Nov 21, 2019 Last Updated 10:52 AM, Aug 14, 2019

The Government’s Industrial Strategy – what does it mean for procurement?

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John Houlden, Procurement and Projects Lawyer at Burges Salmon, discusses the Government’s Industrial Strategy – what does it mean for procurement?

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Last month saw the release of the first Industry Strategy dealing with a post-Brexit UK economy. In a comprehensive Green Paper, the Government seeks to build an industrial strategy to ensure future growth of both the economy and productivity in the UK.

Procurement was a central theme with the aim of improving procurement being one of the 10 ‘pillars’ of the industrial strategy. The Government set its intention to "use strategic Government procurement to drive innovation and enable the development of UK supply chains".

The procurement section focuses on:

  • Stimulating innovation through Government procurement
  • Supporting economic growth through better procurement practices through a “balanced scorecard” approach
  • Procurement in key industries (e.g. health and defence) where the Government’s role can help to achieve wider benefits
  • Transforming digital procurement.

This strategy indicates a move away from traditional public sector procurement to a more holistic and UK-centric approach. This approach could impact the purchasing attitudes of the public sector due to shift in focus from straightforward value for money to ensuring more UK-based small businesses can compete for contracts.

The Government aims to stimulate innovation by ensuring companies retain the intellectual property rights of products developed, understanding how innovative suppliers can better meet the Government's requirements and allowing suppliers to commercialise an innovative product more widely so that Government procurement is not seen as marginalising a particular innovator from access to the wider market(s). In this respect, the Government is building on steps that it has been taking over the past few years.

The Green Paper reiterates the use of the ‘balanced scorecard’ approach (see Burges Salmon article on page 20 of January 2017 issue). This will be twinned with a reporting mechanism for departments to provide reassurance that they are using the scorecard effectively. This also supports the Government’s targets of ensuring a third of its total procurement spend is with small businesses by 2020. Each Government department has a plan for engaging with SMEs and Government procurement projects are being restructured to ensure UK-based suppliers are in the best position to compete for contracts. For example, the Crown Commercial Service (the Government’s central purchasing body) is simplifying its tender documents and streamlining the tender process to allow for increased SME participation.

Where the Government is the main customer in a procurement as well as the regulator, it has committed to driving innovation, particularly surrounding technology and its adoption within Government projects. This ties in with the Government’s focus on transforming digital procurement. The Green Paper highlights the Government’s use of its new G-Cloud platform to allow suppliers to join a ‘preferred supplier’ list considering capability, not purely the size of a supplier organisation.

Overall, the Green Paper suggests a positive move by the Government in prioritising SMEs and technological progress in procurement. Perhaps not revolutionary but certainly evolutionary. The Green Paper is the start of the consultation process – we shall have to see how the policy develops and is implemented in practice.

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