Public procurement as a tool to stimulate innovation - Science and Technology Committee Contents

Chapter 6: list of conclusions and recommendations

134.  Our intention is to follow up this report during the next session (2012-13), in about 12 to 18 months' time, in order to see what progress has been made against the findings of this report and what plans have been put in place to ensure that improvements are set to continue. All our recommendations should be read against this timeline (paragraph 12). (Recommendation 1)

135.  It is striking the number of documents and reports published in recent years that make recommendations about innovation in public procurement. Yet it is disappointing that we have seen no evidence of a systematic and coherence use of public procurement as a tool to stimulate innovation. We urge the Government to take steps to ensure that there is a fundamental change in the culture within government so that innovation is wholly integrated into the procurement process (paragraph 26). (Recommendation 2)

136.  We recommend that a Minister should be responsible for both procurement and innovation, charged with ensuring that, where appropriate, innovative solutions are used to meet procurement problems across government. The Minister assigned with this responsibility should formulate a national framework for innovation in procurement which will provide the basis on which government departments, local authorities and non-departmental bodies would work. The Minister should be held accountable for how well procurement decisions are made including to what extent innovative solutions had been considered and the reasons why they had not been adopted (paragraph 32). (Recommendation 3)

137.  Furthermore, there should be a Minister in each government department with specific responsibility for procurement and innovation in order to create a high level network across government with a view to strengthening the link between public procurement and innovation. (paragraph 33). (Recommendation 4)

138.  We recommend that all government departments, including the DfT, should set out in their IPPs measurable objectives against which success can be assessed and a timetable according to which those objectives must be achieved (paragraph 43). (Recommendation 5)

139.  We recommend that the DfT should identify the additional activities it intends to carry out to ensure that the possibility of innovative solutions to its procurement problems is systematically included in its procurement decision-making processes (paragraph 50). (Recommendation 6)

140.  The examples we have received of the HA's use of procurement of innovative ideas are encouraging and should be used to inform the procurement activities of the DfT and its other agencies. (paragraph 55). (Recommendation 7)

141.  Long-term strategic procurement planning needs improvement. In particular, grand challenges, such as adapting to climate change, should be taken into account in public procurement decisions (paragraph 62). (Recommendation 8)

142.  The involvement of departmental CSAs is essential if horizon-scanning activities within departments are to be carried out effectively. We recommend that government departments should set out in their IPPs how these plans support departmental long-term planning and horizon-scanning, over the next several decades (in the case of departments that procure long-lived infrastructure projects, the very long-term planning should be carried out over the life of the infrastructure). Such plans should be formulated in consultation with Foresight and departmental CSAs. The long-term plan should be kept under review and include technology roadmaps and measures against which the appropriateness and effectiveness of the plan can be assessed (paragraph 63). (Recommendation 9)

143.  The Government's capacity to act as an "intelligent customer" is limited by the level of procurement skills and knowledge in departments and the absence of incentives to procure innovative solutions. Providing training courses is not good enough. Departments need to recruit procurement staff with demonstrable expertise and experience. We invite the Government to set out what further steps they intend to take to take to bring about a marked change in their capacity to act as an "intelligent customer" (paragraph 73). (Recommendation 10)

144.  Ministers recognise that risk aversion inhibits both the commissioning, and offering, of innovative solutions, but it is not clear how this recognition is being translated into action. The Government should identify what steps they will take:

(a)  to offset risk aversion within government departments;

(b)  to make provision to ensure that the balance between risks and rewards in procurement contracts is properly managed and shared to encourage innovation where it is warranted (for example having an element of the procurement budget set aside for innovation); and

(c)  to set out how they intend to demonstrate the success of this policy and the timeframe in which they anticipate achieving that success (paragraph 82). (Recommendation 11)

145.  We recommend that CSAs should have responsibility for encouraging engagement with industry (including both suppliers and potential suppliers) and academic communities with a view to promoting the procurement of innovative solutions. In particular, CSAs should ensure that mechanisms are in place to develop a stronger connection between the department and the science base so that procurement officials are better informed about the availability of innovative ideas. This role should be incorporated into departmental objectives (paragraph 87). (Recommendation 12)

146.  On the basis of the evidence which we have received, we recommend that departments, through the CSA, should either:

·  set up a mechanism similar to the MoD's Centre for Defence Enterprise or the NHS National Innovation Centre, to encourage the submission of proactive unsolicited proposals from industry or academia; or

·  ask the TSB to play a more active role in such activities within their departments (paragraph 88). (Recommendation 13)

147.  We note that the ERG is charged with simplifying the procurement process and we welcome this development. We invite the Government to explain when this simplification will be achieved, by what criteria they will judge its effectiveness and whether it will impact, by example, other areas of public sector procurement (paragraph 94).

148.  The Government's laissez faire approach to the dissemination of best practice in procurement from central to local government appears to be overly optimistic. We recommend that the Government should put in place a system whereby examples of procurement of innovative solutions can be shared across central and local government. The Government should set out what steps, and when, they will take to implement a system of dissemination and indicate how they will assess its effectiveness (paragraph 100). (Recommendation 14)

149.  We welcome the Government's recognition that efficiency and innovation can be complementary and that this message should be communicated throughout the public sector, including local government. Getting this message across is part of the wider issue of a need for a root and branch cultural change in attitude towards adopting innovative solutions to which we have already referred in this report (paragraph 104).

150.  SMEs and large companies both have a role in developing innovative solutions. However, given the conflicting evidence about the contribution of SMEs in promoting innovation, we invite the Government to explain their current policy on SMEs, particularly the aspiration that 25% of government contracts should be awarded to SMEs (paragraph 112).

151.  The Government should set out what support they are giving to SMEs acting as sub-contractors, and what they are doing to improve contract management across the supply-chain to encourage innovation (paragraph 188). (Recommendation 15)

152.  The TSB has an important role in innovation and that role is about to be expanded. We invite the Government to explain how the TSB will discharge its extra responsibilities within current resources and also what steps they will take to ensure that the work of the TSB is used by government departments to improve their capabilities for innovation procurement. (paragraph 123).

153.  BIS is planning an evaluation of SBRI and FCP in 2012. Professor Georghiou and Professor Edler told us that such an evaluation would be challenging. The Government should ensure this review is robust and takes into account the issues raised by Professor Georghiou and Professor Edler. We look forward to seeing the outcome of the evaluation (paragraph 133). (Recommendation 16)

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