Moving Towards Performance-Based Specifications in Public Procurement

The document examines the transition from prescriptive to performance-based specifications in public procurement, specifically through Product Service Systems (PSS). It argues that by specifying required outcomes rather than technical inputs, governments can stimulate private sector innovation, reduce natural resource consumption, and lower costs. While highlighting the potential for circularity and the success of Energy Service Companies (ESCOs), the text cautions that environmental benefits depend on the specific product category and the operational characteristics of the business model used.

• Performance-based specifications allow public authorities to define needs by the required functions (such as lighting or mobility) rather than the specific inputs or processes, which enables the private sector to innovate and reduce resource use and operating costs.
• Product Service Systems (PSS) can reduce environmental impacts through three primary mechanisms: pooling products to serve more customers with fewer units, incentivizing suppliers to increase efficiency to lower their own operating costs, and encouraging customers to reduce usage as costs become variable.
• Energy Service Companies (ESCOs) demonstrate the economic viability of functional procurement, with energy efficiency investments in government buildings in the United States and South Africa resulting in substantial cost savings.
• The environmental effectiveness of leasing depends on the product's life cycle; it is beneficial for products with high use-phase impacts (e.g., washers, printers) but can be worse than sales for products with high production and disposal impacts (e.g., laptops, carpets).
• The 'pooling' component of PSS is critical for reducing environmental impacts; without it, firms may increase total production impact without improving efficiency, potentially leading to worse environmental performance than traditional sales.
• Transitioning to performance-based specifications requires professionalizing procurement processes, including market consultations, specialized training for procurers, and the establishment of clear, measurable testing and acceptance criteria.

APA

Turley, L. (2013). Moving Towards Performance-Based Specifications in Public Procurement. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/specs_public_procurement.pdf

Chicago

Turley, Laura. Moving Towards Performance-Based Specifications in Public Procurement. International Institute for Sustainable Development, 2013. https://www.iisd.org/system/files/publications/specs_public_procurement.pdf.

Wikipedia

{{cite report |last1=Turley |first1=Laura |title=Moving Towards Performance-Based Specifications in Public Procurement |publisher=International Institute for Sustainable Development |date=December 2013 |url=https://www.iisd.org/system/files/publications/specs_public_procurement.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{turley2013moving, author = {Turley, Laura}, title = {{Moving Towards Performance-Based Specifications in Public Procurement}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = dec, url = {https://www.iisd.org/system/files/publications/specs_public_procurement.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }