Fostering innovative partnerships
The Central Procurement Directorate’s Des Armstrong wants to foster innovation partnerships in procurement between the public sector and its suppliers.
Public procurement expenditure is a key feature of the Northern Ireland economy. There is considerable interest on how public procurement is reformed. Following a drive for change led by the former Finance Minister, Simon Hamilton, the CPD is reforming its public procurement agenda alongside the implementation of the new Public Contracts Regulations 2015.
The focus of the Procurement Board is on value for money, helping to grow the economy through supporting local business, and ensuring that the public is confident that the procurement process is fair, transparent, effective and efficient.
The key aim going forward is to maximise the benefits arising out of the new procurement regulations:
• to increase the efficiency of public spending;
• facilitating the participation of SMEs in public procurement; and
• to enable procurers to make better use of public procurement in support of common societal goals.
A number of procedures have been identified in the regulations that would help bring forward innovation:
• competitive procedure with negotiation;
• competitive dialogue procedure;
• innovation partnerships;
• variant bids;
• exclusion for research and development services; and
• design competitions.
Along with procedures such as pre-commercial and forward commitment, these provide a framework for drawing on the potential of the market to find fresh and imaginative solutions.
While there is much political interest in innovation through procurement, and there are good examples, the CPD believes that there is more that can be done to ensure that innovation will actually come about.
The need for innovation is a key element of the Europe 2020 strategy for smart, sustainable and inclusive growth. With the partnership, the European Union has identified a new way to allow for new products to be brought onto the market. However, being clear about the minimum requirements to be met by all tenders is important.
Under the Innovation Partnership (Regulation 31), the need must be identified for an innovative product, service or works which cannot be met through the market, and the elements of that description (which define the minimum requirements to be met by all tenders) should be indicated.
Regional issues
The reform programme recognises how expenditure on public procurement impacts upon the economy in Northern Ireland. Increasingly, public procurement in the region is viewed as a lever or vehicle to bring forward other policy objectives.
Work is ongoing on a study by the Organisation for Economic Co-operation and Development (commissioned by Minister Hamilton last year) on how public services in Northern Ireland are structured. One element will focus on public procurement and its governance. The findings are expected at the end of November.
Regarding the procurement of innovative goods and services, the CPD is seeking innovation every step of the way and is pushing the message that like-for-like procurement – where bodies specify what they specified last time around – simply withdraws any scope for innovation.
To produce innovative processes and models, engagement needs to continue with private sector bodies on a better way of moving public procurement forward.
Good progress is being made on finding savings through the collaborative procurement strategy by collating demand, trying to simplify and standardise specifications, and bringing it to the market in a way in which better value can be achieved.
The CPD has also created a centralised construction procurement and delivery service. For example, the Health Estates Investment Group was brought onboard to help in this area and the CPD has the capability to deliver building infrastructure projects for all government departments.
Recommendations
Focusing on the future, an innovation lab was commissioned to bring together interested parties, stakeholders and experts in an environment which encouraged fresh thinking.
Among the lab’s findings was that procurement professionals need to be more active in the introduction of new innovative procurement tools and procedures. There is also a need to foster a culture of collaboration between commissioners, procurement professionals and contractors, and their skills need to be increased.
In general, a real change of culture is required in how the public sector works. Going forward, it needs to be:
• open to change;
• looking for innovation in each procurement taken forward;
• taking calculated risks and not solely focusing on avoiding legal challenges.
Also, there needs to be better contract management, improvements in the planning of procurement, and no like-for-like procurement. Commissioners should also view procurement as an enabler to get the best value for their spend.
The CPD’s focus is on increased efficiency of public spending and enabling procurers to make better use of public procurement in support of common societal goals. The facilitation of SME participation is high on the agenda, given that the vast majority of Northern Ireland’s businesses fall into this category. Taking part in and winning more competitions could then result in the SMEs exporting their expertise to other jurisdictions.
In summary, innovation in public services will be fostered by collaborative and co-operative relationships between the public sector and its suppliers. Private sector innovation happens in response to customer demand or if problems require solutions.
Therefore, for innovation to happen, the public sector needs to be clear about its demands or express which problems require solutions. In the new culture, procurement professionals must lead and act as facilitators in delivering more innovative outcomes.
