Rethinking Public Procurement for Post-COVID Recovery

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Malcolm Harbour CBE from Connected Places Catapult examines how the public sector can use procurement to drive innovation in Birmingham and the West Midlands.

This blog post was produced for inclusion in the Birmingham Economic Review for 2021.

The annual Birmingham Economic Review is produced by City-REDI, University of Birmingham and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.

This post is featured in Chapter 2 of the Birmingham Economic Review for 2021, on Industry and Innovation: Pathways to Prosperity.

Click here to read the Review.

Birmingham’s role in innovation

Birmingham has played a historic role in developing and manufacturing innovative products. These deeply ingrained skills provide a strong foundation for the post-Covid economy. Working closely with the West Midlands Combined Authority, ambitious plans have been made to develop the skills and infrastructure for future success.

All these plans position innovation as an essential ingredient to achieve global competitiveness. There are many proposals to develop innovative companies, particularly through “accelerators” or “incubators”. But for lasting success, these companies need customers for their innovations. Accelerators must pave roads to customer contracts, Incubators must generate flourishing offspring. Without customers, innovators will struggle to build long-term businesses, with global reach, that will help secure our economic future.

Public Sector

The public sector, as lead customer, can be a powerful booster for innovation. It can use public procurement in an innovative way and work with innovative suppliers to develop solutions to the many challenging problems it is now facing. Tackling climate change and making the transition to a zero-carbon economy is just one example. Innovative ideas will be needed to meet public expectations in all areas of public service delivery.

Local Innovation

The UK cannot meet demanding policy goals by centrally run programmes. They will have to be addressed regionally or locally by projects initiated and managed by local authorities and regional agencies. Local innovation is indispensable across a whole range of products and services to deliver solutions that will be robust, effective and offer value for money.

New Rules on Public Procurement

In England, the government will shortly be introducing new rules on public procurement which will actively encourage the adoption of more innovative processes and solutions. A procurement strategy has already been published. Public authorities will need to consider innovation, sustainability, job creation and social value goals when they prepare their tenders for procuring products or services. They will have to enhance procurement skills and embed them within the teams commissioning innovative solutions.

Procurement Challenges

Birmingham City Council already has long-standing experience in this area. It can play a leading role in responding to the government’s initiative. Across the region, many authorities will have similar problems. There would be real benefits from strong coordination and sharing of ideas. Procurement challenges can be built around planned infrastructure investment – for example, innovative ideas for exploiting 5G connectivity. Sectors already identified as key technology hubs, such as transport or medical devices – could be central to procurement challenges. Combined tender offers will be very attractive to innovative suppliers.

There would be real benefits from strong coordination and sharing of ideas
Public Sector Customers

Ambitious and innovative public sector customers must ensure that they have simple and clear processes that encourage ambitious and innovative businesses to supply them. Where they are looking for “cutting edge” solutions, they should set out their unmet needs and engage the market with pre-tender consultations to ensure that they are being offered the best ideas. The Commonwealth Games team have set a great example with their very clear supplier web portal, future contracts listings and direct online tendering.

Strategic Public Procurement

Strategic public procurement would position Birmingham and the West Midlands as a leading innovative region. The clustering of innovative public sector customers demanding innovative suppliers would have a dynamic effect on the economy. Early-stage companies with a future customer contract will be attractive propositions for scale-up funding. Potential investors would be encouraged to work with new suppliers, understand their needs and develop new investment opportunities.

A New Consortium

The new procurement rules offer Birmingham and the West Midlands a great opportunity to enhance its strong portfolio of regeneration plans. The Digital Services Roadmap has already made it clear that procurement ambitions are essential for the effective and early deployment of digital solutions. That thinking needs to be expanded to other sectors. Rethinking the role of procurement will be assisted by building a research base of ideas and case studies to help authorities and businesses respond to the new challenges. City-REDI at the University of Birmingham, working with the University of Manchester and the Connected Places Catapult, are ready to play a key role as partners in a new Consortium for Research in Innovative and Strategic Public Procurement, which was launched in 2021.

This blog was written by Malcolm Harbour CBE, Associate, Connected Places Catapult.

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WMREDI or the University of Birmingham.

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