The Power of Public Procurement
Social Value is key to a faster, sustainable, circular economy
ESG, CSR, sustainability, social value. Whatever you call it, the critical need to balance people, planet and profit is weighing heavily on all our shoulders. Action is urgently required, yet our current progress speed is agonisingly slow. The public sector is one of the last to adopt new technologies, but what if it became an early adopter? The impact could be transformational, with a trillion pounds spent on procurement annually.
We know that the products we consume need to become sustainable by design and that this is essential if we are going to transition our economies from a ‘consume and waste’ model to a circular one, but many of the things we desperately need have either not been invented yet or aren’t widely adopted. The last year has shown us how amazingly quickly we can develop new products and roll them out globally in an emergency. Could we stimulate similar innovation and progress to solve the other catastrophic problems facing our planet? What role can the public sector play in accelerating action and driving innovation forward, and could ‘Social Value’ be the catalyst the public sector needs to take the lead in building a more sustainable future?
Public sector procurers prefer to wait at the back of the queue when purchasing innovative new goods.
Photo By: Tyler Casey on Unsplash
Innovation: it’s a private sector thing. Or is it?
Product innovation and early adoption are traditionally seen as the domain of the private sector. Developing new technologies is expensive, and wealthy businesses and individuals can afford to invest. These are the people who become early adopters; the first people to buy new things, who shoulder the initial risks, influence the market and pave the way for new products to become mainstream and more affordable for the rest of us.
The public sector, meanwhile, likes to stay out of free markets, seeing its role as setting the regulatory framework and encouraging change through legislation or by introducing subsidy schemes and stimulus programmes. Public sector procurers prefer to wait at the back of the queue when purchasing innovative new goods. They are what innovation theorist Everett Rogers calls ‘the laggards’ – the last type of customer to invest in new products.
Purchasing power and the opportunity for change
What if this was different? What if the government could use its own buying power to drive innovation and stimulate the technologies, new products and innovations we need? The UK Government spends almost a trillion pounds a year buying the things it needs to run the country. That’s a lot of buying power that could be used more intentionally and transformatively. What would happen if, instead of offering incidental funding pots or subsidies for new technologies, the Government said, ‘we want to buy these products and use them in delivering public services? It would present a huge guaranteed market for these products, accelerating product development, encouraging widespread adoption and reducing the risk for the rest of us. It would create demand and stimulate growth. It would be radical. It would be bold. It’s just what we need.
We aren’t going to solve the world’s problems by sticking to our traditional way of doing things. Just as the private sector is forced to innovate and challenge the status quo, the public sector should.
Imagine if the public sector only used cement produced without using fossil fuels, invest in district heating networks, sourced food for hospitals and schools that were vertically farmed, only bought or leased EV vehicles, refused to buy products made with palm oil and committed to reducing plastic in everything it buys? The economic and social impact would be far bigger and more enduring than short-lived sector-specific funding pots.
It’s time for our governments to lead by example. They can’t tell us we need to eat less meat or power our homes using renewable energy and not do these things as part of day-to-day public sector delivery.
Photo By: Ellen MacArthur Foundation
A circular economy that is restorative and regenerative
According to the Ellen McArthur foundation, a circular economy is a restorative and regenerative economy by design. And is based on three principles:
Design out waste and pollution
Keep products and materials in use
Regenerate natural systems
Public sector spending needs to be redesigned along these principles, using Social Value as a mechanism to drive change through procurement.
Of course, this is not without risk; new technologies can fail or become outdated. But all public spending comes with some risk. Voters are prepared to buy these things with their own money, and their message is clear; they want to buy from companies that operate responsibly and sustainably and balance the needs of people, the planet and profit. The Government needs to do the same. Yes, saving the planet will be costly and risky, but the costs and risks of doing nothing will be far greater.
The Social Value Solution
This might all sound like a pipe dream, but it doesn’t have to be. Since January, the UK Central Government has been evaluating Social Value in its purchasing decisions, which presents a huge opportunity for them to embrace more sustainable products and delivery methods. Social Value is now mandatory in UK Government contracts and has a minimum 10% weighting in bid evaluations. The Scottish Government has gone even further, mandating a procurement note in January 2021.
Now is the time for private sector suppliers to show public sector organisations how they can help achieve their sustainability goals. If you have an innovative product that is more expensive to manufacture or deliver but aligns with the outcomes in the new Social Value Model, then now is a very exciting time for your business. At Samtaler, we are working with many of these businesses to help them tender for public sector contracts and improve their Social Value offer and the positive impact they have on their stakeholders whilst also driving economic value.
Barriers to sustainable procurement
However, there are still frustrating barriers in place. Yes, ‘Social Value’ could be the mechanism that the public sector uses to stimulate a circular economy that is sustainable by design, but this requires a shift in thinking. Currently, that shift is happening at a glacial pace. Just one look at the UK’s Find a Tender portal shows the public sector is still buying the same old products and technologies.
Roxanne Abercrombie, Content Manager at ThinkAutomation, helps to shed some light on the problem. “Implementing new technologies always comes with a degree of risk and disruption. And for highly regulated industries such as the public sector. The result is a public sector that is slow to digitally transform – partly due to caution, partly due to compliance headaches, and partly due to obstacles such as supplier lock-in and legacy systems.
