How to overcome the hurdles in public procurement? Filipo Sabatini, Managing Director at Citibank, and Adrian Walker, Global Co-Head of Hogan Lovells Infrastructure, Energy, Resources and Projects, facilitated a session with city officials on how to prevent jurisdiction from becoming a barrier to innovation procurement. Representatives of global cities exchanged ideas on how to adopt the best solutions to enhance public services and citizens' quality of life, while respecting the rules.
City officials discussed the following ideas on how to make public procurement less prescriptive and more collaborative:
- Rules and regulations can be positive. There are two options: 1) de-regulation for innovation with a supporting infrastructure, or 2) new regulation to support SMEs through innovation partnerships.
- Overregulation cannot guarantee better procurement; hence, it is necessary to make compromises between regulation and solutions. It is hard to innovate when validation and proofs are required.
- It is important to explore problem areas and not just solution areas, and avoid prescribing technology.
- Rules can help or hinder. Legislation, especially at national level, can become an excuse for doing things in the same way. On the other hand, new deal structures can lead to more flexible interactions.
- Fear is the biggest barrier of innovation, followed by conservative, defensive attitudes within leadership. It is important to find your champion and change the mindset to overcome conservatism and inertia. Show good examples from other cities when you have to deal with a conservative leader, and understand that some environments are more prescriptive than others. The best way to convince a city to do it differently is to show that another city has already done it successfully.
- Departments and teams should work together, and there should be open conversations between the legal and procurement teams.
- Meet and learn from other cities. Find out how other cities procure and learn from their experience, mistakes, and successes. Cities can help each other by sharing positive examples and welcoming private sector expertise. Embracing and learning from failure is essential.
- Governments look at innovative management and finance models, such as innovative procurement and PPPs, although risks are still perceived. Part of the future procurement challenge will be to stimulate wider market appraisal. Invite another level of government (e.g. central or regional government) to make the process multilateral and encourage market development.
- Specific examples provided by city officials included: using regulation to avoid corruption and to increase transparency (Moscow); asking the market for solutions and conducting market consultation for up-to-date technology (Eindhoven); including social considerations and value (Malmö); providing opportunities to SMEs through legacy projects (London).
- Regarding the key issue of scaling solutions, Barcelona considers important to have a fixed budget to spend on innovative solutions. In Japan, procurement processes are deregulated which has increased flexibility and speed, thereby leading to greater competitiveness. In Philadelphia, a new approach has been introduced to invest in exploration and look into problem areas.
In conclusion, it is important to fast-track innovation, and allow test & scale in procurement.
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From 23-25 June 2014, Mayor of London Boris Johnson hosted Cities Summit | Solutions Worth Sharing together with Citymart and supported by Citi. The Summit brought together city governments, businesses and entrepreneurs with bright ideas to help improve citizens' quality of life. The Summit kicked off with a Peer Learning Session for cities, creating a dynamic dialogue among city officials around four key themes on how to make innovation a tangible reality. Participating cities included London, Barcelona, Dublin, Fukuoka, Heerlen, Kristiansand, Krakow, Lobito, Louisville, Madrid, Malmö, Moscow, Newcastle, Philadelphia, San Luis Potosí, Sant Cugat, Seville, Sheffield, Tampere, Tartu, Valencia, and York.
Next post will cover how to organize and deliver innovation in cities.