House of Lords tackle the question; Can public procurement be used as a tool to stimulate innovation?

Posted on January 25, 2011

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As I spend an increasing amount of time crisscrossing the pond I have seen an emerging trend that is perhaps a strong reflection of the globalized nature of our collective world, including within the arena that is public sector procurement.

What I am talking about is the commonality of challenges that many governments are now facing relative to factors such as the present economy.  Certainly headline grabbing news centered on the large budgetary shortfalls that have led many to suggest that changes to the Chapter 9 legislation that allows U.S. municipalities to get out from under onerous obligations through bankruptcy be extended to the states is noteworthy.

Even the growing recognition that public sector procurement can and should be used as a means by which governments can stimulate their economies is also on the agendas of policymakers as demonstrated by the recently published interim report from the Virginia Governor’s Advisory Board on Supplier Diversity.

In short, government procurement is no longer viewed as simply being a means of acquiring goods and services under the illusion of a level playing field.

Along these lines, the House of Lords Science and Technology Committee is currently going through the exercise of determining how UK government procurement can be used as a tool to stimulate innovation in that country.

This concept is nothing new, in fact I first wrote about the important and undeniable link between government procurement policy, innovation and the  development of a nation’s economy in 2007 under post headings such as “Public Sector Procurement Practice and the Principles of External Economies, Clustering and the Global Value Chain,” and “Reader Question: Is a strong small business sector important to the stability and growth of a nation’s economy?.”

Of course when you talk about a country’s economic health, discussion inevitably turns to the Clark and Fourastie three (now four) sector hypothesis on how a wealthy nation’s economy should evolve over time.  I talked about this extensively in a series of articles including; Will Britannia Rule the Waves of the Vast Sea that is the Global Economy?

The fact that the House of Lords is embarking on such an undertaking is not surprising, as it clearly demonstrates the recognition on the part of the UK Government that procurement policies and practices can no longer be viewed through the myopic lens of a lowest cost mindset.

Sounding more like a Senate Hearing committee in the US that is investigating industry wrongdoing versus gathering information as part of an innovation initiative, the Science and Technology Committee in the UK calls what they refer to as “witnesses” to appear before the Lords to give “evidence” regarding the questions raised in the outline of the original “call for evidence” document (see above) that was released in 2010.

The four main or key areas for which the committee is seeking answers include:

  1. The role of public procurement as a tool for stimulating commercially valuable innovation within industry
  2. The success or failure of current public procurement processes, mechanisms and tools in stimulating innovation within industry
  3. Potential mechanisms and processes for stimulating innovation in industry through public procurement, and any relevant comparisons overseas
  4. The impact of departmental and other government structures, processes and cultures on the use of procurement as an innovation tool, and cross-government and departmental efforts to co-ordinate and reconcile conflicts between policy objectives.

On January 18th, 2011, Colin Cram (pictured below) along with Andrew Wolstenholme (Director of Innovation and Strategic Capability, Balfour Beatty), and Alan Powderham, (Director of Transportation, Mott MacDonald) appeared before the Lords to offer their expert input on the important questions being posed by the committee, which is being led by Lord Krebs.

Click here to watch the video account of the January 18th, 2011 session

On January 25th, David Willetts MP, Minister of State for Universities and Science, Francis Maude MP, Minister for the Cabinet Office, and Mike Penning MP, Parliamentary Under-Secretary of State at Department for Transport, will also give evidence to the Science and Technology Committee, a recording of which I would imagine will be made available to the public.

Suffice to say, and given the efforts in other countries such as Canada where associations like the Canadian Advanced Technology Alliance “CATA” have been pounding the innovation drum for some time, this is a story that will gain significant traction over the next few weeks and months leading up to the release of the committee’s report sometime later this Spring.

In the meantime, I will continue to cover the developments relating to these hearings, including the airing of direct interviews when I visit the UK in early March to deliver my opening keynote at eWorld 2011.

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