In latest edition of The Wright Toolbox:
New Final Federal Rule Requires Procurement of Sustainable Products and Services
On April 22, 2024, a new final rule was issued to amend the Federal Acquisition Regulation (FAR) to restructure and update the regulations to focus on current environmental and sustainability matters and to implement a requirement for agencies to procure sustainable products and services to the maximum extent practicable. The final rule became effective on May 22, 2024.
Background
By way of background, on December 8, 2021, the President signed Executive Order (E.O.) 14057, titled “Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability.” The Order directs agencies to reduce emissions, promote environmental stewardship, support resilient supply chains, drive innovation, and incentivize markets for sustainable products and services by purchasing sustainable products and services in accordance with relevant statutory requirements, and, to the maximum extent practicable, as identified or recommended by the Environmental Protection Agency (EPA). The Executive Office of the President’s Office of Management and Budget (OMB), Council on Environmental Quality (CEQ), and Climate Policy Office jointly issued Memorandum M-22-06 on the same date to provide direction for agency compliance with the E.O. Paragraph G of section I of the Memorandum reiterates the requirement to purchase, to the maximum extent practicable and after meeting statutory mandates, sustainable products and services identified or recommended by EPA.
In August 2022, CEQ issued Implementing Instructions for E.O. 14057. Section 4.6 of the Instructions further directs agencies to prioritize multi-attribute products and delineates when it is considered not practicable to procure sustainable products and services. The CEQ implementing instructions provide additional direction as it relates to Federal facility requirements, such as goals for pollution prevention and waste diversion and requirements for waste reduction, as well as direction for certain construction and modernization projects to meet and (where practicable) exceed the CEQ’s Guiding Principles for Sustainable Federal Buildings and Associated Instructions (Guiding Principles) (available here).
Overview of Changes
Overview of changes made to the FAR as a result of this final rule:
- FAR part 23 is now dedicated to environmental matters.
- “Sustainable products and services” is defined in FAR 2.101.
- Consolidates and updates statutory and other environmental purchasing program requirements in FAR subpart 23.1, Sustainable Products and Services.
- Creates a new omnibus contract clause at FAR 52.223-23, Sustainable Products and Services, to uniformly communicate the Government’s requirements for sustainable products and services.
- Dedicates FAR subpart 23.2 to energy savings performance contracts.
- Consolidates requirements related to hazardous and radioactive material in FAR subpart 23.3.
- Consolidates and updates Federal facility and pollution prevention requirements in FAR subpart 23.4.
- Makes other conforming changes throughout the FAR to align with the revision in FAR part 23.
- Updates agency requirements for construction and architect-engineer contracts at FAR 36.104(b)(1) to align with the CEQ’s Guiding Principles for Sustainable Federal Buildings and Associated instructions.
- Removes certain contractor reporting requirements in the clauses at FAR clauses 52.223-11, Ozone-Depleting Substances and High Global Warming Potential Hydrofluorocarbons; 52.223-12, Maintenance, Service, Repair, or Disposal of Refrigeration Equipment and Air Conditioners; and the alternates to FAR clause 52.223-5, Pollution Prevention and Right-to-Know Information.
- Finalizes the interim rule published under FAR Case 2010-001 (see 76 FR 31395, May 31, 2011).
A government created presentation illustrating the overarching changes at the FAR part/subpart level and more detailed distribution and derivation tables illustrating changes at the section/paragraph level are provided as supplemental documents to this final rule is available here, search for “FAR Case 2022-006,” click “Open Docket,” and view “Supporting Documents”.
Summary of Relevant Changes
Identification of Applicable Sustainable Products and Services
Under the final rule the contracting officer is required to ensure that the solicitation and contract identify the sustainable products and services, including the purchasing program and type of product or service, that are applicable to the acquisition, as identified by the requiring activity. In other words, the requiring activity is responsible for identifying the sustainable products and services that are applicable to the requirement and for justifying when certain sustainable products and services are not practicable.
Updates Related to the Environmental Protection Agency Recommendations of Specifications, Standards, and Ecolabels
Sustainable products and services must meet the Environmental Protection Agency (EPA) Recommendations of Specifications, Standards, and Ecolabels (EPA Recommendations) in effect as of October 2023. The EPA website now provides a search functionality to allow users to search for EPA recommended specifications, standards, and ecolabels in effect since October 2023.
Applicability to Subcontracts
There is no express requirement in the final rule for a prime contractor to flow down the clause to their subcontractors. However, the contractor must “ensure” sustainable products and services, as required by the contract, are delivered, furnished, or incorporated during performance of the contract. Thus, the prime contractor is ultimately responsible for ensuring sustainable products and services are delivered, furnished, or incorporated, regardless of whether performance is by the prime contractor or subcontractors.
Applicability to Supplies Versus Services
This rule makes several clarifications regarding applicability to supplies versus services. This rule makes clear that contractors must provide sustainable products and services, including products that meet the definition of sustainable products and services, if the products and services are: (1) delivered to the Government; (2) furnished for Government use; (3) incorporated into the construction of a public building or public work; or (4) used by the contractor in performing services under a Government contract where the cost of the products is a direct cost to the contract.
Contractors performing management and operation of Government-owned facilities are required to use products that meet the definition of sustainable products and services to the same extent that an agency would be required to comply if an agency operated or supported the facility.
If you have any questions regarding this matter, please feel free to contact any member of the Wright, Constable & Skeen Government Contracts practice group.