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The power of public sector procurement as a driver for innovation

Source: Public Sector Executive May/June 2013

Following the Government pledge in this year’s budget to expand the Small Business Research Initiative (SBRI) five-fold, Stephen Browning, head of the SBRI at the Technology Strategy Board, explains why the public sector should invest in contracts with innovative businesses to solve challenges with technology.

In the UK, we have an outstanding history of innovation, and today we are home to many fantastic innovative technology businesses. The real challenge is connecting this skilled resource with the right organisations to support the development and commercialisation, right through to the implementation, of new products and services for the benefit of wider society.

Building long-term partnerships between small businesses and the public sector is critical to creating new products that can support the delivery of strategically important outcomes for the public sector, enable economic value to the UK economy and improve our quality of life.

Improved outcomes with SME innovation

A number of social and demographic challenges are facing modern society, and technological innovation will be paramount in delivering solutions to meet them. For example, rising life expectancy is putting pressure on healthcare systems, whilst population growth will impact our ability to provide vital services such as energy, transport, water and communications.

The crucial benefit for public sector departments and agencies engaging with innovative businesses is that it delivers improved outcomes. The benefit of working together with entrepreneurs and technology specialists is the development of products and services that directly match pressing real-world needs.

Reaching out to a wider variety of businesses and looking beyond traditional sectors can deliver unexpected and more cost effective solutions to help meet operational and policy objectives. With early access to new technologies, the public sector can play a lead role in shaping solutions to meet specific needs.

Supporting the economy

The UK economy will grow faster if it has the ability to turn innovative ideas into dynamic products and services. By acting as a lead customer, Government has a key role to play in driving innovation.

Traditionally, smaller businesses find it difficult to establish meaningful connections with the public sector and this can discourage them from pursuing new products and services that would have public bodies as their primary customers. To overcome this, the sector must present a small-business-friendly procurement environment that gives companies the confidence and resources to create worldleading products and services that can be of direct benefit to government departments and agencies.

As well as impacting our quality of life, investment in innovation can stimulate growth in other parts of the economy and raises the UK’s competitiveness across many dimensions.

Utilising the expertise and creativity found in many smaller businesses can also be a more cost-effective way for the public sector to identify new solutions to meeting its policy objectives.

What is the Small Business Research Initiative?

Established in 2009, the SBRI gives public sector bodies an opportunity to find new and unexpected solutions to the specific challenges they face by connecting with innovative technology businesses through a ‘competition’ format. Once those new solutions have been identified, it then enables the public sector organisation to behave as an intelligent lead customer and help shape the resulting products and services.

The SBRI is specifically set up to present challenges expressed as outcome-based needs, rather than narrow product specification, to give greater scope for innovation whilst retaining the focus on existing market demand.

The rationale behind the scheme is to present a truly win-win scenario whereby government departments can find solutions to very real problems, whilst businesses have an opportunity to present their ideas to organisations that may otherwise be unreachable.

From each competition, selected ideas can gain first feasibility phase development contracts with the public sector body running it, typically up to a maximum of £100,000. Following a second assessment stage, a subset of these ideas may be awarded a second phase contract, typically up to £1m.

This second phase is generally for developing prototypes or demonstrators and, after completion, companies are expected to commercialise the resulting product or service, which is taken to market and open to competitive procurement.

The first four years of the scheme have been hailed a success, passing a milestone of £100m of contract value awarded from public sector departments earlier this year.

Since it began, the scheme has run 126 full competitions, resulting in 1,293 contracts awarded to SMEs at a total value of £109m.

As a result of this success, in this year’s budget announcement the UK Government stated its intention to expand the SBRI five-fold.

This will take the value of contracts offered through the scheme from £40m in 2012-13 to over £100m in 2013-14, and over £200m in 2014-15.

From drawing board to hospital ward

A great example of a full-circle success story is NHS East of England.

Through the SBRI, the NHS in the East of England put out an open call to businesses for solutions for managing long-term conditions, and one of the respondents was young medical company Eykona.

Eykona presented the NHS East of England with an innovation in 3D wound imaging for assessing hard-to-heal wounds such as diabetic and pressure ulcers.

The system replaces traditional methods of wound assessment, which still involve rulers, tracing paper, and ordinary cameras.

NHS East of England contracted Eykona to develop the technology, and today the wound assessment system is being used in hospitals up and down the country to help manage hard-to-heal wounds, which is a problem that costs the NHS an estimated £3bn per annum.

The same device has also been used in Camp Bastion in Afghanistan, to assess the wounds of injured soldiers, and in March 2013 it was listed in the NHS Health and Wealth Catalogue of Potential Innovations.

Through the NHS East of England ‘long term conditions’ programme with the SBRI, a total of seven phase two contracts were issued to develop exciting new technology products.

These are helping the NHS to tackle chronic wounds, improve testing and support for those with specialist conditions such as cystic fibrosis and Parkinson’s Disease, and improve monitoring for patients in high dependency units. PolyPhotonix, for example, is developing home-based, non-invasive light therapy devices to treat a number of progressive eye conditions that effect diabetics and older adults through age-related macular degeneration (AMD).

AMD is the biggest cause of poor sight and blindness for the over-60s, and the potential cost saving to the NHS when implementing this technology is substantial.

The devices could replace current therapies that use expensive drugs and require specialist clinics.

PolyPhotonix generally develops organic light emitting diode (OLED) technologies and would not normally consider itself a developer of medical products – but that’s the beauty of the SBRI model, it can find innovative solutions in unexpected places.

Frontline solutions for the Ministry of Defence

The Ministry of Defence (MoD) is also utilising the UK’s rich resource of small, innovative technology companies to improve conditions for soldiers on the front line.

The MoD’s Centre for Defence Enterprise (CDE) connected with Cambridge Design Partnership (CDP) through the SBRI, to develop a portable oxygen generator that would be lightweight enough to use for treating injured soldiers on the front line.

The new oxygen generator that CDP developed weighed just 3kg compared to 9kg for existing battery powered generators, and can run for four hours instead of just one.

In recognition of this innovation, CDP and CDE were awarded first prize at The Engineer Technology and Innovation Awards 2011 for best collaboration in the field of defence and security.

As well as the military benefits, CDP also sees an opportunity for the supply of compact oxygen generators in civilian ambulances, disaster relief operations and for use in developing countries.

Helping impaired students for BIS

The Department for Business, Innovation and Skills (BIS) put out a call through the SBRI for technologies to help dyslexic and visually impaired students navigate digital information independently.

Iansyst answered with an assistive technology called Azzapt, which is an online document facility that automatically converts files to the preferred format for people with reading disabilities such as dyslexia or visual impairment.

So, a text file could be converted automatically into audio, for example, or into a specified font size and colour for improved readability.

Iansyst won a contract with BIS to develop the software and, when it launches this summer, this fantastic innovation could benefit thousands of disabled learners.

A number of universities have already expressed their interest.

These are all fantastic examples of British engineering and entrepreneurship, helping public sector organisations and departments to meet operational and policy objectives.

We must utilise the wealth of innovative technology businesses that we have in the UK to stimulate our economy and to deliver improved solutions to today’s societal challenges.


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