On May 31, 2011, federal agencies joined retailers, such as Walmart and Target, in embracing sustainability in their acquisition policy. An interim rule amending the Federal Acquisition Regulation (FAR) requires federal agencies, with certain exceptions, “to foster markets for sustainable technologies, materials, products, and services”1 by implementing new, more stringent product and high-performance sustainable building design, construction, renovation, repair, maintenance, and management practices.2 (Sustainable Acquisition Interim FAR). Since this is an interim rule, the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration are accepting public comments until August 1, 2011. The breadth of the rule’s impact and the complexity of the issues suggest that it may be prudent for government acquisition officers, contractors, and manufacturers of products purchased by the government to provide comments, notably with respect to six key provisions.

First, the Sustainable Acquisition Interim FAR requires agencies to “ensur[e] that 95 percent of new contract actions (including those for construction) contain requirements for products that are designated as energy efficient, water-efficient, biobased, environmentally preferable (e.g., EPEAT-registered,3 non-toxic or less toxic alternatives), non-ozone depleting, or those that contain recovered materials.”4 The requirement encompasses a wide range of product attributes, but perhaps the most controversial aspect is the criterion that could ban the purchase of products that contain “non-toxic or even less toxic alternatives.”

Unfortunately, there is no definition in the Sustainable Acquisition Interim FAR (or a generally accepted definition elsewhere) of what is non-toxic, less toxic or even what type of data is sufficient for such a determination. On its face, the Sustainable Acquisition Interim FAR seems to impose an absolute requirement to use the less toxic alternative, regardless of other consequences. The mere fact that substitution of one product for another product may result in less exposure does not necessarily mean that there is a meaningful reduction in risk. The decision to substitute one product for another traditionally has considered the degree of risk reduction (if any), the comparative effectiveness of the products, the lifecycle impacts of each product (such as exposure during manufacturing, energy intensity differences, and increased costs), and costs. As a practical matter, the interim rule is likely to unleash a flood of difficult-to-prove claims by companies asserting that their products are safer than their competitors’ products. Indeed, it is not clear that “less toxic” even means less exposure to a toxic substance, since it could be interpreted as meaning that a product that contains a lower total concentration of a toxic substance is “less toxic” (regardless of the likelihood of exposure). Increasingly, environmental groups, legislatures, and some regulators have argued that the mere presence of a “toxic” chemical in a product warrants restrictions on uses or a ban, while critics object this is a meaningless measure of concern.

The burden and complexity of the decision that must be made by the federal acquisition managers under the new rule is far beyond the current resources available to either the private sector or the federal government. Even more troubling, nothing in the preamble suggests a check and balance on the government’s decision to declare one product more energy efficient or less toxic than another.

Second, federal “[c]ontractors will be required to support the goals of an agency’s environmental management system”5 and contractors operating government-owned or -leased facilities in the United States must comply with the environmental requirements applicable to the contracting agency (unless the agency head applies an exemption).

Third, federal agencies and contractors must implement high-performance sustainable building design, construction, renovation, repair, operation, and management. These buildings must now be managed in a manner consistent with the “Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings.”6 These principles include requirements to: (a) employ integrated design principles; (b) measure energy efficiency at all new major installations using the Energy Star Benchmarking Tool; (c) optimize energy performance; (d) protect and conserve water; and (e) reduce environmental impact of materials.

These requirements not only affect the method and costs of designing, constructing, and maintaining the approximately 445,000 buildings (with total floor space of more than 3 billion square feet) and the 57,000 leased buildings (comprising 374 million square feet of floor space),7 but they may set de facto “generally accepted practices” for building design, construction, and maintenance. However, since the economic framework for government buildings is different than for the private sector, such practices may have a disproportionate impact on the commercial building sector, which is still recovering from the recent economic downturn. Additionally, these requirements will have an indirect effect on the manufacturers of building materials generally.

Fourth, government contractors are required to make paper submissions to the government on double-sided 30 percent post-consumer fiber paper, whenever practicable, unless they use electronic commerce methods. The current regulations only encourage the submission of paper documents on recycled paper.

Fifth, although this interim rule deletes the requirement that contractors report to agencies their compliance with toxic chemical release reporting, the rule states that contractors must comply with reporting required by existing or future statutes and regulations.

Lastly, the Sustainable Acquisition Interim FAR requires compliance with the Sustainable Acquisition Rule policy over other government contracting policies, whenever the Sustainable Acquisition Rule policy is inconsistent with the other government contracting policy.8 This policy preference, in effect, sweeps aside decades of carefully crafted, experience-based policies that were each developed to solve a particular government contracting problem. To declare a policy preference in favor of a sustainable acquisition policy may have the unintended consequences of reversing prior effective solutions that should be thought through on a case-by-case basis.

In short, the Sustainable Acquisition Interim FAR contains significant changes to government acquisition practices. While the underlying purpose and intent of the interim rule are to be commended, the necessary details are still lacking to ensure that the cure (i.e., the Sustainable Acquisition Interim FAR) is not worse than the disease (i.e., the existing FAR). Government officials, contractors, and potentially affected product manufacturers may want to comment on this interim rule in order to ensure that the final rule avoids unintended pitfalls.