PUBLIC PROCUREMENT
139. The public sector is an important consumer
of the products and systems that may be disrupted by plastic electronics
(paper, printing, energy and lighting, for example). The 2007
Sainsbury Review of the Government's science and innovation policies,
The Race to the Top, and the Government's 2008 innovation
White Paper, Innovation Nation, both recognised that, used
effectively, Government procurement has the potential to pull
innovative goods and services through from business and drive
innovation in the economy.[169]
The Council for Science and Technology called on the Government
to use procurement to "encourage marketable products and
services" in the plastic electronics industry.[170]
140. In 2008-09, the Government will spend £175
billion on third party goods and services.[171]
We asked Professor King whether he felt the Government was able
to deliver on its commitment to foster innovation through procurement.
He told us that this was a drum he had "been banging on for
quite some time",[172]
but that the need for Permanent Secretaries to demonstrate value
for money was likely to deter them from procuring innovative solutions:
[I]f you [
] simply encourage each permanent
secretary to use a proportion of their budget for procurement
[
] those permanent secretaries will be pulled hard in the
other direction to demonstrate value for money on their purchases,
and we are talking about risk procurement here. You are buying
an object which is as yet unproven and you are asking for the
product to be delivered in five years' time. That in itself means,
in my view, you have to ringfence a proportion of the procurement
budget and take it from each department, and then that money must
be spent in the interests of that department, but it must be seen
to be risk procurement.[173]
141. We put the same question to the Minister
and were struck by the similarity of his answer. Like Professor
King, he told us that Government spending represents "an
enormous opportunity to make a positive difference", but
that:
The challenge here from my experience in the Ministry
of Defence is that using government procurement to strategically
develop the science base and innovation will require the civil
servants responsible for that procurement to take risk and so
there will always be a balance between the amount of risk you
are prepared to take by trying a new innovation and the criticism
which you may be subjected to if that risk-taking in a proportion
of times leads to greater costs and more delays.[174]
142. The Minister went on to explain that DIUS
was reforming the process by which departments "use their
procurement budgets so support SMEs and support innovation".
He highlighted the Ministry of Defence's (MoD) 'Grand Challenge'
competition as a recent initiative that successfully enabled civil
servants to more accurately assess technological risk, while providing
an opening into the UK defence market for new suppliers and investors.[175]
143. We applaud initiatives to develop the use
of procurement to drive innovation. However, the success of the
MoD's Grand Challenge competition appears to lie in the fact that
it: (a) acted to fulfil a specific need identified by its sponsor,
the MoD; and (b) provided a forum to test product capabilities,
and allow potential investors to assess technological suitability
and risk. These factors, however, make it inappropriate as a means
to inform decisions regarding the procurement of plastic electronics
R&D. The relative immaturity of the plastic electronics sector
means that rather than being at the level of product readiness,
emerging technologies may not yet be incorporated into functioning
devices. Further, as the Minister was aware, the applications
of these technologies are still being identified:
It is not clear at the moment what product areas,
what market areas, plastic electronics is likely to have the biggest
impact on, so it is not possible for the Government to say today
"This is the area we think the technology could have an impact
on" and therefore I think it is right the way in which the
Technology Strategy Board has supported this area [
] because
it is not yet clear what those key markets are going to be.[176]
144. As indicated by the Minister, support for
technological R&D to address challenges that cut across Government
departments is the responsibility of the Technology Strategy Board.
Specifically, the Board's 'Innovation Platforms' function to "pull
together policy, business, Government procurement and research
perspectives and resources to generate innovative solutions"
to such challenges.[177]
Current Platforms include: Low Carbon Vehicles, Assisted Living,
and Network Security. Lord Carter of Barnes, Minister for Communications,
Technology and Broadcasting (BERR & the Department for Culture,
Media and Sport (DCMS)), told us that:
It is somewhere between interesting and conspicuous.
If you look at the five platforms they [Technology Strategy Board]
have chosen, most of those are ones where you have got government
as a specific customer or potential procurer, and there is a question
about how much more commercial they can be in their interest areas.[178]
145. We are concerned that the Technology Strategy
Board is limiting support for technological development to areas
where the Government is commissioning or procuring specific products.
The early stage of technological development in the plastic electronics
sector means that no single Government department can be identified
as the industry's natural customer. Without a department to champion
investment in what are inevitably high-risk technologies, we are
concerned that plastic electronics will fail to be supported through
Government procurement initiatives.
