Government Response to the House of Lords Science and Technology Committee Inquiry into Public Procurement as a Tool to Stimulate Innovation

Transcription

1 Government Response to the House of Lords Science and Technology Committee Inquiry into Public Procurement as a Tool to Stimulate Innovation The Government welcomes the report by the Committee as a positive contribution to the debate on how public procurement can support innovation whilst delivering value for money for the taxpayer. Achieving value for money for the goods and services the government needs is the primary purpose of public procurement. Government also wants UK business to participate in and grow from that marketplace thus benefitting the UK economy. The two aims are not incompatible, but too often in the past the procurement process has been loaded with multiple and often competing policy objectives, resulting in lengthy and complex processes and overly specific requirements, which made these more difficult to manage and lead to poor value for money for the taxpayer. Making the procurement process simpler and cheaper, coupled with a greater use of outcome and output based specifications, will help stimulate innovation in UK business, rather than it being stifled by long and complex processes. The optimum time to secure innovation is by engaging with industry when future strategy and needs are being assessed and not when a formal procurement process is already underway. There are various mechanisms in place, such as SBRI (Small Business Research Initiative) and Forward Commitment Procurement, to help stimulate innovative solutions and act as exemplars for the benefits innovative procurement can deliver. The Government also believes that the very significant programme of reform it is undertaking in public procurement, which will streamline procurement processes and remove many of the policy objectives that have been linked to the procurement of products and services will lay down the conditions for innovation to thrive in UK business. This programme includes raising the capability of public procurers in central government, a recurring issue in the Committee s report, a vastly simplified procurement process, in the short term by the adoption of LEAN techniques and in the longer term by a fit for purpose set of public procurement directives and a diversified supplier base including more SMEs, voluntary organisations and mutuals. 1. Our intention is to follow up this report during the next session ( ), in about 12 to 18 months time, in order to see what progress has been made against the findings of this report and what plans have been put in place to ensure that improvements are set to continue. All our recommendations should be read against this timeline. We welcome the Committee s continued engagement in this area of activity and look forward to presenting the progress on procurement reform made during the Committee s next session. 2. It is striking the number of documents and reports published in recent years that make recommendations about innovation in public procurement. Yet it is disappointing that we have seen no evidence of a systematic and Page 1 of 14

2 coherence use of public procurement as a tool to stimulate innovation. We urge the Government to take steps to ensure that there is a fundamental change in the culture within government so that innovation is wholly integrated into the procurement process. Government agrees that a fundamental culture change in public procurement is necessary, and that is why it has embarked on a radical programme of reform, the detail of which is set out in this response. At the heart of this is the investment in improving the capability of central government procurement staff. Further detail on improving capability is set out later in the Government response to recommendation 10. The Government is committed to continuing to invest in successful procurement programmes that have proved to be effective in supporting innovation, such as the Small Business Research Initiative (SBRI) and Forward Commitment Procurement, and to increasing the use of these. We will also continue to look for other approaches or mechanisms that can help procure innovative solutions in a manner consistent with the need to secure value for money for the taxpayer. We will also give further consideration to the recommendations of the Committee and how these can be taken forward, for example when developing the forthcoming Innovation and Research Strategy. Another important development in encouraging suppliers to offer more creative solutions to Government is the appointment of Crown Representatives (CRs) in April 2011 so that suppliers have a single place to come to talk about the strategic direction of their relationship with government. These senior individuals have knowledge of the pipeline of government business and can assess potential solutions in that context. Government is holding its first Pipeline Event in the Autumn to inform suppliers of the anticipated pan-government procurements from now until This is a significant step towards increasing transparency with suppliers. 3. We recommend that a Minister should be responsible for both procurement and innovation, charged with ensuring that, where appropriate, innovative solutions are used to meet procurement problems across government. The Minister assigned with this responsibility should formulate a national framework for innovation in procurement which will provide the basis on which government departments, local authorities and non-departmental bodies would work. The Minister should be held accountable for how well procurement decisions are made including to what extent innovative solutions had been considered and the reasons why they had not been adopted. The Department for Business, Innovation and Skills (BIS) leads on innovation policy, and works closely with the Cabinet Office, which leads on public procurement policy for central government. As the Minister responsible for central government procurement policy, the Minister for the Cabinet Office will encourage and set the conditions to enable procurers to harness innovation in a manner consistent with ensuring long term value for money for the taxpayer. Innovation will be appropriate in many but not all circumstances. Page 2 of 14

