1.20 Innovation, science and technology have driven businesses' quality and productivity improvements. To bring about the transformation needed to deliver high quality public services at good value for money, the Government will need to harness that innovation. This will require the Government to be more open to adopting an outcome based approach to procurements where appropriate - working with suppliers to solve problems rather than attempting to specify the precise solution at the outset.
1.21 It is much easier to evaluate the costs and benefits of a tried and tested product, rather than something that may not have previously been used in practice, or may not even exist at the time the Government first considers using procurement as a means of solving a complex delivery problem. However, if a new and better solution is already developed or could be made available, this might provide better value for money than a tried and tested product.
1.22 To be successful at using innovation as a means to improve value for money and public service delivery requires a highly skilled procurement function within Government. Box 1.5 sets out a number of examples of where the public sector has already used innovative solutions successfully.
| Box 1.5: Innovation to improve services and value for money The Government is cutting carbon emissions with Whitehall's energy-saving district heating system. The Combined Heat and Power (CHP) system provides heat to 18 departments, and produces electricity for use across Whitehall. It is estimated that the energy-efficient plant will reduce carbon emissions by 2,600 tonnes and save taxpayers £140,000 a year. The prison service buys around 60,000 flame retardant foam mattresses and pillows, disposing of around 40,000 a year to landfill with the remainder classed as clinical or hazardous waste, incurring high disposal costs. Using the Forward Commitment Procurement model, the prison service received over 35 detailed responses to a call for innovative solutions, submitted by multinationals, small and medium enterprises and social enterprises. These ranged from entirely new designs using smart materials that eliminate waste completely to alternative commercial and logistical arrangements, and community reuse and recycling schemes. Recent advances in digital technology have increased the ways in which public services can be delivered, for example: • several local authorities have implemented a mobile system for housing repairs and maintenance using personal digital assistants. These devices communicate to back office systems via the global packet radio service. By implementing a procurement process not solely based on cost but on outcomes, authorities can now deliver better services to 20 per cent (2,000) more homes, reducing waiting times for non-urgent repairs from twenty to seven days, and gaining efficiencies of £1.8 million a year; • police identity parades are traditionally carried out in person with a witness, possible perpetrators, and dividing one-way glass. In 2005 over half of all police identity parades were conducted by video, saving on average 65 per cent of uniformed staff time and over 70 per cent of administrative staff time; and • Leeds City Council social services used digital pens and paper to record services carried out in clients' homes, increasing staff time spent with patients and eliminating transcription errors. Police forces are buying the same devices to record statements or case details. |
1.23 The Government is also using innovative procurement tools:
• E-auctions allow suppliers to bid online for business. Savings, typically 20-25 per cent of the project value, emerge from the price improvements produced by a transparent negotiation, which is instantaneous and electronic, and from simpler processes. OGC sponsored IT e-auctions have saved nearly £16 million on an expenditure of £54 million, involving more than 300 organisations;
• OGCbuying.solutions launched the Zanzibar e-marketplace in February 2006. This web-based procurement tool connects suppliers and their catalogues with government buyers and their demands. Buyers can easily compare prices and specifications and then operate the entire procurement process through the online system. Zanzibar has made procurement a paperless exercise and given its users a choice of 222 suppliers to buy from;
• procurement cards (similar to debit cards) provide an efficient means for authorised staff to conduct low value transactions quickly, and consolidate large numbers of invoices from multiple suppliers into a single, monthly invoice, removing process costs and improving management information. These cards are in use across the public sector, helping to minimise bureaucracy and inefficiency in the procurement process, resulting in a saving of £28 per transaction; and
• establishing Supply2.gov.uk to make it easier for small and medium size businesses to bid for government contracts valued under £100,000.