Innovate to accumulate

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By Morven MacNeil, GO Content Editor

With the Government determined to achieve the £6.2 billion spending cuts set out in the Chancellor’s Emergency Budget in June 2010, we are currently operating in a procurement environment driven by the need to optimise economic growth while controlling public spending. It is therefore more important than ever that the public sector uses its procurement budget effectively. Procurement of innovative products and services will make public services more effective and more efficient and in turn will help stimulate growth in business.

Procurement has a vital role to play in encouraging the development of new technologies and providing innovative solutions to deliver better public services and responses to societal challenges. The public sector is a major customer in sectors such as transport, waste and health, where there is considerable scope for new technologies to drive better services, resource efficiency and economic growth.

Small businesses are a critical source of innovation, so it is vitally important to make best use of this resource. They are far from being a marginal group – 99 per cent of firms in the UK employ fewer than 50 people, and between them they employ a workforce of more than 11 million and have a turnover of over £1000 billion.

The Small Business Research Initiative (SBRI) championed by the Technology Strategy Board and modelled on a highly successful programme pioneered in the United States was launched in the UK in April 2009 after a pilot in late 2008. It is designed to drive innovation and ensure that this takes place in areas where there is real future demand from the public sector. It does this by providing the public sector with a mechanism to communicate challenges and seek ideas from across industry by enabling engagement with innovative companies and other companies they would not normally connect with.

The SBRI is not restricted to small businesses. It is designed to help Public Sector bodies to procure R&D from any type or size of business. The evidence so far, however, shows that more than 75 per cent of applications and awards go to organisations with less than 50 employees.

The process has four broad stages:

1. Government departments or public sector organisations identify a serious operational or policy problem and work out the clearest way to communicate their need or problem to businesses.
2. There is an open competition, where those companies with the most promising solutions are awarded R&D contracts to test the feasibility of their solutions (Phase 1 funding).
3. Those companies that successfully pass the feasibility test can apply for further contracts to develop a working prototype (Phase 2 funding).
4. The public sector procures the resultant technology or it enters the open market (or both).

An important part of SBRI is that the sponsoring body is engaged with the contractors throughout the process as an “intelligent lead customer” evaluating and guiding the development.

In June 2010, the National Endowment for Science, Technology and the Arts (NESTA) published a report on the effectiveness of the SBRI in harnessing innovation, and overall the findings are promising. The ‘health-check’ looks at a carefully chosen sample of new SBRI competitions to analyse the effects of the initiative on both the companies and public sector bodies engaged in the scheme.

NESTA reported that ten years after its original introduction in the UK, the reformed version of the initiative seems to have finally found its feet. Thirteen (now 25) Public Sector bodies are engaged and 28 (now 58) competitions have been started, with 425 (now 58) confirmed contracts amounting to a combined value of £27 (now 38) million.

For the companies interviewed, SBRI is filling a funding gap for innovation. Specific and appropriately sized R&D contracts combined with a need to solve live public challenges are accelerating technology development.

On the public sector side, departments and agencies are learning how to communicate their needs more effectively to the private sector, with genuinely interesting solutions going to market that would not have been reached by other means.

Where businesses have technologies that could provide potential solutions, SBRI provides an accelerated route to market for their ideas. Unlike many R&D projects which offer grant or match funding, SBRI provides 100 per cent funded development contracts where government is the customer. Phase 1 contracts for feasibility testing have been valued at up to £100,000 and last for six months. Phase 2 contracts for prototype development have been worth up to £1 million over two years.

While the public sector has the right to license the resultant technology, the intellectual property (IP) remains with the company. Whether the public sector procures the technology or not, the firm is in a position to commercialise the technology on the open market.

SBRI in action

SBRI competitions have been launched by 25 public sector bodies, seeking innovative solutions for Health, Defence, Transport, Energy and other challenges.

One example is a company called Eykona. By using 3D scanning technology for the monitoring of chronic wounds in diabetic patients, clinicians are able to accurately assess wound healing leading to rapid changes in treatment which in turn can prevent amputation in extreme cases. This monitoring can occur in the patients home, reducing the need and cost of outpatient services and following the drive to treat patients in the community.

Another example. The Department for Transport and the Highways Agency ran an SBRI competition to explore ways in which synthetic environments (i.e. virtual reality) could be applied in the transport industry.

A 17km test-bed section of the M42 between junctions 3a and 7 was selected to demonstrate the importance of the managed motorway approach because of the section’s extremely variable traffic flows. Handling more than 120,000 vehicles per day, it operates as part of a cross-country north-east to south-west route, an orbital route for Birmingham and an access road to Birmingham Airport, the NEC and business parks and residential areas.

Nine viable competition entries were received and three companies were each awarded £100,000 contracts to develop a prototype model.

Both projects are ongoing, for the latest information on SBRI, please click here. Or you can contact Bryan Forbes – SBRI (bryan.forbes@tsb.gov.uk) 07824 600063.