Five ways to increase innovation in public procurement

28 November 2019

Public sector procurement teams need to think about new ways to do things, including using alternative procedures and opportunities with SMEs.

Speaking at the Local Government Procurement Expo in London, Malcolm Harbour, chair at the Local Government Association Task and Finish Group on Public Procurement of Innovation, said innovation was an unexploited area.

Harbour said: “There isn’t a single golden bullet for this, but the procurement rules are innovation-friendly if you choose to use them.”

Here are five principles to think about that can help increase public sector innovation:

1. Leadership

The public sector needs to innovate in the way it delivers services in the future, said Harbour. “It’s very much a leadership issue, because clearly we have to innovate.” 

Management needs to create “a culture in which you encourage people to think about new ways to do things and how you want to do them”. 

2. Alternative procurement procedures

Following the procurement process, a strategy and procedure need to be chosen that can bring innovation in where suitable, Harbour explained. He suggested alternative procurement procedures including “innovation partnerships”, “negotiations” and working closely with suppliers in a “commercial partnership”. 

He added: “Procurement teams need to be engaged in their innovation strategy to advise how to manage the procurements.”

3. Boosting public sector innovation

Increasing innovative functions may require you to “designate certain projects to be dealt with in a different way and for you to open up ways to encourage suppliers to bring new ideas in”, said Harbour.

He warned that local governments need to “bring the procurement teams into the strategic planning of an innovative solution as soon as possible”. Finding new solutions will involve “organising procurement around testing a number of ideas based on problems that they want to solve.” 

4. Commercialising innovation

“If you’re working with a small innovative company which has a cutting edge piece of technology then by working with them you can help commercialise the product as a partnership,” Harbour said. 

This will involve a firm producing a first stage development of a product, and it will move on to the second stage if you like it as a customer. You can grow with them, said Harbour, and if successful and it can be sold on the market, a commercial agreement can be made such as using the product royalty free. 

“There’s a lot of interesting examples from Europe about consorting projects in health, fire service delivery and in developing new ambulances,” he added. 

5. Work with SMEs

The SME market can be useful for bringing in more innovative solutions. “We can exploit far more SMEs in public procurement,” said Harbour. We need to make it more SME friendly by having minimum formalities to get them started in the first stage, he added.

“Don’t over-prescribe solutions, give them challenging problems. You want to develop challenging contracts where they can really show off their skills in developing solutions.”

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