Political commitment needed to boost innovative public procurement, finds study
Innovative procurement is both 'unconventional and difficult', but is 'gradually coming to the foreground in many European countries and beyond', according to a new study on innovation and public procurement. The study was carried out by Germany's Fraunhofer Institute for Systems and Innovation Research on behalf of the European Commission. The study assessed public procurement systems in 19 countries, including all of the EU15 except Luxembourg, and found very few examples of generalised public procurement policies for innovation with strategic objectives. The study did find examples of good practice, but that there is no single organisational model that will work for all countries and all sectors. The resulting report puts forward a number of recommendations, highlighting intelligence-gathering and risk-sharing as the key criteria for successful policies. The first, intelligence-gathering, requires user-producer interaction and interactive learning. 'In innovative public procurement, knowledge about procurers' needs must be transferred to potential suppliers, and suppliers' knowledge of possible technological solutions must be transferred back to procurers,' explains the report. Indeed, innovative public procurement requires more interaction between procurers and potential suppliers than 'regular' public procurement, for example relating to office stationery, as the characteristics and needs of the procurers are less evident. Intelligence-gathering is also much easier, and much more effective, if the procuring agency itself has very good technological knowledge so that it can understand and assess potential technological solutions. The second criteria, risk-sharing, can be implemented through 'sequential unbundling', where a prototype is tested prior to the complete implementation of a new product or system. The report underlines the importance of deciding from the start who should bear the risk. In one of the cases investigated - the UK's Benefit Card - transferring almost all of the risk to the supplier led to the withdrawal of all but one competitor, leaving little option for the contracting authority. Other risk management scenarios identified during the study included: division of a complex project into separate components; extended negotiation procedures with successive stages of discussion and multiple feedback loops; and retention of intellectual property rights. Having looked at innovative procurement in 19 countries, the Fraunhofer Institute concluded that: 'With the exception of the USA and the UK, where policies are explicit and actively pursued, innovative procurement occurs more as a result of good ad hoc policies, good culture and good people.' The UK is the only EU Member State with a strategic process that uses public procurement to foster innovation. Procurement has become an integral part of the innovation strategy of the UK's Department of Trade and Industry (DTI), which is adjusting its structures and processes. The Netherlands and Germany occupy the second rung on the EU ladder - both are in the process of adopting strategic practices. In Germany, a process of re-orientation is currently underway. In other countries, the debate on innovative procurement is only just starting, and is unearthing barriers. For example, in Austria and Greece, suppliers routinely file a complaint when they do not win a contract, which leads to procurers being more risk averse. Generally, innovative public procurement is more advanced in two sectors, namely sustainability and information and communication technologies (ICT). The study resulted in a number of recommendations, including ensuring political commitment which, the report suggests, can best be done within the context of the EU's Lisbon agenda. The report also recommends systematic evaluations and appraisals, creating 'intelligent customers' through training, lobbying by industry and other stakeholders, and using a life-cycle assessment, which takes into account all direct and indirect benefits and costs over the whole procurement cycle.
Countries
Austria, Germany, Greece, Netherlands, United Kingdom