Innovation and Efficiency

22.12.16

Putting innovation at the heart of public procurement

Source: PSE Dec/Jan 17

Malcolm Harbour CBE, who wrote Parliament’s first report on innovation in public procurement in 2008 and now chairs the LGA Task and Finish Group on this issue, outlines how public bodies can embed innovation in spite of tight budgets.

For many in the public sector, ‘innovation’ is not synonymous with ‘public procurement’. On the contrary, ‘legalistic’ and ‘bureaucratic’ would generally be the most associated characteristics. 

Yet innovation can help deliver quality services with fewer resources, in more joined-up ways, responding to users’ needs more efficiently and effectively, stimulating local employment and economic growth. But few public organisations are beacons of innovative practice. Reforming procurement would help to put innovation at the centre of their activities. 

LGA Task and Finish edit

Mainstreaming innovation across the public sector 

The encouragement of innovation was embedded into the 2015 Public Contract Regulation. The published guidelines encourage the use of competitive dialogue for design or innovative requirements where no pre-determined solutions are available. There are new tools to encourage technology challenges, such as Pre-commercial Procurements, and there is an entirely new legal tool, the innovation partnership procurement. 

Innovative procurers are not on their own. There are extensive EU best practice networks, publications and training courses. EU funding is still available for project support. In a number of countries, including the UK, public procurement is recognised as a principal instrument to promote innovation. Innovate UK operates the Small Business Research Initiative (SBRI), the UK form of Pre-commercial Procurement. Since 2009, over £350m has been invested in contracts. However, the adoption of innovative procurement practices has been very uneven across the UK public sector. Most SBRI support has been taken up in health and central government, and much less with local authorities.  

The LGA is now addressing this deficit through an expert group that will report in 2017. In her recent speech to the CBI, the prime minister highlighted the need to boost innovative public procurement and announced a review of the SBRI, which will also report next year. 

Challenging innovators to deliver new solutions 

Many public sector customers can see the possibilities offered by innovation. They would like to find new ways to deliver better services, more efficiently, at lower costs. But the process of being an innovator can seem difficult and risky. Pre-commercial Procurements set up challenges for competing technologies, with a possibility of a major contract at the end, and will manage the generation of great ideas. They work best when their customers set challenging problems to solve, without prescribing solutions. 

Innovative suppliers will deliver those great solutions, tailored to their needs, by deep engagement with a smart and demanding customer. This engagement can take the new technology through development, test and deployment. The illustration shows how this ‘Pre-commercial Procurement’ stage can be organised. 

Technology contests can significantly enlarge the range of suppliers. For small and medium enterprises (SMEs), participation can be particularly attractive. The prospect of a significant contract from a public authority makes it easier for SMEs to raise capital from outside sources. If they are appointed as a lead contractor, their company becomes much more attractive and a much less risky proposition for investors. 

All companies involved, even those not chosen as preferred suppliers, gain benefits. Many go on to exploit the developed solutions and find other customers for their product or service. 

Removing the obstacles 

Risk aversion is the biggest obstacle to working with new suppliers offering ‘cutting edge’ solutions. Most public authorities have very tight budgets. Procurement teams are reluctant to take on uncertain, complex and potentially risky projects. It is safer to procure a proven solution from an existing supplier, where the tendering process is felt to be straightforward and easy to complete. Political leadership often avoids solutions which are perceived to carry higher risks. There are continued worries about contravening public procurement law. 

Integrating innovative public procurement into an organisation requires strong political and operational leadership. Internal ‘customers’ must work in strategic and open-minded ways with procurement specialists. Social value requirements are already moving procurement into many ‘non price’ dimensions. Encouraging innovation is a further challenge that must be embraced.

 

FOR MORE INFORMATION

W: www.gov.uk/government/collections/sbri-the-small-business-research-initiative 
W: http://eafip.eu
W: https://ec.europa.eu/digital-single-market/en/innovation-procurement

Tell us what you think – have your say below or email opinion@publicsectorexecutive.com

Comments

There are no comments. Why not be the first?