3 The Open Public Services White Paper launched in July sets out Government s plans to modernise the delivery of public services. This includes opening up the delivery of public services to a more diverse range of providers, such as public sector mutuals. Government has committed to consult on how to stimulate more openness and innovation in public services through new types of providers within the public sector, where this will improve services and give better value to the taxpayer. Further details on the Government s plans to transform public sector services can be found in the Open Public Services White Paper 1. Finally, central government cannot mandate how Local Government conducts its day-to-day procurement activities, other than the fact that local authorities are required to follow EU procurement rules and EU Treaty principles. Government does not therefore have any plans to assign a Minister overall responsibility for both procurement and innovation. Government believes that it would be more appropriate for individual departments to be responsible for their future needs as part of its work on departmental strategy, working with their commercial teams to procure in an innovative way where appropriate. 4. Furthermore, there should be a Minister in each government department with specific responsibility for procurement and innovation in order to create a high level network across government with a view to strengthening the link between public procurement and innovation. Each department s procurement activity is subject to Ministerial oversight, including under which circumstances procuring innovative solutions can deliver best value for money. The Public Expenditure (Efficiency and Reform) Committee co-chaired by the Minister for the Cabinet Office and Chief Secretary to the Treasury, oversees Government s cross-cutting efficiency and reform agenda to ensure savings across central government. A minister from each department attends the Committee, ensuring that all departments work together to tackle waste and improve accountability across a range of areas, including procurement. Government has also in the last twelve months changed the composition of Departmental Boards, appointing senior business leaders as non-executives. Their business expertise brings greater insight into how different sectors approach the encouragement of innovation. There is also a non-executives network. The reform of procurement is being led by Government s Chief Procurement Officer within the Cabinet Office. The governance that oversees this reform (and whose members are accountable for it delivery) consists of the commercial directors from across Central Government, who meet monthly. Taking a more centralised approach to the procurement of specific categories of goods and services also has the potential to increase the professionalism of procurers in these areas, and to enable the identification and procurement of innovative solutions. 1 public services Page 3 of 14

4 5. We recommend that all government departments, including the DfT, should set out in their IPPs measurable objectives against which success can be assessed and a timetable according to which those objectives must be achieved. Innovation Procurement Plans (IPPs) are no longer being used as a model that departments should follow. Following the Innovation Nation White Paper (2008) recommendation, all central departments produced an IPP setting out how they would encourage innovation through their procurement processes and practices. The quality of the Plans was variable; some from those departments that had more experience of procuring innovative products and services, such as the Ministry of Defence, were relatively strong - others were focused on distinct procurement mechanisms and activities that were under way, rather than being more forwardlooking documents. For this reason, it has been decided to end the requirement for Departments to produce IPPs, as part of the wider programme of reform of government procurement. 6. We recommend that the DfT should identify the additional activities it intends to carry out to ensure that the possibility of innovative solutions to its procurement problems is systematically included in its procurement decisionmaking processes. 7. The examples we have received of the HA s use of procurement of innovative ideas are encouraging and should be used to inform the procurement activities of the DfT and its other agencies. Since the Committee commenced its investigation, the Department has undergone a significant reorganisation. A Major Projects and London (MPL) Directorate General has been formed in order to adopt a holistic programme-management approach to the delivery of major projects. MPL is a multi-disciplinary organisation, containing project management, commercial, procurement, corporate finance and engineering expertise. The creation of a multi-disciplinary organisation, together with a programme-management approach to project delivery provides the Department with greater visibility, capability and focus to inject innovative thinking. The Department has also created a Board Investment and Commercial Committee. This is chaired by a Main Board member, and is composed of senior members of the project management, commercial, procurement, corporate finance, science and research professions. The Chief Executive of the Highways Agency (HA) is also a member, and therefore able to offer the benefit of HA s innovative thinking to the broader Department. This senior-level committee provides oversight and scrutiny of the Department s Commercial and Investment decisions, and further improves visibility and capability to inject innovative thinking. Building on the HA approach, the Department intends to develop further its Commercial Stakeholder Engagement strategy to provide more opportunities for collaboration and the sharing of ideas with Commercial Stakeholders, particular during concept development stages. The Department is particularly keen to encourage innovative solutions from SMEs. Its SME Action Plan contains targets Page 4 of 14

