirable environmental attributes, such commentators may confuse "best value" as the goal of all federal procurements and "best value" as a synonym for the cost/technical tradeoff process involved in negotiated procurements. "Best value" is the goal of all federal procurements, but there is no special legal authority for implementing this goal independent of existing statues and regulations, of which only the attribute-focused statutes would authorize agencies to prefer products or vendors based on environmental considerations. "Best value" is also the desired result of the cost-technical tradeoff process in negotiated procurements, but the use of this process is subject to all the limitations discussed above (e.g., evaluation factors must represent a key area of importance and emphasis). This makes it unlikely that the reportedly lower life cycle costs of environmentally sound products would necessarily result in the selection of such products in all or even most procurements. While agencies do not have authority to prefer certain contractors over others based on environmental considerations, they are required to avoid dealings with environmentally irresponsible contractors in certain circumstances. Agencies are prohibited by statute from contracting with vendors who have been debarred from federal contracts by the Administrator of the Environmental Protection Agency (EPA) for certain violations of the Clean Air and Clean Water Acts. Such debarments are mandatory for specified violations; last until the EPA Administrator certifies the condition is corrected; and can be waived only if the President determines that doing so is in the "paramount interests of the United States" and notifies Congress. However, these debarments apply only to the vendors' operations at the facility at which the violations occurred. This means that vendors with multiple facilities are not excluded from all federal contracts. There could also potentially be circumstances in which a particular contractor who is not debarred from federal contracting is found to be nonresponsible for purposes of the award of a federal contract because of environmental considerations. Federal law requires that agencies determine that prospective contractors are "responsible" before awarding any contract. This determination is based on a number of factors, including the contractors having the necessary technical skills and facilities to perform the contract, or the ability to obtain them. Certain contractors could conceivably be found nonresponsible for certain contracts because of environmental considerations under these factors. However, because responsibility determinations must be made on the basis of the most recent information available, vendors who have remedied previous environmental problems could not repeatedly be found nonresponsible on the basis of these problems. Implementation of the attribute-specific and general authorities that could allow agencies to prefer certain products or vendors based on environmental considerations involves two components: identification of prospective products and contractors, and implementation of various purchasing methods. In the case of the attribute-specific authorities, contracting officers generally rely on third-party designations of eligible (or ineligible) products, rather than making their own determinations of which products qualify on a case-by-case basis. In fact, the statutes and executive orders providing such authority often require both that (1) one agency, with appropriate technical expertise, designate eligible products and (2) other agencies purchase these products. Where recovered-content products are involved, for example, the EPA designates eligible products, while the U.S. Department of Agriculture designates biobased products. When relying on the general contracting authorities, program managers or other program personnel identify their requirements and communicate these requirements to the contracting officer, who incorporates them into a solicitation. Parties excluded from government contracting because of violations of the Clean Air and Clean Water Acts, among other things, are listed in the Excluded Parties List System (EPLS). Responsibility determinations are made on a case-by-case basis by contracting officers considering information included in the Federal Awardee Performance and Integrity Information (FAPIIS), as well as information submitted by the prospective contractor and from other sources. When purchasing products or services under either the attribute-focused or general contracting authorities, agencies rely on the same vehicles or methods generally available for their use in purchasing goods or services. This includes (1) bilateral contracts; (2) the Federal Supply Schedules; and (3) government-wide commercial purchase cards. When determining which of these options to use, contracting officers consider various factors, such as the nature or type of the agency's requirements (i.e., goods or services, or both); the anticipated cost (or price); and the complexity of the procurement. Probably the best-known procurement vehicle is the bilateral contract, which "means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them." Contracts are the end result of a process that begins when agencies identify their requirements and craft solicitations to procure goods or services meeting these requirements. Solicitations identify, or describe, what agencies want to buy and also include applicable information, instructions, or guidance related to, for example, packaging and marking, inspection and acceptance, contract administration, special contract requirements, applicable contract clauses, representations and certifications, and evaluation factors for award. As discussed earlier, these factors may include ones that address environmental considerations and attributes. For example, an agency that uses the tradeoff source selection method for a specific procurement could include environmental considerations as a non-cost, or non-price, evaluation factor provided that they have a bona fide need for goods or services with specific environmental attributes. Another option available to agencies procuring goods or services with desirable environmental attributes involves the General Services Administration's (GSA's) Federal Supply Schedules. A schedule is an online "catalogue" that contains goods or services offered by multiple vendors. Each schedule focuses on a particular category of goods and services, and GSA has established and maintains over 40 schedules, covering things such as "advertising and integrated marketing solutions" (Schedule 541) and "professional engineering services" (Schedule 871). Federal agencies can use GSA's online shopping and ordering system, GSA Advantage!®, to procure goods and services off the Schedules. Several special buying programs are listed on this Web page, including "Environmental," which leads to a separate Web page ("Go Environmental with GSA Advantage!