Mar 11, 2021
It could be argued, that in the UK currently, there could not be a more exciting time for innovation despite the backdrop of hardship that many are feeling on the back of BREXIT, COVID-19 and the economic recession underway. For this thought piece, we are focussing on the upside around these macro trends in that they are creating a kaleidoscope of innovation from regulation through to social community value creation.
There is a specific area that we want to focus on based on the work that we do at Cimple and that is the innovation underway on how the Government spends its £200bn per annum through the Public Procurement process. There have been a swathe of recent Public Procurement policy reviews over the last 12 months or so that have supported the drive towards a more ‘Flexible’ (Government Green Paper 2020) and a more ‘Socially Conscious’ (Social Value Policy 2020) form of Government contracting.
For those close to Government contracting and service provision here in the UK (a nerdy collective which I am happy to be a part of!) there has been a lot to talk about over the start of 2021 including procurement reform. Regardless of specific opinions, there is definitely consensus that procurement in the UK is likely to change, for better or for worse.
It is critical that it does so as well due to the role the Government has as a customer for UK businesses. The importance of this role will only continue to grow post leaving the EU. On the back of COVID-19 as well, the Government will be a key driver of stabilising our economy and helping us head back to the heady pre-COVID-19 recession/depression that we have now fallen headfirst into.
In the recent budget announcement, Rishi Sunak committed to helping build a better future economy. This was supported through specific investment measures such as the new £12bn Infrastructure Bank to support the drive to Net-Zero. Out of COVID-19, the UK has a fantastic opportunity to build back a better society, one that is focussed on social equality and inclusion as well as a greener way of operating.
This all sounds lovely in practice but anyone from previous ‘groundbreaking times’ will tell you that the Government's ability to operationally deliver is (whilst full of heart) often hamstrung by the way it is structured, the regulation it needs to follow and the capabilities within its organisation. None more so does this apply to than those that govern what I biasedly see as the most important process for creating value and change globally beyond the process of fiscal investment and enterprise.
Procurement is not a dirty word as it used to be in Government, although, it hasn’t recently showered itself with glory due to the allegations of cronyism deployed throughout the response to COVID-19. However, I will move this to one side for the purpose of not spiralling this piece into a regurgitation of what is hitting mainstream media. Procurement, and importantly the Government Commercial capability from the Government Commercial Officer down to the School Business Manager have the ability to create a more innovative, dynamic and fair practice of procurement across the UK. The eternal optimist in me says now more than ever is the chance to do that.
However, the changes referred to above driving towards greater flexibility and improved social outcomes only really go so far as to changing things. Without structural change on how the commercial landscape delivers and a real focus on capability changes across the public sector, then it is unlikely the policy changes will hit the heady heights they could have with procurement reform.
The cynics in my network have said that the changes outlined in the Green Paper will only provide ammunition to buyers enabling them to make increasingly risk-averse decision making through the contracting process (simply because a more flexible process makes it harder to commercially challenge). Furthermore, the Social Value Policy only deals with contracts above £10m and assessing the social value they create. Whilst a good start, a real simple digital solution would enable Government buyers to deploy this capability across all contracts creating immense growth at the Small and Medium Enterprise end of the market and finally maturing how Government works with Voluntary and Community Service Enterprises to deliver public services.
For me, the above is a fair assessment of the challenges faced. However, there is also a far greater omission that has personally irked me more so than the above. For the UK to truly transform into a standalone industrial leader it has to have the ability to drive a far greater level of commercial value from research and development. Every generation says that the world is going to change more in theirs than ever before. However, I think on the back of COVID-19 and with the impending ecological meltdown ahead of us driven by the Climate Crisis, I expect the current generations may have reason to believe that it is theirs.
Technological innovation has the ability to truly transform the way that we govern and the way that we are driven as a species. Our way for an organisation to support our continued survival and growth as a species may well be different to how we are currently organised and governed. It is the Government's obligation in its form as the ‘state’ (whose single role is to give security to humankind) to help us navigate towards a more abundant future.
To do this, the Government will have to drive a level of technological innovation the likes of which has never been seen before and have the ability for the UK to become a powerhouse for a revolution worldwide. However, one of the key blockers in the UK from achieving this is that the procurement process embedded in Government and the reforms set out last year have a glaring omission.
There needs to be a new capability that will drive innovation through the Government procurement process. This capability is a different minded individual than the majority of Government buyers who are very much focussed on traditional value delivered through procurement (this is a sweeping generalisation and should in no way be seen as a slight against the commercial capability that exists in Government).
The Green Paper highlights the problem in that by 2017 (2 years after launch) only 3 Innovation Partnerships and 5 Design contests had been run across all of Government. This is remarkable in its insight as it shows that there is a real reticence to run a process that could drive innovation with no clear outcome at the start. This is the gap that has not been filled by the Green Paper or the Social Value policy and one that needs to be filled for the Government truly to drive us towards a better society post-COVID-19.
The Innovation Buyer needs to be a capability that is created with no fixed outcome of what it is there to achieve. The capability should be a network of professionals who are driven by continuous learning through the process of innovation or research and development. The capability needs to have the ability to invest profitably in outcomes from the innovation activity it undertakes. If this capability is created in the right way, the commercial landscape will become more flexible, socially minded and innovative in how it delivers.
Right now, the challenge with innovation procedures in Government is that they are seen to be too complex in supporting achieving a desired fixed outcome. And that is exactly the problem. Individuals look at them as a procurement process to deliver a fixed outcome and now an innovation process with a set of objectives but no fixed outcome. The Innovation Buyer will therefore need to be a new capability, with a new set of people built to serve across Government as well as in the specific sectors. A lot of the innovations that they would be focussed on could be applied to different areas of Government in different ways. Hence, the cross-cutting nature this capability needs). What may lose out in one innovation area focussed on one set of objectives may create material value in an alternative area of Government with a slightly different set of objectives.
Critically, this capability needs its own budget to innovate with. One of the greatest challenges in the research and development process is the ability of organisations to commercialise the outputs of their activity. There is a known ‘grant cycle’ where innovative organisations continue to apply for grants due to the inability to commercialise their innovation through the traditional rigid procurement processes. Having a Commercial Innovation Function within Government that has the ability to co-invest with departments and bodies to deliver innovative technologies needed to transform the lives of civilians would go a long way to mitigating the challenges we face.
Many will say ‘But isn’t this what Government Digital Services does with the Digital Marketplace?’. In short, no, the Digital Marketplace is a shop that operates once an organisation has got to the innovation (predominantly software-led) and can package it up to sell to the Government. It may well be a critical route for Innovation Buyers to help suppliers to commercialise their offering once through the process, however, there needs to be more at the front end of the pipeline which is where the issue is evidenced by the stark figures stated above.
If done well, with the right capability recruited into the role, and that it is given the freedom to operate; the Innovation Buyer could go on to be the spark that ignites the flywheel in the broader policy changes increasing further the traditional outcomes and social value outcomes delivered through Government procurement. With this capability in place, the Government has the opportunity to use procurement to transform the way that it operates. Something that a few of the procurement geeks out there (which yours truly is happily one of) have always believed could be achieved.