Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in the Marshall Islands based on a desk review. The review applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective GPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country Overview" section with executive summary, indicative maturity rating, key achievements, potential pathways forward and timeline of key events related to advancing sustainable public procurement.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document to promote knowledge sharing and support training activities at ADB. It will be revised and improved as new information is uncovered and advances are made. If you have new information, please contact ychu@adb.org.

The Republic of the Marshall Islands (RMI) is the largest single employer in the country and government spending accounts for 73% of GDP (in 2022). Leveraging government spending to achieve the nation’s environmental and social goals can have a significant impact. However to date, the country does not specifically recognize or endorse public procurement as a policy tool to achieve its development goals.

Despite this, sustainable procurement can help achieve many priority goals set by the RMI Government. The Government committed to achieve net zero by 2050, guided by two main policy documents - the Tile Til Eo Climate Strategy 2050: Lighting the Way and The RMI Electricity Roadmap. These documents recognize that RMI is one of the most vulnerable countries to climate change due to sea level rise that threatens to inundate its low-lying atolls. While its population of 58,413 is distributed across its many atolls and islands, more than 65% is concentrated on Majuro (the capital) and Ebeye (an island on Kwajalein Atoll). Its economy depends on fisheries, remittances, development assistance and grants from the US government under the Compact of Free Association. Approximately 10% of RMI’s GDP is spent on importing fossil fuels for electricity generation alone.

As such, energy efficiency and a transition to renewables are key priorities in the country. The Government recognizes the need for government leadership and has launched several projects recently that aim to showcase energy efficiency improvements in government buildings. Within this context, the introduction of sustainable procurement can complement these projects and further leverage the government’s power to shift to a more sustainable and resilient development pathway.

>> Visual snapshot of Sustainable Procurement Maturity Level

Key Achievements

• Ambitious commitment to achieve net zero by 2050 backed by detailed climate and energy policies
  
• Understanding that government leadership will be key to demonstrate the benefits of energy efficiency
  
• Recent projects launched with activities to promote energy efficiency and climate resiliency in government buildings
  
• Procurement law framework allows life-cycle costs considerations and other procurement approaches useful for sustainable procurements
  
• Market dialogue allowed under the procurement law framework, enabling a pathway for procurers to engage sustainable suppliers
  
• Some business associations and local suppliers interested in sustainability
  
• Examples of green building and infrastructure upgrades exist in the country
  

Ongoing work

• Minimum performance labeling for government buildings planned
  
• Purchase of energy efficient air conditioners planned for government buildings and piloting of nature-based solutions (Nbs)
  
• Construction of up to three Resilient Government Facilities
  

Potential pathways forward

• Integrate sustainability criteria into ADB financed projects as demonstration
  
• Develop a policy and action plan on sustainable procurement, or integrate the concept into other policy documents
  
• Build awareness and capacity of RMI institutions on sustainable procurement
  
• Develop guidelines and tools on sustainable procurement
  
• Support pilot sustainable procurements with interested procuring entities
  
• Advance dialogue on the need for and best practices in effective monitoring of sustainable public procurements
  

>> Timeline of Implementation of Sustainable Procurement Activities

2015

2017

2018

2019

2020

2021

2023

National Gender Mainstreaming Policy priorities women’s participation in economic development

National Environmental Management Strategy aims to increase energy efficiency in government buildings by 75% by 2020 and phase out use of HFCs in all government offices by 2019

RMI commits to achieving net zero emissions by 2050, including by electrification of government fleets and use of solar lighting in government buildings

The RMI Electricity Roadmap promotes “Government whole-of-life investment decisions”

Public Procurement Act adopted

Public Procurement Regulations adopted

Procurement Manual released

Training program on Sustainable Procurement under development

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

The Republic of the Marshall Islands (RMI) does not have a dedicated action plan for sustainable procurement. However, it has set several policy priorities that sustainable procurement could contribute to achieving.

