PLANT A SPOTLIGHT ON THE PROBLEMS YOU ARE TRYING TO SOLVE, AND OPEN IT UP FOR OTHERS TO INNOVATE
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PLANT A SPOTLIGHT ON THE PROBLEMS YOU ARE TRYING TO SOLVE, AND OPEN IT UP FOR OTHERS TO INNOVATE
POSTED BY: Graeme McDonald, Managing Director – Solace
The last five years have seen five governments under three different leaders. Local government is used to periodic political change with semi-regular shifts in the political make-up of councils. But ultimately the institutions and systems which underpin this country’s national and local politics rarely experience excessive upheaval and widespread reform in the areas where such reform is needed. One example is public procurement.
This is positive as it enables officers and civil servants to provide stability no matter the political landscape. However, the controlled pace of shifts in various sectors, including public procurement, means our institutions are at risk of relying on entrenched traditional practices and being less open to innovation.
Yet, as the world changes around us, government at both a local and national level needs to adapt and evolve too in the way it not only operates but procures and commissions services too.
That is why Solace is pleased to be working with Connected Places Catapult on its Challenging Procurement initiative.
“Procurement processes have the potential to catalyse the re-imagining and improvement of the way services are delivered.”
There was a time when procuring or commissioning services was mostly about cutting costs and driving out inefficiency. However, a steady stream of examples over the last decade of lengthy, inflexible and costly contracts between councils and their partners has led many of our members to question the value of this approach. Gone are the days of simply ‘lifting and shifting’ services and the largely artificial transferring of risk.
Historically procurement processes have been perceived to be rigid, slow and expensive when in fact they have the potential to catalyse both the re-imagining and improvement of the way services are delivered. This could be through working with partners in the private sector, voluntary and community organisations and other alternative providers, or even bringing services back in house.
Instead of focusing on costs and savings, procurement processes are a chance to put a spotlight on the problems you are trying to solve and the objectives you want to achieve. Doing so has the potential to not only lead to more imaginative and inventive solutions but to deliver progress towards a wider, less siloed set of goals.
This reinforces the importance of developing a coherent and compelling future vision for a place — if everyone understands where you want to get to, it can encourage innovation and change in order to achieve those objectives. This includes building in social value to a procurement process as sometimes the ‘value’ you get is not just about the bottom line but the social good and creating more resilient communities.
In May 2019, the UK signed up to the OECD declaration which committed the country to making the public sector more innovative. As we prepare to enter a new decade, under a new government, this is a chance for us all to think again about how we could, and indeed should, operate more innovatively and deliver better outcomes for our people and our places.
10 examples of ‘radical procurement’ that drive innovation in public sector
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10 examples of ‘radical procurement’ that drive innovation in public sector
POSTED BY: Paul Conneely
In 2011, Sir Frances Maude, then Minister for the Cabinet Office, determined that strong skills development was required at all levels of government to enable public servants to harness the power of the market with confidence and achieve real, meaningful outcomes on the ground, by commissioning procurement. The Commissioning Academy was established in response to that ambition. Over 1,200 senior decision-makers and practitioners from across sectors have graduated from the Commissioning Academy since 2013, including participants from:
- the Cabinet Office, FCO, Home Office, Ministry of Defence, Ministry of Justice, DWP, DCMS, Department of Education and the Department of Health — among others;
- most major local authorities as well as CCGs, PCCs and the Police
Since 2016 the Commissioning Academy has been delivered by the Public Service Transformation Academy — a not-for-profit social enterprise partnered with Connected Places Catapult.
In that time, we’ve come across a range of instances which show how procurement can be used to support truly radical change. Based on that experience, here are ten examples of ‘radical procurement’ that we think indicate a growing trend in entrepreneurial approaches to accessing and harnessing innovation in the public sector.
1. Spinning-out services and companies
LCC took a creative approach to designing the procurement process, fully using the flexibility of the ‘light touch regime’ to engage with the market to develop a partnership model and a tender which aimed to assess the suitability of potential partners rather than procure a specific solution. LCC’s approach tapped the potential offered by the ‘innovation partnership’ concept introduced through the European Commission’s Social Business Initiative in 2015 but so far under-utilised in the UK.
Read more in the Public Service: State of Transformation 2019.
2. Bringing suppliers together
Plymouth City Council (PCC) has created an alliance to improve the lives of people with complex needs by supporting the whole person to meet their aspirations. PCC awarded a multi-million-pound contract to an alliance of local charities to provide services to people with complex needs (homelessness, drug or alcohol misuse, mental illness and offending). The contract is a new way of bringing together commissioners and services in a partnership where power and responsibility are shared collectively for the common good of people with complex needs.
The contract, which will run for five years initially with the potential to extend to ten years, enables the Council and other commissioners to build long term sustainable relationships with local charities and other service providers to plan for the future.
3. Generating social value
Bristol City Council established Bristol Energy in 2015 with ‘triple bottom line’ goals of:
- sustainable economic prosperity,
- reduction in social inequality and
- improved environmental performance.
The company now serves customers across the United Kingdom, offering 100% renewable tariffs, and aims to be “a force for social good” by reinvesting its profits back into the community.
