post

Public Procurement and Regional Development in the UK

Authors

Elvira Uyarra
University of Manchester

Rikesh Shah
Connected Places Catapult

This research brief discusses the implication of recent policy developments, including the National Procurement Policy Statement (NPPS) and the Procurement Act 2023, which highlight the potential for procurement to drive local economic growth and innovation. It argues that, in order to harness the full potential of public procurement for regional development, a shift towards more strategic, innovation-friendly, and regionally sensitive procurement practices will be needed. Key recommendations of this brief include:

• Decentralising Procurement: Empower local and regional authorities with greater discretion and financial capacity to make procurement decisions that align with local economic development needs.
• Supporting Local and Innovative Suppliers: Reduce barriers to entry for SMEs and fast-growing firms by simplifying procurement processes, diversifying contract structures, and increasing pre-market engagement.
• Enhancing Data Transparency: Improve procurement data collection and publication to track spending distribution, supplier participation, and innovation impacts.
• Embedding a Pro-Innovation Approach: Move beyond rigid specifications to problem-driven procurement, fostering creative solutions through collaborative procurement models.

For further insights into procurement’s role in regional development and innovation, refer to research by the Innovation Procurement Empowerment Centre (IPEC), which continues to analyse procurement strategies, spending patterns, and policy impacts across the UK.

Public Procurement and Regional Development in the UK: Challenges and Opportunities in a New Policy Landscape

File type: pdf

File size: 2.6Mb

Download Report

post

Procurement Act comes into force

The new Procurement Act provides a greater focus for everyone in the public sector (not just commercial managers) to use their budgets to create new value by bringing in innovation from the market.

With the financial challenges facing public agencies and the pressure to solve multiple problems that urgently need to be addressed from the climate emergency, transport and housing, etc., the need for market innovation has never been so important. The recently published National Procurement Policy Statement and the updated Social Value Model emphasises the government’s desire to use public procurement to implement its policy objectives.

The UK public sector already spends more than £380bn with the private sector annually through public contracting. As we see advances in technology and the government’s push for innovative ideas to solve public policy challenges, this budget can be further optimised through bringing in new innovative solutions to deliver better, quicker, cheaper and greener outcomes. Good ideas tested in the UK can also be exported and supported UK PLCs more broadly. By using its strong purchasing power, the public sector at local, regional and national levels can shape markets by stimulating innovators of all sizes – from start-ups, scale-ups, corporate or academic spinouts, to realise new benefits. Public agencies should each be ambitious in using their significant purchasing powers to inspire and integrate innovative products or solutions into business-as-usual delivery. Through the different discussions that I have had, it is encouraging that the government and the innovators from the private sector recognise this opportunity. 

The new Procurement Act focuses on a wide range of areas that will make procurement simpler and more efficient. In my role as the Head of the Innovation Procurement Empowerment Centre, I believe it is absolutely right that the Act places a good focus on innovation. Funded by the government through Innovate UK, IPEC is working with local authorities, governmental arms-length bodies, devolved authorities and national departments to empower and upskill different specialist staff from procurement, innovation, services, tech and data and many other to make the most of procurement-based challenges. IPEC is also working with senior leaders on helping to curate the right culture for innovation through procurement to thrive in different organisations.

 Whilst the theory above sounds right, in order to enable this, we need the right leadership, culture, capacity, capability and more to create an entrepreneurial culture and mindset in the public sector that embeds the right conditions for innovators from the market to respond to key challenge areas by testing, iterating and potentially scaling innovative solutions through the use of public procurement.  I was reading a paper from Lina Svensberg recently and she talks about the process of venture development in the public sector which is common in the private sector (as innovation is what is needed to keep a company a strong going concern) but it is much more difficult to apply in the public sector as you dealing with unknowns and, as such greater risk. 

The challenge of addressing culture also came out strongly in our IPEC Research Survey when we asked public bodies across the UK on the barriers to innovating through procurement.