“One result of this hesitance to adopt new technology is that public sector organisations are missing out on disruptive software solutions that have the potential to radically transform back-office labour. For example, we have a process automation system almost uniquely suited to public sector challenges thanks to its on-premises setup. It could bring positive disruption to how employees handle draining, expensive, and repetitive tasks, which, in turn, only drives efficiency and adds value for the taxpayer. Yet, in the UK, we have only a handful of large public sector customers, and tender opportunities are rare and typically take an unusually long time to complete.
“While a lack of funding is often presented as an issue to digital transformation in the public sector, the cost-savings of introducing time-saving technologies are enormous. For public sector organisations, avoiding innovation means avoiding a more sustainable future with less waste and less operational drain.”
At Samtaler, one of the biggest problems we see is that the public sector hesitates to invest in new technology. Most procurers often don’t know what innovative products are out there or what to ask for. This is usually because they don’t know what their stakeholders, service users, communities and staff need and they also don’t know what good social value looks like because they assess value using short-term economic measures.
Investment in specialist training around procurement and commissioning is happening –Samtaler is proud to be involved in delivering it - but change is also required in the procurement process. Currently, the system is not set up to welcome innovation and change. Bid applications don’t allow businesses to showcase innovative solutions or explore new ways of thinking. Questions are copied and pasted from previous contract iterations rather than encouraging procurers to have more in-depth conversations with stakeholders and suppliers. Suppliers can also find themselves talking to the wrong people and being passed from pillar to post.
MiShop.local is an example of an organisation that has experienced this and struggled to engage with the public sector despite working with national retailers, including M&S, Waitrose and Primark. Managing Director, David Whatley, explains: “We manage Google Maps for retailers. People use Google Maps extensively to access information on local services, yet we never see requests for tenders to fix and manage this vital channel for public services. We have such an innovative business, but we have given up trying to engage local or national government departments to get this on their radar as no one seems to take ownership of the decision-making. It’s a shame, as instead of handing out grants, government departments could do more to support innovative businesses to grow (globally) by engaging their services for real. Customers provide a greater foundation for growth than grants.”
At Samtaler, we are developing a new range of targeted supplier engagement roundtables/forums to help our private sector clients identify the new technologies and innovations that would work in their supply chain. The public sector should make this a basic part of their early market engagement processes.
10 technologies the Government could buy
1. Nano-particle fire extinguishers. These innovative fire extinguishers from FirePal can tackle any type of fire. They don’t need to be re-pressurised, you don’t need the training to use them, and they don’t need to be inspected annually. Imagine the cost saving across all public sector offices!
2. Chairs and furniture made from Covid lateral-flow tests. Rework is one of many organisations turning plastic waste into other things. They can collect lateral-flow tests from schools, workplaces and individuals, preventing these tests (and other ‘non-recyclable’ plastic) from ending up in a landfill.
3. Roads made from plastic waste. Scottish company MacRebur is gaining a global reputation for turning plastic waste into roads. Each mile of road that uses the MacRebur blend removes the equivalent weight of one million plastic bottles or 2.8 million single-use plastic bags from the environment. Plastic roads are also reportedly more durable.
4. School chairs made from PPE. Thermal Compaction Group has developed a way to turn used PPE into school chairs, toolboxes and other items. Five NHS hospitals have already installed specialist thermal heating machines to do this but wouldn’t it be great if this technology was embedded more strategically at a national level?
5. Sustainably dyed clothing. The public sector buys a lot of clothing, but the traditional textiles industry uses vast water and chemicals and produces huge amounts of toxic waste. A Dutch company DyeCoo has developed a solution by dyeing cloth without the need for any water or chemicals other than the dye. It uses highly pressurised carbon dioxide to carry the dye deep into the fabric. The process takes half the time, uses less energy, and costs less.
6. Recycled signage and office furniture. Imagine if these Storm Boards, made from 100% ‘unrecyclable’ plastic waste, were used at all public sector construction sites or as signage, shelving and furniture in civil service offices?
7. Sustainable paint. Dulux offers a range of recycled and sustainable paints, including water-based paints with lower VOCs, paints that are designed to last longer and even paints that claim to improve the energy efficiency of a building! Can you imagine if all public sector buildings used sustainable paint?
8. Drones. The use of drones in construction is growing exponentially in the private sector. Elena Major, Head of Operations at ARPAS-UK, the UK Drone Association, tells us that drones are "safer, faster, greener and cheaper. The vital common thread is that drones are used well in the roles they’re being asked to do. Moreover, they deliver accurate data faster than before, saving us from dangerous jobs and companies millions in cost."
9. Compostable food packaging. We’d also love to see the public sector commit to using less packaging in its catering contracts and less meat. Vegware is the only company in the UK that develops, manufactures and distributes a full range of completely compostable food packaging and catering disposables.
10. Biodiesel. Scottish firm Argent Energy takes cooking fats and turns them into high-grade, sustainable biodiesel sold to fuel suppliers across the UK. We’d love to see as more public sector contracted fleets running on biodiesel.
How we can help
At Samtaler, we understand the importance of your social value commitment. You’re here because you care about the impact your business has on society and want to be better. We want you to succeed, and we know from experience that achieving social value requires skill, strategy, and support.
To find out how we can help send an email to hello@samtaler.co.uk
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