By 2019, 79% of its energy supply was generated from renewable sources. The firm buys renewable power direct from the city’s wind turbines and solar panels in Avonmouth which provide an additional revenue scheme for the council and more local, green power generation for Bristol.
Electricity comes from community owned projects such as Thrive Renewables and Gower Power, giving an economic boost to renewable generation in the region. In partnership with Geneco, a local energy innovator, waste from one million Bristol people is turned into biomethane, an environmentally friendly green gas.
Furthermore, Bristol Energy say the estimated social value put back into the Bristol community in 2019 to be £7 million.
4. Multiplying investment
Procurement can play a catalytic role in attracting resources to collaboratively realise outcomes. The Belfast City Deal offered the Belfast Region the opportunity to undertake transformational investments that would generate and secure inclusive economic growth for current and future generations. The vision for the Belfast Region (which comprises Belfast City Council and five neighbouring local authorities) is, ultimately, to secure £1 billion in total for its City Deal from a range of stakeholders.
Securing funding from UK central government has in turn opened the channels to further investment from secondary and tertiary stakeholders, which include the Northern Ireland government and the local authorities involved, as well as additional investment secured from the private sector.
Supported by Connected Places Catapult, the City Region identified four key digital projects which could only be realised if private-sector funding was obtained for each project. Subsequently, the strategic outline cases contained letters of intent from eight potential private-sector partners (B4B Telecoms; RF Proximity; BT; EE; Microsoft Azure; Telcom and Pinacl; Belfast Harbour; Procul-IOT).
Read more in How Belfast is using procurement to unlock economic value.
5. Focusing spend locally
By working in partnership, developing new spending tools and changing spending behaviours public service organisations in Preston including the City Council, Lancashire County Council, the police service and local education bodies have grown the portion of their procurement pound spent in city and the county from 5% to 18%, and 39% to 79% respectively.
6. Cultivating Future Innovation
Central government department increasingly share their pipeline of future requirements, without obligation, to signal to suppliers what they may be seeking from the market in the medium and long-term. In parallel, the MOD continuously scans the market for innovations that could be relevant to their clients emerging and potential requirements, investing in SMEs with promising ideas.
7. Working with the wider system
Thinking about outcomes, for example clean streets, a council could simply procure a street cleaning contract. Or they can think about multiple factors influencing the bigger picture, including the position of bins, when they are collected, whether the architecture of local buildings encourages wind alleys, and how the community can get involved in preventing litter dropping. This wider perspective shapes procurement requirements, and how resources are prioritised.
8. Commissioning collaboratively
The intention driving accountable care is for the various organisations from the health and care system work together to improve the health of their local population by integrating services and tackling the causes of ill health.
It marks a shift away from policies that have encouraged competition towards an approach that relies on collaboration between the different organisations delivering care — such as hospitals, GPs, community services, mental health services and social care — and the organisations paying for it — including clinical commissioning groups (CCGs) and local authorities.
Not least, accountable care will accelerate the implementation of new care models designed to integrate care and promote population health. Hence, rather than being based on annual contracting rounds as it is currently, commissioning is likely to become more strategic, focusing on the planning and funding of new models of integrated care.
9. Flexing payment around population risks and outcomes
As new care models emerge, built around patients rather than organisations or services, appropriate payment models need to be in place to support them.
Rather than paying providers based on activity, ‘capitation’ allows commissioners to reimburse providers for making available specified services and possibly delivering specified outcomes for a defined target population, drawing on services that cross different organisational boundaries to meet individual patient needs. Commissioners pay the provider or network of providers a regular lump sum per person in the target group. Ideally, this capitated payment will be weighted or risk-adjusted, to take into account of the fact that some patients in the groups require more (or more costly) services than others.
Commissioners may have dialogue with the bidders in relation to payment mechanisms as part of the procurement process and minimise procurement risk by stating that the contract value or payment mechanism may be subject to change, and provide a list of non-exhaustive options as to the types of changes that may occur during the term of the contract.
10. Keeping competition alive through ‘Contestability’
For some years, the New South Wales government used the threat of private sector competition as an instrument in reforming prison management. In this case, a rough benchmark and potential competition came from a privately-managed prison that was delivering a comparable service at a significantly lower cost.
For prisons that were public-managed, ‘contestability’ was the credible threat of competition — the clear prospect of the intervention of alternative providers if the incumbent’s performance was unsatisfactory. Contestability seeks to get the best from public service ethos and private sector innovation.
This is therefore different from old-fashioned public sector monopolies, but also from enforced competitive tendering where the primary consideration often becomes price and from outsourcing, where the governing assumption is that private sector is best.
See Public Service: State of Transformation 2018 for more detail.
How do you solve a problem like procurement?
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How do you solve a problem like procurement?
POSTED BY: Nicola Yates OBE
“Governments and their public sector organisations operate in volatile, uncertain, complex and ambiguous contexts and must contend with a variety of challenges, such as digital transformation, energy poverty, environmental degradation, climate change and inequality… In such a context, it cannot be assumed that existing structures, processes and interventions remain the most appropriate or effective means for the public sector to achieve its purpose and deliver upon government and citizen needs and expectations”.