When speaking with different public bodies, one area is common; the need to bring in, test and scale innovative ideas through using procurement continues to be a barrier whether it’s risk, fear of failure, organisation silos, procurement or managing change. 

To be clear, it’s not that public agencies aren’t using market innovation to solve some of their knotty challenges; we have seen Transport for London, Dorset Council, Rail Delivery Group, Sunderland City Council, Westminster City Council. Bristol City Council, Transport for West Midlands and many others in the UK creating the right culture and processes to drive more public and private collaboration through the use of procurement. But, we need this approach across the public sector where we collaborate with the market to solve some of the challenges in a new way through having an entrepreneurial approach of innovating and experimenting with the market rather than simply relying on the tenacity of a brilliant individual in these public bodies trying to drive to change in an environment where the conditions don’t assist.  

The Procurement Act can help stimulate more market innovation if we take advantage of it. Here are some areas of focus that stand out for me:

• Competitive Flexible Procedure: This procedure allows contracting authorities to design a bespoke, multi-stage procurement process that enables R&D and scaling to take place in one procedure. This engagement throughout the process can lead to more creative and effective outcomes. This will also support applying new and emerging technologies.
•  Pre-market engagement: The Procurement Act 2023 promotes early engagement with the market to gather the right intelligence, consider and refine different solutions before formally starting the tendering process. This includes the obligation to publish a preliminary market engagement notice where the market is being consulted, which helps ensure a level playing field and attracts new entrants.
• Central Digital Platform: A new central digital platform, delivered through Find a Tender Service, will streamline the process of finding and bidding for contracts, making it easier for suppliers to participate in public procurement, particularly start-ups, SMEs and other innovators. The platform will provide a source of data on procurement activity as well as contract performance for higher value contracts.
• Transparency by publishing pipelines: The Procurement Act 2023 requires contracting authorities (those that spend £100m+ on public contracts) to publish a forward-looking procurement pipeline, which includes information about current and future public contract opportunities at an estimated value of £2m and above for the next financial year. This enables innovators to plan any engagement including assessing whether to bid, well in advance.
• Most Advantageous Tender: Contracts do not have to be awarded based solely on the lowest price; instead, they can consider a broader range of factors, including quality, social value, and environmental impact. This creates an opportunity to bring in new innovative solutions providing better value overall.
• Open frameworks: Companies can apply to enter frameworks at specific junctures following its award which provides the opportunity for better value for money and more flexibility for innovators.
  

Whilst there is an emphasis on transparency, it would be even better to have more data at a micro level on where the public sector is allocating budgets and funding for innovation, as well as publishing how much value has been realised. Also, furthermore, is there an opportunity to reduce the worry of large penalties when a public body is trying to do the right by using an outcome-based procurement?

I look forward to seeing how the new Procurement Act will be a catalyst – through market innovation – in creating better public policy outcomes. It can create an environment where staff at all levels, suppliers of all sizes, stakeholders from across the UK and the end citizen work closer together in unison and provide a much greater return.

post

Extracting Insights from Procurement Data

Authors

Annum Rafique
City-REDI, University of Birmingham

Pei-Yu Yuan
Alliance Manchester Business School

Understanding trends in public sector spending, supplier engagement, and funding allocation effectiveness is crucial in building trust in the government. A comprehensive understanding of procurement contracts enhances accountability and provides actionable intelligence for policymakers and stakeholders, enabling them to assess the effectiveness of procurement strategies and monitor progress toward sustainability goals.

 This research brief explores the methodological approach of text mining and using it for procurement contract analysis. The approach focuses on keyword-based filtering and data extraction to identify relevant contracts, providing a practical approach for researchers, policymakers, and stakeholders without specialised expertise in natural language processing (NLP) or machine learning.

Using the methodology, we analysed structured data from Tussell database for the year 2022, examining social housing retrofitting contracts in the West Midlands. To gain a deeper understanding of the procurement landscape in the West Midlands Combined Authority (WMCA) area, a subregion within the broader West Midlands, refer to the IPEC publication: “Retrofitting Social Housing in the West Midlands Combined Authority (WMCA) Area”. This report by Annum Rafique (2025) provides valuable insights into procurement challenges, supply chain dynamics, and policy considerations specific to the region.