5 and measures designed to provide real opportunities for SMEs in meeting its business needs. DfT was the first Department to organise an SME Product Surgery, hosted by the Crown Commercial Representative for SMEs. It has also been an active participant in the government s Innovation Launch Pad, offering mentoring support to SMEs to develop innovative solutions to the delivery of public services. The Department is seeking to recruit a new Chief Scientific Advisor in collaboration with BIS, and is keen to encourage early engagement between its scientific and research communities and those responsible for developing requirements. It recognises the importance of developing output/outcome specifications in enabling innovation. This has been the Department s policy for some time, and the Permanent Secretary has recently reminded staff of its importance. 8. Long-term strategic procurement planning needs improvement. In particular, grand challenges, such as adapting to climate change, should be taken into account in public procurement decisions. Addressing grand challenges such as adapting to climate change requires long term strategic planning, of which procurement will form part. Public procurers should not be basing their decision-making on short term issues alone, though affordability is an important consideration in the current climate. The Treasury Green Book 2 makes clear that public procurers should assess costs over the whole life of the project when evaluating procurement solutions. Encompassing whole life costing in this way allows issues such as climate change adaption to be taken into account, as it is critical that infrastructure is able to function within appropriate performance parameters throughout its anticipated life. The new Greening Government Commitments, published in February this year, include a commitment to ensure government buys more sustainable and efficient products and engages with its suppliers to understand and reduce the impacts of its supply chain. The Greening Government Commitments also include a commitment for departments to be open and transparent on any steps they are taking towards climate change adaptation. 9. The involvement of departmental CSAs is essential if horizon-scanning activities within departments are to be carried out effectively. We recommend that government departments should set out in their IPPs how these plans support departmental long-term planning and horizon-scanning, over the next several decades (in the case of departments that procure long-lived infrastructure projects, the very long-term planning should be carried out over the life of the infrastructure). Such plans should be formulated in consultation with Foresight and departmental CSAs. The long-term plan should be kept under review and include technology roadmaps and measures against which the appropriateness and effectiveness of the plan can be assessed. 2 The Treasury Green Book sets out the core principles on which all public sector economic assessment is based. Page 5 of 14

6 As detailed in our response to recommendation 5, IPPs are no longer being used as a model that departments should follow. The Government agrees that departmental procurement strategies should consider the longer-term perspective and that there is an important role for CSAs in challenging plans within departments and for working across government, including through the Foresight Programme and its Horizon Scanning Centre, to identify technologies for which there is a need within the public sector, and to encourage procurers to engage with potential suppliers to understand how these can be used. This will help facilitate the procurement of innovative solutions. A valuable role can also be played by the Council for Science & Technology. 10. The Government s capacity to act as an intelligent customer is limited by the level of procurement skills and knowledge in departments and the absence of incentives to procure innovative solutions. Providing training courses is not good enough. Departments need to recruit procurement staff with demonstrable expertise and experience. We invite the Government to set out what further steps they intend to take to take to bring about a marked change in their capacity to act as an intelligent customer. The Capability Improvement Programme set up by the Cabinet Office, aims to develop the skills of Civil Service procurement staff and includes the following: Licence to Operate currently being developed by the Cabinet Office with industry and professional bodies aimed at increasing the capability of procurement professionals. The programme will cover a range of elements that make up procurement. Specifically a Licence to Source, Licence to Category Manage and Licence to Supplier/Contract Manage, with the intention to award a Licence to Operate. A pilot for this programme is expected to run in September This approach differs from previous training in that it will revolve around a real procurement case study and practitioners will not be awarded their licence until they have delivered a successful LEAN procurement in the workplace. Pan-Government Apprenticeship Scheme research is being undertaken into the feasibility of introducing a Pan-Government Procurement Apprenticeship Scheme in 2011/12. The aim would be to attract new talent into Government and creating a more skilled, flexible and productive workforce. Commercial Interchange Programme a programme with industry, launched by the Minister for the Cabinet Office in February this year. The programme is currently running as a pilot and is designed to facilitate two-way commercial skills and knowledge exchange between government and industry. 12 large firms are currently participating. 11. Ministers recognise that risk aversion inhibits both the commissioning, and offering, of innovative solutions, but it is not clear how this recognition is being translated into action. The Government should identify what steps they will take: Page 6 of 14

