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Encouraging innovation in local government

Malcolm Harbour CBE, chair of the LGA expert group on innovation in public procurement, reports on the findings and recommendations of their first report.

This is the fourth article in a series that began at the end of 2016, driven by the LGA’s National Advisory Group for Local Government Procurement (NAG) initiative to encourage innovation. The first output, a comprehensive report and recommendations based on an interview and research programme, has now been published.

Innovative solutions and new technologies are indispensable for sustaining the quality and scope of service delivery. Political and executive leadership needs to welcome innovation and encourage new ideas. Designated innovation leaders can act as focal points for culture change. Rethinking procurement should be a catalyst to develop more innovative approaches. Outward-facing economic development teams can also help promote innovation internally.

Many local authorities have changed procurement culture by embracing social value, often with new practices. However, innovation has not been well integrated into the social value imperative. Adding innovative dimensions would encourage providers to generate more social value and help meet the market-shaping requirements of the Social Value Act.

Innovation must be integrated into the commissioning cycle, driven by asking open questions. Defining unmet needs, and specifying challenging outcomes, attracts innovative suppliers. Commissioners must avoid prescribing solutions and closing off technology options. Service commissioning must be fully embraced in the search for innovative ideas. Citizens and local businesses should be invited to identify unmet needs.

Innovation by PCP

Public authorities can be lead customers, working with suppliers to evaluate, refine and develop ideas into fully working solutions. By using Pre-Competitive Procurement (PCP), they can organise technology contests and commission demonstrators. Their investment boosts innovation and helps new companies become established.

Innovate UK has been promoting PCP through the Small Business Research Initiative. It would like more councils to engage with the organisation and exploit its PCP expertise and advice. Participation in PCPs should be particularly attractive to small innovators. Traditional processes can discourage suppliers who feel that they cannot break into an established relationship. Councils can facilitate collaboration between small and large enterprises.

Best practice sharing

Experience sharing encourages more innovative approaches. There are extensive EU best practice networks, publications and training courses, and Innovate UK can share the results of completed projects. The NAG will consider ways to boost data sharing and best practice in all aspects of innovative procurement.

Best practice deployments of local government PCP projects are observed in devolved regions across the UK and Europe. Identifying common needs, and meeting them by shared procurement and technology challenges, spreads contracting costs and attracts innovation agencies to invest in support programmes.

In English councils, this is an ideal role for combined authority structures. Dedicated regional innovation strategies are already being developed, and these should embrace innovative procurement projects.

Next steps

Public procurement is not currently perceived as a coherent, dynamic and effective policy instrument for encouraging innovative solutions. A deep and comprehensive commitment to change perceptions across the public sector is needed, given the volume and value of spending it covers.

The NAG will promote the role of local government procurement as an efficient and effective means of generating innovation for the benefit of the whole UK economy. It will build on the procurement aspirations advocated in the Industrial Strategy green paper and ensure that local government is deeply engaged. The NAG will launch a follow-up to its report to progress its recommendations.




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