®"). This Web page enables prospective buyers to identify the type of product or service they plan to purchase and then select one or more environmentally based criteria or filters. Among the 14 criteria listed are biobased, Energy Star® compliant, and EPEAT. However, GSA leaves it up to vendors to determine and identify, as applicable, the environmental attributes of the products or services they provide. GSA notes that, for some products, "vendors denote whether the product meets the specifications and determine which symbols [environmental criteria] to display." Elsewhere on its website, GSA offers the following caveat regarding vendors' claims about environmental attributes: To assist customers' [agencies'] efforts in complying with the requirements of environmental laws and Executive Orders (considering price, availability, and performance requirements), Schedule contractors have been requested (where possible and/or feasible) to identify items that: Have recycled content (e.g., EPA-designated items with specific content requirements); Are energy and/or water saving (e.g., Energy Star); [or] Have reduced pollutants (e.g., low volatile organic compounds (VOCs) and chromate-free). Note : Customers should review contractor literature and contact the contractor directly to obtain complete information regarding environmental claims. Moreover, recent court decisions suggest that vendors' misrepresentation of their products on GSA Advantage!® is not sufficient for liability under the False Claims Act absent government purchases of the misrepresented products through the site. Agency personnel authorized to make "micro-purchases" can also use government purchase cards, which are similar to credit cards, to purchase so-called green products or services. A micro-purchase is "an acquisition of supplies or services using simplified acquisition procedures [e.g., a purchase card], the aggregate amount of which does not exceed the micro-purchase threshold," which is generally $3,000. When using a government-wide commercial purchase card, agency personnel may generally buy any commercially available supply or service not prohibited by either federal or agency-specific procurement regulations. However, the May 2011 amendments to the FAR expressly provide that federal environmental policies pertaining to energy, water efficiency, and renewable energy extend to all acquisitions, including those at or below the micro-purchase threshold and made with government-wide commercial purchase cards: The Government's policy is to acquire supplies and services that promote a clean energy economy that increases our Nation's energy security, safeguards the health of our environment, and reduces greenhouse gas emissions from direct and indirect Federal activities. To implement this policy, Federal acquisitions will foster markets for sustainable technologies, products, and services. This policy extends to all acquisitions, including those below the simplified acquisition threshold and those at or below the micro-purchase threshold (including those made with a Government purchase card) . In procurements not covered by the May 2011 amendments, though, agency personnel could retain substantial discretion in determining what to purchase. Personnel could thus select goods or services based on their environment attributes, although they would not necessarily be required to do so.

Summary: Coupled with increasing concerns about the environment, the magnitude of federal spending on contracts has prompted questions from Members of Congress and the public about the role of environmental considerations in federal procurement. These include: to what extent do agencies consider environmental factors when procuring goods or services? What legal authorities presently require or allow agencies to take environmental factors into account when acquiring goods or services? How are existing provisions authorizing agencies to consider environmental factors implemented? This report provides an overview, answering these and related questions. The federal procurement system is designed "to deliver on a timely basis the best value product or service to the customer, while maintaining the public's trust and fulfilling public policy objectives." Environmental objectives can generally be among the public policy objectives that factor into federal procurement. However, they are not necessarily the most significant objectives overall or in any specific procurement. There are numerous other objectives (e.g., obtaining high quality goods and services at low prices, promoting American manufacturing, protecting small businesses, fostering affirmative action) that can also factor into procurement decisions. The relationship and prioritization among these different objectives is not always clear. Various legal authorities currently require or allow contracting officers to take environmental considerations into account when procuring goods and services. These authorities can be broadly divided into three categories: (1) "attribute-focused" authorities, generally requiring agencies to avoid or acquire products based on their environmental attributes (e.g., ozone-depleting substances, recovered content); (2) general contracting authorities, allowing agencies to purchase goods with certain environmental attributes when they have bona fide requirements for such goods; and (3) responsibility-related authorities, which require agencies to avoid certain dealings with contractors that have been debarred for violations of the Clean Air or Clean Water Acts. "Attribute-focused" authorities arguably do not deprive vendors of ineligible products of due process or equal protection in violation of the U.S. Constitution. However, certain preferences for products with desired environmental attributes, or vendors of such products, could potentially violate procurement integrity regulations and the Competition in Contracting Act if not based in statute. Use of evaluation factors based on environmental considerations is possible in negotiated procurements, but subject to certain conditions, and the reportedly lower lifecycle costs of "green" products do not, per se, mean that their acquisition is justified on a "best value" basis. Agencies generally implement these authorities by relying on third-party designations of products with specific environmental attributes and using standard purchasing methods, including bilateral contracts, the Federal Supply Schedules, and government-wide commercial purchase cards. Beginning with President Obama's 2009 Executive Order on "Federal Leadership in Environmental, Energy, and Economic Performance," the Obama Administration has taken steps to promote consideration of environmental factors in federal procurement. Recently, for example, the General Services Administration (GSA) reported on plans to incorporate consideration of greenhouse gas emissions inventories into federal procurement decisions, and the Federal Acquisition Regulation was amended to require that contractors report on their purchases of biobased products under service and construction contracts. Certain such initiatives have prompted controversy, however. Some Members of Congress sought to restrict the Department of Defense's purchase of biofuels as part of the National Defense Authorization Act for FY2013, and some commentators have objected to GSA's use of the LEED rating system for buildings.