Blog: Public and Private Sector Procurement Driving Innovation

In another well attended IAWM event on 22nd November 2018, speakers Andrew Pestana (Interim Head of Innovation, HS2) and Haydn Brown (Head of Procurement Strategy Development, Birmingham City Council) gave an engaging talk on how their organisations are using procurement to stimulate innovation, which invited a lively discussion on the topic. 


(Andrew Pestana and HS2)

To begin the session, Andrew outlined how HS2 defines innovation as everything that provides benefit beyond industry best practice, stating that a key element to this is people. HS2 has evolved an innovation process which is as collaborative as possible to deliver value and benefit.

Andrew explained how a drive for innovation underpins their entire commissioning approach, arguing that waiting until the procurement stage would be too late.  He described innovation as being hard-wired into their contracts, starting with examples of previous innovative practices being part of the pre-qualification process for tenders, and including contractors being mandated to have an innovation champion.  First tier contractors have KPIs around bringing forward innovative suggestions, and are granted access to an innovation hub.  Ideas are captured before being considered by two tiers of innovation panel, and a recent review showed that of around 1,000 ideas, 209 were considered to be desirable, viable and feasible, from which 12 were endorsed to move forward into further testing and work.  Together, these 12 ideas have the potential to realise £289m worth of benefits.  More on HS2 contract opportunities can be found here.


(Haydn Brown and Birmingham City Council)

Haydn spoke about recent Local Government Association work on good practice in encouraging innovation through procurement,  and his role in encouraging innovation in local government by trying to embed a culture of innovation as a way of transforming public services.  The practice of considering innovation early in the procurement cycle is encouraged, giving commissioners and contract managers enough time to look for innovative solutions and not just ‘buy what they know’.  A host of resources are available through the National Procurement Strategy website.  Birmingham City Council have used both Innovate UK and GovTech funding to support this work, as well as Innovation Partnerships which can operate when there is no pre-existing solution in the market.  More about Birmingham Council’s millions of pounds work, supplies and services procured each year can be found here.

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Both Andrew and Haydn acknowledged the challenges of innovating in risk averse organisations, often using the established technique of breaking down a new idea into its component parts to do feasibility or other distinct pieces of work to de-risk unfamiliar solutions.  HS2 has sometimes acted as an enabler, investing directly in some ideas on behalf of the supply chain to catalyse progress. They also use Foreword Commitment Procurement methodology to reduce the risk for innovative suppliers, which effectively ensures a market for the innovation.


All of these approaches recognise that a public service market will tend to be looking for innovations which can reduce costs or realise efficiencies, unlike, for example, the smart phone market, where consumers are happy to pay a higher price for a newer more innovative model of phone. Some culture change may be required for the public sector to recognise that innovation might be about better value, long term savings and service improvements, and not just reduced cost!

Access Haydn’s full presentation Haydn Brown – IAWM 22 November 18.

Access Andrew’s full presentation Andrew Pestana – IAWM 22 November 18.

(Author: Jane Holmes, Innovation Alliance for the West Midlands)