Government procurement needs to change to address climate change

Frank Van Beuzekom
Dec 20, 2023

Originally published in MIT tech review arabic


Sustainability means that the world is on a schedule. Achieve net zero by 2050. Achieve the SDGs by 2030. Complete sustainability transitions in firms by 2025. There is a timeline and failing to achieve it has systemic consequences beyond the bottom-line. The ability for any firm, any country, any community to thrive under uncertain conditions becomes a more difficult question.


The burden then falls on how governments and businesses can work together; but most fundamentally, how businesses can effectively pursue sustainable transformations of their core models to align with the requirements for national and global sustainable transitions. From circular retrofitting of manufacturing systems and circular platforms to core shifts of CSR programs to the heart of corporate strategy, these processes are already underway.


But for each of them there is a common experience. The timeline from policy decision makers takes too long. From argument to policy and policy to action is misaligned fundamentally with sustainability timelines to avoid the extremes of climate change. In the US, the landmark climate bill that was just passed is the result of years of negotiation, allocating billions over a 10-year timeline. A piece of policy in Limbo for 18 months.  When it comes to corporate transition and sustainability transitions, our ideas of how much time any given task requires is skewed. Decision making is not aligned with urgency. We know this. But this lack of urgency is not about the complexity of the items being negotiated - it's about organisational inertia, unsuited historical processes, unsuited institutions, and frameworks in need of changing.

Where the rubber meets the road is not simply in aligning on billion-dollar investments, it's the contracts and procurement which comes in the post-agreement timeline. How long does it take to go from funding the 10 billion programs, to funding the right sub-program, to scaling that sub-program to impact. Academic reviews can take 6-12 months for high profile journals, due to the realities of the academic profession. Requesting peer reviews from busy academics fits into a tight scheduling, causing delays; and the time for processing and thinking about the article also adds time.


Either there's something wrong with the way in which we get from agreement to action in terms of funding and contracting with the necessary consumer, environmental, and quality assurance; or, at the most basic level, we are structurally unable to address climate change in the timeline required to avoid catastrophic environmental change.


This takes us always back to one of the most essential conundrums. The trade-off between expediency and legitimacy, between assurance and agility, between simplicity of decision-making processes and missed fundamental risks.


Firms and governments which can effectively innovate in the basics of timeline management will be central to sustainable transformation - and even further, to embedding the capacity for repeated, expedient, legitimate, and successful transformation as a national advantage. A further example from the United States is in the recent push from DARPA. Looking to build a strategic advantage in AI, they moved from an open contracting timeline to a 90-day call and 18-month delivery timeline, restricting on the input side the kinds of people submitting while focusing on high impact and high risk engagement. DARPAs novelty through contracting is in part from its ability to find the one high risk project that offsets the 85% failure rate of other projects.


So, let's consider what the options are to increase speed. Where should attention be paid?


First point of concern is the agility of the organisations themselves. Public sector contracting is generally designed with high friction - and in large part for good reason, to avoid irresponsible expenditure; or at least, to avoid the allocation of public funding more generally. However, this parallel goal ends up creating internal systems of management which align with high friction. There is a need for organisational design for a funding and contracting process designed for accelerated rate of decarbonization. Expediency should not sacrifice legitimacy, but to have expedience and legitimacy, we need organisations prepared for balancing these two together.


The second point is the number of steps and people required per step in any procurement process. For this, there may be a more technical and technological solution needed. There is a need to autonomously review how and whether any additions to a contract were made, the nature of the contract itself, and the necessity for sign off at each stage. The increased number of steps and people adds an inherent level of friction which can compound if any difficulties or delays emerge for any given partner. Consolidation and automation of this process for external review.


The third point is a need for a potential higher level of experimentation in the decision making for climate funding overall - from planning and regulation to contracting. To what extent are traditional models misaligned with urgency - or rather, to what extent are the needed checks misaligned for a process which requires both legitimacy and expediency. What alternative models of decision-making review, contracting review, could better navigate these steps? We do need more experimentation here - experimentation which will have a direct impact on what climate entrepreneurs want to scale where and when.


If decision making remains misaligned with climate necessity, decarbonization agendas will fail to meet their targets. But if experimentation and shifts push too far, they can fund projects which divert necessary capital from the investments needed to achieve decarbonization. We need both together, which affords one of the most necessary and unique areas for policy experimentation for the next decade.




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