Public procurement 

Public procurement is an important lever. However, to incorporate sustainability criteria, questions related to procurement and funding regulations and the financing of additional costs must be addressed. The public procurement action area covers contracts for the supply of goods and services at all levels of public procurement bodies: Federal Government, Länder and municipalities. The NCES focusses primarily on measures at federal level, while also considering potential cooperation with the Länder and municipalities and at EU level. Public procurement holds significant market power, which can also be leveraged to reduce environmental impact. However, there are still considerable deficits in the implementation of general sustainability criteria. The majority of procurement processes continue to follow a linear approach.  As a goal of sustainable public procurement, the concept of circular procurement, meaning procurement that aligns with energy and material cycles within supply chains, requires a fundamental rethinking of procurement processes, strategic procurement management and the reorganisation of procurement procedures. 

This shift cannot be initiated by individual organisations alone but also requires governance through economic, procurement and waste management regulations. Public sector demand is a key driver for transitioning from a linear to a circular economy, yet it depends on a functioning overall system, particularly logistical infrastructure for take-back and preparation for reuse, as well as a sufficiently large and qualified supply market that can provide the required functionalities.

The following barriers hinder circular procurement in Germany:

  • Procurement offices primarily acquire goods and services on behalf of their internal clients in a largely linear manner and often base decisions on the initial purchase price as the most important criterion, without considering long-term costs and benefits over the entire life cycle. Although there are legal provisions for circular procurement, particularly in section 45 of the Circular Economy Act (KrWG), which applies to federal authorities, legal entities under public law, special funds and other institutions under federal supervision, these requirements are not always known to procurement officers and internal clients, are not correctly applied or are insufficiently operationalised. Additionally, there is a lack of suitable guidance to help implement these requirements.
  • It is not legally defined, particularly in terms of budgetary law, whether and to what extent procurement offices and internal clients are permitted to incur potential additional costs for circular procurement. The conflict of objectives between short-term budgetary frugality, which focusses on minimising direct acquisition costs, and genuine economic efficiency, which considers the total life cycle costs of products (including external costs), is often unresolved in procurement practice.
  • Procurement offices lack a central contact point that could supplement existing resources by providing legal guidance on circular procurement and support in preparing tender documents.
  • Shared structures and strategies that bring together all circular economy actors with the public sector have not yet been widely established.
  • Indicators and tools for labelling and quality assurance of circular products, as well as for monitoring procurement behaviour, are largely lacking.

The following ongoing legislative processes, regulations and measures at the national level are relevant to this action area and will be considered in the implementation of the NCES: 

  • Reform of national procurement law (public procurement reform package) by the BMWK: This reform aims to strengthen sustainability in public procurement and make it more binding.
  • Preparation of the further development of the Federal Government’s General Administrative Regulation on the Procurement of Climate-Friendly Services (AVV Klima) to also cover environmentally friendly services (AVV Klima und Umwelt). This revision will incorporate the results of the public procurement reform package and strengthen and clarify the requirements for circular procurement. The new AVV is expected to be evaluated after an appropriate period.
  • The Federal Government’s Maßnahmenprogramm Nachhaltigkeit 2021 (2021 Sustainability Action Programme), which includes various restructuring and process optimisation measures for federal public procurement. According to section IV of the action programme on procurement, federal authorities and institutions are required to procure standardisable products and services electronically through framework agreements from the Federal Purchasing Portal (Kaufhaus des Bundes, KdB), provided such agreements with sustainability criteria exist. The central procurement bodies that use the KdB as a platform for the provision of framework contracts, as well as all other procurement bodies within the federal administration, must align their procurement increasingly with the guiding principle of sustainability. According to the action programme, the KdB is to be further developed as a central body for the sustainable procurement of standardisable products and services, where available on the market. The planned inclusion of circular procurement criteria in future framework contracts of the KdB will be implemented swiftly, in line with available resources.
  • Key principles for a recycling label for sustainable public procurement will be developed. This includes assessing the feasibility of providing information on recyclability and recycled content, as well as determining which product groups would be particularly suitable for such a label. The label will be designed to comply with relevant regulations, including procurement regulations.
  • Circularity criteria will also be integrated into additional quality labels used in procurement.
  • The BMWK will advocate linking definitions of climate-friendly basic materials with national and European procurement law in order to strengthen markets for green products. This applies to definitions for climate-friendly steel and cement, as well as potentially climate-friendly ethylene as outlined in the BMWK concept Lead markets for climate-friendly basic materials.
  • At EU level, public procurement is also being addressed as a key driver, for example in the Ecodesign Regulation, the Construction Products Regulation and the EU Monitoring Framework by Eurostat, which will include an indicator for sustainable public procurement in 2024. 

The overarching vision of a circular economy in the action area of public procurement is that procurement bodies at the federal, Länder and municipal levels consistently align procurement, particularly of goods and services, with the principles of circularity, while adhering to the budgetary principles of efficiency and cost-effectiveness. 

