Innovation guidance from Cabinet Office and Government Commercial Function

The Cabinet Office and Government Commercial Function’s recently published Our innovation ambition: Delivering better procurement across the public sector setting out how the Procurement Act 2023 will enable contracting authorities to innovate in procurement and deliver greater innovation.

What is the Government’s ambition for innovation?

Using procurement to drive innovation is a major theme of the new procurement regime. The innovation guidance makes clear that Government wants contracting authorities to work with innovative companies and procure innovative solutions. It wants contracting authorities to use procurement processes in a more flexible and innovative manner to achieve this.

Innovation in procurement has been piloted outside the mainstream regime previously via Innovate UK’s Small Business Research Initiative. The goal is to transfer this learning to the main field of play, where there is an annual UK spend of around GBP300 billion. By giving contracting authorities enhanced scope to purchase in new ways, Government’s aspiration is that they will ultimately be able to procure better services and deliver greater value for the public.

How will this be achieved?

The guidance sets how the Act will seek to achieve the Government’s ambition for innovation – principally via new processes, duties on contracting authorities and greater transparency.

In terms of process, the new Competitive Flexible Procedure will allow contracting authorities to use almost any process they wish to award contracts – provided, of course, that they comply with the overarching requirement of equal treatment. Contracting authorities will also have the option to undertake preliminary market engagement with suppliers to help develop their approach to a procurement and will be able to use product demonstrations alongside written tenders as part of the evaluation process.

The Act will oblige contracting authorities to have regard to a new national procurement policy statement when they go out to tender. This will set out strategic priorities for procurement and seems likely to reference innovation. More specifically, contracting authorities will have to consider whether there are barriers preventing SMEs from participating in a procurement and if these can be removed or reduced.

What are the takeaways for contracting authorities?

Whilst the Procurement Act offers greater flexibilities, contracting authorities will need to ensure that any early market engagement and/or bespoke procurement process respects the principle of equal treatment and does not result (and is not seen to result) in picking pre-defined winners. Contracting authorities should similarly be aware of the new obligations placed on them by the Act and the importance of the new procurement objectives.

It seems clear that the Competitive Flexible Procedure will result in contracting authorities having to take on more responsibility for designing clear tender processes and then implementing them effectively. Nevertheless, how quickly contracting authorities take up new opportunities to innovate may ultimately be determined by how well they understand what is feasible and their appetite for risk – which will vary from one procurement to another as well as between contracting authorities. Another key factor will be the guidance that Cabinet Office and Government Commercial Function will publish on how to implement the new flexibilities.

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