![4) What suppliers say…
”Knowledge and appetite for innovation differs vastly across different sectors e.g.
councils vs. the NHS.”
“[Procurers] pretend to be after innovation but they're after the lowest price.”
“If you always ask for what you always had you'll always get what you always got. I.e.
technical and performance specifications don't allow for significantly innovative
approaches.”
“There is no direct communication between the bidder and the 'user', all is via the
restrictive interface that is the procurer. This results in poor specification and ineffective
procurement. As a bidder, you need this dialog to innovate effectively.”
“The procurer has already defined a specification that could be better specified by
consultation with the potential private sector providers.”
“[It’s] All to do with the willingness and quality of the procurers. Some of them are like
sending a non driver to buy a car, others are like Jenson Button.”
Manchester Institute of Innovation Research 17](https://image.slidesharecdn.com/rigby-oecdmeasuringppi-140903083113-phpapp02/85/Developing-a-framework-for-measuring-public-procurement-of-innovation-What-are-the-key-user-needs-Can-they-be-met-17-320.jpg)
Developing a framework for measuring public procurement of innovation. What are the key user needs? Can they be met?
- 1. Expert Workshop on the Measurement of Public Procurement of Innovation OECD, Paris 4th February 2013 Session I: Developing a framework for measuring public procurement of innovation – What are the key user needs? Can they be met? John Rigby, Manchester University Manchester Institute of Innovation Research 1
- 2. Procurement of Innovation: Measurement Issues • The PCP to PPI link subject of recent policy reviews • While PCP can be demand / supply / hybrid policy, link to PPI (procurement of actual goods and services) from PCP is envisaged clearly in the law / procedures / policies of the EU and is the focus in new directives (Innovation Partnerships) (Apostol, 2012 PPLR) • PCP / Innovation Partnerships and Competitive Dialogue discussions reveal concern over structure / system as well as output • Implications for measurement? Manchester Institute of Innovation Research 2
- 3. Procurement of Innovation: Measurement Issues System / Rules / Practices of Procurement Outputs of Procurement Impacts Ease of Use Procurement of goods and services Economic and social improvement in key areas of grand challenges and wherever procurement of innovation is undertaken Widely diffused and engaged with Risk reduction effects Employment creation Appropriate applications of the methods of PCP and PPI Projects moving from Stage 1-3 to Stage 4 (across the gap) Technological capability development Procurement capability enhancement Shortening time to innovation / market Venture capital investment in the SMEs involved Manchester Institute of Innovation Research 3
- 4. Elvira Uyarra, (John Rigby) Jakob Edler, Luke Georghiou, Jillian Yeow Manchester University Session III: Asking businesses about their involvement in innovation procurement and its impact – the UNDERPINN Project Expert Workshop on the Measurement of Public Procurement of Innovation
- 5. Session III Presentation The UNDERPINN Study – Public Procurement of Innovation, what was done and some findings from the Suppliers’ Survey – Issues raised by the Study for understanding innovation in terms of its practices and its outcomes, and for objectivizing and measuring these Manchester Institute of Innovation Research 5
- 6. UNDERPINN Study Starting point: Public demand.. • Has great potential to spur innovation – but underutilised? Three aims • Innovation effects of procurement practices • Understanding the supplier‘s perspective • Process and institutional context of public procurement Methods • Literature review • Multiple case studies • Supplier survey, not matched pairs / control group • Institutional analysis and context analysis Funding: BIS/ESRC/NESTA/TSB, (through UK IRC) Team: Edler, J., Georghiou, L., Uyarra, E., Gee, S., Yeow, J, James, A., McMeekin, A., Thomas, S., Cousins, P., Maddock, S., Cram, C. Manchester Institute of Innovation Research 6
- 7. Survey details • CATI survey on suppliers to public bodies conducted between June and July 2011 • 800 responding organisations across sectors or areas of government > 10% response rate • Structure: – Types of innovation – Procurement profile: main categories, main clients, tendering modes and procurement practices – Procurement and innovation: main drivers and barriers, comparing public and private. – General assessment Manchester Institute of Innovation Research 7
- 8. Type Categories % Size (employees) Less than 10 82 10% Between 10-49 297 37% Between 50-250 226 28% More than 250 190 24% Age <5 years 32 4.0% between 5-10 years 147 18.4% between 10-25 years 231 28.9% between 25-50 years 117 14.6% > 50 years 33 4.1% Type of organisation Private 649 81.1% Social enterprise 139 17.4% Main category of goods and services supplied Facilities & Management services 91 11% Healthcare equipment, supplies and services 116 15% Office equipment & IT 61 8% Professional services 159 20% Social community care, supplies & services 133 17% Other (incl. utilities, education, transport) 54 7% Works 145 18% Main client NHS 195 24% Local Government 423 53% Central Government 121 15% Profile of respondents Manchester Institute of Innovation Research 8
- 9. UK public sector UK public sector (sample) Supplier Population Population : 8198 organisations across the three areas of government We used information for central government, local authorities and NHS Our population would supply goods and services for central &local gov and NHS, but also other parts of the public sector as well as the private sector Central government suppliers 22% NHS suppliers 49% Local government suppliers 30% Sampling Manchester Institute of Innovation Research 9