Based on the vision of a comprehensive circular economy for 2045 presented in Section 1.3, and complementing the guiding principle and overarching goals formulated in Section 2, the following additional goals apply to this action area:

  • Unless obviously excluded by the nature of the case, an assessment is carried out for every need  to determine how it can be met in line with circular procurement. All possible ways of meeting the need are considered, including purchasing, leasing, product-as-a-service systems and extending product lifespans.
  • New working methods, use patterns, longer durability, service models, and maintenance, repair and upgrade measures are used as much as possible to limit new acquisitions to the necessary level.
  • Needs assessment and performance specifications prioritise long life cycles, products with recycled context and the circularity of procured items.
  • Linear products or those designed for short life cycles are only selected in justified exceptional cases.
  • Indicators for circular procurement are developed and consistently applied.
  • Close cooperation and specific procurement partnerships between public sector institutions enable joint purchasing, exchanging or leasing wherever possible.
  • When defining award criteria for evaluating tenders, sustainability criteria, including circular procurement criteria, are considered in all suitable cases and where appropriate included alongside price in the performance specification.
  • Once products are no longer needed, they are primarily passed on to third parties for refurbishment or reuse rather than being disposed of. The necessary adjustments to the legal framework to allow public bodies to resell and repurpose products are in force. If reuse is not possible, decommissioned products are recycled in a way that prioritises the highest possible level of the waste hierarchy.
  • Resources for training staff on implementation are expanded accordingly.

To achieve this, the following timeframes are set for medium-term objectives:

  • By 2030, the Federal Government will define qualitative and quantitative target values, including measurable indicators, for its own circular procurement, based on an evaluation of existing programmes and targets and in line with developed guidelines. Clear timelines for achieving the objectives by 2045 will be established.
  • Early discussions will be held with the Länder with the aim that the Länder and municipalities set qualitative and quantitative targets for circular procurement by 2035. Efforts will be made, in coordination with the Länder and municipalities, to introduce a shared digital monitoring system. 

Embedding circularity in public procurement through regulations

The existing regulations on a circular economy (particularly in section 45, paragraph 2 of the Circular Economy Act, KrWG) are not sufficient to effectively implement circularity in public procurement. They are therefore to be supplemented and clarified through appropriate regulations. The regulations to be developed for implementing these provisions must continue to allow the special interests of the Federal Ministry of Defence to be taken into consideration. The Russian war of aggression against Ukraine has demonstrated the fragility of the European peace framework. This necessitates ensuring accelerated public procurement to maintain the material readiness of the armed forces, without compromising the quality of the procured goods.

Taking into account the results of the procurement transformation package, work is underway to introducea General Administrative Regulation on the Procurement of Climate- and Environmentally Friendly Services (AVVKlimaundUmwelt): It is intended to replace the General Administrative Regulation on the Procurement of Climate-Friendly Services (AVV Klima) and the Timber Procurement Policy and, if necessary, consolidate provisions that have not yet been laid down or have been regulated elsewhere. This will involve a review of how the requirement to take account of life cycle costs as an award criterion when determining the most cost-effective tender, which is already included in the AVV Klima, can be better reflected in procurement practice.

Prioritising the procurement of used and refurbished products: There will be a review to determine how the existing special legal provision for the Federal Government in section 45(2) no. 2 of the Circular Economy Act (KrWG) can be more effectively applied in practice, for example through an administrative regulation.

Assessment to determine whether the principles ofefficiency andcost-effectivenessshould be expanded toinclude environmental considerations in secondary legislation for cost-effectiveness assessments: In the cost-effectiveness assessments conducted before procurement, environmental costs (life cycle costs, external costs) must be evaluated in a standardised way, factored into decision-making and documented. The BMUV will submit concrete proposals to the relevant committee. 

Enabling the continued use of long-lived products at the end of their life cycle by:

Internal clients within the direct federal administration will be required to prioritise making decommissioned items available for refurbishment or recycling them in accordance with best practice, if reuse, resale or donation is not possible. 

Preferential transfer or donation of Federal Government products that are no longer needed to non-profit organisations and public interest enterprises, particularly those whose main aim is the social and professional integration of disabled or disadvantaged persons (as defined in section 118 of the Competition Act (Gesetz gegen Wettbewerbsbeschränkungen, GWB). This will be implemented by the Federal Government in cooperation with the German Supreme Audit Institution Bundesrechnungshof (BRH) through amendments to the existing BRH directive on the disposal of decommissioned assets and the current directive on service life, decommissioning and disposal of IT equipment and software (IT Council Decision 2013/7). 

 

Legal provisions will be created to enable the sale of decommissioned items through public procedures. 

The Federal Government will promote the adoption of similar regulations by the Länder and municipalities within their respective areas of responsibility. 

Statistical recording of circular procurement will be improved. An indicator[i] for circular procurement will be developed, and an assessment will be conducted to determine to what extent the Public Procurement Statistics Ordinance (Vergabestatistikverordnung, VergStatVO) can be amended accordingly. 

Digitalising procurement and providing digital support for monitoring

Circular procurement as part of public procurement will be supported by the digitalisation of needs assessment, procurement processes and monitoring. The development of digital tools[ii] for circular procurement will be initiated, and these tools made available for use at all administrative levels. Interfaces with established award management systems (VMSs) used by procurement offices will be leveraged. Mandatory use at the federal level is planned. 