7 (a) to offset risk aversion within government departments; (b) to make provision to ensure that the balance between risks and rewards in procurement contracts is properly managed and shared to encourage innovation where it is warranted (for example having an element of the procurement budget set aside for innovation); and (c) to set out how they intend to demonstrate the success of this policy and the timeframe in which they anticipate achieving that success. During the launch of the Open Public Services White Paper, the Prime Minister emphasised the need for a cultural change in the Civil Service including a different attitude to taking risk and the importance of embracing innovation to achieve public service reform. The new departmental board structures should help to drive forward this cultural change. Liberating procurement staff from the current constraints of public procurement and proper training will be also help procurement staff to better manage risk and thus take a less risk-averse approach to procuring goods and services. Government is working towards the elimination of Pre-Qualification Questionnaires for central government procurement below 100,000 and greater use of the open procedure for above EU threshold procurements. This will remove the early selection stage for potential suppliers, thereby reducing the tendency for procurers to take a risk-averse approach by only selecting those potential suppliers with a previous track record and experience without seeing the product offering. 12. We recommend that CSAs should have responsibility for encouraging engagement with industry (including both suppliers and potential suppliers) and academic communities with a view to promoting the procurement of innovative solutions. In particular, CSAs should ensure that mechanisms are in place to develop a stronger connection between the department and the science base so that procurement officials are better informed about the availability of innovative ideas. This role should be incorporated into departmental objectives. Crown Representatives act on behalf of all departments, to provide a single contact point for key suppliers and allow government to act more intelligently as a single client. This will bring benefits to both sides, but it will be particularly important in helping government to identify opportunities for synergy, cost removal and more effective resolution of pan-departmental issues. A key part of the CRs' role will be to develop a number of 'emerging players', ensuring that departments can take advantage of improved competition and value for money in the public market. The CRs are also now working to develop a comprehensive understanding of the pipeline of future spend and, together with departments and informed by suppliers, will use this to develop new pan-government sourcing strategies that will allow government to achieve better value through its purchasing. The CRs will also provide support and oversight to key commercial decisions, using their view of the contractual landscape and of each supplier's performance across its portfolio of contracts with government to feed in, where appropriate, to procurement decisions. Page 7 of 14

