How to measure procurement with innovation surveys: recommendations for the UK Innovation Survey
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IPEC Research
How to measure procurement with innovation surveys
Authors
Elvira Uyarra
University of Manchester
Oishee Kundu
University of Manchester
Pei-Yu Yuan
Alliance Manchester Business School
Xin Deng
Alliance Manchester Business School
Raquel Ortega-Argilés
Alliance Manchester Business School
Public procurement holds significant potential to drive innovation across industries. Despite its importance, the role of public procurement in fostering innovation is underrepresented in the UK Innovation Survey (UKIS). Enhancing this tool to capture procurement’s impact can yield vital insights for achieving goals such as sustainability, healthcare advancements, and economic resilience.
Key areas where improved procurement data is critical include:
- Policymaking: Robust data is needed to understand how public contracts incentivise innovation in high-impact areas.
- Measuring green innovations: With increasing focus on sustainability, it is crucial to track whether public procurement supports environmentally friendly technologies and processes.
- Reducing barriers for SMEs: Small and medium enterprises (SMEs) face unique challenges in accessing public procurement opportunities, limiting their ability to innovate through government contracts.
Innovation Procurement Empowerment Centre commissioned experts from the University of Manchester to develop evidence-base that would inform procurement processes and unlock the full potential of government spending to drive the transformation of UK economy. This research brief highlights several gaps in current edition of UKIS, which limit the understanding of procurement’s role in stimulating innovation. To address this, the following steps are recommended:
- Reintroduce and Expand the Survey Questions: Reinstate and broaden procurement-related questions to include details on contracts, revenue from public procurement, and innovation outcomes such as R&D investments or process innovation.
- Include Sustainability Metrics: Introduce questions specifically targeting green procurement practices to align with the UK’s net-zero and sustainability objectives.
- Ensure Inclusivity: Extend questions to all firms engaging with public procurement, not just those identifying cooperation with public entities, to minimize underreporting.
- Capture Barriers to Innovation: Explore challenges like contract complexity and competition, particularly for SMEs, to inform reforms that enhance innovation outcomes through public procurement.
By addressing these gaps, policymakers can better understand how public procurement fosters innovation, ultimately enabling the design of more effective policies that align with broader economic and sustainability goals.
IPEC Research
Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy
Authors
Conrad Parke
Centre for Local Economic Strategies (CL
The city of Birmingham is using public procurement to address its socioeconomic challenges and make its local economy more equitable. In this research brief, “Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy (Part 2),” Conrad Parke from the Centre for Local Economic Strategies (CLES) builds on the work outlined in the previous brief, “Working with the Anchor Institutions (Part 1),” to examine the practical application of innovative procurement strategies.
As the coordinator of the Birmingham Anchor Network, Conrad has been working closely with procurement managers and officers from the Network partners, and this brief captures lessons and insights from their collaborative efforts to foster inclusive growth in East Birmingham.
The previous brief (Working with the Anchor Institutions. Research brief no. 11/2024 – 4) introduced the concept of anchor institutions—large public sector organisations with substantial local influence—as key players in driving economic inclusivity and highlighted the barriers to embedding social value in procurement. This brief (Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy. Research brief no. 11/2024 – 5) focuses on the implementation of these ideas in East Birmingham, an area with significant socioeconomic challenges and a local economy dominated by micro-enterprises.
Through initiatives such as hyper-local spending, simplifying procurement processes for smaller contracts, and fostering direct connections between anchor institutions and local businesses, the Birmingham Anchor Network is piloting approaches to address these barriers. This brief highlights the practical challenges encountered, the innovative solutions being tested, and the potential for these efforts to transform public procurement into a tool for equitable economic growth. This brief also offers an understanding of the practical application of procurement strategies, showcasing their potential to support local businesses, create jobs, and build resilient communities.
Key Points from the Brief:
- Socioeconomic Challenges in East Birmingham: Despite Birmingham’s overall economic growth, East Birmingham faces significant challenges, including high unemployment, widespread deprivation, and a business landscape dominated by micro-enterprises with fewer than nine employees. These issues underscore the need for targeted procurement strategies to foster inclusive growth.
- Challenges in Procurement Practices: The brief identifies institutional barriers, such as cost-driven decision-making, risk aversion, and resource limitations, which hinder small businesses from accessing opportunities within public sector supply chains.
- Hyper-Local Spending Initiatives: The Birmingham Anchor Network is piloting approaches to direct procurement opportunities toward businesses in specific neighbourhoods, aligning public spending with local economic needs.
