There is increasing recognition that public sector procurement can have an impact on skills and innovation in contractor companies. In 2003, the DfES and the Office of Government Commerce (OGC) produced guidance to all Government Departments on how they should incorporate basic skills requirements into their procurement arrangements. This guidance was updated in 2005 and is directly referenced in the 2005 Skills White Paper. The Department of Trade and Industry (DTI) has commissioned this report to understand the potential for using public sector procurement as a lever to drive up private sector employers’ demand for skills and stimulate innovation in the economy.
The public sector is the biggest purchaser in the UK economy, spending ?125 billion a year on private sector goods and services. More and more functions have been outsourced in recent years by central government departments, local authorities and agencies such as the NHS.
This report looks at:
- Fifteen case studies exploring a wide variety of ways that public procurement has impacted on skills and innovation.
- The legislative and guidance frameworks for using procurement to raise demand for skills and innovation and other policy implications.
- What the public sector can learn from private sector purchasing.
- Examples from other European countries on how public procurement has impacted on skills and innovation.
This report will be of interest to all who are engaged in designing or using public procurement. It will allow them to consider whether their particular procurement situation could be used to stimulate the demand for skills, and whether the way they procure could lead to a more innovative solution to their contractual needs. In particular, procurement officials may like to see if the case studies can give practical lessons on how they can achieve both value for money and a contractor workforce that is skilled to deliver innovative goods and services.
Contents
Preface
Executive Summary
1.1 Background
1.2 Aims and objectives
1.3 This report
2 Policy Context
2.1 Increasing employers’ demand for skills
2.2 Principles of public sector procurement
2.3 Using procurement to drive up workforce skills
2.4 Procurement and local economic development
2.5 Social clauses in procurement
2.6 Procurement and innovation
2.7 SMEs, ethnic minority businesses and the voluntary and community sector
2.8 Conclusions
3 The Impact of Procurement on Skills and Innovation
3.1 Introduction
3.2 Summary of the case studies
3.3 The business benefits of using procurement to drive demand for skills
3.4 Procurement can stimulate demand and supply for all levels of skills, from basic to professional
3.5 Increased skills can be an unforeseen benefit of procurement, particularly where innovation is involved
3.6 Innovation is an iterative process from procurers and suppliers
3.7 Good practice is decentralised within the public sector
3.8 Committed individuals, social capital and personal relationships are important elements of innovative procurement
4 Private Sector Approaches to Procurement
4.1 Introduction
4.2 How are modern supply chains structured?
4.3 Inter-firm Collaboration and Training
4.4 Quality Assurance and Skills
4.5 Standards, Certifications and Skills
4.6 Conclusions: What can the public sector learn?
5 European Case Studies
5.1 Introduction
5.2 Examples of European public procurement
5.3 Conclusions
6 Policy Recommendations
6.1 Conclusions
6.2 Policy recommendations
7 Case Studies
7.1 Practical messages for procurers
7.2 Methodology
7.3 Case Study 1: London Borough of Newham and Crowley
7.4 Case Study 2: Highways Agency and H.W. Martin
7.5 Case Study 3: DTI security guards contract
7.6 Case Study 4: Sheffield Homes and Kier
7.7 Case Study 5: DfES and Aramark
7.8 Case Study 6: Agency Nursing Framework Agreements
7.9 Case Study 7: NHS national contract for digital hearing aids
7.10 Case Study 8: Darlington Borough Council and Waterstons
7.11 Case Study 9: Sunderland City Council and Gleeson
7.12 Case Study 10: Highways Agency and Signature Ltd
7.13 Case Study 11: ION IT and Ealing Hospital NHS Trust
7.14 Case Study 12: Atos Origin and Department for Transport
7.15 Case Study 13: London Contracts and Supplies Group and Eden Brown
7.16 Case Study 14: HM Prison Service College and ESS Support Services Worldwide
7.17 Case Study 15: East London Community Recycling Partnership
Annex 1: List of Interviewees
Annex 2: Topic Guide
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