With the start of the Biden administration approaching, federal contractors seeking to provide the new administration with goods and services would do well to make sure their ESG (environmental, social, governance) ducks are in a row—especially the “E.”
Over the past several decades the federal government has made efforts to encourage—and even require—government contractors to adhere to certain “green procurement” specifications. But these efforts are likely to come into unprecedented focus and undergo significant expansion under President-elect Biden, who campaigned on an ambitious environmental, climate change, and clean energy agenda.
A divided Congress, however, will complicate any efforts at securing sweeping climate change legislation, and because controversial environmental regulatory action can get sucked into a seemingly endless loop of litigation, remand, and reconsideration, the Biden administration should be expected to leverage the federal procurement process to jump start the centerpiece of its environmental agenda: net-zero greenhouse gas emissions by 2050.
This pursuit undoubtedly will create new opportunities and competitive advantages for government contractors able to offer “zero emission” products and services with superior climate attributes, while also bringing increased scrutiny to the climate resiliency of the government supply chain.
Using Purchasing Power to Shift to Clean Energy
To significantly expand upon priorities of prior administrations for “green” and “sustainable” acquisitions (pursued through a range of measures, including a series of executive orders and Part 23 of the Federal Acquisition Regulation, or FAR), the Biden administration will need to make good on the campaign pledge to think and act big when exercising the federal purchasing power.
Central to that pledge was the commitment to align a “$400 billion procurement investment” with the shift to a clean-energy economy and compliance with the requirements and underlying objectives of so-called “domestic preference” requirements such as the Buy American Act.
The impact of and opportunities created by such a commitment could be far-reaching. For example, the Biden campaign’s commitment to purchase “tens of billions of dollars of clean vehicles and products” would, if executed, not only support production of zero-emission vehicles, but also support the development of infrastructure and renewable power generation necessary to fuel a transformed federal fleet.
The direction, scope, and aggressiveness of the Biden administration’s efforts to boost the acquisition of climate-friendly goods and services across numerous federal agencies should be known relatively early on. At first, it is likely the administration will issue one or more executive orders directing agencies to assess and update procurement planning as well as guidance to incorporate far more aggressive climate objectives. Ultimately, the administration will look to make amendments to the FAR.
Climate Resiliency and National Security
With expanded opportunity also comes expanded risk of new regulation, particularly for contractors engaged with the Department of Defense. Such risk is expected to flow from the Biden administration’s treatment of climate change risk as an emerging threat to national security.
The Trump administration downplayed the importance of climate change to national security (often to the chagrin of its own defense agencies), but the incoming Biden administration already is elevating such concerns by appointing former Senator and Secretary of State John Kerry as a “climate czar” with a seat on the National Security Council—the first time the NSC will include such an official.
And while a series of provisions in the National Defense Authorization Act (NDAA) authorizations in past several years have compelled DoD to assess and begin to address the climate resiliency of its installations, a report by the General Accounting Office this past July concluded that DoD lacked visibility into the climate resiliency of commercial installations in its supply chain, and recommended that the department develop a climate risk assessment of its supply chain participants.
The GAO also recommended the Defense Department update its guidance on incorporating climate risk into its procurement planning and sourcing decisions.
Climate Concerns Will Pervade All Purchasing
The precise contours of the Biden administration’s procurement action remain to be seen, but at the very least we know that “green” and “sustainable” procurement will no longer be relegated to recycled content of copy paper or energy-efficient lighting. Rather, environmental and climate concerns are likely to pervade every aspect of the Biden administration’s purchasing of goods and services.
This will ultimately lead to a dramatic increase in the number of solicitations targeting the purchase of products and services capable of advancing the administration’s climate objectives, as well as the emergence of evaluation criteria and contractual provisions aimed at improving the transparency of climate risks confronting the government supply chain.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
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Paul Freeman is a senior counsel in Crowell & Moring’s New York office and a member of the firm’s Environment & Natural Resources and Government Contracts groups. He advises clients in the energy, maritime, and aerospace and defense industries, with a primary emphasis on matters involving enforcement defense, litigation, and risk management.
Thomas A. Lorenzen is a partner in Crowell & Moring’s Washington, D.C., office, the vice-chair of the Environment & Natural Resources group, and a member of the Government Affairs group. He works with clients seeking to successfully navigate the federal environmental rulemaking process.
Elizabeth B. Dawson is a counsel in the Environment & Natural Resources group in Crowell & Moring’s Washington, D.C., office. Her practice ranges from agency rulemaking petitions under the Clean Air Act to Superfund liability and allocation disputes.