Add your comment

 

public sector executive tv

more videos >

latest public sector news

November too late for pay cap decision, GMB says

25/09/2017November too late for pay cap decision, GMB says

The GMB has criticised the government’s choice to defer the decision of ending the public sector pay cap until the Autumn Budget on 22 Nove... more >
LGA: TfL Uber decision shows need for ‘urgent reform’ of outdated taxi laws

25/09/2017LGA: TfL Uber decision shows need for ‘urgent reform’ of outdated taxi laws

Councils have this week declared that outdated taxi laws need to be urgently reformed following Transport for London’s (TfL’s) decisi... more >
Councils falling short of preventive care obligations

22/09/2017Councils falling short of preventive care obligations

Councils are failing to meet their obligations to prevent, reduce or delay the need for care as set out in the Care Act 2014. New research p... more >

editor's comment

14/08/2017Time for reflection

A lot has happened since the last edition of PSE was published. In particular, the snap general election delivered an astounding result that many of the pollsters and political experts could not have predicted when Theresa May initially called for it back in April. Chris Painter, Professor Emeritus at Birmingham City University, provides ... read more >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the o... more > more last word articles >
November too late for pay cap decision, GMB says

25/09/2017November too late for pay cap decision, GMB says

The GMB has criticised the government’s choice to defer the decision of ending the public sector pay cap until the Autumn Budget on 22 November, arguing that this is “too long to wait... more >
How would local government look under a Labour government?

25/09/2017How would local government look under a Labour government?

Few will disagree with the statement that the current landscape of local government is one that has been shaped by seven years of Tory influence. Harsh austerity measures have seen pressures... more >

the raven's daily blog

How would local government look under a Labour government?

25/09/2017How would local government look under a Labour government?

Few will disagree with the statement that the current landscape of local government is one that has been shaped by seven years of Tory influence. Harsh austerity measures have seen pressures on council-run services, as well as the NHS, mount sharply as demand increases. The resurgence of the Labour Party in June’s snap election... more >
read more blog posts from 'the raven' >

comment

Support for councils following Grenfell

04/09/2017Support for councils following Grenfell

Ian Moore, CEO of the Fire Industry Association (FIA), discusses the wider lessons of the tragic Grenfell Tower fire and what measures and assess... more >
A quiet revolution

04/09/2017A quiet revolution

Dermot Ryan, programme director at NHS Digital for the Health and Social Care Network (HSCN), talks to PSE about the importance of moving to the ... more >
Effective leadership in uncertain times

04/09/2017Effective leadership in uncertain times

Dr David Beech, lecturer in people management at Salford Business School, argues that continuous renewal and progress is fundamental to effective... more >
Refocusing professional development

04/09/2017Refocusing professional development

Graeme McDonald, managing director of Solace, discusses the importance of taking time out to focus on learning, especially in the ever-changing l... more >

interviews

‘The HSCN is the realisation of industry best practice’

30/06/2017‘The HSCN is the realisation of industry best practice’

Keith Smith, public sector business development manager at Virgin Media Business, tells PSE’s Luana Salles that health and social care orga... more >
HSCN: The enabler for a more joined-up public sector

26/06/2017HSCN: The enabler for a more joined-up public sector

Mark Hall, Chief Assurance Officer at Redcentric, discusses NHS Digital’s project, the new Health and Social Care Network (HSCN) and what b... more >
Maintaining the momentum for further devolution

25/04/2017Maintaining the momentum for further devolution

Ahead of this year’s mayoral elections, Lord Kerslake, the former head of the Civil Service, tells PSE’s David Stevenson why the argu... more >
New social care funding misses the point

13/04/2017New social care funding misses the point

Clive Betts MP, chair of the Communities and Local Government (CLG) Committee, reflects on the social care funding released in this year’s ... more >

public sector focus

View all News