Applying the text mining methodology to Tussell’s procurement data provided several key insights:

• Single-Supplier Contracts: Most procurement contracts involved only one supplier, limiting multi-supplier collaborations.
• Short-Term Contracts: The majority of contracts had a duration of one year or less, which is a challenge for long-term retrofitting projects.
• Regional Supplier Distribution: Many contracts were awarded to suppliers outside the West Midlands, indicating potential gaps in local supplier capacity.
• SME Participation: 65% of suppliers were SMEs, showing a positive trend toward engaging smaller firms in retrofitting projects.

These findings provide a data-driven foundation for improving procurement strategies, enabling policymakers to extend contract durations, support regional supplier development, and enhance SME participation. The insights derived from this methodology support evidence-based decision-making and reinforce procurement as a strategic tool for driving innovation, economic resilience, and the transition to a low-carbon economy.

Extracting Insights from Procurement Data – A Text Mining Approach for Social Housing Retrofits in the West Midlands

File type: pdf

File size: 4.42Mb

Download Report

post

the role of public procurement on the performance of Knowledge-intensive business services

Authors

Xiuqin Li
Alliance Manchester Business School

Xin Deng
Alliance Manchester Business School

Elvira Uyarra
University of Manchester

Knowledge-Intensive Business Services (KIBS) are the cornerstone of innovation in a knowledge-based economy. Acting as facilitators, carriers, and sources of innovation, KIBS firms play a pivotal role in enhancing both public and private sector capabilities. These services encompass a wide range of expertise, from accountancy and management consultancy (Professional KIBS or P-KIBS) to IT and R&D services (Technology-based KIBS or T-KIBS).

Public procurement offers an invaluable opportunity for fostering innovation through KIBS. By serving as suppliers to government agencies, KIBS firms contribute to technological advancements, public service transformation, and regional economic growth. Our research analyses the dynamics of KIBS engagement in UK public procurement from 2016 to 2022, shedding light on patterns, trends, and opportunities.

Key Findings:

• Innovation Amplification – KIBS suppliers show significant innovation, particularly in digital and technological domains. This is evident in their strong representation in computer programming and management consultancy services.
• Typological Dynamics – Firms providing IT, engineering, and R&D services (T-KIBS) excel in central government procurement, meeting technical and digital demands. Accountancy and consultancy services (P-KIBS) support broader management and administrative needs across various government levels.
• Geographical Patterns: KIBS suppliers are predominantly concentrated in London, benefiting from urban networks and knowledge spillovers. However, non-KIBS firms display broader regional dispersion, particularly in the Southeast.
• Sectoral Growth: T-KIBS suppliers have seen robust growth, reflecting the increasing digitalization of public sector operations, including the adoption of AI and cloud technologies.

To maximise the contributions of KIBS, especially SMEs, to public procurement and innovation, the following strategies are essential:

• Streamline Procurement Processes: Simplify access for SMEs by reducing procedural barriers and enabling smaller contract lots.
• Focus on Innovation: Embed criteria that prioritise innovative solutions in public contracts.
• Promote Regional Participation: Encourage the involvement of regional KIBS firms to address geographical imbalances and foster local innovation ecosystems.

KIBS firms hold immense potential to drive innovation, economic growth, and public service transformation. However, achieving this requires a nuanced approach that balances the strengths of T-KIBS and P-KIBS, promotes regional diversity, and ensures sustainable procurement practices. By addressing these challenges, public procurement can unlock the full potential of KIBS to reshape the innovation landscape.

