Innovating Public Procurement: SME Engagement with Local Authorities

On 14th April, the Connected Places Catapult hosted a breakfast event on innovating public procurement to share best practices between SMEs and local authorities in procuring new solutions that can be deployed at city scales. We invited 3 of our SMEs from our network to share examples of successful collaboration work that have delivered innovation and impact across the connected places sectors to address different industrial challenges. The event is part of the Connections Café series, led by the SME Team, that explores developments and opportunities in the built environment and mobility sectors that enable new levels of physical, digital and social connectedness.  Our Connections Café events aim to offer support and guidance to growing businesses to help them bridge the gap between innovations and commercial success.

At the event, we first welcomed George Johnston, CEO of Nitrous, who shared some of the aspects in innovative procurement that Nitrous has been working on. His company has been advising cities to make their work more accessible to SMEs by innovating local authorities’ procurement process.  Having worked with all 32 boroughs in London, George addressed a technical and cultural gap when solutions arrive into the public sector – for example on product features, on regulations, data protection and accessibility of data; all of which affects the rate at which SMEs become “procurement-ready”. In overcoming this barrier, there is a need to de-risk this gap so that public organisations can readily access innovation.  This is where Nitrous comes in to digitally support the landscape of innovation inside procurement – for example, when at times shared challenges would have duplication of procuring the same solution, Nitrous aims to help diversify providers and to provide aggregation of contracts of different suppliers.  In some cases, there is also a lack of standard within local authority challenges that enable the integration of providers, which often leads to silo independent contracts that can take away the supplier’s purchasing power. The goal for Nitrous is to utilise digital services to enable collaborative and joint procurement, where procurement aggregation is facilitated and different platform sources are centralised.

Next, we welcomed Martine Skaret, Business Development Executive of Emu Analytics, a London based data analytics software company,who shared with ustheir work ondeveloping geospatial analytics and visualization software solutions for smart city initiatives. Martine shared her experience working with the London Borough of Barking and Dagenham in the Tombolo project – an Innovate UK funded project where Emu Analytics partnered with Connected Places Catapult to provide a visualisation tool to help the council visualise their data.  This data includes social progress index to understand the wellbeing of their residents, which is shareable with residents.  While Emu Analytics went through the standard procurement process, Martine mentioned that “as an SME working with a council, there is always a bit of a journey you have to go on.”  In engaging with local authorities, Emu Analytics started by providing their product to the council in a cost-effective way; for them to first understand its usefulness before deciding on embarking on a more long-term collaboration, which is what happened with Emu Analytics.  Martine also expressed very positive experiences working with councils, and as a business, they are looking for further outreach to other councils

Lastly, on our speakers’ session, we welcomed Jason Warwick, Director of Urban Integrated – an SME that provides urban data platform solutions on visualising data.  Jason had shared some successes in working closely with local authorities – in particular, Oxford County Council on EV charging projects and park & charge.  Echoing Martine’s thoughts, long-term engagement with local authorities has been the best way to build a relationship with local authorities for Urban Integrated – especially when such relationships lead to a formal collaboration under government funded projects.  However, it’s also been noted that usually, businesses find it hard to scale through engaging with one single portal of the procurement process.  Furthermore, while frameworks such as G-Cloud are helpful, cost and resource can significantly impact a small business’s decision to pursue the collaboration.

In the next session, we welcomedour Associate DirectorMalcolm Panel CBEto chair the panel discussion with the SME speakers, addressing some of the questions that were raised by the audience. The discussion started with exploring the point about finding opportunities from a proliferation of information, and how SMEs would want to see the system changed so that information and opportunities can be quickly found. One main challenge for SMEs is that oftentimes large value contracts usually attract large businesses to apply, and not only are many contracts designed for single-source suppliers, smaller contracts are also more difficult to find on public domains, which could all contribute to increased difficulty for SMEs to stay competitive in the market.

The panel then discussed how local authorities and SMEs can work closely together to solve a problem, where ideas can be taken up by councils to execute innovation projects.  Common challenges lie in the understanding of the local challenges by the SMEs, where oftentimes a relationship must be in place first before understanding the challenges that local authorities are facing.  Local authorities are also encouraged by the SMEs to open more challenges in a broader sense and to initiate more open dialogues before the contract stage. However, while this is the case, the SMEs also recognises that local authorities also have their limitations, especially in financial aspects, which is why innovation funding is an ideal initiating platform to carry out new projects.

It was also raised during the panel discussion that there were observations that bid pre-qualification and requirements have been inconsistent, which often delays the process of SMEs passing through the procurement process.  One positive action suggested is to have a more integrated pipeline of activities for policymaking, and to close the gap between policymakers and those who are directly interacting with SMEs. 

As the SMEs on the panel have all experienced co-creating their solutions with councils, it was widely shared that to go from pilot stage to scale-up there remain some difficult barriers in the pre-commercial procurement contest stage, especially when these barriers differ across sectors due to differences in regulations.  In addition to that, boroughs have been seen to have different standardised sets of framework specifications when procuring solutions directly.  The panel made further suggestions on introducing more interventions by the central government to mandate procurement specification questions.    

As we were approaching the end of the session, Malcolm raised a final question regarding the benefits in the aggregation and the scale of the contracts.  While larger contracts attract larger players in industry, it was suggested that some local authorities pull together cohorts of SMEs that meet a particular technical requirement before designing a framework around it.  However, the panel agrees that this may not be seen as “SME-friendly”, but rather it is beneficial for boroughs on increasing their purchasing power.  It was also suggested by the panel that aggregation of contract should be used at the right time with the right procurement pathway, and that co-creation of solutions will create more aggregation and collaboration of integrated solutions as joint propositions to tackle a shared challenge.   

The recurring point of the conversation suggests that while structural changes in the procurement process will require lengthy time, engagement and relationship-building between SMEs and local authority partners is pivotal in securing more innovative solutions to be procured at a faster rate.  Knowledge sharing from other local authorities is imminent to recognise new solutions supplied by SMEs.  Another common thought is that, when procuring solutions, local authorities should have the understanding that the priority is in articulating a challenge-led proposition to find suitable solutions, rather than defining the solutions and creating a challenge around them.

The panel gave their last thought that, while there is work to be done on encouraging more willingness in engagement between local authorities and SMEs, it’s also important to make options available whereby such engagements will lead to collaborations; with an emphasis on funded innovative projects that can help alleviate financial risks from local authorities.  The challenge is also for industry, placemakers and city authorities alike to understand how the innovation landscape will change over time, and how innovation can be built into our relationship with cities, with new technology to be designed to be fit for purpose as we journey towards future generations.

If you are an SME and would like support on procurement, please visit our webpage here and download our SME Tender Support Guide. Join our SME network for more news and opportunities by registering here.

This Connections Café was run as part of the Catapult’s wider Challenging Procurement programme, where we are engaging with experts and representative bodies from across the public procurement ecosystem to challenge and share best practices for the procurement of new and innovative solutions by the public sector.  To find out more about our Challenging Procurement program, visit here.