Sustainable Development Goals

This atoll country made a public commitment to the Sustainable Development Goal (SDG) Agenda through its 2021 Voluntary National Review (VNR). The VNR highlights the RMI National Strategic Plan (NSP) 2020-2030 as its central policy document on sustainable development. The Strategy outlines policy objectives related to SusPP:

• Mitigation of Green House Gas (GHG) emissions in pursuance of RMI's NDC targets and pathway to net zero emissions by 2050
  
• Increased energy efficiency in households, businesses, government, transport and other sectors
  
• Comprehensive management of waste water
  
• Promote local recycling
  
• Raise building standards through implementation of a Building Code
  
• Improve production, supply and distribution of nutritious food
  
• Promote environmental sustainability in agriculture
  
• Increase import substitution and production and export of locally manufactured goods
  
• Promote MSMEs and women entrepreneurs
  

The RMI National Environmental Management Strategy 2017-2022 (NEMS) sets concrete steps in seven key themes and connects each to one of the SDGs. Under Theme 1: Atmosphere and Climate, the NEMS outlines a goal to increase energy efficiency in government buildings by 75% by 2020 and phase out use of hydrofluorocarbon (HFCs) in all government offices by 2019. It is unknown if these targets have been achieved to date.

Climate & Energy

The RMI commits to achieving net zero emissions by 2050 in their 2018 Nationally Determined Contribution. The strategy to achieve this goal is set out in the Tile Til Eo Climate Strategy 2050: Lighting the Way (2018). It highlights specific opportunities for sustainable procurement by prioritizing the transition of Government fleets to electric vehicles (p. 35) and a shift from kerosene and liquefied petroleum gas (LPG)-powered lighting to solar lighting, including in Government buildings (p. 41). The Climate Strategy recognizes that poor investment decisions can “lock RMI into a particular development pathway for many years to come”. It highlights that “there are examples of developing countries being sold technologies that are outdated, obsolete or even outlawed” for failing to meet environmental and health standards. The country is committed to avoiding this trap.

Energy Efficiency and Renewables

The RMI Electricity Roadmap provides a strategic framework for the RMI electricity sector, to meet its climate change targets and to strengthen its role as a climate leader. The Roadmap sets out two key policy priorities:

• reduce diesel use by at least 50% below 2010 levels by 2025, and 65% by 2030
  
• improving affordability, energy efficiency, energy security, reliability of service, and quality of life.
  

The largest sources of energy use in RMI are air conditioning, refrigeration, lighting and water pumping. The Roadmap promotes “Government whole-of-life investment decisions” that consider energy use costs rather than solely up-front costs, especially in the procurement of appliances and heating-

ventilation-air-conditioning (HVAC) systems. Government leadership will be key in demonstrating the benefits of energy efficiency and conservation behaviors (e.g. lowering temperature settings for air conditioning, turning off lights and appliances). Further legislative and policy work on energy is underway, including a proposal for an Energy Sector Management Act.

Technologies recommended in the first steps of the energy transition in RMI include: “wind turbines and solar PV for generation; battery energy storage systems (BESS); advanced control systems; and other enabling technologies, such as synchronous condensers and dump loads. Controllable loads and thermal storage, in the form of ice banks for cooling buildings or hot water, could also be used. Waste-to-energy is a technology that requires further consideration and a feasibility study to determine whether it can be applied in the short term. Biodiesel generation is considered a key technology for cost-effective achievement of the 2050 target.” (IUCN, pp. 19-20) These technologies can be integrated into the design of future sustainable procurements in RMI.

Equal Opportunity

RMI adopted a 2015 National Gender Mainstreaming Policy that sets out five key priorities, including Priority Outcome 4 to create an “enabling environment for equitable participation in, and benefit from, economic development.” The country’s commitment to gender is further enshrined in the Tile Til Eo Climate Strategy 2050 that highlights the need to support women’s entrepreneurship in climate responses.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

Public procurement in RMI is centralized and regulated by the Procurement Code Act 1988 and the Procurement Regulations to the Procurement Code Act 1988 adopted in 2020.

Life-Cycle Costing

The Regulations , Part V, 3M allows procuring entities to consider life-cycle costs incurred during the ownership of the asset. Life-cycle cost estimates must be “reasonable”, “objectively measurable” and “based upon information the Government has available concerning future use.” Procuring entities must draft the Invitation to Bid to clearly set out the life-cycle cost criteria that bidders will be required to meet in order to be considered a “responsive bidder.” Contracts are awarded to the “lowest responsible and responsive bidder” whose bid meets all material criteria. Life-cycle costs and “environmental effects” are recognized as important in infrastructure procurements (Part V, Section 2 for Contracting for Infrastructure Facilities and Services).