8 The Government agrees that departmental CSAs have a role to play in whichever process departments put in place to encourage innovation in procurement, particularly in relation to developing links with academia. Whether they should have responsibility for the process or have a more advisory or challenge role will be for individual departments to determine as they consider the best arrangements for managing procurement. It will also be for individual departments to consider whether activity in this area is significant enough in their case to warrant inclusion in Departmental objectives. The Technology Strategy Board and its Knowledge Transfer Networks represent a considerable expert resource and we would consider that they have a role in ensuring procurement officials are better informed about the availability of innovative ideas. The Technology Strategy Board already plays this role with the public sector bodies involved in the Small Business Research Initiative (SBRI). 13. On the basis of the evidence which we have received, we recommend that departments, through the CSA, should either: set up a mechanism similar to the MoD s Centre for Defence Enterprise or the NHS National Innovation Centre, to encourage the submission of proactive unsolicited proposals from industry or academia; or ask the TSB to play a more active role in such activities within their departments. The Centre for Defence Enterprise is a good model which works well in engaging with potential suppliers, particularly in response to identified needs. However, it is important to note that such a resource-intensive approach would only be worthwhile in major procuring departments where significant quantities of products and services are procured centrally and there is a need for more innovative solutions. This does not apply to the majority of Departments. Government recently ran an Innovation Launch Pad, which provided a mechanism for SMEs to pitch business proposals direct to Government for innovative products and services that they could provide to help deliver better value for money. Government was looking for deliverable proposals with the aim being to stimulate new, open competitions in government markets in which SMEs would be able to participate, rather than ideas for future products or services. Over 350 proposals were received and assessed based on the most innovative solution that also offered the best value for money. Whilst this initiative did not represent a formal procurement process resulting in the award of a contract, the top 30 SMEs with the best proposals were offered intensive mentoring by entrepreneurial experts to help them find a route to doing business with Government. In addition to this, the top 9 SMEs presented their proposals in full at a Product Surgery held in July, attended by the Minister for the Cabinet Office, senior Government officials and representatives from the wider public sector as well as trade associations. This will morph into departmental product surgeries 7 have already been booked, and will better match the needs of individual departments. As mentioned in response to the previous recommendation, the Technology Strategy Board is already working with government departments and other public sector bodies through SBRI. Departmental CSAs will be involved in this. It is helping them Page 8 of 14

9 to better define the challenges they face and then turning those challenges into a specification which business can respond to with innovative solutions. Since the reformed SBRI programme was launched in April 2009, over 600 contracts worth over 41m have been awarded to technology-based businesses in the UK. 67% of these have been awarded to micro (less than 10 employees) or small (less than 50 employees) businesses, typically the cadre of companies that the public sector has the greatest difficulty contracting with. The programme has already brought forward a significant number of ideas, which promise to bring real improvements to public services in a number of areas; for instance: the Department of Health seeking to develop better means of detecting pathogens and improving hand hygiene in order to reduce the incidence of healthcare acquired infections such as MRSA, and to find ways to help manage the growing numbers of people with long-term health conditions, such as diabetes, coronary heart disease, high blood pressure; the Ministry of Defence, looking for major reductions in the 70 Kgs weight that soldiers have to carry into battle, and to reduce the dependency of the Armed Forces on hydrocarbon based fuels when conducting operations; the Home Office running competitions to find solutions to reduce mobile phone theft under the Design Out Crime initiative; the Department for the Environment, Food and Rural Affairs running a competition to develop highly efficient lighting solutions that do not use mercury in the final product, making them more energy efficient and therefore cheaper to use and easier to recycle under sustainability initiatives; the Department for Communities and Local Government and the Homes and Communities Agency, to develop and install sustainable technologies in social housing units; and with the Department for Transport to explore the use of synthetic environments for modelling and managing complex traffic situations on motorways, managing the road network more effectively. A number of the Technology Strategy Board s Knowledge Transfer Networks have also helped public sector organisations to better define their challenges as part of work on Forward Commitment Procurement projects. We do however recognise that the Technology Strategy Board has finite resources and so will need to work with those organisations best placed to support procurement which drives innovation. As part of its new 4 year strategy, Concept to Commercialisation, the Technology Strategy Board has set out its plans to increase its emphasis on the best ways to harness government procurement to stimulate innovation. We note that the ERG is charged with simplifying the procurement process and we welcome this development. We invite the Government to explain when this simplification will be achieved, by what criteria they will judge its effectiveness and whether it will impact, by example, other areas of public sector procurement. Page 9 of 14

