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Public Procurement Policy

DIUS is leading the Government's work to develop a public procurement culture that both stimulates innovation in the economy and helps the public sector to meet its future needs at better value for money for the taxpayer.

DIUS Innovation for Sustainability Competition

The White Paper, Innovation Nation (March 2008), sets out the Government's aim to make the UK the best place in the world to run an innovative business or public service. It argues that innovation is essential to the UK's future prosperity and the ability to tackle major challenges like climate change, and that the power of Government spending must be harnessed to create demand for new innovative products and services. The paper highlights the key role that public procurement plays in encouraging the development of new technologies and providing innovative solutions that provide better public services and respond to societal challenges. An important commitment in the White Paper is for each Government Department to include an Innovation Procurement Plan as part of its commercial strategy, setting out how the Department will embed innovation in its procurement practices and seek to use innovative procurement mechanisms. Guidance has been produced to help Departments develop their Innovation Procurement Plan and is available below.

The importance of public procurement in stimulating innovation was also set out in Lord Sainsbury's Review of Government's Science and Innovation Policies (October 2007). This report emphasised the need for greater coordination across the public and private sectors, and stressed the need for Government procurement to be improved by an "outcome-based approach" and for new procurement approaches to be introduced to stimulate innovation, for example Forward Commitment Procurement.

Forward Commitment Procurement was also highlighted in the Government publication Building a low carbon economy: unlocking innovation and skills (May 2008) issued in response to the CEMEP (Commission on Environmental Markets and Economic Performance) report. This document sets out how Government will make the UK one of the best locations in the world to develop and introduce low-carbon and resource-efficient products, processes, services and business models. The Commission specifically emphasised Forward Commitment Procurement as an important means of creating demand pull for environmental innovations.

The Forward Commitment Procurement (FCP) model provides a practical and proven means to enable public sector organisations to stimulate and harness innovation for the public good and achieve a step change in environmental performance. It does this by transforming the market for innovative and sustainable solutions, making new and emerging solutions more affordable and widely available, and providing a way for the public sector to manage the risk of procuring innovative products and services.

The aim of the DIUS Innovation for Sustainability Competition is to increase awareness and access to this valuable tool and support a select number of innovative flagship projects that can be picked up and replicated across the public sector. The winners of the competition will receive the resources and know-how to implement an 'Innovation for Sustainability' FCP project and develop in-house FCP capability. Access to funding streams for technical support and lead market deployment will also be provided.

To participate simply submit a general expression of interest. The DIUS FCP Team will then get in touch to discuss ideas, introduce the FCP approach and help you to submit an Innovation for Sustainability proposal. The Expression of Interest form can be found below, or is available on the Technology Strategy Board website http://www.innovateuk.org/ourstrategy/procurement/forwardcommittmentprocurement.ashx

Background

In January 2007, HMT announced in Transforming Government Procurement a new vision for government procurement (incorporating innovation and sustainability) and the regime required to achieve that vision based on a more professional government procurement service, supported by a smaller, higher calibre Office of Government Commerce. The UK Government's Sustainable Procurement Action Plan (March 2007) also identified ways of harnessing public sector purchasing power, such as Forward Commitment Procurement, to make innovative and sustainable solutions more widely available and affordable to others and to deliver a low carbon economy.

The European Commission has also been looking at how procuring, within the current EU Procurement Directives, can be used to stimulate innovation in markets. It has published a paper on Pre-commercial Procurement of Innovation of March 2006 and a subsequent Guide on Dealing with Innovative Solutions to Public Procurement of February 2007.

Procurement Guidance

DIUS have been working closely with OGC on providing practical advice on how to ensure that innovation is incorporated into procurement practices. The OGC/DIUS publication Finding and Procuring Innovative Solutions was launched in August 2007. It complements and updates the earlier publication by providing a number of more detailed approaches for finding and procuring innovative solutions. It uses case studies from the NHS, HM Prison Service and London Fire & Emergency Services to demonstrate how public sector needs can be identified and effectively expressed to the market to illicit innovative solutions. It then shows how the responses can be managed and, where appropriate, procured.

In addition, the following case studies have been developed: