Practising Innovation in Public Sector Procurement

The pursuit of inclusive economic growth through public sector procurement is gaining traction as cities like Birmingham explore ways to make local economies more resilient and equitable. Conrad Parke, from the Centre for Local Economic Strategies (CLES), examines both theoretical and applied aspects of Practising Innovation in Public Sector Procurement in two research briefs.

As the Co-ordinator of the Birmingham Anchor Network, Conrad has been working with the procurement managers and officers from each of the Network partners, and the following two briefs will capture some of the learning from this experience:

Part 1: Working with the Anchor Institutions

The first brief (Working with the Anchor Institutions. Research brief no. 11/2024 – 4) introduces the concept of anchor institutions—major public sector entities with substantial local influence—as catalysts for economic inclusivity, highlighting the potential benefits of innovative procurement in Birmingham. The brief explains how standard public sector procurement practice needs to change and, in particular, innovate if the potential of public sector spend is to be truly unlocked for greater economic benefit.

Part 2: Mobilising the Power of Local Spending - East Birmingham Inclusive Growth Strategy - coming next week

The second brief (Mobilising the Power of Local Spending - East Birmingham Inclusive Growth Strategy. Research brief no. 11/2024 – 5) will delve into the practical application of the Anchor Institutions within East Birmingham, the city area facing significant socioeconomic challenges. The brief outlines some of the practical barriers and the innovative procurement approaches they are now trying to introduce.

Together, these two pieces underscore the transformative potential of innovative procurement policies in supporting small local businesses, fostering job creation, and distributing economic growth more equitably. These two pieces provide valuable insights into the policy framework and the practical hurdles of embedding social value in public procurement.

Key Points from the First Brief

• Anchor Institutions as Economic Catalysts: Anchor institutions, such as universities, hospitals, and local authorities, are positioned as significant economic drivers capable of fostering local growth by prioritising spending with local businesses and SMEs.
• Birmingham Anchor Network's Approach: In Birmingham, the Anchor Network is piloting a collaborative response to the Procurement Act, aiming to develop a consistent approach to make it easier for SMEs to engage in procurement opportunities. This collective response includes defining shared barriers and coordinated solutions across anchor institutions.
• Barriers to Innovative Procurement: The brief highlights barriers to innovative procurement, such as procurement processes heavily focused on compliance, cost-saving priorities, and risk aversion, often excluding smaller, local businesses from participating.
• Lessons from the Past and Future Directions: The brief reflects on lessons from the Public Services (Social Value) Act 2012, emphasising the need for clear, unified approaches to avoid market fragmentation and genuinely supporting local enterprises with social value missions.
• The Role of the 2023 Procurement Act: The Procurement Act is seen as an opportunity to encourage innovative procurement practices, emphasising local economic benefits and reducing barriers for small businesses. However, the Act's vague language may lead to varied interpretations, creating inconsistencies across institutions.

Download the full publication below.