The challenges faced by developed nations across the world – including climate change, changing demographics and intensified global competition – all require innovative solutions from public services. These solutions will need to be supported by smarter approaches to procurement from government and suppliers.
Government has already made progress in developing innovative approaches to procurement; recent evidence shows that design-led approaches in particular can help public bodies procure innovative goods and services.
The economic slowdown is already having a major impact on public spending plans, which are now rightly focused on supporting families and businesses through the recession.(1) The plans for £5 billion in further savings for 2010–11 announced in the pre-budget report therefore suggest that the procurement challenge is to deliver value for money in the broadest sense.(2) The first economies to recover from the global downturn will be those that harness their skills and creativity to drive innovation in business and the public sector.
Stimulating innovation through procurement
The Office of Government Commerce (OGC) has made significant progress in promoting innovation and creativity as part of the value for money agenda. Since 2000 the OGC has helped departments make £13.3 billion of savings through greater efficiency, enabling increased investment in frontline services. The OGC has also acted on recommendations made by The Cox Review of Creativity in Business that the government should encourage creativity from suppliers to enable innovative solutions – and stimulate innovation in UK business. The Cox review recommended a number of measures to encourage more innovative solutions from suppliers including:
- allowing more discussion in the pre-specification phase;
- identifying project needs more holistically;
- helping smaller innovative companies to bid for public projects;
- improving purchaser capability through better training;
- taking into account the impact on future supplier capability.
The review placed particular emphasis on ‘early creative conversations’ between procurers and suppliers so that requirements can be fully explored before specifications are produced. The Design Council has championed this approach, recently helping the NHS to engage creatively with industry to fight hospital acquired infections (see case study 4).
Sophisticated, strategic and outcome-based approaches to procurement will help the government to source the most innovative goods and services; and ensure that time and expense are minimised for all parties.(3)
Driving innovative procurement through good design practice
Good public procurement recognises the needs of users. Design tools and methods focus on the needs of individuals and would help the government procure solutions which deliver user-centred public services (4) and provide value for money.(5) Design methods facilitate greater collaboration between procurers, suppliers and users before solutions are specified, leading to tested briefs which respond to service users’ needs.
Strengthening stakeholder relationships
The development of relationships between suppliers, clients and stakeholders has been acknowledged as a key driver of innovation.(6) Design strengthens these relationships by adopting a more collaborative approach early in the procurement process: techniques such as visualisation and journey-mapping enable greater communication and clarification of vision among the parties involved.(7)
Case study 1: Designs of the Time (Dott)
The Design Council has developed a unique public and community engagement programme, Designs of the Time (Dott), which has the key objective of driving the development of new solutions to social and economic problems by harnessing the involvement and expertise of local communities. By working with different communities and through using a specific, design-led approach, innovation and creativity can be unlocked. The first Dott programme was hosted in North East England in 2007. The projects (or ‘public design commissions’) were based around local challenges including sustainable living, sexual health and rural mobility – and produced many viable prototypes and solutions.
Identifying user needs to create personalised services
Design techniques can play a critical role in identifying users’ needs and developing the right services around them. For example, visually mapping the end-to-end patient journey allowed BUPA to improve on aspects of out-patient experience which had previously been neglected.(8) Employing this approach in the specification phase of procurement would ensure that services respond to user needs which have yet to be met.
Managing risk
Design approaches such as visualising scenarios, prototyping and testing ideas with users can reduce the risk inherent in innovation by allowing projects to ‘fail early and cheap’, before significant public finances are committed.(9)
There is an important distinction between prototyping – the process of developing small scale ‘mock-ups’ in the research phase of a project – and piloting, where a larger-scale test version is rolled out over a longer period. problems.
Case study 2: Low Carb Lane
The rationale behind Low Carb Lane was to find innovative ways of helping low income households to reduce their domestic energy use. The design team produced several prototypes that were then developed following user feedback. Many of the solutions are now being prototyped for wider use, including a ‘TV dashboard’ to help people monitor their energy use; the development of a local energy saving co-operative; and a ‘pay as you save’ financial service scheme to help people pay for energy efficient home improvements.