146. In order to support innovation in emerging
industries, we believe the Government has to take the brave decision
to procure future technologies and products, even if their 'killer'
application is as yet unclear. The procurement of future technologies
can result in highly successful outcomes. The decision by the
scientific community at CERN to commission the Large Hadron Collider
(LHC) is a case in point. Critical to the LHC's procurement was
a decision to source state of the art technologies for 15 years
hence. In September 2008, this instrumental apparatus was switched
on for the first time. It is expected that outcomes of LHC experiments
"will revolutionise our understanding, from the minuscule
world deep within atoms to the vastness of the Universe".[179]
147. The Government has recognised the potential
for Forward Commitment Procurement (FCP) to stimulate innovation,
and DIUS is taking steps to raise awareness of FCP through the
establishment of a number of flagship projects.[180]
Each Government department is also committed to publishing an
Innovation Procurement Plan, setting out how it will "embed
innovation in its procurement practices and seek to use innovative
procurement mechanisms".[181]
Throughout this inquiry, organisations such as UKDL KTN, Plastic
Logic and Dupont Teijin Films have proposed that Government might
stimulate innovation in the application of plastic electronics
research by sponsoring pilot projects. Suggested projects include:
trialling e-readers in educational institutions; disposable, printed
medical sensors for general medical use in the healthcare environment;
and trialling Organic PV devices in Government construction projects.
[182]
148. Public procurement has
the potential to be a valuable tool in driving innovation. We
welcome the Government's efforts to develop innovative procurement
mechanisms, and recommend it supports pilot projects in the area
of plastic electronics in order to stimulate product development
and manufacture.
The Small Business Research Initiative
149. The Small Business Research Initiative (SBRI)
was established in 2001 with the aim of boosting innovative Government
procurement from SMEs. The scheme aimed to reproduce, as far as
possible, the success of the USA's Small Business Innovation Research
(SBIR) programme. Since its creation in 1982, the US SBIR has
awarded over $12 billion to various small businesses and "has
played an important part in sustaining the demand for newand
often radically newproducts and services that are vital
to support innovative activity". [183]
150. The 2007 Sainsbury Review identified little
change in Government procurement practice as a result of the UK
SBRI, reporting that it had "done little more than reproduce
existing practicewith an additional bureaucratic burden".[184]
The failure of the UK SBRI to replicate the success of the US
scheme was made only too clear when we asked Mike Biddle (Technology
Strategy Board) whether SBRI had ever benefited a UK plastic electronics
company. We were disappointed, but not surprised, to hear that
it had not.[185] This
disappointment was compounded by Plastic Logic's assessment of
the value of grants awarded under the US SBIR to a US start-up
company engaged in plastic electronics R&D:
Universal Display Corporation (one of the key US
start-ups in plastic electronics) has won approximately 10 Phase
II awards in flexible displays and solid state lighting, and reports
SBIR has been very useful in enabling the company to launch new
initiatives as well as providing a good external validation that
is appreciated by the investment community.[186]
151. Dr Richard Price (Nano e-Print) not only
identified the support provided to Universal Display Corporation,
but compared it with the support, or relative lack of it, provided
to the UK spin-out Cambridge Display Technologies (CDT):
[T]he number of projects that UDC got was phenomenal
from the US Government. Despite the success of CDT, I think they
could have done much better by having additional support.[187]
152. As a direct result of recommendations made
in the Sainsbury Review, the Technology Strategy Board, working
with DIUS, has been asked to launch a reformed SBRI. In its new
incarnation, the SBRI will emulate the US scheme to a greater
degree, and Government departments participating in the scheme
will buy at least 2.5% of their R&D requirements from SMEs.
Suppliers for each project will be selected by an open competition
processadministrated by the Technology Strategy Boardand
will retain the intellectual property rights generated from the
project.[188] Projects
will be 100% funded.
153. Speaking of the reformed SBRI, Stuart Evans
(Plastic Logic) said:
I think they [SBRI grants] play a really important
role in enabling pilot projects and because they provide 100 per
cent funding, which is completely different to any other regime,
they permit little companies like ours and Nano e-Print to do
some different kinds of stuff, so it is a very welcome initiative
and I do hope it progresses.[189]
154. Following evaluation of the pilot schemes
now running in the Ministry of Defence and Department of Health,
it is expected that the reformed SBRI will be rolled out across
Government from April 2009.
