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2008 Public Procurement of Innovative Science & Technology Solutions Report

Distinct from the Horizon Programme, MATRIX conducted a study into the use of public procurement as an instrument to find and implement innovative solutions to issues faced by the public sector.

This tightly focused study has been undertaken by a sub-panel of MATRIX with expert advice and support from SQW Consulting (SQWC).

The study focused on two strands, namely:

  • A review of Government policy to use public procurement to encourage SMEs to increase their levels of R&D and science and technology innovation;
  • An investigation of the potential for establishing a targeted small scale pilot in a distinct high technology area e.g. ICT or Medical Services in order to demonstrate best practice.

The report makes recommendations into how public procurement can be undertaken in more innovative ways in Northern Ireland.

Existing models of innovative procurement

In recent years there has been growing recognition on the part of governments in the UK and elsewhere in Europe as well as the European Commission of the potential value of using public procurement as an instrument to find and implement innovative solutions to issues faced by the public sector and to fund small, early-stage companies with ideas for such solutions. A number of policy and guidance documents, papers and websites on the subject were reviewed in order to ascertain the current status of UK government policy and practice and to assess the relevance of policies and practices elsewhere in Europe and the rest of the world.

The focus areas for innovative procurement

The Panel drew the following conclusions:

Proposed Pilot

The idea of a pre-commercial procurement pilot was widely supported by the consultees. For a possible pilot in the healthcare field, the consultees identified a number of key organisations and initiatives that could be involved:

Key recommendations

In Northern Ireland, a pilot could be undertaken in various sectors with various government departments, with the health & social care sector a promising first candidate. a key first step would be to identify a budget, the size of which would depend on the characteristics of
the proposed solutions, which in turn depends on the functional specification. Therefore, only indicative budgetary amounts can be provided here. an indicative minimum budget for a pilot would be £750,000 plus management costs (5-10% of the project budget), to cover at least four Phase one projects with an indicative budget of £35,000 each and at least two Phase two projects with an indicative budget of £300,000 each. It may be desirable to budget for more Phase one projects in order to have a wider ‘pool’ of prospective solutions to choose from. Key recommendations for the pilot are:

There is a strong argument that the customer (i.e. the organisation that ultimately wishes to procure and use the solution should provide the budget, in order to ensure a sense of ‘ownership’ and commitment to achieving the right outputs and outcomes, and to create the conditions for a clear contractual relationship between the supplier and the customer. If it is not feasible for the customer in a pilot to provide the budget, then if a budget is found elsewhere it should ideally be transferred to the customer at the start of the process.
Another key practical issue is the question of who manages the pre-commercial procurement process. This task will require a good understanding of procurement practices and regulations, but because of the distinct character of pre-commercial procurement compared to mainstream procurement it is probably not appropriate for a mainstream procurement body  to undertake it. Instead, existing procurement expertise should probably be provided through the establishment of a steering group that brings together the customer with the management body and relevant mainstream procurement organisation(s).
In order to determine the scope of the pilot, the recommended approach would be to arrange an ‘early engagement’ discussion between the customer and prospective providers of ideas and solutions. although the ultimate intention is that the suppliers will be small and
medium-sized businesses, at this stage it is probably desirable that the discussion includes relevant university groups, research centres and prospective sources of ideas from within the customer organisation.
Clarity will need to be provided on Intellectual Property issues. By default, ownership of the
IP rights should rest with the supplier, with the customer receiving exploitation rights.
any agreements with third parties such as large companies that express an interest in
commercialisation will need to be negotiated between the supplier and the large company.
It is of course possible that a large company will buy the IP rights or even buy the small
company, in its entirety, and that the ultimate supplier of the innovative product will then be the large company. consideration should be given to this possibility and whether action
should be taken to try to discourage or prevent it.
Another issue to consider at this stage is that of the timescales involved and the implications
for expanding the pilot into a mainstream scheme. The process of preparing for the solicitation, publicising it, accepting and assessing submissions and signing contracts
is likely to take around six months. Phase one projects would typically take six months to
complete and subsequent Phase two projects two years, with at least three months between
the end of the Phase one projects and the start of Phase two. After this, in most cases the prototyped solutions will have to go through a Phase three development before the end product(s) can be offered for mainstream procurement, which could take another two
years or so. This means that it is likely that mainstream procurement won’t take place until
perhaps five years after the start of the pilot. Not only does this mean that there has to be
commitment from the parties involved over that timescale, but that consideration needs to be given to the timescales on whether any further pilots or a wider roll-out should start before the initial pilot has run its complete course.

The panel

Ed Vernon


Ed Vernon OBE founded B.I.C. Systems in 1984 which became a leading technology systems integration business and was acquired by BT plc in 2004. He is a former board member of the Software Industry Federation, Invest Northern Ireland, the IoD Northern Ireland Committee and the CBI Northern Ireland Council.

Frank Bryan


Frank Bryan is Managing Director of Bryan Powercom Ltd. specialising in computer networking, fibre-optics and electrical contracting and Chief Executive of QUBIS Ltd, company spin-out vehicle for Queen’s University Belfast.

Nigel Smyth


Nigel was educated in Belfast, completed an Honours Degree in Geology at Bristol University and a
Masters Degree at Leicester University. Nigel spent 10 years as a geologist employed in opencast coal exploration in the United Kingdom, Belgium and Chile. He returned to Belfast in 1990 to join the CBI and in September 1991 was appointed Regional Director.

Linda Brown


Linda Brown has been Director of IoD Northern Ireland since 1995. Her previous experience includes roles as a Director of Business in the Community NI, producer with BBC Radio Ulster, Assistant Director of CBI NI, FE college lecturer, travel agent and primary school teacher.

Bob Barbour

Centre for Competitiveness

Bob Barbour is the CEO of the Centre for Competitiveness.

Jim Shaw

Invest NI

Jim Shaw is a member of Invest NI’s Business Improvement Services team.

Brendan O’Neill

Central Procurement

Brendan O’Neill is the Policy Advisor at the Central Procurement Directorate.