Implementing innovation procurment
Innovation procurement can be implemented by any public authority in any country. Different steps and procedures will be appropriate depending on the contracting authority, their needs, and the market sector. However, some common guiding principles for successful innovation exist.
Innovation procurement can take time, which is why it is important to plan ahead, and leave enough time to thoroughly assess and understand your needs, and provide early notice to the market of your intentions.
Know the market
A thorough understanding of the potential supply chain for an innovative product or service is essential, and market research and preliminary market consultation are important tools for improving your tender, and improving the final outcome.
Assess and actively manage risks
The best innovation procurement procedures share risks, and regularly appraise and act upon risks. Establishing a 'project steering group' which can communicate and manage risk as they arise can be a helpful governance solution to risk.
The public procurement directives allow for derogation in exceptional circumstances from the general rule that competition must be held, however, competition can help to deliver value and uncover improved outcomes. Publishing a Prior Information Notice (PIN) and making relatively small investments in publicity - such as advertisements in trade journals - can go far in attracting a wider pool of competitors.
Use flexible procedures
Procedures like the innovation partnership, competitive dialogue or competitive procedure with negotiation, allow greater interaction with the market in order to refine requirements . They do however require extra time, therefore it is important to consider resource implications when choosing a flexible over an open or restricted procedure.
Don't over specify
Performance-based or functional specifications allow flexibility for suppliers to propose solutions. Allowing variants is another. A well-balanced specification lets the market know exactly what you want, without dictating how this should be achieved.
Make information freely accessible
Where possible, open sharing of data online can allow researchers and enterprises to think about solutions before a procurement has even been launched. When conducting innovation procurement, the right quantity, quality and timing of information can help understand the organisation and the challenge at hand.
Agree and intellectual property strategy
In order to capture the benefits of innovation which are most important to it, without paying unnecessarily for rights and options which won't be used, the contracting authority should develop a strategy on intellectual property rights (IPR) which takes into account the likely future applications of the product or service it is purchasing. Issues to consider include the future ability of the authority to change service providers, and whether the design could also be licensed to other users of the service.
The contract and how it is managed determines the ultimate outcome of a procurement. If a framework agreement of phased contact is being used, the conditions for award of further contract phases should be clear. Key performance indicators, incentives and penalties, licensing rights, termination and renewal clauses are all likely to be particularly important for innovation procurement, and insurance and indemnities may also have a role to play.