155. The Small Business Research
Initiative (SBRI) is potentially a valuable source of funding
for innovative companies in the UK. Our concern is that unless
this support mechanism is re-launched in a format accessible to
SMEs developing future technologies, UK companies will refocus
their business models to engage with the lucrative procurement
opportunities offered by the US under its Small Business Innovation
Research programme. We ask that DIUS keep us updated on progress
made in rolling-out the revised SBRI.
Case study conclusion: innovation
and commercialisation
156. While the UK's research base is world-class,
this case study highlighted that:
without
a serious revision of the structures used to support the growth
of fledgling industries the UK will miss out on the opportunity
to exploit the economic potential offered by the commercialisation
of innovative technologies;
the UK has a strong track record in spinning
out companies from the research base, but this has not translated
into established companies; and
countries such as Germany, Japan and
the US are taking steps to create strategic capability in emerging
industries. We note that the Government has embarked on a debate
to determine whether the UK should identify, and concentrate support
on, areas of research in which: (a) it could be world leading;
and (b) have the potential to provide significant economic returns
on any investment. The form of this debate is the focus of our
forthcoming inquiry, 'Putting science and engineering at the heart
of Government policy'.
157. In Chapter 6, we draw upon the evidence
received during this case study to discuss how the UK's graduate
population might be better equipped with the skills needed to
progress emerging industries.
158. The provision of well targeted financial
support and government policy is critical if the products of innovative
research are to transition into the marketplace. In the next chapter
we consider what steps might be taken in formulating policies
relevant to one emerging sector of engineering in particular:
geo-engineering.
73 Q 19 [Ev 510] Back
74
Oral evidence taken before the Innovation, Universities, Science
and Skills Committee on 5 December 2007,
HC (2007-08) 115-i, Q 22 Back
75
Uncorrected transcript of oral evidence taken before the Innovation,
Universities, Science and Skills Committee on 26 January 2009,
HC (2008-09) 169-i, Q 6 Back
76
Uncorrected transcript of oral evidence taken before the Innovation,
Universities, Science and Skills Committee on 26 January 2009,
HC (2008-09) 169-i, Q 16 Back
77
Uncorrected transcript of oral evidence taken before the Liaison
Committee on 12 February 2009, HC (2008-09)
257-i, Q 40 Back
78
Semiconductor alloys made from elements from Group III and Group
V on the periodic table, such as Gallium Arsenide (GaAs). Back
79
Q 13 [Ev 509] Back
80
Note that the Plastic Electronics sector is also referred to as
'organic electronics', 'printed electronics', and flexible electronics. Back
81
Q 13 [Ev 509] Back
82
Q 4 [Ev 507] Back
83
Ev 567, 578, 581 Back
84
Oral evidence taken before the Innovation, Universities, Science
and Skills Committee on 5 December 2007,
HC (2007-08) 115-i, Q 22 Back
85
Fluorescent lamps contain mercury. Back
86
Ev 547, 597 Back
87
Ev 552 Back
88
Ev 547, 552, 564, 573, 578 Back
89
Ev 581 Back
90
Ev 557, 581; www.molecularvision.co.uk Back
91
Ev 557, 581; www.molecularvision.co.uk, www.lumicure.com Back
92
Ev 562, 595, 597 Back
93
Q 5 [Ev 507], Q 118 [Ev 526], Q 128 [Ev 527] Back
94
Ev 589 Back
95
Q 2 [Ev 507] [Dr Ian French]; Ev 600 [M-Solv] Back
96
Ev 600 Back
97
Council for Science and Technology, Strategic decision making
for technology policy, November 2007 Back
98
BERR, Plastic Electronics in the UK: a guide to UK capability
2008-09, April 2008 Back
99
Ev 604 Back
100
www.printedelectronics.net/PlasticElectronicsintheUK.htm Back
101
Q 6 [Ev 508] Back
102
Note that Dr Zella King's research was funded by the ESRC. Back
103
Ev 584 Back
104
As above. Back