10 The Efficiency and Reform Group (ERG) is building on the results of the `Lean` study of complex procurements that was carried out in December 2010, by developing a lean sourcing process for all central government procurements for implementation from January The new lean sourcing process is currently being tested and refined on a number of departmental pathfinder projects covering three OJEU procurement procedures (competitive dialogue, restricted and open). There are a range of key features built into the new sourcing process that are designed to help simplify it and these include: A requirement for routine engagement with a wide and diverse range of suppliers including SMEs as part of pre-procurement engagement with the market to test out industry s view on the requirement and to provide an opportunity for suppliers to share their ideas for innovation. A requirement for increased transparency in procurement opportunities via the publication of contract notices (adverts) on the UK government opportunities portal, Contracts Finder as well as the European-wide portal, Tenders Electronic Daily. The introduction of measures that make it easier and simpler for all suppliers to: a) decide whether they are interested in bidding for government business through the publication of all procurement documentation (Invitation to tender, evaluation criteria and terms and conditions etc at the same time as the Contract Notice is published) b) engage and do business with government through the introduction of simplified selection / qualification criteria New and more efficient ways of carrying out negotiations with suppliers to help minimize the cost of both running procurements and bidding for government business via a time-boxed `boot camp` approach that features parallel working rather than costly and inefficient sequential working. The requirement for departments to use web-based e-sourcing systems to support their procurements resulting in a standardised approach to the way in which government receives and evaluates tenders and as a result eliminating waste. The introduction of performance measures covering time, cost and quality to help ensure that procurements are run by departments in line with the lean sourcing process and in a highly efficient and visible manner as part of a performance measurement environment. Work is also underway to develop the capability of procurement staff within government departments to ensure that they are equipped with the knowledge and skills to operate the lean sourcing process. This programme of work will result in the 3 Lean Review reports published Feb 2011: Page 10 of 14

11 piloting of training throughout the summer in advance of refinement and rollout from January The application of the lean sourcing process will have the following impact: a standardised and efficient approach to running procurements across central government that will result in reduced turnaround times, reduced processing and resource costs as well as reduced supplier bidding costs. An uplift in the capability of up to 1000 civil servants (over a three year period) who will be Licensed to Operate the lean sourcing process and as a result, significantly reduce any reliance on costly external advisors. greater transparency of contracting opportunities for all suppliers resulting in greater competition SME friendly procurement practices that make it easier for them do business with government Streamlining the procurement process and reducing burdens should encourage a wide range of potential suppliers to bid as well as placing greater emphasis on early market engagement, which is key to fostering innovation solutions. 14. The Government s laissez faire approach to the dissemination of best practice in procurement from central to local government appears to be overly optimistic. We recommend that the Government should put in place a system whereby examples of procurement of innovative solutions can be shared across central and local government. The Government should set out what steps, and when, they will take to implement a system of dissemination and indicate how they will assess its effectiveness. We welcome the Government s recognition that efficiency and innovation can be complementary and that this message should be communicated throughout the public sector, including local government. Getting this message across is part of the wider issue of a need for a root and branch cultural change in attitude towards adopting innovative solutions to which we have already referred in this report. There are no plans to introduce a formal system or assessment process to manage the sharing of best practice across the public sector. Government is looking to simplify and rationalise procurement related guidance, which over time has become too voluminous and complex for procurers. However, Government agrees that the dissemination of best practice is beneficial and will continue to use existing channels to communicate with the procurement community. The new Government Procurement Service portal will provide savings for Government and the UK public sector as a whole and specifically deliver centralised procurement of common goods and services for central government departments. SMEs and large companies both have a role in developing innovative solutions. However, given the conflicting evidence about the contribution of SMEs in promoting innovation, we invite the Government to explain their Page 11 of 14