- 10. Four key findings 1) Suppliers to public bodies show considerable innovation activity - but heterogeneous picture. 2) There are procurement practices that are more innovation friendly and make a difference in terms of innovation and competitiveness of suppliers. 3) Innovation friendly procurement practice not as common as they should be. 4) There are a set of common barriers. Manchester Institute of Innovation Research 10
- 11. Innovation and Public Contracts Manchester Institute of Innovation Research 11
- 12. Product innovation (432) Process innovation Service innovation (540) (605) Respondents have introduced a mix of product, process and service innovations in the last three years (N=800) 200 73 246 62 1) Suppliers innovate, but very heterogeneous picture - much is hidden Larger companies slightly more innovative Service providers more innovative Product Manchester Institute of Innovation Research 12
- 13. 2) Procurement practices make a difference 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% product service process All sample Those having experienced innovation friendly procurement practices more often Share of those suppliers having actually introduced a new or significantly improved product/service/process innovation in the last three years Innovation pays off: 60.4% of respondents reported having won a contract because of an innovation. This figure raises to 72.2% for those more exposed to innovation friendly practices. Manchester Institute of Innovation Research 13
- 14. Catalytic effects: The innovations introduced as a consequence of bidding for contracts or delivering to public sector enabled or increased sales in other public, private and overseas markets for 81%, 57% and 30% of cases. These shares are higher for those experiencing innovation friendly procurement 2) Procurement practices make a difference 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% public private overseas All sample Those having experienced innovation friendly procurement practices more often % of sample for whom public sector contract/bidding has increased or enabled sales in other markets Manchester Institute of Innovation Research 14
- 15. 3) Use of practices not ideal 19% 10% 37% 31% 9% 72% 55% 61% 26% 6% 22% 28% 48% 15% 38% 33% 31% 23% 24% 33% 33% 37% 39% 46% 46% 47% 48% 49% 51% 56% 58% 59% 60% 66% Provisions related to intellectual property E-auctions Restricted tender Non-OJ tender procedure Private finance initiative Electronic submission of tenders Framework agreement Open competitive tender Negotiated tender Incentive contracts such as profit-sharing … Competitive dialogue Full life-cycle costing considerations Emphasis on sustainability criteria Advanced communication of future needs Outcome-based specifications Early interaction with procuring organisation Innovation requirements in tenders encouraged innovation (% out of those that experience it) frequently experienced Manchester Institute of Innovation Research 15 The most effective practices are the least frequent
- 16. 4) Key barriers to innovation in procurement • Differences by category: healthcare & works suppliers: too much emphasis on price; Social and community care organisations: contracts not long enough • Differences by firm size: Large companies emphasise the lack of risk management • Lack of market / technological knoweldge; poor use of supply chains Manchester Institute of Innovation Research 16
- 17. 4) What suppliers say… ”Knowledge and appetite for innovation differs vastly across different sectors e.g. councils vs. the NHS.” “[Procurers] pretend to be after innovation but they're after the lowest price.” “If you always ask for what you always had you'll always get what you always got. I.e. technical and performance specifications don't allow for significantly innovative approaches.” “There is no direct communication between the bidder and the 'user', all is via the restrictive interface that is the procurer. This results in poor specification and ineffective procurement. As a bidder, you need this dialog to innovate effectively.” “The procurer has already defined a specification that could be better specified by consultation with the potential private sector providers.” “[It’s] All to do with the willingness and quality of the procurers. Some of them are like sending a non driver to buy a car, others are like Jenson Button.” Manchester Institute of Innovation Research 17
- 18. Procurement of Innovation: Challenges for Measurement and Indicators I • Procurement data poor quality – Not good records; poor relevance of functional to industrial categories • Public sector fragmented – UK 30,000 procurement organisations; no central portal (at time of UNDERPINN study) • Many purchases below legal threshold – Majority of purchases currently falling outside threshold, so difficult to research Manchester Institute of Innovation Research 18
- 19. Procurement of Innovation: Challenges for Measurement and Indicators II • Public sector market characteristics – Some single suppliers, some supply to many organisations: inherent difficulty distinguishing which procurement was instrumental • Diversity of supply firms – Increasing role of non-profits but they have different innovation dynamics • Innovation by suppliers difficult to attribute to procurement by public sector – Many firms have multiple supplies to many CAs and a mix of public and private clients Manchester Institute of Innovation Research 19