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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