Bill Hall

By Bill Hall Partner, Winston & Strawn LLP
The Federal government spends approximately $500 billion a year on products and services. On Oct. 5, 2009, President Obama issued Executive Order 13514, titled “Federal Leadership in Environmental, Energy and Economic Performance,” through which he intends to use this immense purchasing power of the Federal government to achieve his administration’s environmental goals. Any entity that sells products or services to the Federal government — such as those that sell flooring to GSA, DOD and other federal agencies for use in military bases, VA hospitals, post offices, courthouses and other government buildings — should take note.

The Order directs federal agencies to monitor, report and reduce their greenhouse gas (GHG) emissions and move toward environmental sustainability in other ways, such as reducing water consumption, promoting pollution prevention, eliminating waste and implementing sustainable federal building design, construction, operation and maintenance, and deconstruction. Through these provisions, the Obama Administration intends for the Federal government to lead by example in achieving environmental sustainability.

Of greatest significance to flooring companies that provide products and services to the Federal government, however, are provisions in the Order that guide federal agencies in their dealings with government contractors.

Not only are federal agencies directed to reduce their own GHG emissions, but they are required to take actions that would result in reduced GHG emissions from their contractors as well. By June 2010, each federal agency must have prepared a plan to implement this directive. The plans will likely include policies that reward contractors that themselves have taken steps to monitor, report and reduce GHG emissions. Flooring companies would thus be doubly served by taking action on this front today.

Perhaps the most far-reaching provision of the Order directs federal agencies to ensure that 95% of new government contracts are for products and services that are energy-efficient, water-efficient, bio-based, environmentally preferable, non-ozone depleting, contain recycled content, or are non-toxic or less-toxic alternatives. Federal agencies will be required to purchase products and services that meet at least one of the listed criteria, provided such products and services are available.

However, the scope of this provision is as ambiguous as its reach is broad. While several of the environmental sustainability metrics are defined in the Order (e.g., Energy Star-designated products are considered “energy efficient”), others are not (e.g., which products qualify as “non-toxic or less-toxic alternatives”). Although the Order provides some guidance on coordination between agencies, the possibility that different agencies will interpret the environmental sustainability metrics in an inconsistent manner remains.

Although the specifics of the Order’s implementation remain unclear, it is certain that government contractors will face new procurement policies for fiscal year 2011. Flooring companies that hope to maintain or increase business with the Federal government should prepare for the implementation of the Order in two ways. Internally, companies should focus on achieving environmental sustainability in ways that are consistent with the Order — from monitoring, reporting and reducing GHG emissions to developing products that meet the specified environmental sustainability metrics. Externally, companies and their trade associations should look for opportunities to provide input to the various federal agencies about identifying and using appropriate environmental sustainability criteria for product selection (e.g., pilot NSF 332 Sustainability Standard for Resilient Flooring).

1 The author is grateful for the assistance of Linda Leibfarth, an associate at Winston & Strawn LLP, in preparing this article.