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Stimulating innovation through the public procurement of innovation

AMBS research has influenced international policy for the public procurement of innovation (PPI) and schemes including the European Commission’s Innovation Procurement Broker scheme and the Inter-American Development Bank (IDB).

“MIOIR’s work was a breakthrough in how the Bank and the country representatives thought about the potential of public procurement and the mechanisms with which it can be mobilized for triggering innovative activity and economic development. This has indeed been a game-changer for the region.”

(Principal Specialist in Competiveness, Technology and Innovation, Inter-American Development Bank)

Analysing Public Procurement Innovation (PPI)

Researchers from the Manchester Institute of Innovation Research (MIOIR) in AMBS pioneered the investigation of PPI. A group of MIOIR colleagues - Professor Jakob Edler, Professor Elvira UyarraProfessor Luke Georghiou and Professor Jilian Yeow - analysed how public authorities (e.g. governments, public agencies) can procure goods and services that are not yet widely available in order to stimulate responsible innovation.

This research produced key outputs, including a framework providing a demand-side perspective on PPI and a framework to help understand the impact of procurement on markets and innovation.

Informing the design of the European Commission’s Innovation Procurement Broker scheme

MIOIR research influenced the European Commission’s design of a new programme, the Innovation Procurement Broker scheme, as a sustainable method to facilitate effective PPI. The scheme supports a coordinated system of firms that facilitate commercial connections between the suppliers of innovative solutions (especially SMEs and start-ups) and public buyers, while connecting to investors and knowledge producers such as universities.

The influence of MIOIR research continues to be evident in the design of the brokerage scheme. A number of principles for the scheme were taken from MIOIR research, including: (i) not picking winners, but enabling the process of public procurement to unfold in a more dispersed manner and (ii) the role of intermediators as crucial actors, who serve to link buyers with suppliers. The European Commission’s Innovation Procurement Broker pilot served as an exemplar for similar policy experimentation and the development of PPI brokerage schemes in European countries including Italy, Norway, Austria, Germany and Ireland.

Establishing a PPI funding mechanism at the Inter-American Development Bank (IDB)

In Latin America, public procurement accounts for approximately 20% of GDP, so there is significant potential to use PPI to strengthen innovation and economic development in these countries. Actors in the region approached the MIOIR team for evidence and advice on developing PPI. In 2016, MIOIR colleagues wrote a report for the Inter-American Development Bank (IDB) outlining existing practices for PPI in developed countries.

MIOIR colleagues’ research extended the IDB’s understanding of PPI and the IDB presented the results of the work to high-level policy makers in specific ‘target’ countries in the region. The IDB has subsequently invested in a number of pilot projects that use the new PPI funding mechanism, including in Ecuador, Uruguay, and Peru.

Establishing national guidelines and changing public procurement in Chile

The IDB work has led to further impacts in Chile. MIOIR colleagues’ research was cited in the background paper that informed the first ever directive for Public Procurement of Innovation in Chile, launched in January 2018. The Chilean government then used the MIOIR research led by Edler for the IDB to develop a government working document for PPI and a national initiative on PPI, resulting in national guidelines for public procurement.

This engagement resulted in three pilot projects to test the procurement approach proposed by Edler and his MIOIR colleagues in Chile. An online platform – the Chilecompra Innovation Platform – was then created to match 850 Chilean government agencies with national innovators.

Influencing how the Organization for Economic Co-Operation and Development (OECD) measures PPI

MIOIR contributed directly to the drafting of the OECD’s 2016 report on PPI for low carbon innovation, as acknowledged in the report. Research by MIOIR colleagues is cited throughout the report, specifically informing recommendations concerning how PPI can foster low carbon innovation and addressing barriers and solutions to sustainability.

The report had a significant international impact and was used to set the terms for the 33rd Round Table on Sustainable Development in Paris in 2016 and supported discussions with high-level government experts.

Further reading:

The next chapter of procurement innovation and policy

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