Procurement Approaches supportive of SPP

The Regulations, Part IV-2A encourage the use of “functional or performance characteristics” as technical specifications. This approach can be useful to design sustainable procurements, as procuring entities need not set out technical specifications (that may be complex). Rather they can outline a performance objective such as reduction in energy consumption or material use and leave it up to the market to propose solutions.

Part XII.2 allows procuring entities to issue “multi-year contracts” to promote economies of scale in Government purchasing. This approach can be useful to aggregate sufficient demand to motivate the market to offer sustainable solutions. Part V-2 allows the Government to prepare “bidders listing” with suppliers that may be interested in competing for Government contracts. This provision allows the possibility to create a central listing of sustainable suppliers that can facilitate the engagement and selection process for procuring entities across Marshall Islands.

Division 2 of the Procurement Code Act allows for “cooperative purchasing” where multiple Procurement Units can enter into joint or multi-party contracts with suppliers. Procurement Units are also encouraged to sell, acquire or use any supplies belonging to another Procurement Unit to optimize existing stock across Government. Improved stock management is in itself a sustainable procurement strategy, by reducing purchasing needs altogether.

Benefits for Local Suppliers

The Procurement framework does not specifically allow for price preferences to be allocated to domestic suppliers. However, local suppliers can obtain a waiver of the 5% bid security, required for any procurement that exceeds $100,000 (Procurement Code Act, Division 3, Section 153).

Pillar 3: Institutions & Capacity

No specific agency in Samoa has been assigned responsibility to promote sustainable procurement.

Procurement Policy Office

Procurement in RMI is centralized and overseen by the Procurement Policy Office, an independent office within the Division of Administration in the Office of the Chief Secretary. The Office is led by a Chief Procurement Officer who acts as the central procurement officer of the Government. Purchasing Agencies within each government body have the right to manage procurements on their own behalf for a limited set of services (e.g. accountant, clergy, physicians, dentists, and lawyers - the latter only upon approval of the Attorney General).

Other ministries with responsibilities relevant to the advancement of sustainable procurement include:

Ministry of Environment

2018 Ministry of Environment Act created a new division of the executive branch that leads RMI’s environmental policy and action. The Ministry submits an annual report to the Parliament (Nitijela) and convenes the annual National Council on the Environment, which provides policy recommendations and participates in the delivery of annual reports.

Office of Environmental Planning and Policy Coordination (OEPPC)

The Office of Environmental Planning and Policy Coordination Act 2003 established a government body responsible for the consolidated implementation of RMI’s environmental and climate strategies, including the administration of international programs and the SDGs.

National Energy Office

The National Energy Office (NEO) was established by legislation in late 2018, elevating what was formerly a division of the Ministry of Natural Resources and Commerce, to a standalone office, reporting directly to the Minister of Environment. It is intended that NEO would play a central role in the implementation of the RMI Electricity Roadmap of 2018 and other energy sector mitigation activities. As written in the Roadmap, the responsibility for implementation, communication, coordination, monitoring, and reporting of this Roadmap will largely fall to the NEO, working closely with the utilities and other government agencies.

Pillar 4: Market Practices

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

Market dialogue to inform tender design

The Procurement Regulations, Article 3G, allows procuring entities to host pre-bid conferences with prospective bidders. The objective of this dialogue is primarily to explain the procurement requirements. Changes to the Invitation to Bid are not allowed unless by a written amendment sent to all prospective bidders. This provision offers a limited opportunity for market dialogue that procuring entities can leverage to learn more about potential sustainable solutions and suppliers.

For more in-depth market dialogue, procuring entities can choose a multi-step competitive sealed bidding process (Article 3Q). This process is allowed when it is not practical for procuring entities to determine a definitive purchase description and market discussions may be valuable to inform tender design. In the first step, bidders are invited to submit an unpriced technical offer. Bidders can designate portions of the technical offers that contain trade secrets or other proprietary information to remain confidential. Procuring entities can conduct oral or written discussions with bidders to better understand their offer, potentially leading to amendments to the Invitation to Bid.

