Despite positive intentions and a range of initiatives EEF believes the current system of public procurement is not delivering and a step change is now required to transform public procurement processes and boost innovation.
In particular, extensive interviews with defence and medical companies have shown too much emphasis is still being placed on short term efficiency savings at the expense of long term planning. Furthermore, public procurers also often lack the skills or the incentives to purchase innovative solutions.
In response, EEF believes significant investment is required in the skills of procurers and to simplify the guidance that they have to follow. Government must make a break with the previous feast and famine approach and communicate a long-term procurement strategy that would provide suppliers with much greater certainty over demand. Taking these steps would stimulate greater innovation by business, improve public services and provide tax payers with better value for money.
Commenting, EEF Chief Economist, Steve Radley, said:
"Given the size of its budget, government can play a critical role in fostering innovation. Companies in the defence industry have seen a significant improvement but overall progress has been patchy despite a range of reviews and initiatives. Business remains frustrated by the high administrative costs and long delays involved in tendering for government contracts.
EEF has called for the following recommendations to be implemented to improve the public procurement process and help boost innovation:
1. Government should set up a dedicated body responsible for driving the early adoption of innovative solutions.
This enhanced Technology Strategy Board (TSB) would support projects from technical feasibility through to prototyping and advanced demonstration and would be similar to the Defence Advanced Research Projects Agency (DARPA) model in the United States.
The enhanced TSB should receive the funding and political support it requires to be effective which EEF estimates to be in the region of 25% of the UK’s £2.5bn science budget, or £625m per year. In particular, the UK should aspire to matching the 20-25% of early stage development funding provided by the US federal government, by strengthening the Small Business Research Initiative (SBRI) scheme.
2. An enhanced Technology Strategy Board should also be used to upgrade the skills of public procurers.
This would draw on people from business, academia and other government departments and would have the skills and responsibility for promoting more radical innovations. Staff would use their skills and experience to train procurers within government departments in areas such as risk-management, commercial best practice, technical skills and how to recognise and understand long-term value. TSB staff would be employed on fixed terms and paid market salaries rather than the standard public sector pay scale.
3. The government should develop and communicate a long-term procurement strategy that would enable procurers to understand and meet government demand over the long-run.
It would also provide procurers with a basis for evaluating how innovative solutions could provide value for money over the long term. Setting out a strategy would provide business with insight into government demand that would help it to invest in the appropriate capacity.
4. Procurement policy and guidance to procurers should be kept simple with a focus on value for money
. This should be coupled with a full understanding of the real needs of the organisation. Public purchasers should have the flexibility to deliver value for money as identified by departmental long-term strategies.
Steve Radley added:
"By giving the Technology Strategy Board a wider remit, investing in the skills of procurers and simplifying the guidance on procurement so that it focuses on lifetime value for money government would go a long way towards addressing the current failings."
ENDS