Every day at the Connected Places Catapult, I am excited by emerging technologies, applied solutions, and brilliant businesses. At the same time, I grow concerned that as a country we are only making slow progress in harnessing these innovations to deliver benefits for places and the people who live in them.
As a Catapult charged with tackling market failures, we have sought to understand the reasons for this slow progress. Ask any business seeking to provide services to the public sector what their greatest challenge is and you will hear that public procurement is a serious problem. Ask pioneering place leaders what is stopping them from harnessing the creativity of the market to solve their pressing service and policy challenges and you will get the same answer: our procurement policy doesn’t allow it.
This is not just an issue confined to the UK. In May 2019, the UK became a signatory to a wide ranging and ambitious OECD declaration, which committed us to make the public sector more innovative.
So in response to this widely recognised market failure, and rising to the OECD’s call to action, we have instigated this new project which we have called Challenging Procurement. We will be undertaking new research and seeking to engage experts from across the ecosystem as we explore this issue. I am eager to hear from place leaders, procurement professionals, commissioners and innovators in local services, and from those endeavouring to sell into that market about your experiences of public procurement and encouraging examples of pioneering practice.
Thank you to those public sector leaders and experts who have already contributed to our understanding of this topic. We will pool these insights (which you can read more about in this post summarising a recent roundtable) with new ones generated as the project progresses. We will share those findings with all of you, and use them to frame our own plans to support innovation in public procurement from now on.
Our ambition in undertaking this work is to identify some practical actions which will remove obstacles to innovation and create opportunities for new solutions. I hope that you share our vision, and will join us in the journey ahead.
Join the conversation
The Connected Places Catapult has created this publication to have a conversation with place leaders, private sector providers, procurement professionals and others in the innovation market. Subscribe for regular updates from voices across the system as well as examples of pioneering practise that we hope will inspire and enable the adoption of innovative solutions and services in more places.
Got questions or have a case study or example of pioneering procurement of your own to share? Please get in touch with us via contact@ipec.org.uk.
INNOVATION BLOCK? THE PROBLEM WITH PROCUREMENT
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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.
PIONEERING PARTNERSHIP TO BOOST REGIONAL INNOVATION
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PIONEERING PARTNERSHIP TO BOOST REGIONAL INNOVATION
A pioneering partnership between Connected Places Catapult and leading researchers in Birmingham and Manchester will boost regional innovation and jobs. The team will work with local authorities to engage inventive companies in developing and deploying innovative new services, with the shared goal: to invest public procurement funds in better, greener solutions.
The project partners - University of Birmingham, the University of Manchester and Connected Places Catapult – have named their venture The Consortium for Research in Innovative and Strategic Public Procurement (CRISPP) which aims to gather evidence and develop best practice guidance for public sector bodies seeking new ways of delivering public services. It will also assess the impact of different approaches to innovation procurement – an area in which there are sizeable data and knowledge gaps, looking across the world for best practice solutions.
Innovation is central to the Government’s growth strategy and its desire to use procurement to invest in innovation was highlighted in the Green Paper on procurement reform ‘Transforming Public Procurement’, published in Dec 2020, and the 2021 Queen’s Speech announcing the upcoming Procurement Bill. Innovation procurement will also play an essential role in delivering net zero carbon goals.
CRISPP’s work will help maximise the effectiveness of this approach to drive growth in innovative products and services across the UK.
“Public procurement is worth £270bn a year of goods, works and services in the UK, and is a major influence on private sector innovation, having played key roles in the emergence of sectors such as IT and semiconductors,” says Nicola Yates OBE, Chief Executive of Connected Places Catapult. “Yet there are significant gaps in our knowledge of why innovation procurement is successful and how best to use it, with evidence typically reliant on case studies. This consortium is looking to address this data gap and thereby improve the impact of public spending on innovation.”
“Our research focuses on insights and policy recommendations to improve the innovation outcomes of public procurement and maximise its benefits for regions and communities in the UK. We will develop analytical methods to understand the impact of innovation procurement in the productivity and growth of UK regions and cities. We are also interested in understanding how procurement can be leveraged to support inclusive innovation to ensure that all communities and places around the UK can benefit equally.” Professor Raquel Ortega-Argilés, Chair Regional Economic Development, City-Region Economic Development Institute (City-REDI), University of Birmingham.
Dr. Elvira Uyarra, Director of the Manchester Institute of Innovation Research states, “Public procurement is a key, yet under-exploited, industrial policy tool with the potential to stimulate private sector innovation and productivity, foster industrial renewal and the development and diffusion of technologies that address societal challenges. This partnership reflects the strengths of the Manchester Institute of Innovation Research (MIoIR) at the University of Manchester in the area of innovation and public procurement and has the potential to significantly contribute to closing the evidence gap around this important agenda.”
CRISPP is encouraging engagement and collaboration with its research. It is keen for any interested parties to get in touch, whether they have relevant data, are interested in the consortium’s findings, are running a related project or considering such a project.