12 current policy on SMEs, particularly the aspiration that 25% of government contracts should be awarded to SMEs. The Government s 25% aspiration is one part of the procurement reform programme aimed at opening up markets to all types of suppliers, large and small to deliver better value for money. In recognition of the importance of SMEs to the UK economy providing nearly half of private sector employment and over half of private sector turnover, the Coalition programme ( The Coalition: our programme for government ) included an aspiration that 25% of government contracts, by value, would be awarded to SMEs. This 25% aspiration applies to the total central government procurement spend including supply chains (excluding only those Arms Length Bodies (ALBs) explicitly outside government administrative control) across the whole Spending Review period, rather than an individual target of 25% for each department. To increase their spend with SMEs, departments will need to use more open procurement methods to drive up competition, engage with industry much earlier in the procurement process and specify for outcomes and outputs rather than the product they believe they want to buy. It is anticipated that this will not only result in an increase in spend levels, but also encourage greater take up of innovative new solutions from suppliers that had not previously had access to Government. 15. The Government should set out what support they are giving to SMEs acting as sub-contractors, and what they are doing to improve contract management across the supply-chain to encourage innovation. Various measures have been put in place to support SMEs, both those which are prime contractors as well as those acting as sub-contractors. Government reaffirmed its policy of paying 80% of undisputed invoices within 5 days and ensuring that contractors paid tier 2 subcontractors within 30 days through use of a contract condition and passing 30 day payment terms down supply chains. On 19 July we announced that this would be monitored by departments through the contract management process. Earlier this year Government launched Contracts Finder, a free electronic service for businesses, government buyers and the public. Under the Government s transparency agenda, all central government tender documents and contracts are published on Contracts Finder, providing greater visibility of central government contracting opportunities. Government is also encouraging prime contractors to advertise sub-contracting opportunities on Contracts Finder. As part of the work to open up public procurement to SMEs, Government will consider what further work can be done to tackle the barriers faced by SMEs acting as sub-contractors. The TSB has an important role in innovation and that role is about to be expanded. We invite the Government to explain how the TSB will discharge its Page 12 of 14

13 extra responsibilities within current resources and also what steps they will take to ensure that the work of the TSB is used by government departments to improve their capabilities for innovation procurement. The Government has now positioned the Technology Strategy Board as the prime organisation supporting business innovation in the UK. It has recently been given responsibility for delivering an elite network of Technology and Innovation Centres and also Grant for R&D which was previously delivered by the English Regional Development Agencies. During the current 4 year spending review period the Technology Strategy Board will have a budget of just over 1 billion to support innovation and technology development for the benefit of UK business. The Technology Strategy Board has already built up a strong track record of delivery and we would expect that to continue. And as mentioned above, procurement is one of the priorities set out in its new strategy covering the next four years. The Technology Strategy Board has already made excellent progress since it was established and developed good relationships with government departments. Through SBRI, it is currently working with 24 public sector bodies which is helping those organisations improve their capabilities for innovation procurement. Both the Minister for Business and the Minister for Science and Innovation have met with a number of Ministerial colleagues cross Whitehall to discuss the use of SBRI and how departments could make more use of SBRI and the knowledge which exists in the Technology Strategy Board. As mentioned in recommendation 13, a number of the Technology Strategy Board s Knowledge Transfer Networks have also helped public sector organisations to better define their challenges as part of work on Forward Commitment Procurement (FCP) projects. The FCP model helps public sector bodies to create a dialogue with the market to help ultimately to deliver products and services better aligned with the needs of the public sector organisation. The FCP approach transforms the market for innovative and sustainable solutions, making new and emerging solutions more affordable and widely available. It also provides a way for the public sector to manage the risk of procuring innovative products and services. 16. BIS is planning an evaluation of SBRI and FCP in Professor Georghiou and Professor Edler told us that such an evaluation would be challenging. The Government should ensure this review is robust and takes into account the issues raised by Professor Georghiou and Professor Edler. We look forward to seeing the outcome of the evaluation. Evaluation of the FCP projects and the FCP model is an ongoing activity in order to inform the guidance material and training modules. NESTA has undertaken an initial assessment of SBRI, the findings of which were positive, even though SBRI is still at an early stage. Government will evaluate the SBRI in 2012, as part of the planned comprehensive review of the Technology Strategy Board. This review will cover all the Technology Strategy Board s programmes and the effectiveness of the organisation. Issues flagged as part of this Page 13 of 14

14 Select Committee inquiry will be revisited at the time of the review. The outcomes from the review will be published. August 2011 Page 14 of 14