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Innovative supplier selection is the key to government procurement success

The government has improved its procurement processes for SMEs and acknowledges the importance of small suppliers, but there are important steps that still need to be taken

The Cabinet Office’s SME Panel advocates and supports government working better with small and medium-sized enterprises (SMEs) across every sector and every region in the UK. The panel works with the Cabinet Office and the Crown Commercial Service (CCS) to lower unfair barriers to entry for SMEs that wish to access government and public sector contracts.  

The UK government has made it clear through policy, procurement reforms and communication that it recognises the value of innovation to the economy as a source of competitiveness, productivity, revenues and profit.

Indeed, the government’s industrial strategy highlighted “ideas” as among the five foundations of productivity. There is also a growing understanding by government that we cannot keep doing the same things, in the same ways, for a new and growing set of challenges that we face. Almost invariably, meeting those challenges will rely significantly on digital technology as a means to effectively serve and support society today.

Open for business

The UK government is definitely “open for business” with SMEs, and it is investing considerable resources to effect the necessary culture change and procurement practices that enable fair buying behaviours towards SMEs.

This can be seen by the policy changes, setting SME targets of 33% of government spending and the extensive procurement reforms undertaken in recent years, the most recent of which is the prompt payment code. Now law since 1 September this year, the code requires bidders during the selection process to answer a series of questions about their supply chain management and tracking systems. This will incorporate providing details about payment practices, processes and performance, including the percentage of invoices paid within 60 days.

This continued commitment showcases a desire for innovation and a more diverse, competitive supplier marketplace. However, effective culture change and moving the large, complex engineering of government buying behaviours, onto new ways of procuring innovative solutions requires a different government buyer mindset, particularly as regards selecting and working collaboratively with suppliers.

Read more about government SME procurement

Procuring innovative solutions relies on a three-way relationship between the procurer, the buyer and the supplier. The key to success lies in making this three-way relationship work for all parties.

Core to this is having a buyer and customer-side procurement team that has the confidence and capability to meet with interested suppliers and explore different types of options and different types of working partnerships. 

Traditional paper-based procurement processes, in which the parties don’t even talk with each other and there is an over-reliance on compliance with highly prescriptive, specified buyer requirements, rarely produces successful innovation partnerships and best value. Delivering innovative solutions is predicated on getting the evaluation, supplier selection and working dynamics right.

Innovation mindset

An innovation mindset in procurement is similar to a diversity mindset when looking to attract and recruit people. We can decide to recruit on a cookie-cutter basis, hiring for skills and people types that “we already have and we already know”. Alternatively, we can acknowledge the benefits and value of diversity by considering different types of people and different types of skills, those that we don’t already have, understanding that they need to be able to fulfil the needs of the role. 

There is little opportunity in the cookie-cutter approach to achieve any diversity, innovation or added-value ambitions. We need to encourage approaches that make space for diversity and different thinking, in both how we recruit people and how we procure solutions. The societal challenges we face today require diverse insights, new skills and different approaches to solving problems. 

From a business perspective, leaders must place a huge emphasis on attracting talent that brings fresh viewpoints, respectfully and constructively challenges established thinking, and can work with teams to develop new solutions to both old and new problems.

This diversity adds value to clients and to the business, as well as teaching all of us new skills and new ways of solving problems. Isn’t that what government should aspire to in its search for supplier diversity, attracting top talent and encouraging collaborative problem-solving?

There is a diverse and highly-skilled supplier community wanting to work collaboratively with government to solve the big problems. Many of those suppliers are aspirational SMEs that want to compete on a level playing field, where they aren’t discounted or discredited because of preconceptions or biases. 

Fair competition is based on proven capabilities, a commitment to collaborate and deliver a great business outcome, and the ability to offer innovative fit-for-purpose solutions, at a transparent and advantageous price.

Procuring innovation

The policy and procurement barriers to the government buying innovative solutions are lower than ever. The next step is to support and train civil servants to build their confidence and capability in selecting the right innovation supplier-partner and to know how to work together to deliver great solutions and outcomes.

Ultimately, we should strive to create economic and social value by helping build a more inclusive, fair and safe society through the ethical use of technology and data, and by investing in innovation and digital skills for the future.

It is encouraging to see the government looking to introduce new ways of procuring innovation on the near horizon. The CCS’s new Spark Dynamic Purchasing System and the inclusion of social value when assessing bids and proposals, offer suppliers new ways to showcase their innovation. 

There must also be new and further ways to level the playing field for SMEs and scale up businesses that want to compete for government contracts.

Elizabeth Vega is group CEO at Informed Solutions; a member of the Cabinet Office SME Panel; chair of the Meet the Buyer Working Group; a DIT Northern Powerhouse export champion; and a member of the Scale-Up Institute Access to Markets Committee.

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