Public procurement driving innovation

Birmingham Science City (BSC) was early to recognise the potential to use public sector procurement as a way to stimulate innovation and R&D, in order to simultaneously improve public services and create new market opportunities leading to growth for innovative business.  Policy makers in both the UK and Europe are eager to use the power of huge public sector budgets to drive innovation in this way, but there are significant challenges in putting the principle into practice.  Thus BSC has been working for a number of years to develop demonstrator projects with Birmingham City Council – Europe’s largest local authority; the Council spends over £1bn externally each year commissioning and procuring goods and services.

On two approaches are being taken, both of which are recognised in Europe and in the UK

  1. Direct public procurement of innovation (PPI) – essentially buying products that are near to market, where the procurement activity serves as the final ‘market pull’ for these products
  2. Pre-commercial procurement (PCP) – buying R&D to address a need for which there is no suitable, available/ near to market solution.

The European Commission is funding both types of activity (the former through the Competitiveness and Innovation Programme (CIP) and the latter through Framework Programme 7 (FP7)). Nationally, the Technology Strategy Board (TSB) runs a process called the Small Business Research Initiative (SBRI) which funds PCP nationally. The Climate KIC (Knowledge and Innovation Community) is also looking to work on procurement through a stream called the Climate Market Accelerator. The main aim of these various initiatives is to boost public spending on R&D – the European Commission’s target is 3% to bring Europe in line with the US – through the driving of markets for innovative products and processes.


Birmingham Science City has supported Birmingham City Council to become engaged in a number of projects and activities in order to try and maximise our access to funding to undertake procurement of innovation and R&D. Some examples are described below.

Smart Procurement European Alliance (SPEA) (CIP-funded project) – The main aim of the project is to implement a public procurement of innovative solutions in the area of energy efficiency in municipal buildings in the partner cities Barcelona (lead partner), Eindhoven and Birmingham. The expected impacts are to:

  • increase the demand for innovation in this area;
  • improve quality/efficiency of public services; and
  • provide opportunities for SMEs to get involved in public procurement as direct beneficiary/client of a purchasing authority.

Towards Sustainable Zero Carbon Transport through Innovation Procurement (TRANS-FORM) (FP7-funded project) – This is a project being led by the Department for Business, Innovation and Skills. Birmingham is a partner along with Barcelona, Rotterdam and the Technology Strategy Board (to name a few of the partners). The key aim is to help European city authorities to make more rapid, collective progress towards the ultimate goal of sustainable zero carbon transport systems.

Public Procurement of Innovation Platform (CIP-funded) – This has been established with CIP funding. The lead partner is ICLEI (Local Governments for Sustainability). Birmingham City Council has been invited on to the Advisory Board for this platform, which will involve dialogue and engaging with key officers from the European Commission involved in the funding of PPI and PCP.

Climate Market Accelerator (Climate KIC-funded) – The Climate KIC has huge potential in the area of public procurement and to work with the ‘technologists’ at the university partners in the KIC on the one hand and the city and regional authorities on the other. In order to scope the potential of public procurement for the Climate KIC, a pilot study is underway. Birmingham City Council is working with the University of Birmingham to take this work forward.

UK Corporate Leaders Group on Climate Change Procurement Compacts – Birmingham City Council signed up to two procurement compacts in the areas of bioenergy and transport in April this year. Birmingham was the only local authority to sign and is co-Chair of the Transport Working Group.

The level of activity in the areas of PPI and PCP is increasing and we continue to work with the European Commission and the Technology Strategy Board to maximise our opportunities to feed into policy, as well as to engage in projects.

For more information, on these approaches or any of the projects mentioned, please contact