Exploring the roles of public procurement on the performance of Knowledge intensive business services (KIBS)

File type: pdf

File size: 4.61Mb

Download Report

post

Retrofitting Social Housing in the West Midlands Combined Authority (WMCA) Area

Authors

Annum Rafique
City-REDI, University of Birmingham

The UK is at a critical point in its transition to a net-zero future, with one of the most urgent challenges being the retrofitting of social housing to transform them into energy-efficient, low-carbon homes to meet the 2050 net-zero targets. While the benefits of this transition are apparent (lower emissions, higher living standards, and cheaper energy prices), attaining it will necessitate overcoming numerous barriers. Public procurement is at the heart of this challenge: the mechanism through which funding is secured for projects, quality is maintained, and key stakeholders are aligned.

This research brief explores the procurement barriers associated with retrofitting social housing in the West Midlands Combined Authority (WMCA) area and the innovative solutions and initiatives used to overcome them. Key barriers, such as financial constraints, quality assurance concerns, and coordination complexity, are examined alongside actionable solutions implemented in the area. The WMCA area serves as a good example of how to address the intricacies of retrofitting at scale. Securing funding through initiatives such as the Social Housing Decarbonisation Fund (SHDF), as well as collaborations with industry and academia, has allowed local and regional governments in the WMCA area to address funding constraints, ensure quality assurance, and develop a skilled workforce capable of driving low-carbon transitions.

By fostering collaboration and embracing innovative procurement approaches, the area is transforming challenges into opportunities, setting a benchmark for progress in the housing sector. By leveraging these strategies, policymakers, researchers, and stakeholders can accelerate the transition to energy-efficient social housing.

Key Points from the Brief:

• Retrofitting Challenges: Financial constraints, quality assurance issues, and stakeholder coordination complexities hinder large-scale retrofitting efforts for social housing.
• WMCA’s Achievements: The region has upgraded over 2,600 homes under the SHDF and secured £700 million since 2018 to support retrofitting initiatives.
• Role of Procurement: Innovative procurement strategies are essential for overcoming barriers, driving cost efficiency, and fostering market innovation.
• Net-Zero Approach: WMCA integrates retrofitting with broader initiatives like Net Zero Neighbourhoods and Energy Capital to maximise impact.
• Future Focus: The study will develop best practices and analyse economic impacts to support efficient, scalable, and sustainable retrofit solutions

Retrofitting Social Housing in the West Midlands Combined Authority (WMCA) Area: Overcoming Procurement Barriers for a Net-Zero Future

File type: pdf

File size: 3.29Mb

Download Report

post

Public procurement and SMEs’ innovation in the UK

Authors

Elvira Uyarra
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 represents a pivotal mechanism for fostering innovation, constituting nearly 15% of GDP in OECD countries. In the UK, this accounts for a significant portion of public expenditure, with SMEs playing a vital yet underutilised role. This research publication investigates how public procurement influences SME innovation, with a particular focus on patenting activity from 2016 to 2019.

Key Findings:

• Innovation Amplification: SMEs engaged in public procurement exhibit higher patenting activity compared to their non-supplier counterparts, emphasizing procurement’s role as a demand-pull policy tool.
• Incremental and Exploratory Innovation: Government suppliers outperform non-suppliers in both familiar technological areas and novel domains, illustrating the dual role of public contracts in supporting both incremental and exploratory innovation.
• Technological Directions: Central government procurement drives advanced innovation in areas such as Physics and Electricity, while local governments focus on applied fields like Mechanical Engineering and Transportation.

SMEs constitute 99% of UK businesses yet account for only 20% of direct public procurement spending. Despite this, the research highlights procurement’s stabilizing influence on innovation, even amidst challenges such as delayed patent data capture and economic disruptions.

Central Government’s Strategic Impact: Central procurement supports cutting-edge innovation tied to national priorities, showcasing the potential of large-scale contracts to steer technological advancements.

Local Government’s Regional Focus: Local procurement enhances community-level infrastructure and applied technological solutions, aligning regional innovation efforts with broader policy objectives.

To unlock the full potential of SMEs in driving innovation, the following strategies are recommended:

• Streamlining procurement processes to increase accessibility for SMEs.
• Embedding innovation-focused criteria in public contracts.
• Enhancing local government capacity to support regional innovation ecosystems.

