Moving Towards Performance-Based Specifications in Public Procurement

This briefing note by the International Institute for Sustainable Development explores how public procurement can transition from buying discrete products to procuring functions and services through performance-based specifications. It argues that this shift can drive resource efficiency, stimulate private sector innovation, and reduce costs, provided the business models are aligned with the environmental impacts of the specific product categories.

• Performance-based specifications allow public authorities to define their needs by the required results or functions—such as luminosity of light or fuel efficiency—rather than prescribing the exact processes, materials, or inputs needed to achieve them. This approach transfers the risk of innovation to the private sector, which is better positioned to identify market options and optimize delivery costs.
• Transitioning to Product Service Systems (PSS)—where the service component is intensified and ownership often remains with the producer—can reduce environmental impacts through three 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 (pay-per-use) rather than fixed.
• Public procurement is a powerful lever for sustainable development because states spend between 13% and 20% of their annual GDP on goods, services, and works in OECD countries. Using this purchasing power to demand PSS can support the green economy and realize significant cost savings, as seen with Energy Service Companies (ESCOs) in the United States and South Africa.
• The environmental effectiveness of leasing or PSS depends on the product's life-cycle impact and the business model. Leasing is beneficial for products with high use-phase impacts (e.g., printers, washers), but can be environmentally worse for products where impacts are concentrated in production and disposal (e.g., laptops, carpets). Additionally, PSS only reduces environmental impact if it includes a 'pooling' component; without pooling, it may increase total production impact.
• Implementing performance-based specifications requires a shift in organizational culture and procurement professionalization. It necessitates new supplier-buyer relationships based on trust, market consultation processes, specialized training for procurers, and the establishment of clear, measurable testing methods and acceptance criteria to verify performance.
• Resource efficiency improvements could meet 30% of worldwide resource demand by 2030, potentially saving up to US$3.7 trillion annually. Performance-based specifications help governments move toward a 'total cost of ownership' model, accounting for direct and indirect costs across the entire life cycle of a system.

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} }