- Simplifying Procurement Processes: Efforts are being made to reduce the complexity and burden of procurement processes for smaller contracts, enabling micro-enterprises and social enterprises to participate more effectively.
- Building Business-Institution Connections: The initiative emphasises fostering relationships between anchor institutions and local businesses through “Meet the Buyer” events and sharing local business intelligence to increase engagement.
- Enterprise Support Initiative: Funded by the Shared Prosperity Fund, this 14-month project focuses on testing innovative procurement solutions while providing targeted support to local businesses to help them navigate public procurement processes.
- Challenges in Procurement Practices: The brief identifies institutional barriers, such as cost-driven decision-making, risk aversion, and resource limitations, which hinder small businesses from accessing opportunities within public sector supply chains.
- Testing Collaborative Solutions: The Network is experimenting with strategies like shared procurement needs across institutions, import replacement, and progressive ideas such as breaking down large contracts into smaller, more accessible “lots.”
Practising Innovation in Public Sector Procurement: Mobilising the Power of Local Spending – East Birmingham Inclusive Growth Strategy
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IPEC Research
Sparking innovation in the market: the role of expert support hubs
By adopting innovative solutions, the public sector can make services work better for people, and cut costs
In the UK’s drive for growth, we need to make full use of the lever that public procurement of innovation offers. In the past, the UK has not done that, but the Government is making important reforms to public procurement, which will be supported by an ambitious Learning and Development plan to ensure that public sector organisations have the knowledge, skills and models to grasp the opportunities created by reform. This new report shows that national and regional hubs focused on improving public procurement of innovation have a significant positive impact, delivering more for the public and rewarding innovation by businesses. A dedicated UK Innovation Procurement Hub would help to make sure that the programme for improvement includes building capability to procure innovation better.
The Innovation Procurement Hubs explored by this research are predominantly public sector-led. They offer information and advisory services and provide networking, all of which deliver value to procurement bodies and suppliers. There are differences between approaches, and quantitative assessment is ongoing, but the hubs deliver significant added value and there is strong support for their continuation.
The UK can learn from these examples, and select what approaches best fit our needs. A Hub would develop and share information and advice on innovation procurement. It would model and replicate successful approaches. It would accumulate learning and expertise over time, continually improving the efficiency of the delivery of the services. By acting primarily in a coordinating capacity, rather than seeking to direct centrally, it would minimise unnecessary duplication.
Innovation Procurement Hubs: Examples from Europe and beyond
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reports
Sparking innovation through the market: a review of pioneering practice
Public procurement in the UK is failing to reach its potential as a driver of innovation and growth.
Public procurement in the UK is failing to reach its potential as a driver of innovation and growth. When Government spending accounts for roughly 39% (2018-19 figures) of the UK’s GDP, it is clear how large that potential is. In 2019, the figure was more than £292 billion and the value grows almost every year.
While complex factors contribute to this failure – such as a lack of clear and coordinated government policy, difficulty in getting stakeholders to buy into an idea, and capacity and capability bottlenecks – existing tools for the better use of public spending are being woefully underused.
Along with other European nations, the UK has strived to improve public procurement so that it goes beyond simply buying products and services. It wants public spending to stimulate new markets, achieve better value for money, meet citizens’ expectations and expand market opportunities for businesses of all sizes – goals that can fuel longer-term economic growth and increased public value. Indeed, the UK recently mandated that all public procurement activities should be developed with innovation outcomes in mind.
There are many ways of promoting ‘innovation procurement’: innovation partnerships, pre-commercial procurement and accelerators to name just three. These and other methods have been promoted by the European Union, while the UK government outlined its approach in the Transforming Public Procurement innovation procurement green paper published in December 2020.
Several programmes and platforms have also been established to encourage innovation procurement. Among these are GOVTECH Catalyst, the Mayor of London Innovation Challenges, Innovate UK, CIVTECH and ARIA. However, each of these operates in its own way and with slightly different objectives, causing difficulty for both suppliers and buyers.
This issue is compounded by the lack of a national competence centre in the UK – a notable absence because such bodies currently provide great value and coordination in five EU nations, with efforts underway to establish them in at least five more.
Responses to the green paper suggest it has its flaws (including insufficient consideration of SMEs and the need to confront lacklustre uptake by local authorities), but these should not trigger a ‘baby and bath water’ reaction. Within it are the foundations of a sound approach to promoting innovation procurement and untapping the UK’s latent potential.
This latest report from our work on innovation-friendly procurement looks at the benefits of treating public procurement as a strategic tool, available procedures and pioneering practice.
Innovation Procurement: Unlocking Best Practice for the UK
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