In recent years, the procurement landscape has been undergoing significant transformations, driven by the push towards innovation. The Innovation Procurement Empowerment Centre (IPEC) has been at the forefront of these efforts, aiming to embed innovative procurement practices within public sector organisations. A recent study sheds light on the current sentiment in the procurement world, revealing both challenges and opportunities.

Growing Awareness but Limited Understanding

Awareness of innovation possible within procurement is varied among professionals in the public sector. Our recent study found that only about 14% of respondents are very aware of the concept, while a significant 19% are not aware at all. This discrepancy highlights a critical need for education and consistent terminology in the field. The mixed use of terms like “innovation procurement,” “innovation-friendly procurement,” and “innovative procurement” often leads to confusion, underscoring the necessity for a clear and unified lexicon.

This inconsistent terminology creates confusion among professionals, as it is unclear whether these terms refer to the same practices or different ones. Because of this confusion, there is a need for a clear and standardised set of terms (a unified lexicon) to ensure everyone in the procurement field understands and communicates these concepts consistent.

The Role of IPEC

The Innovation Procurement Empowerment Centre (IPEC) is a specialised initiative focused on bringing innovative solutions to procurement. Our mission is to empower councils and local authorities to adopt innovative practices that drive better, cheaper, faster, greener, and safer outcomes through market innovation.

IPEC offers guidance, resources, and support, including access to best practices, training programs, expert consultations, and networking opportunities. We partner with industry experts and stakeholders to identify, evaluate, and implement innovative solutions tailored to public authority needs.

Despite being relatively new, IPEC has raised significant awareness, with 42% of respondents aware of our efforts and 13% very aware. Engagement has been beneficial, fostering community building, sharing best practices, and highlighting the importance of innovation in procurement.

Since its inception two years ago, IPEC has facilitated the adoption of innovative procurement practices, leading to streamlined processes, cost savings, faster project timelines, reduced environmental impact, and enhanced safety standards.

We provide innovation guidance, training, and shared learning to tackle procurement barriers and run a funded annual cohort programme to find innovative solutions for specific challenges.

Barriers to Innovation

A significant portion of procurement professionals does not yet view public procurement as a driver of innovation. Only 14% see it as very much an enabler, whereas 10% believe it is not an enabler at all. The main barriers identified include risk aversion, restrictive procurement rules, and limited budgets. These challenges are compounded by a lack of understanding of the concept itself, indicating a pressing need for training and development.

Embedding Innovation

Embedding innovation within procurement practices remains a challenge. The survey revealed that only 27% of respondents are in the early stages of learning about innovation within procurement, and an equal percentage are not exploring or adopting the concept at all. This indicates that while there is interest, practical implementation is still in its infancy.

Benefits Realised

Despite the challenges, those who have adopted innovative approaches to their procurement practices have reported tangible benefits. These include improved relationships with suppliers, stimulation of internal and external innovation, better value for money, and increased staff motivation. Pre-engagement with suppliers has also been identified as a key strategy, leading to a better understanding of market solutions and pricing structures.

The procurement world stands at a crossroads where traditional practices are being challenged by the need for innovation. With continued efforts from organisations and a collective push towards education and support, the potential for transformative change is immense. By addressing the barriers and leveraging the identified opportunities, the public sector can harness procurement as a powerful tool for driving innovation and achieving greater value.

IPEC will continue to monitor the procurement landscape on an annual basis with our second survey release in the autumn. If you are interested in inputting your views into this then sign up here to stay updated. For more insights and to stay updated on the latest developments in innovation within procurement, and the work local authorities are doing join the conversation on our LinkedIn group and follow our IPEC company page.

By Kayleigh Hadjimina

Senior Marketing and Communications Manager for IPEC

Innovation in procurement is a multifaceted concept, especially within the risk-averse and budget-stretched environment of the public sector. Some advocate for trials, R&D, market-making, and using competitive dialogue or flexible procedures to ensure full market engagement as part of the process.

Empowering SMEs

Another approach focuses on creating an environment where SMEs have the best chance of winning bids. While this might not be traditional innovation, it is transformative for many SMEs, placing empowerment at its core. The following strategies can significantly enhance tendering opportunities for SMEs without needing public body endorsement:

Value for Money and Cost Savings: Public bodies prioritise value for money and cost savings, making it crucial to provide metrics that demonstrate this. Improved efficiency, achieved through innovative methods, can lead to reduced resources or faster outcomes, both of which cut costs. SMEs also can often offer competitive rates due to lower overheads compared to larger firms.

Key Considerations for Public Bodies:

• Value for Money
• Improved Efficiency
• Sustainability
• Carbon Reduction
• Social Value

Efficiency and Evidence

Improved efficiency often requires doing things differently. With robust evidence and data, the perception of high risk can be mitigated. Capturing comprehensive data to support your business case, which can often be completed through desk-based research, is essential.

Sustainability and Carbon Reduction

Sustainability encompasses more than just carbon reduction; it includes local benefits, sustainable materials, and ethical practices. Aligning these factors with your business values and policies is crucial. Carbon reduction, a key goal for achieving Net Zero by 2050 in the UK (2045 in Scotland), is a significant focus. Adhering to PPN 06/21’s ‘Carbon Reduction Plan’ is often a prerequisite for many government frameworks, positioning you favourably against competitors.

Social Value and the New Procurement Act

The new Procurement Act emphasises ‘Most Advantageous Tender’ and the importance of ‘maximising public benefit.’ Social value, as outlined in the Social Value Model (GCF) and PPN 06/20, covers job creation, community benefits, well-being, and innovative efficiencies. Preparing to demonstrate your business’s support for social value initiatives is essential in the bidding process.