105
Q 40 [Ev 585] Back
106
Spintronics is an emerging technology that harnesses the spin
of particles. www.epsrc.ac.uk/CallsForProposals/Archive/JSTCollaborativeCall.htm Back
107
A collaboration between Queen Mary University of London and Imperial
College London. www.epsrc.ac.uk/PostgraduateTraining/Centres/NewCentres.htm Back
108
www.innovateuk.org/aboutus.ashx Back
109
Ev 560 Back
110
Q 165 [Ev 534] Back
111
www.ukdisplay.net Back
112
Ev 562 Back
113
Ev 579 Back
114
Q 177 [Ev 536] Back
115
Q 107 [Ev 524] Back
116
Q 44 [Ev 515] Back
117
As above. Back
118
www.technologyprogramme.org.uk/site/Documents/default.cfm Back
119
Ev 590 Back
120
Q 187 [Ev 538] Back
121
Ev 572 Back
122
Ev 598 Back
123
Ev 555 Back
124
Q 116 [Ev 525] Back
125
Q 121 [Ev 526] Back
126
Q 188 [Ev 539] Back
127
Q 133 [Ev 528] Back
128
Q 29 [Ev 512] Back
129
Q 6 [Ev 508] Back
130
Q 27 [Ev 512] Back
131
Q 148 [Ev 531] Back
132
Ev 574 Back
133
Q 147 [Ev 531] Back
134
Q 74 [Ev 519] Back
135
Q 146 [Ev 530] Back
136
Universities of Cambridge, Durham, Hull, Imperial College London,
Liverpool, Manchester, Oxford, QMUL, Sheffield, St Andrews, Surrey
and UCL. Back
137
www.ukpetec.com/pages/about/faqs.htm#6 Back
138
Ev 574 Back
139
Ev 582 Back
140
Ev 354-364 Back
141
Myoken Y., Overview of organic electroluminescence R&D
in Japan, British Embassy, Japan, 2008 Back
142
Ev 575 Back
143
Council for Science and Technology, Strategic decision making
for technology policy, November 2007 Back
144
www.eetimes.eu/germany/212100996 Back
145
Uncorrected transcript of oral evidence taken before the Innovation,
Universities, Science and Skills Committee on 26 January 2009,
HC (2008-09) 169-i, Q 15 Back
146
Q 189 [Ev 539] Back
147
Clean rooms are an area where the environment is controlled to
eliminate all dust, dampened against vibration and climate controlled. Back
148
Ev 560 Back
149
Q 52 [Ev 516] Back
150
Q 52 [Ev 516], Q53 [Ev 517] Back
151
Q 209 [Ev 543] Back
152
Myoken Y., Overview of organic electroluminescence R&D
in Japan, British Embassy, Japan, 2008 Back
153
www.itri.com/practices_5.php Back
154
www.itri.org.tw/eng Back
155
www.etri.re.kr/eng Back
156
Ev 601 Back
157
Ev 557, 577, 583, 591 Back
158
Several multinational companies already manufacture products in
the UK. For example, G24i has a manufacturing plant in Wales. Back
159
Q 171 [Ev 535] Back
160
www.electronicsweekly.com/Articles/2008/11/18/44941/first-oled-panels-to-be-manufactured-in-uk.htm Back
161
Open access facilities allow any user to access equipment whilst
maintaining complete integrity over the intellectual property
generated by the project being undertaken. Back
162
Ev 583, 592 Back
163
Ev 583 Back
164
Ev 589 Back
165
Q 130 [Ev 528] Back
166
www.sumation.co.uk/about_us Back
167
Ev 602 Back
168
Q 172 [Ev 535] Back
169
HM Treasury, The Race to the Top, October 2007, p 126 Back
170
Council for Science and Technology, Strategic decision making
for technology policy, November 2007, p 30 Back
171
www.ogc.gov.uk/About_OGC_news_8748.asp Back
172
Q 124 [Ev 527] Back
173
As above. Back
174
Q 195 [Ev 540] Back
175
As above. Back
176
Q 202 [Ev 541] Back
177
www.innovateuk.org/ourstrategy/innovationplatforms.ashx Back
178
Q 210 [Ev 544] Back
179
http://public.web.cern.ch/public/en/LHC/LHC-en.html Back
180
www.dius.gov.uk/policy/public_procurement.html Back
181
As above. Back
182
Ev 575, 583, 591 Back
183
HM Treasury, The Race to the Top, October 2007, p 130 Back
184
As above. Back
185
We note that Molecular Vision did receive a £147,000 grant
from the BBSRC under its Small Business Research scheme. Back
186
Ev 574. Note that since the evidence sessions for this inquiry,
UDC has received two $750,000 US SBIR contracts to further advance
white OLED technology. These grants are part of a package of measures
aimed at meeting the US Department of Energy's targets for solid-state
lighting. Back
187
Q 168 [Ev 534] Back
188
Certain rights of use are to be retained by the contracting department. Back
189
Q 168 [Ev 534] Back