How a Small Carbon Footprint Might Someday Win You a Government Contract

The FAR Council is considering a rule that would give preference to bids from contractors who minimize their impact on climate change.

The council has just begun the process as there is no draft rule yet out. Currently it is seeking public comment.

The FAR Council published an advance notice of proposed rule making on October 15. Those seeking to comment can access FAR Case 2021-016 on the Federal Register.

This possible rule is a response to Executive Order 14030 from May of this year. It called on the federal government to “lead by example” and use its status as the nations largest spender to speed the adoption of climate change mitigation efforts in the private sector.

To that end, the FAR Council wants to craft a rule that would “require the social cost of greenhouse gas emissions to be considered in procurement decisions.” That would mean possibly “giving preference to bids and proposals from suppliers with a lower social cost of greenhouse gas emissions.”

There are some carefully chosen words in there, but a fair reading is that if a contractor can show it doesn’t contribute to climate change as much as the competition, it could win award for that reason.

The FAR Council actually does explain what it means by “social cost” and that is “an estimate of the monetized damages associated with incremental increases in greenhouse gas emissions” and directs contractors how to find interim estimates (a PDF is available here: https://www.whitehouse.gov/​wp-content/​uploads/​2021/​02/​TechnicalSupportDocument_​SocialCostofCarbonMethaneNitrousOxide.pdf.)

That, of course, doesn’t answer all the questions. Is this going to be a procurement by procurement thing or is it going to take a look at a company’s total impact on the environment? Can a company with an enormous carbon footprint overall win a contract by pledging to use fuel efficient vehicles and solar panels? And where does that leave small businesses? Is this something they can use to their advantage or should they be exempt because the costs associated with reducing environmental impact are too great for most small businesses to withstand?

These are among the questions the FAR Council is seeking the public’s help to answer. Comments are due by December 14.