Public procurement of innovation and R&D

1. Public procurement of innovation and R&D Dr Jacqueline Homan Sustainability and Science City Manager

2. Why do it? • In 2009 total public expenditure on works, goods and services was estimated to be 19.4% of the GDP of the EU 27 • Recommendations are that about 3% should be spent on innovation. • Nowhere near this yet

3. Background • Birmingham City Council and Birmingham Science City developed initial work • Responded to House of Lords Select Committee report in 2010 • Began linking into strategic thinking in Europe and UK • Developed links with the Technology Strategy Board • Accessing and developing European funding opportunities • Focus to date has been on carbon reduction initiatives

4. ICLEI Network • ICLEI is developing a public procurement of innovation platform. • Birmingham City Council is represented on the Advisory Board with other local authorities and national organisations across Europe. • This will feed into European Commission thinking. • It will also provide an opportunity to develop practical tools for public procurers.

5. SBRI • Run by the Technology Strategy Board. • Similar to models used in the US and Netherlands. • Procurement of R&D. • Investigating possibilities in the retrofit arena – links to Birmingham Energy Savers.

6. Procurement Compacts • Prince of Wales Corporate Leaders’ Group: ‘Down to Zero’ • Birmingham City Council one of a number of signatories • Signalling to the market about what we want to purchase • Transport, biogas and catering

7. TRANSFORM • Towards Sustainable Zero Carbon Transport through Innovation Procurement • Themes: • Alternative transport models and behaviour • ICT and network technologies • Zero carbon zero emission vehicles

8. Climate KIC • Pioneer Cities project: led by Birmingham City Council • Climate Market Accelerator pilot • Public procurement explored as a future priority • Procurement network to be established and links to other networks

9. SPEA • Main aim is to develop innovative retrofit solutions for municipal buildings. • Other objectives: • To improve the capacity of contracting authorities as well as SMEs regarding the procurement of innovation • To create buyers’ groups • To build cooperation with other stakeholders essential for the implementation of innovative procurement • To deliver recommendations to the EU • To raise awareness among policy makers

10. Challenges • Organisation of both national and local government into a series of stand alone silos. • A local authority procurement contract may stimulate innovation and employment in places that are outside the local authority’s area of responsibility • Procuring innovation using PCP or FCP is based on the premise of an unmet need. Organisations are adept at finding partial solutions or ‘work arounds’ to these needs and therefore avoid procuring innovation. • Procurers are naturally risk averse and unwilling to be first to bring to trial a new approach and the ‘first rider principle’ applies. • Procuring innovation needs to be incentivised and funding should be conditional on procurers using outcome based procurement including innovation as a selection criterion.

11. What do we need to do? • Nomination of a senior champion • A funding stream to remove the issue of additional complexity and risk. • A network and staff resources need to be available to identify, consider and prioritise opportunities. • Establishing a pre-commercial procurement demonstrator project. • Continue to access and develop future funding sources to try and deliver more ambitious procurement activity.

12. The Greater Birmingham Project • Procurement of innovation highlighted • Single procurement strategy to be produced • And there will be a more to share ‘capacity and expertise to drive forward innovative procurement across the GBSLEP’

13. Contact information: jackie.homan@birmingham.gov.uk +44 (0)7833 059273