Business Associations and Suppliers

The Office of Commerce, Investment and Tourism (OCIT) notes in its 2019-2021 report that sustainable development is a key priority for the country. The OCIT expressed its interest to partner with the Guam Small Business Development Center to provide business and finance training to small business owners. However, the OCIT revealed that it lacks resources and manpower to provide such support to its communities highlighting the complexity of sustainable development in such small economies. Despite this challenge, local businesses are present on the atoll that offer sustainable solutions, such as Green Energy Solutions Majuro.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Sustainability Criteria

As of now, there are no ecolabels, standards or criteria sets for goods and services in RMI. Despite that, work is planned or underway to promote these tools. The RMI Electricity Roadmap of 2018 articulates the need to consider standards for imported equipment and recommends the renovation of existing standards and improving energy efficiency. The Government plans to require all purchases of equipment to have an Energy Star certification. The Second National Communication of RMI (2015) points out the necessity to review and revise draft building codes. A minimum energy performance and labeling scheme for government offices is planned. Another possible entry point for sustainable procurement may be through the pilot projects and studies considered in the RMI Climate Strategy 2050.

Energy-Efficient Buildings

The Marshall Islands Building Energy Efficiency Project was launched in 2023 with GEF funding and IUCN support. The project aims to make energy efficiency improvements in government buildings to demonstrate benefits of these actions across RMI society. The planned improvements focus on behavior change (e.g. turning lights off), technological improvements (e.g. sensors, energy efficient air conditioners, ban on incandescent light bulbs) and nature-based solutions (e.g. landscaping and tree planting). Under the Sustainable Energy Development Project (SEDeP) supported by the World Bank, energy efficient LED lighting was installed along the Majuro airport runways, energy efficient water pumps were purchased and more energy efficient generators were installed.

Under the Urban Resilience Project, up to three “ Resilient Government Facilities” are planned for construction. Such facilities will meet agreed resilience standards to mitigate against future hydrometeorological and geophysical hazards, and serve as an example of good sustainable development practice - focused mainly on improving resilience to climate hazards and extreme events.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

No monitoring indicators or system has been put in place in RMI to track sustainable procurements.

Monitoring of procurement, in general, is the responsibility of the Department of Finance, Office of Planning, Budget Officer, and the Auditor-General. The Chief Procurement Officer prepares statistical data concerning the procurement, usage, and disposition of all supplies, services, and construction. All government bodies utilizing supplies, services, or construction procured must furnish reports concerning usage, needs, and stocks on hand to the Chief Procurement Officer.

Projects Supported by ADB

RMI Energy Security Project (additional financing), 2021, 7 million USD (ADB). The project aims to support RMIimprove its performance to enhance the disaster resilience of RMI’s energy network and to prepare for a shift to renewables.

Other Initiatives supported by National/International Agencies

Marshall Islands Building Energy Efficiency, 2023 (IUCN, GEF). The project aims to improve energy efficiency in the building sector in Marshall Islands to reduce greenhouse gas emissions and help achieve the net zero emission target. Activities focus on demonstrating energy efficient upgrades in government buildings.

Sustainable Energy Development Project, 2017-present (World Bank). The objective of the project is to increase the share of renewable energy generation in the Recipient’s territory, and enhance the reliability of electricity supply and improve energy efficiency in the Project Areas.

Urban Resilience Project, 2022-2028, 30 million USD (World Bank). The project aims to strengthen the resilience of select urban areas in the Republic of the Marshall Islands to the impacts of natural hazards and climate change. Under Component 3, up to three Resilient Government Facilities will be constructed.

References

ADB, 2023. Asian Development Bank and the Marshall Islands: Fact Sheet.

IUCN 2021. Project Identification Form (PIF) for Marshall Islands Building Energy Efficiency for GEF Funding.

Government of the Republic of Marshall Islands, 2015. National Gender Mainstreaming Policy.

Government of the Republic of Marshall Islands, 2015. The Second National Communication of RMI.

Government of the Republic of Marshall Islands, 2017. RMI National Environmental Management Strategy 2017-2022.

Government of the Republic of Marshall Islands, 2018. RMI Electricity Roadmap.

Government of the Republic of Marshall Islands, 2018. Tile Til Eo Climate Strategy 2050

Government of the Republic of Marshall Islands, 1988. Procurement Code Act.

Government of the Republic of Marshall Islands, 2020. Procurement Regulations to the Procurement Code Act.

Government of the Republic of Marshall Islands, 2020. RMI National Strategic Plan (NSP) 2020-2030

Government of the Republic of Marshall Islands, 2021. Voluntary National Review.

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