Public procurement and SMEs’ innovation in the UK

File type: pdf

File size: 5.66Mb

Download Report

post

Connected Places Catapult responds to Industrial Strategy consultation

The Connected Places Catapult welcomes the Government’s consultation on a new Industrial Strategy. As the UK’s innovation accelerator for transport, cities and place leadership we are excited about the opportunity this represents.

The Connected Places Catapult welcomes the Government’s consultation on a new Industrial Strategy. As the UK’s innovation accelerator for transport, cities and place leadership we are excited about the opportunity this represents. We are encouraged by the strong focus on the importance of unlocking the complexities of place, as well as the role that data and digital technologies have to play in raising the economic productivity of our cities and regions.

As the Resolution Foundation and others have demonstrated, the UK struggles with the dual challenges of low growth and high inequality, which has left us lagging our European peers in terms of living standards and productivity. Closing that productivity gap would yield incredible returns – an additional £100 billion in gross value added (GVA) per year. According to the Centre for Cities, hundreds of thousands of new jobs would be created if UK core cities achieved productivity levels equivalent to their European counterparts.  

An Industrial Strategy that recognises the importance of place, connectivity and innovation is critical to that endeavour.

Place as a driver for successful sectors and clusters

We welcome the fact that the Green Paper articulates the important role of place. It is also encouraging to see cities explicitly referenced as places that require focus given the important role that they can play in driving economic growth.

We recognise the Government’s need to focus the outputs of the Industrial Strategy around sectors to maximise the potential for long-term sustainable growth. But the economy is a matrix of both places and sectors. We would encourage the Government to ensure that there is no disconnect between the Green Paper’s recognition of the importance of place and the focus on sectors.

A strictly sectoral focus does not allow for challenge-based emerging sectors to occur. In our experience ‘emerging sectors’ occur where technological capabilities with place-based applications are applied across sectors. This often happens as opportunities to work with government and industry create new commercial propositions that respond to place-based challenges.

We also support the focus on clusters and basing investments on robust analysis of strengths and opportunities. We caution against an overreliance on single sectors in any given area, noting the huge opportunity for innovation when diverse sectors intersect and ideas share between one industry/cluster to another. Places which fixate on a single cluster also lack resilience and agility. There is a risk in emphasising clusters that we create unhealthy competition between regions.

Through our work with place leaders across the UK (e.g. the Innovation Places Leadership Academy, the UK Innovation Districts Group, the Freeport Innovation Network), we are also well placed to provide practical support to those seeking to deliver innovation-led local growth.

Innovation & Local Growth Plans

We see an opportunity for the Industrial Strategy, complemented by robust Local Growth Plans, to promote nationwide collaboration between places and clusters which make up different parts of our innovation value chains. This will promote mutually beneficial flows of talent, investment and knowledge across all parts of the chain. We see this as an opportunity to apply a market-driven focus to cluster development, emphasising access to emerging markets and creating tangible business opportunities, as companies join clusters to grow their bottom line.

Capacity to deliver innovation-led local growth is unevenly distributed across combined and local authorities as they face multiple competing fiscal and other pressures. This requires new thinking and resourcing approaches to capacity development and new strategic thinking. Without building innovation capability, there is a danger that the gap between innovation rich and experienced regions, and those regions with untapped potential, will grow. Without broader coordination, Local Growth Plans risk unnecessary fragmentation, competition or duplication.

Investments in high-productivity sectors will deliver a weak return if the places in which they are based are not optimised. Local Growth Plans need to not only describe how places will deliver sectoral improvements in support of the national growth mission, but also place-based transformations in the physical, digital and civic fabric of the place to support a flourishing innovation economy. 

We can help unlock innovation in local growth planning and delivery, strengthen regional digital capability and capacity, and align local plans into national activity and vice versa providing a consistent approach across the UK.

Digital & data leadership

We welcome the Green Paper’s focus on the role of data in supporting the Industrial Strategy, as well as the role of Government in removing the barriers to sharing data to improve business operations and decision making.
 