Opening the Door

• Joining Frameworks: Being part of the right frameworks is crucial. It simplifies the buying process and provides market confidence. Ensure the frameworks you join align with your products or services.
• Stakeholder Mapping: Understanding your target audience through stakeholder mapping helps identify key decision-makers and organisational structures, enabling strategic engagement.
• Marketing and Events: Effective marketing ensures your product is known. Participating in supplier days and industry events promotes your products and services, positioning you favourably when procurements are announced.

By embracing these strategies, SMEs can enhance their opportunities and contribute significantly to driving innovation in public sector.

By Hannah Lloyd
IPEC – Innovation Procurement Empowerment Centre

This year, we launched the follower sessions to drive forward a new era of innovation in procurement strategies within local authorities. As part of the broader IPEC Cohort programme, designed to address the growing need for effective and value-driven procurement practices amidst increasing demands and shrinking budgets, our aim is clear: to empower local authorities with the knowledge, tools, and strategies necessary to innovate their procurement processes. Through fostering a community of learning and collaboration, we strive to enhance the capabilities of procurement teams to deliver better outcomes for their communities.

In our inaugural session, we embarked on a journey to reshape procurement strategies through innovation. The session had a clear agenda: to provide an overview of the IPEC programme, share insights from work with four local authorities, and discuss the initial steps taken towards innovative procurement strategies.

IPEC’s mission to accelerate innovation in urban and transport systems through impartial innovation services was underscored. The discussion stressed the critical need for innovative approaches in local authority procurement, given that authorities spend approximately £70 billion annually on goods and services. Despite rising demands and shrinking budgets, there has been an undue focus on cost at the expense of value, highlighting the urgent need for a more strategic procurement approach.

Debunking Myths and Encouraging New Approaches

In the world of local governance, initiatives like the IPEC programme are lighting the way towards more collaborative and effective strategies. With a focus on academic partnerships, stakeholder engagement, and the creation of online communities, this programme is on a mission to equip local authorities with the tools they need to thrive.

At a recent session, participants delved deep into the core components of empowerment support for local authorities. From challenge scoping to stakeholder engagement, from business case development to SME involvement, every aspect was carefully dissected. The overarching message? Clarity is key. By defining problems clearly and setting goals that are both achievable and ambitious, innovative solutions can emerge organically from within the market.

One of the most illuminating parts of the session was the discussion around engaging with tech corporations and SMEs. With startups proliferating in certain sectors, finding the right approach to SME engagement is crucial. The conversation emphasised the importance of striking a balance between market engagement and understanding the unique challenges faced by local authorities. It’s about finding that sweet spot where effective interventions can make the most impact.

In the ever-evolving landscape of local governance, initiatives like the IPEC programme are leading the charge towards more collaborative, innovative, and ultimately, more effective solutions.

The ‘Followers’ session established a firm groundwork for the IPEC programme, highlighting the necessity of shifting towards value-driven procurement strategies and the critical role of innovation in addressing challenges within the public sector. As aptly put by one of the participants,

“With budgets consistently shrinking, it’s crucial to rethink our approach to procurement. Maximising the value of every pound spent is essential to relieve the strain on our already tight budgets. This involves shifting towards value-driven procurement strategies and recognising the critical role…”

Our cohort’s journey includes a range of activities, from Challenge Scoping webinars to Stakeholder Engagement workshops, each marking a significant step towards integrating innovation into council practices. These initiatives go beyond mere planning; they signify a collective dedication to pushing the limits of what’s achievable.

The Welcome Day served as an invaluable opportunity to set the stage for collaboration, define our collective vision, and lay the groundwork for transformative change in procurement practices. We look forward to the journey ahead, as we work together to drive innovation and enhance the effectiveness of local government operations.

Rikesh Shah, Head of IPEC

The Stakeholder Relationships workshop, led by Nick Talbot, provided a quick overview of the attitudes required to improve relations and focused support for Local Authorities given their unique organisational structures. The session highlighted that all procurements are multi-stakeholder activities, particularly innovation procurements, and revealed a lack of training dedicated to internal relationships within local authorities. Activities included listing all internal stakeholders and using templates to improve understanding and empathy towards key stakeholders. Councils left inspired to improve internal relationships immediately and commit to developing innovation procurement allies over the long term.

The Challenge Scoping and Definition session by Trusha Oza, supported by Nick Talbot and George Wardell, offered an overview of the challenge scoping process, sharing different stages, methodologies, and best practices. Councils engaged in system mapping to understand the root causes of their challenges and co-created “how might we” statements to draft actionable challenge statements. This process helped councils gain a deeper understanding of their challenges and identify areas for intervention, leading to early drafts of their statements that included practical insights and solutions.

Moreover, the “Art of the Possible” session by Rikesh Shah and Helen Tryphonides, provided invaluable insights into procurement tools that help attract innovative suppliers of all sizes and build new growth hubs. The session emphasised the importance of flexibility and adaptability in procurement practices to accommodate the diverse needs of suppliers, ultimately driving growth and competitiveness.

What distinguishes this journey is the ethos of collaboration and mutual learning that suffuses every exchange. Within our Cohort, councils don’t merely acquire knowledge from experts; they actively engage with one another, exchanging insights, tackling challenges, and celebrating successes together. It’s this communal knowledge pool that drives our progress, turning obstacles into opportunities and aspirations into accomplishments.

The day was incredibly inspirational, and the benefit of this engagement has the potential to go beyond our initial challenge idea and empower us to embed these principles to solve problems across the city.

Westminster City Council

As we start this journey, the possibilities for positive change are endless. Whether it’s transforming service delivery or boosting economic growth, our path is driven by creativity, determination, and a commitment to innovation. With every milestone, we move closer to a future where innovation is ingrained in our governance, not just an idea.