The federal administration is particularly aiming to implement the following measures: 

  • Reviewing, developing, establishing and introducing digital pooling and sharing platforms. These platforms will facilitate joint inventorying and procurement of infrequently used items (pooling solutions) and serve as digital exchange and redistribution platforms at the federal level. Products at the end of their service life can be transferred to third parties, such as social institutions, via these platforms.
  • Developing and, following successful pilot implementation, mandating the introduction of (digital) evaluation tools for circular procurement at the federal level. These tools will provide procurement bodies with additional support and information on implementing circular procurement.
  • Developing and introducing a digital contract and supplier management tool with an interface to the planned federal award management system (VMS), which identifies circular economy-relevant information. This will enable automated monitoring of warranty periods, maintenance intervals, repair services and guarantees, as well as the storage of standardised information such as type of delivery, packaging and reuse options.
  • Developing and introducing a digital monitoring tool to record data on circular procurement. Existing data collection structures for public procurement (such as eForms) will be expanded in future, including indicators for circular procurement. Procurement bodies will be able to record data on the quantity and type of procured goods and services and the circular procurement criteria applied. This will help identify untapped potential in circular procurement. 

Pooling expertise and organisational measures

The pooling of expertise and the strengthening of central procurement bodies within federal authorities and institutions, as set out in the Interministerial Working Group on Sustainable Public Procurement (Interministerieller Ausschuss Nachhaltige Öffentliche Beschaffung, IMA nöB), will be expanded. The organisational integration of Länder and municipalities into the work of the IMA nöB will be assessed and considered for future implementation.

Taking into account personnel and financial resources, a central advisory body for circular procurement will be established at the federal level, housed within the Competence Center for Sustainable Procurement (KNB) as the main advisory and information centre for sustainable procurement. The existence of multiple advisory bodies for public procurement makes it difficult for procurement bodies to obtain the necessary guidance on complex circularity issues from a single source. Further centralisation will consolidate the strengths of the various advisory bodies and ensure targeted provision of information. This will enable procurement to better meet requirements related to climate action, environmental protection, innovation and circular economy. The following services will be provided: 

  • Centralised advice on the legally compliant formulation of circular procurement processes, including individual consultations, wherever structurally feasible and legally permissible. This will be reviewed in coordination with the Länder.
  • Provision of information, practical guides and best practices for circular procurement. This also includes aggregating the findings of market research efforts.
  • Training programmes on circular procurement for federal authorities, focusing on raising awareness of challenges and presenting possible solutions, while also being open to Länder and municipalities as part of the Sustainable Procurement Training Initiative (Fortbildungsinitiative nachhaltige Beschaffung, FoBi). These measures will include suitable information services for internal clients and management alongside procurement bodies.
  • Avoided procurement, for example through reuse, continued use or repair, will be promoted as a resource conservation strategy and showcased through practical examples.

A working group will be established, involving representatives of the Länder and local government associations, with the aim of contributing to the harmonisation of procurement regulations and requirements for circular and sustainable procurement and promoting their application. This working group will be integrated into the structures of the IMA nöB and the KNB.[iii] 

Expansion of cooperation

To improve cooperation and strengthen synergies in procurement, the following instruments will be introduced:

  • Implementation of model projects for procurement cooperation and support in establishing sharing models[iv] between procurement bodies. To enable internal clients and procurement bodies to gain practical experience with circular procurement, they will work together on collective procurements and temporary procurement collaborations within the limits of competition law. Procurement bodies will receive support in establishing procurement cooperations and sharing models.
  • Establishingcooperation between the public sector and companies or organisations with circular business models. Refurbishment, remanufacturing and reuse of procured items will be promoted through cooperation and network-building between internal clients, procurement bodies and companies or organisations with circular business models (such as reuse organisations), while ensuring compliance with procurement law. The exchange of information on respective needs will also be facilitated.
  • Establishingexchange opportunities and networks among different stakeholders. Successful circular procurement requires collaboration with various stakeholders, including the Länder, municipalities, businesses, chambers of industry and commerce, chambers of skilled trades and civil society organisations. The Federal Government will support the establishment and operation of networks while ensuring compliance with competition law.

Research funding

  • To further strengthen circular procurement in the long term and support the measures outlined above, the following research and innovation needs should be funded by the Federal Government:
  • Development of product group-specificminimum requirements for circular procurement.
  • Modelling and assessing environmental impacts, especially regarding circular product alternatives of particular relevance to public procurement.
  • Development of criteria and indicators enabling reliable labelling of circular products or aspects (such as durability, functional reliability, longevity, repairability, recyclability and recycled content). These should be designed to serve as verification mechanisms within the procurement process. 

 

[i] The indicator is being developed under the lead responsibility of the BMUV.

[ii] The Federal Government is developing implementation concepts, taking existing tools into account, selecting suitable options, developing prototypes, evaluating them, rolling them out for use and making them available to the authorities.

[iii] The lead responsibility for this working group lies with the BMUV.

[iv] The BMUV is expected to lead on implementation.