Those looking at the news in the UK over the last week can’t have missed the stories about the award of the latest rail franchise to run the West Coast Main Line, the railway line connecting London with the Midlands, the North West of England and Scotland, and the legal challenge mounted by Virgin against the award of the contract to FirstGroup. The events that are unfolding are, at this stage, not good news for rail users, nor the public generally, and for those of us with an interest in public procurement of innovation, they are rather ill-omened but all too familiar.
At this moment in time the problem lies with the process of award, not with the service that has been delivered to the public, although we know from other franchise awards in the rail industry, there can indeed be problems down the line when firms are unable to make their franchise pay and have it give up.
We are fortunate too that a legal challenge and possibly a Parliamentary enquiry may open up this particular procurement which has significant economic implications for the UK. But what would be more useful still is if there was a re-examination of the difficulties involved in doing public procurement of innovation. And one issue that has to be tackled right across the public procurement of innovation agenda is the issue of complexity and the risks we take. The past is not such a good guide to the future. As one of my colleagues likes to say, “the future is not evidence based”.
Uncertainty of outcome is very common when complex systems are involved and the time horizon is long. But we do have ways of reducing risks. Within procurement of innovation, pre-commercial procurement is one of the obvious steps, although in the rail case, it’s not likely to have been helpful, as pre-commercial procurement is a tool that operates on narrower focus although often with major implications. And we can also reduce risk by narrowing the scope of what we demand down to a level where our decision making methods and techniques can reduce uncertainty to a level that won’t see us in court. That though needs us to achieve a balance between two powerful forces, on the one hand politics and on the other, our technology of decision making.
Editor’s Note: Dr. John Rigby is one of the UK’s top experts and champions on leveraging public sector procurement as a tool to drive innovation. John works in the Manchester Institute of Innovation Research (of which PREST is now a part), the University’s main research centre in science and technology policy. He also sits on the Manchester Business School IT Advisory Board as Divisional Representative, and is staff representative of the Institute of Innovation Research Board. John is a member of the Council of the Manchester Statistical Society.
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Procurement Insights 
Colin Cram
October 11, 2012
A perceptive article. I particularly like the reference to reducing risk by narrowing the scope of what we demand to a level where our decision making methods and techniques can reduce uncertainty.
piblogger
October 11, 2012
Thank you for sharing your thoughts on this post Colin.
Ian Burdon
October 12, 2012
I don’t think the lessons for public procurement are being learned anywhere and that is because of a blinkered view of what procurement is about. In very general terms – and yes I acknowledge this is a generalisation – it seems to me that the private sector, particularly manufacturing, is more concerned with managing the supply chain to ensure delivery of business outcomes (ie what strategic sourcing really means) while the public sector is more concerned with process and compliance. There have been considerable efforts in the UK to raise the skills levels of procurement staff, which is a good thing: the problem, it seems to me, is that this has made them skilled buyers rather than skilled in procurement.
piblogger
October 13, 2012
Great insights Ian . . . thank you for posting your comments.