National Procurement Policy Statement consultation: IPEC RESPONSE
1. Maximising value for money: How can mission-driven procurement help us achieve greater value for money for the taxpayer in the delivery of
public services?
Our work in the Innovation Procurement Empowerment Centre hosted in the Connected Places Catapult has demonstrated that, for public and private collaboration on innovation to deliver fully, mission-driven procurement needs to be driven by public sector leaders and supported by skills, end-to-end processes and organisational cultures.
Mission-driven procurement defines problems and desired outcomes, rather than deciding narrowly on one type of solution at the start. As technology develops, new solutions to challenges become available, often from new providers. These are not visible to a public body that only tries to buy the same solution it has bought before.
We think this should be clearly set out in the opening of the NPPS: “Mission-driven procurement should actively seek new and better ways of solving problems, and engage with the market to signal positive openness to innovation well in advance of a procurement process starting”
That enables public sector bodies to take up new solutions routinely, to deliver better services for citizens and allow people working in the public sector to use with the best tools available. With £380bn a year spent on UK public procurement, mission-driven procurement will help ambitious small businesses and boost regional economies around the country, as well as a creating a public sector culture of more entrepreneurial practice.
New flexibility in the recent Procurement Act gives more support to mission-driven procurement. To make use of that flexibility organisations need supporting leadership and processes for undertaking pre-market engagement, and actively creating new partnerships and public assets through a more iterative procurement process. In IPEC we look forward to supporting Government in developing these skills. The NPPS should include reference to the “skills, culture and organisational processes that enable public procurement of innovations to achieve better value for money, better policy outcomes and faster delivery.”
2. Delivering social value: How can we use public procurement to achieve greater social value to support delivery of the missions?
IPEC has been engaging with both buyers and sellers and we have uncovered valuable opportunities to create more consistent understanding between them. We have identified procurement practices that successfully deliver social value and innovation into the public sector. Success could be spread more widely by showcasing best practice case studies that demonstrate how to realise that greater social value. Research and dissemination of best practice could be made even more impactful if better data were made available.
We are still seeing many buyers focused on overall cost in selection criteria and limiting the emphasis on local suppliers, encouraging start-ups, upskilling and job creation to support sustainability and net zero goals.
Long-term planning, openness to new solutions and providers, and sustained engagement with supplier markets in the approach to public procurement can deliver better social value outcomes. By creating new value in partnership with suppliers, mission-driven public procurement can deliver social externalities including regional job creation and the growth of innovation hubs.
Better data would help to measure these additional benefits and understand in more detail how to replicate them around the UK. It will be advantageous for the overall effectiveness of the public procurement system if machine readable data could be interrogated through the whole value chain from pre-market engagement, pre-commercial procurements, procurements, contract variations and benefits realisation (did the buyer achieve the outcomes that were set out?). Transparency enabled by better data would enable all participants, including suppliers, to understand where funding allocation has taken into account social value and innovation.
The NPPS should specify the need to collect and publish procurement data relating to social value and innovation. IPEC will work to support the Government’s development of richer procurement data.
3. Enabling collaboration: How can we accelerate collaboration in public procurement (between central and local government, between local anchor partners (e.g. in health and education) and in partnership with suppliers), to support delivery of the missions?
Central and local government organisations can promote partnerships between public sector organisations and suppliers to co-create solutions. Partnerships across the public sector can accelerate development of procurement skills and transmission of best practice.
Leading public sector organisations have shown the value of flexible processes. Transport for London opened data for the market to create new products for customers and ran running multi-stage innovation challenges on complex problems, with lower barriers to entry in procurement creating a level playing field for start-ups. TfL created innovation partnership frameworks with larger corporates securing R&D investment from the market to co-development solutions. They have also included innovation schedules in long term contracts to innovate in the lifetime of the contract through a gain-share mechanism. In the case of digital solutions, partnership to promote open standards can reduce over-charging for certain products.
IPEC works in partnership with DSIT, the Cabinet Office and other governments departments to support the Government’s objectives on mission-driven procurement. We work with a cohort of local authorities to model skills and processes, to disseminate those across local government and the wider public sector. We have published research and best practice guides and are undertaking further research to improve the evidence base. In additional programmes IPEC works with local authorities, central government departments and arms-length bodies to create new value from innovation through procurement (Bristol, Derry, Newham and Westminster), DfT, HS2, NH.
The NPPS should state that “partnerships across the public sector should disseminate best procurement practices, and build skills and capability across organisations to achieve mission-driven procurement”. IPEC will continue to work with Government to build these partnerships.
4. Fostering innovation: How can we help policy makers/commissioners identify challenges that can be put to the market to support mission outcomes through innovation, and improve commercial capability to deliver mission-driven procurement?
Public bodies can identify challenges that could be solved by innovation, if they have the direction, the culture, the skills and the processes in place to engage with innovative suppliers. The National Procurement Policy Statement can help them build culture and capability by including stronger and more specific provision to establish these necessary supports. Over time, the ability of public sector organisations to deliver Value for Money rests not on trying to do the same things with less resources, but on meeting their challenges in new and better ways with the most effective tools and techniques, including those that have become available through the development of new technology applications. Innovation can offer new ways to deliver Social Value. The capability to engage with novel approaches and new suppliers also ensures that they can meet the NPPS priority on allowing Small and Medium-Sized Enterprises to compete.
The need for the leadership team, policy makers, service owners and procurement and legal colleagues to work in harmony is critical. The nature of innovation means that there is uncertainty on what the solution might be, and whether it will work or not. So, the need to create the right conditions before embarking on an innovation programme is critical. This requires creating a culture and processes that enable innovation to work.
We propose that Innovation is made a headline objective in the NPPS, parallel to Value for Money, Social Value and Small and Medium-sized Enterprises, and as the necessary tool to achieve all those priorities.
We propose that the NPPS section on Commercial and procurement delivery adds “including pre-market engagement” among the key stages of commercial delivery. We propose that the section on Skills and capability for procurement specifies "skills to use the procurement system flexibly to engage with innovative solutions and providers”. IPEC will work with Government to model and promote these skills.
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