Improving efficiency and reducing waste
Over the coming years the demand for design that aids sustainable development will rise as regulations become more stringent, consumers become more discerning and businesses require specialist design input. 80% of the environmental impact of today’s products, services and infrastructures are determined at the design stage; influencing decisions made by designers can therefore significantly reduce waste in the life-cycles of products and services.(10)
Case study 3: HM Prison Service and zero-waste mattresses
HM Prison Service (HMPS) sought to procure an innovative solution to a more sustainable way of supplying, using and disposing of prison mattresses. Forward Commitment Procurement was used by HMPS to procure zero-waste mattresses and pillows and improve the £3million practice of sending 40,000 hazardous mattresses to landfill every year. After consultation with the market and working closely with the FCP team, HMPS are now finalising the procurement of a fully managed service for recyclable mattresses which will aim to reduce the number sent to landfill by up to 40 per cent by 2012.(11)
Embedding innovative procurement
Innovative procurement is being promoted as a wider objective across government agendas. The 2008 Innovation Nation white paper recommended that each government department include an innovation procurement plan (IPP) as part of its commercial strategy. The paper also recommended a range of measures to promote innovation across the public sector. In support of this work, the Design Council has been commissioned to run a number of pioneering projects which promote innovation in public sector procurement and service delivery. These include developing a programme, Public Services by Design, to help public sector managers use strategic design methods and build capacity for innovative procurement;(12) a Home Office sponsored initiative to promote a new generation of crime-proof products and services; and an NHS programme to tackle hospital acquired infections.
Case study 4: Design Bugs Out
The Department of Health and the NHS Purchasing and Supply Agency recently partnered with the Design Council in a new project aimed at reducing hospital acquired infections (HAIs). The project has developed new approaches to market sounding to inform and shape subsequent procurement specification.(13) In advance of any solutions being specified, insights were gathered from clinical staff and experts to inform the development of a brief. Once the brief had been framed, a competition was launched that encouraged designers and manufacturers to work collaboratively on proposed responses. R&D grants were provided to participating design and manufacturing teams to prototype their ideas. As intellectual property rights for new designs remain with the suppliers, this approach secures the best solution for the public sector while encouraging innovation in the private sector and potentially helping to stimulate new markets – something critically important in challenging economic times.
Removing barriers to innovative procurement
While there has been notable progress in some areas, greater innovation in public procurement could be achieved in the following ways:
Enabling meaningful relationships and collaboration with suppliers
Design Council research found the perception among designers that public procurement processes often inhibit early-stage projects in which relationships between client and supplier can be established.(14) This makes it difficult to test ideas before larger initiatives are launched. In turn, the public sector perception of design tended to be of traditional applications such as products and logos rather than a strategic approach to service innovation. Design agencies saw this perception as a barrier to winning public sector contracts. There was frustration that procurement processes seemed more geared towards ‘buying widgets’ than creative services; and that design tended to be seen as ‘part of the cost of delivering a service, rather than an investment in the quality of its outcomes’.(15)
Encouraging procurement of value added services rather than products
In its review of the Home Office’s procurement capability, the OGC reported the perception suppliers that contracts are traditionally awarded on unit price. The review noted cases of incumbent suppliers deciding not to bid for new contracts due to perceived lack of consideration and understanding of broader issues and propositions. While innovation was found to be encouraged within existing contracts, it was rarely taken up due to suppliers being unable to position ideas within their business planning cycle.(16)
Providing incentives to suppliers to encourage innovation
Allowing suppliers to acquire intellectual property rights can encourage greater innovation by providing sufficient incentives. This clearly needs to be done while balancing the need for value for money for the taxpayer. The NHS Purchasing and Supply Agency should be commended for its innovative approach to procurement when it partnered with the Design Council to reduce hospital acquired infections (see case study 4).
Recommendations
The Design Council will work with HM Treasury, the OGC and the Technology Strategy Board to ensure that good design practice is built into early pre-specification stages of procurement. We recommend the following steps to harness the practical benefits of design so that government procures innovative goods and services more effectively and with better outcomes:
- Ensure greater collaboration with suppliers to frame briefs
A pre-specification phase should be built in to the procurement process – to define the problem, develop innovative ideas and solutions and to appropriately frame subsequent briefs in collaboration with suppliers and users.
Use design methods to identify user needs
- Use design methods and tools to identify user needs by prototyping ideas, testing them with users and modifying and adapting further to meet latent and expressed user needs.
Improve value for money by considering life cycle costs and taking a holistic approach to procurement
- Use design methods and tools more effectively when considering life cycle and environmental costs as stipulated in HM Treasury’s Green Book.(17)
Encourage smaller innovative companies to bid for public sector contracts
- Harness the creative power of the UK design sector and encourage more small and medium design companies to bid for government contracts as recommended in Anne Glover’s Review.(18)
- Include design as part of the R&D definition in the Small Business Research Initiative.