New Public Services Procurement Model: Key to SME Growth

Buying Power? Is the Small Business Research Initiative for procuring R and D driving innovation in the UK?NESTA (National Endowment for Science, Technology and the Arts) is calling for the UK’s Small Business Research Initiative (SBRI) to be scaled up to offer wider access to growth for SMEs as a new report published today concludes that it drives technology innovation in the UK. (Buying Power? Is the Small Business Research Initiative for procuring R&D driving innovation in the UK?)

Public procurement of products and services amounts to £220 billion a year in the UK. The SBRI programme encourages public sector procurement of pre-commercial technologies often from small to medium sized businesses by running targeted competitions to fulfil public sector contracts. It is based on the successful American model in which SBRI-funded companies generated five times more growth than other companies over a ten year period.

The UK SBRI programme was originally formed in 2001 however the scheme was less focused on R&D and received low public sector buy-in. A revised version of the SBRI, managed by the Technology Strategy Board (TSB) was launched in the UK in April 2009 after a successful pilot. NESTA is assessing the scheme to ensure it creates value to SMEs and to the wider economy, with a view to how it can be successfully scaled-up.

Since its re-launch SBRI has awarded 425 contracts to the value of £27 million to small businesses. As well as being another source of start-up financing, SBRI generates faster outcomes by sharing solutions being developed in other sectors with similar challenges, cutting both R&D spend and time. In addition, small businesses are able to retain their intellectual property, whether their technology is procured or not, so that they can commercialise their technology on the open market.

Sir John Chisholm, NESTA’s Chairman says

“SBRI shows that when small businesses are offered the chance to solve real public challenges, they are able to accelerate both their own technology development whilst bringing about wider benefit to the economy and society. It is a win-win situation.”

Iain Gray, Chief Executive of the Technology Strategy Board said:

“The fact that NESTA has published a review of SBRI that is extremely positive is a great acknowledgement of all the hard work that has taken place within the Technology Strategy Board and the Government departments and bodies that have been running the new SBRI programme over the last 12 months. SBRI has been a priority for the Technology Strategy Board since the new programme was set up last year and we are delighted that we have breathed life into a project that is set to produce great opportunities for SMEs in the UK in coming years.”

SBRI was piloted by the National Institute for Health Research (NIHR) in 2008 when it launched a competition to find ways of eradicating hospital superbugs. MRSA treatment costs on average £9,000 per patient, and the total cost nationally runs into billions of pounds a year. Nine of the ten competition entrants had never worked with the NHS before. It allowed the NIHR to access, for the first time, companies in the food industry that had solved the problem previously in a different context. It also gave them more immediate results compared to previous procurement exercises that had taken up to seven years.

To ensure the benefits of the SBRI are maximised, NESTA recommends the SBRI scheme in the UK is scaled up in order to optimise impact on public bodies and to reach a far greater number of promising companies.

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