The report was published by the Tony Blair Institute for Global Change © Photo by John Lamparski/Getty Images
The report was published by the Tony Blair Institute for Global Change © Photo by John Lamparski/Getty Images

Why the UK needs an Advanced Procurement Agency to boost innovation

22 February 2023

The UK should introduce an “Advanced Procurement Agency” (APA) to boost innovation in the public sector and make it less risk averse, according to a report.

The report into technology and innovation across government, written by the former prime minister Tony Blair and former Conservative leader William Hague, said public procurement needs a “significant cultural change towards risk tolerance”.

The report, published by the Tony Blair Institue for Global Change, said the government should introduce an Advanced Procurement Agency (APA) to provide small-scale procurements of “high-risk innovative products” to trial in public services, which could be broadened out more widely across Whitehall if successful. 

The APA should deploy programme managers who would be responsible for a particular area of public service and have a mandate to exercise judgement for tech innovation, within a flat hierarchy. 

Commentators have welcomed the idea, saying the public procurement is too risk averse.

Gavin Hayman, executive director of the Open Contracting Partnership, a non profit organisation that collates open data, said the APA could help change procurement culture. 

He told Supply Management: “It’s great they have fastened onto the power of procurement for economic innovation. I think it’s great they’ve focused on the real need for culture change across UK procurement more generally, but there’s a lot more that can be done.”

He said the UK needs more agile and flexible procurement rules across the public sector, and it should be more data driven. He said the Procurement Bill, which is currently passing through Parliament, was an opportunity to introduce flexibility into the system. 

Procurement needs to have the “ability for experimentation” and should be supported by oversight mechanisms to verify the results in order to flourish. 

“At the moment, the regime in the UK has neither of these two elements, and that’s part of the problem,” Hayman said.

“I’m all in favour of innovation, I’m also in favour of learning from innovation and having that feedback loop that allows us to do things better. I don’t think that culture has always been allowed to flourish or been encouraged.

“There’s not a lot of muscles in central government that doesn’t seem to learn its lessons.”

Alasdair Ramage, director at consultancy Arca Blanca, told SM an APA could overcome “the deep cultural barriers to innovation” across government.

He said: “Something different is needed to kick-start public sector productivity and build national-level capabilities that can successfully compete in the 21st century world.”

He said the barriers to innovation are “cultural”, with risk aversion “embedded in guidance on public money management” and procurement structures.

“Blair and Hague are right to seek alternative procurement approaches, for innovation, AI and data. The UK public sector’s track record is poor: risk aversion drives procurement choices in linear, typically sequential ways that design out alternative delivery mechanisms.

“The idea of pricing for future utility – building national capabilities for future competitiveness – is well beyond the current system, except perhaps in defence.”

He said the APA has “merit” but would need “ministerial ownership at the Cabinet table to have a hope of success”. 

Blair and Hague said the government should “leverage its significant procurement budget towards directly supporting research and development efforts that drive efficiency and greatly improve the quality of public service”.

The report said the UK should “take inspiration” from the US. It said the US government’s willingness to act as a “buyer of first resort” had created environments for early stage innovation and “consistently accelerated progress for technologies that benefit the whole world”.

The report further noted: “The government should strongly reduce friction to encourage risk-taking and reduce administrative requirements that favour incumbent players rather than SMEs.”

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