It is important that Government plays a leading role in reusing public sector data by adopting the principle of “collect once, use many times,” treating data as essential infrastructure. It should incentivise data sharing to unlock regional and sectoral potential while aligning policies with global best practices and market standards. Public sector data, including the proposed National Data Library, should be prioritised as a driver of innovation and growth.
 
We welcome the provisions in the Data (Use and Access) Bill – mandatory sharing, funding mechanisms, and enforcement—extend across sectors. A cross-sector Smart Data framework should promote secure, standardised sharing, enhancing productivity and innovation. Clear governance, pro-innovation regulation, and alignment with international frameworks, such as the Interoperable Europe Act, are essential.
 
Improving data literacy and capabilities within businesses will enhance their use of data across supply chains, foster collaboration, and strengthen competition in data-driven markets. These efforts will ensure the UK’s public and private sectors thrive in an increasingly data-driven economy.
 
It is also important to adopt a standardised approach across Government, industry, academia and Catapults. A decentralised approach to data sharing infrastructure is vital for unifying fragmented systems across transport, energy, and water, reducing costs and boosting productivity.

This will:

• Establish transparent governance 
• Identify critical cross sector uses-cases and route maps
• Inform legislation, policy and investment in demonstrators
• Inform the development of a framework of future-proof components (technical and socio-technical) building on existing digital assets and legacy technology
• Share strategic insights to guide the market to implement this infrastructure effectively, fostering innovation and resilience across industries.

Innovation-friendly procurement

Thanks to technical advances we are seeing incredible innovations being unlocked in the UK by new suppliers from academic spinouts, small and medium sized businesses (including start-ups), scale-ups, venture capitalists, accelerators, corporate innovation teams and many others. These diverse suppliers are helping to achieve better, cheaper and quicker outcomes and create more value from the £400bn the public purse spend per annum on third party suppliers.
 
If just 5% of public sector contracts were brought to market in this way, it would transform £19bn of existing spend into innovation fuel annually. There is an opportunity to nurture this approach further and reform how the public sector shapes markets by not only effectively delivering public policy outcomes, but also by creating new businesses that could be exporting services across the world. To achieve this, we must go beyond Research and Development and use procurement to realise more value by scaling solutions.

• Being more open with the market on the challenges the public sector is facing;
• Applying effective procurement routes to market;
• Creating the right culture and environment for innovation in the public sector to thrive;
• Using experimentation to test, iterate and build evidence on where innovation can add value, and scouting the market for those hard-to-find companies that can solve key problems; 
• Upskilling on the buyer and seller side on how public and private partners can co-create, work together and create a more entrepreneurial approach to solving public policy agencies.

post

Procuring innovation playbook

The Procuring Innovation Playbook is your go-to guide for breaking down procurement myths and unlocking innovation opportunities

The Procuring Innovation Playbook is your go-to guide for breaking down procurement myths and unlocking innovation opportunities. It provides practical solutions to overcome procurement barriers, explores innovation pilots, outlines diverse procurement routes, and offers insights on designing effective evaluation criteria—alongside successful case-studies and much more.

This playbook is tailored for procurement professionals, innovators, decision-makers, and public sector teams ready to:

• Explore innovative solutions to pressing challenges.
• Build partnerships with innovators and SMEs.
• Navigate procurement rules while fostering creativity.

What you’ll gain:

• A clear understanding of common myths that limit innovation.
• Understanding of how to use Pre-Market Engagement (PME) to uncover untapped opportunities.
• Strategies for running successful trials and scaling them responsibly.
• Guidance on leveraging flexible processes and frameworks to attract SMEs and spark creativity.
• Tools to design contracts and KPIs that reward collaboration and innovation.

Download the playbook now to access practical steps to build a future-ready procurement strategy, expert advice on navigating procurement rules while fostering innovation, and tools to manage risks while achieving transformative results.

Find this information useful?

Download a PDF of this page for quick and easy access anytime!

Download now