A series of measures are needed to take full advantage of the forthcoming Procurement Act, writes Rikesh Shah, head of the Innovation Procurement Empowerment Centre
A significant change is in store for public sector procurement, and it raises a big question about how it can be used to support innovation for better services.
The Procurement Act 2023 is scheduled to go live in October of this year, opening up new possibilities for organisations in their buying of goods and services, including digital solutions. But there is a consensus that breaking the mould will be difficult, and there will have to be changes in how organisations approach their procurements and engage with suppliers.
The Innovation Procurement and Empowerment Centre (IPEC) – part of the Connected Places Catapult – has been working with public sector bodies on the issue, and recently staged a discussion with UKAuthority involving myself, Katy Armstrong, deputy director for digital services at the Department for Levelling Up, Housing and Communities (DLUHC), Carol Williams, director of transformation and digital at Walsall Council, and UKA publisher Helen Olsen Bedford.
Complexity and rigidity
It identified a number of issues that have restrained the ability to use procurement in innovation. Much of it is in the complexity and rigidity of the relevant processes, along with the limited capacity of procurement and technology teams. It was noted that an open tender can often produce a major burden in the need to review all the documentation, which adds to the tendency to follow processes that have worked in the past rather than doing things differently.
Other factors include adding too many specifications to a tender, some of which could be secondary to the main purpose and could deter some suppliers, and it is difficult to create a level playing field for suppliers, especially the SMEs that can bring new solutions and ideas but do not have large bidding teams.
It has been noted that, with the public sector spending around £380 billion a year on procurement, 23% of the number receive just one bid, most likely from a larger company.
There is also a major issue in encouraging the larger companies to extend their ecosystems and work more closely with start-ups.
Scope for improvements
But the Procurement Act provides scope for some radical improvements. IPEC has previously addressed the issue with a report, The Art of the Possible in Public Procurement, that points to the introduction of the ‘competitive flexible procedure’ as the biggest change, giving creative contractors ‘a wider palette of colours’ on which they can design procurement procedures.
This relates to the importance of partnerships with suppliers and how they can be nurtured before tenders are published. Authorities can engage with a supplier to explore possibilities for solutions, then cement the partnerships in any subsequent contracts through means such as collaborative terms and conditions.
The discussion brought up a series of suggestions on what can help. They include the adoption of an ‘innovative partnership procedure’ approach, which begins with the production of a problem statement, then the provision of some seed funding and creation of a testbed environment for possible solutions. If a strong solution emerges this can then lead to the award of a contract.
Another is to adopt a different attitude towards the value in the contract. It should not be awarded simply on price but with a clear view of the prospects for achieving desired outcomes and how it will affect the long term financial outlook for the organisation. This can require some complex modelling and new ways of evaluating success, but also to a better use of resources over time.
There is also a need to bring together relevant people from different parts of an organisation to influence new procurements, preferably well before they begin for major projects. If you can begin planning two or three years before a procurement is due you are much more intelligent when you go out to the market.
Clarity in spending
Another difficult but important point to emerge was the need for more clarity around spending on innovation. It might be possible to allocate a specific budget for this, but it needs to outline what does and does not qualify, and to be transparent about what is and isn’t working to encourage suppliers to invest in new solutions.
Underlying all this is a long term need to normalise new, more flexible approaches, and spread the understanding that innovation is about continuous improvement. The movement needs an investment in upskilling teams to manage these approaches – maybe buying in support for the short term – and some champions to promote it inside their organisations and further afield.
Katy Armstrong made the point that people have different ideas about what can work, but the Local Digital team in DLUHC plans to provide case studies of what does work, and “incentivise other local authorities to do something different and accept risk”.
IPEC is also contributing to the effort, working with local authorities to showcase existing achievements in innovation through procurement, and to help them design their procurements to fulfil the potential of the act.
It is also collecting case studies of innovative procurement from authorities around the UK. If you have used innovative ways and challenged the norm in bringing new value into your organisation, please connect and share your experiences with IPEC team via [email protected], which are then to be promoted to a wider public to facilitate collective learning.
The discussion also noted that public sector IT association Socitm is aiming to showcase good examples and connect people to work together.
Cause for optimism
While it may seem a complicated and daunting outlook, there is plenty of cause for optimism that the sector can rise to the challenge successfully. Carol Willams made the point with words referring to local government but with a relevance for the whole public sector.
“Don’t underestimate local government,” she said. “We have some really good people but sometimes they are shackled by policies and procedures, so if there’s anything we can do collectively to release those shackles, local government will fly.”
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Watch the recording of the UKA Live discussion here:
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