Regulation of the President No. 16 of 2018 on Government Procurements of Goods and Services, as amended by Regulation of the President No. 12 of 2021 (collectively referred to as “Regulation 16/2018”),[1] mandates that policies that specifically address sustainable procurements of government goods and/or services and that aim to achieve value-for-money whilst simultaneously minimizing any negative impacts during the manufacture, utilization and post-utilization of relevant goods and services (“Sustainable Procurements”)[2] should be established.[3]

In order to realize the above-outlined mandate, the National Public Procurement Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah – “LKPP”) recently introduced a comprehensive set of guidelines that specifically address the implementation of Sustainable Procurements (“Guidelines”) through the issuance of Decree of the Head of LKPP No. 157 of 2024 (“Decree 157/2024”), which has been in force since 13 March 2024.[4] The Guidelines themselves are comprehensively outlined under the Appendix to Decree 157/2024 and should now be used as a reference by government procurement actors during the implementation of Sustainable Procurements. Said actors break down as follows:[5]

1. Budget users (Pengguna Anggaran – “PA”) or budget user proxies (Kuasa Pengguna Anggaran – “KPA”)
2. Commitment making officials (Pejabat Pembuat Komitmen – “PPK”)
3. Selection/tender working groups (Kelompok Kerja Pemilihan - “Pokja”)

At their core, the Guidelines cover a wide range of matters that specifically relate to the implementation of Sustainable Procurements, which overall encompass the following aspects:

1. Introduction to Sustainable Procurement;
2. Implementation phases of Sustainable Procurement;
3. Roles and responsibilities of relevant Sustainable Procurement actors;
4. Fulfillment of sustainability criteria through labeling and goods/services standards; and
5. Utilization of electronic systems during Sustainable Procurements.

In terms of the overall implementation of Sustainable Procurements, the Guidelines state that the following aspects should be taken into account:[6]

1. Economic aspects (e.g. costs involved in the manufacture of goods/services during the relevant utilization period)
2. Social aspects (e.g. empowerment of small enterprises, fair working conditions, inclusivity and so forth)
3. Environmental aspects (e.g. reducing any negative impacts relating to health, air/land/water quality and the utilization of natural resources).

Against the above backdrop, this edition of Indonesian Legal Brief (“ILB”) offers an elaboration of the various provisions that are set out under the Guidelines, as comprehensively outlined under the Appendix to Decree 157/2024, specifically as they relate to the following matters:

1. Procedures for the Implementation of Sustainable Procurements; and
2. Available Electronic Procurement Systems.

Procedures for the Implementation of Sustainable Procurements

Before proceeding any further, it is important to note that Sustainable Procurements may be carried through independent procurements (swakelola) or Procurements that are undertaken via business actors that provide goods/services on a contractual basis (“Providers”)[7]

In terms of Sustainable Procurements themselves, the Guidelines state that said procurements comprise three main phases, as summarized in the following tables:

During the implementation of procurements, UKPBJ may also require all goods/services that are supplied to adhere to various environmental or sustainability standards (e.g. eco-labeling or fair-trade standards) or other relevant international standards, as comprehensively outlined under Annexes 3 - 5 to the Guidelines.[13]

Moreover, the results of the above-outlined implementation should be reported as a part of UKPBJ annual or performance reports or separately in special reports. The aforementioned reports may then serve as tools for assessments of the sustainability of procurement contracts and may ultimately serve as the basis for early contract terminations or the issuance of poor performance ratings to Providers.[14]

Available Electronic Procurement Systems

Pursuant to the Guidelines, any procurement actors that engage in procurement activities through the use of state funds are required to utilize e-procurement systems.[15] The following tables summarize the e-procurement systems that are available for Sustainable Procurements:

Source: hukumonline.com