Innovation Block? The Problem with Procurement

Innovation is driving significant changes in the way we work, live, and interact with each other. In many ways it is quite literally redefining the fabric of our places through new levels of digital and physical connection. However, the rules and regulations which govern public procurement are regularly cited by place leaders in both public and private sectors as a major barrier to the adoption of such innovative solutions.

At Connected Places Catapult we wanted to test that assumption and understand the nature of that barrier. So earlier this year we convened a roundtable event at our Urban Innovation Centre in London, and welcomed leading organisations in the connected places sector — including Solace (the Society for Local Authority Chief Executives), the Confederation of British Industry (CBI), the Local Government Association (LGA), and The Public Service Transformation Academy— to share their experiences.

Here’s what we learned…

Recently introduced reforms to public procurement are being under-used.

Informed by his work as an MEP supporting the reform of EU Procurement Rules and his role as Chair of the LGA Procurement Taskforce, Malcolm Harbour CBE (also an Associate of the Connected Places Catapult) argued that while the European Parliament had successfully introduced reforms of public procurement in 2015, the UK public sector has yet to take full advantage of these reformed practices and processes.

The findings of the LGA task force suggest that the problem is not necessarily what the process does or does not allow, but rather an under-use of the tools they make available, such as pre-commercial engagement.

Having said that, however, there are encouraging signs of progress in projects such as the GovTech catalyst, and MHCLG’s Local Digital Fund.

Procurement is considered not high enough up ‘the food chain’.

This point was raised by a number of attendees at the roundtable, from a number of perspectives. Michael Mousdale of Browne Jacobson (who were representing the Public Service Transformation Academy) for example, felt that “procurement just isn’t considered important enough and is not represented high up enough in the ‘food chain’ in organisations.”

Meanwhile, Cindy Nadesan from Orbis, the UK’s largest shared services partnership delivering procurement and other services to councils and other public sector organisations, went even further: “There needs to be a shift of the role of procurement so that it becomes more of a strategic resource.” This would mean that procurement officials are seen as less of a ‘gatekeeper’, and more as key stakeholders in ensuring organisations’ long-term visions are delivered. Having said that, Cindy went on to say that while the imperative to approach procurement exercises differently sat with procurement professionals, they would need support from across their organisations to do things differently: “The focus should be investing in empowering people — they don’t know how to undertake procurement in many instances and so end up repeating activity from last time. People need the headspace to shift to a new approach.”

Once again, however, the outlook isn’t entirely bleak, as noted by Peter Campbell of the Business Services Association, who commended the growing focus on social value among central government commissioners, and noted that both local and devolved government have already stolen a lead on this front.

The ‘procurement problem’ is often an excuse for inaction.

Alex Thomson, Head of Policy at Solace and former CEO of Localis, a local government think tank, noted that procurement would reliably turn up in conversations with the local government sector as a reason for not doing new things, whatever the topic. He hoped to see move away from procurement being an excuse for not doing something and towards being enabler of achieving objectives.

Aiden Rave, then CEO at South Kesteven District Council with a background in the private sector picked up Alex’s theme. He reflected that whilst it might be easy to blame procurement for institutional stasis, the common assumption that it is a broken system is a myth: the ‘brokenness’ is perpetuated because it serves some purpose to somebody, and that’s the cultural reality that needs to be tackled and changed: “The system is the way it is because we choose to have it that way.”

Data from the CBI on the views of businesses, presented by Liz Crowhurst, revealed that only 5% of CBI members feel that procurement incentivises innovation. The CBI and its members were also of the view that it wasn’t the rules themselves are the problem, but rather the way they are being applied.

Ian McGill from Spend Network, an organisation which specialises in analysing procurement data, shared that from their analysis it is clear that opportunities are being missed. For instance, in work they have undertaken with the Financial Times, they have discovered that around 23% of UK tenders only receive one bid. That’s good news if you’re the lone bidder, but unlikely to represent good value for the taxpayer and service users: “We are sleepwalking into monopoly situations. The challenge should be for buyers to provide better feedback loops — there is a bad habit of measuring savings at point of contract award, rather than looking at the whole lifecycle.”

Cindy Nadesan said she felt there was a lack of practical information for those seeking to take a more innovative approach to procurement. What does pre-commercial engagement actually mean? What are the other channels and mechanisms that procurement officers need to look at? She highlighted the work of the National Social Value Taskforce as a potential model. “We need to equip procurement officers with the time, resources and skills they need to procure more innovatively.”

Time to redeem procurement

All of which suggests that public procurement’s reputation has fallen unfairly into a state of disrepair. As such, we’ve set ourselves some homework:

Firstly, we’ve begun gathering examples of pioneering practice where places have used the tools available to buy innovative solutions and services so that more people can hear about them and be inspired.

And secondly, we are inviting anyone who is interested in increasing the adoption of innovation by public services (whether as a buyer or a supplier) to share their own experiences and examples of public procurement and their ideas on how to ensure that more places are able to harness the tools available to them and introduce brilliant new solutions and services in their areas.