ARTICLE

Procurement Bill 2022 – Initial Assessment

Innovation procurement is challenging, and many commercial departments struggle to engage with it. We recommend that the planned dissemination programme, already announced, should be extended to include a best practice centre in innovative procurement to build up a knowledge centre with case studies, training and practical advice on contract development.

Integration with UK Strategic Goals

The government is promoting strategic procurement as a powerful tool for delivering innovations and competitiveness objectives for Global Britain.

The Innovation Strategy, published in July 2021, says, “There is enormous potential to make better use of [public spending] to provide a route to market for innovative new products and services. By procuring more innovative solutions, the public sector can be a driver of innovative new ideas, providing innovative firms with the foothold they need to succeed in the market, fuelling the scale-up ecosystem and facilitating wider adoption of new tech services”.

The Levelling Up White Paper also points to the transformative power of public spending. Strategic use of public procurement is also cited in the UK Net Zero Strategy, in which it is named one of the six key commitments for embedding net zero in government.

It would be a powerful signal if innovation, sustainability and local development goals were explicitly mentioned at the front of the Bill as objectives that all procurements should encompass. The Bill intends to cover these points by reference to “the national procurement policy statement”. However, merely stating that “A contracting authority must have regard” for this policy is a very weak endorsement.

Promoting Innovative Small Enterprises

A common factor in both the innovation and levelling up ambitions is encouraging more innovative small businesses and start-ups. This is critical in building lively ecosystems where start-up companies that offer innovations to meet desirable outcomes can thrive.

The proposed reforms could do significantly more to promote practices that make public procurement more appealing to small enterprises. The planned digital platform, which is highlighted in the impact assessment as the key element of delivering small business access, is not even mentioned in the Bill. Issues to be considered are the encouragement of electronic tendering, burdensome requirements for pre-qualification, and overly onerous access to frameworks and dynamic procurements.

Encouraging an Innovative Culture

Transformation of public procurement practice towards a truly innovation-friendly culture will be extremely challenging, as risk aversion is deeply embedded. This was recognised in the impact assessment, which noted, Contracting authorities concerned of legal challenge may opt for familiarity and procure the bulk of contracts under open procedure”.

The encouragement of planning and pre-market engagement is welcome. The new public notice requirements for procurement pipelines and processes may help capture potential supplier attention. However, it is very important that these procedures do not become overly inflexible and bureaucratic. The nature of the innovative process must be flexible and dynamic. Approaches such as design contests and hackathons should be equally acceptable under the rules, and it would be helpful for this to be clarified. The impact assessment of the bill also indicates that the new requirements are adding cost and regulatory burden and thio must be carefully monitored.

Choice of Procedures

Risk aversion also comes into play in the choice of procurement procedures. Since 2015, when the new public contract regulations were implemented, UK procurers have significantly increased the use of procedures that encourage innovation.

A comprehensive European Commission benchmarking study rated the UK’s use of innovative procurement tools as the best of any large economy in the EU. This is a good base on which to build. It will be beneficial if the streamlined (“modern”) flexible, competitive procedures provide signposts that would help procurers relate to the ones they are already familiar with. For example, the concept of the new procedure is very close to the existing competitive dialogue. This would also avoid a freeze in innovation activity before the new Bill is implemented.

Pre-Commercial Procurement and SBRI

InnovateUK has just published a powerful report demonstrating the benefits of innovation procurement, particularly through the deployment of the small business research initiative (SBRI) tool. However, the report highlights that SBRI procedures often frustrate innovative companies because they do not extend through to a final deployment contract.

It is recommended that the final Bill take full account of this research, which was unavailable when the green paper consultations took place. It should include a new innovation partnership procedure that allows the successful supplier to transition from development into fully deploying their solutions without needing multiple tenders. This would significantly depart from the current European rules and give UK innovators a significant competitive advantage.

An innovation procurement knowledge centre

Innovation procurement is challenging, and many commercial departments struggle to engage with it. We recommend that the planned dissemination programme, already announced, should be extended to include a best practice centre in innovative procurement to build up a knowledge centre with case studies, training and practical advice on contract development.