The top 4 questions to ask to see if your procurement process enables infrastructure innovation
Learn more about the role of procurement in delivering innovative infrastructure
For all professionals involved in the procurement of large, complex transport and infrastructure projects, an opportunity and challenge exist in delivering truly innovative projects that have a meaningful and enduring impact to society.
The procurement of innovative transport and infrastructure projects require a receptive, strategic and systematic process which clearly articulates the desired innovation (good or service) that the procuring agent wishes to purchase. Procuring for innovation in transport and infrastructure projects focus on practical and implementable new ideas and technologies that are recognized by markets, governments and society, as being able to make a meaningful and enduring impact.
In essence, this requires the selection of trusted partners who can deliver a relatively risk-free tried and tested innovation that offers value for money. However, it must be recognized that the procurement of infrastructure innovation does involve risk that can be mitigated by a procurement process that is truly competitive. It is also important to note that unsolicited proposals (USPs) by innovative private sector companies are an important source of innovation for government institutions who are not always aware of the latest innovations and their technical applications.
Poor understanding of innovations adds the need for an extra level of due diligence by the procurer, which can only be achieved through a comprehensively exhaustive procurement process that in itself might require innovation.
Here are a few key questions to ask to determine the openness of your team and organization to welcome innovation in your procurement processes and infrastructure projects:
Question 1: Does the procurement due process stimulate or stifle infrastructure innovation?
It is important that we are clear when we discuss innovation in the context of procurement. We need to ask: “Are we looking at procurement innovation, innovation procurement, or both?”
Innovation procurement strategies, although less common, are increasing. These strategies require a procurement approach that is not based on business as usual, but operate within the established procurement guidelines and best practices. To ensure that innovation is not inadvertently stifled and that institutional willingness to pursue innovative infrastructure prevails, collaborative procurement is necessary between the procurer and the vendor (bidding party).
A responsive and flexible approach should be adopted to avoid risky procurement shortcuts. Administrative records of all innovation procurement decisions should also be diligently documented. In doing these, all possible future litigations regarding the transparency and competitive process of the technical innovation can be mitigated.
Governments should leverage competitive dialogue between existing and new vendors to identify and incentivize novel ways of doing things during procurement. Understandably, tried and tested procurement processes are difficult to break away from. This is especially true with trusted vendors, who require less time-consuming due diligence processes than new vendors.
In this scenario, procurement professionals should avoid inadvertent preferential bias to existing players. If bias prevails, the goal of successful execution of the procured infrastructure innovation could be lost.
Question 2: Does the organizational culture welcome infrastructure innovation?
Challenges to existing institutional procurement culture take time to overcome. A flexible, competitive approach that allows consultation of desired outcomes will permit the consideration and assessment of unconventional ideas.
Excessively bureaucratic institutions will find it difficult to implement innovative infrastructure procurements. Unless bureaucratic procurement approaches are transformed, innovation will be stifled.
Governments that are receptive and create innovation-enabling environments have a massive impact on innovative infrastructure. The defense, aerospace, and IT sectors of the US Federal and state governments are examples of where proactive innovation procurements have led to the development of cutting-edge infrastructure that has benefited not just the military, but society as well.
When introducing innovative procurements for innovative infrastructure, it is often required that institutional change management takes place. This requires exposing procurement officers to practical implementation knowledge and nurturing the desire and culture for innovation within the institution. Intelligent risk-taking needs to be recognized and rewarded as well. It is therefore important that procurement innovation does not face excessive red tape and punitive sanctions of procurement officers, otherwise the process of innovating is dead on arrival.
Question 3: Are intellectual property protected to stimulate innovative infrastructure?
When developing a procurement strategy for innovation, it is important that a holistic procurement ecosystem analysis takes place. This involves considering a number of factors:
- The desire and need for new models are explained;
- Intellectual property is protected and the bidders trust the process for this;
- Practical implementation occurs, and that the technical innovation that is being procured is affordable and cost effective.
One of the often most overlooked procurement areas is the protection of innovative intellectual property (IP). No innovation agent will ever share innovative ideas with a procuring agency if their intellectual property is at risk of being shared with competitors.
This requires IP ground rules being established when innovation is requested during a procurement. Safeguards have to be put into place that prevent malicious or unintended sharing of IP with unauthorized parties. This also requires a complex data and documentation management system that protects the integrity of intellectual property.
One of the quickest ways to kill innovation is for innovators to realize that their innovative ideas are at risk. Failure of implementing safeguards would also open procurers up to expensive legal litigation and reputational damage.
Question 4: Are there checkpoints in place to thoroughly evaluate innovation ideas and their genuine impact to society? Do these checkpoints challenge and flag ‘Greenwashing’?
Innovation is increasingly being placed under a microscope. Strict ESG parameters are also now applied to infrastructure projects with key stakeholders held accountable to deliver these parameters.
Poor project record keeping is no longer an excuse and a lack of accountability cannot be brushed off as an unintended omission. Regulators are demanding that innovation-based projects have steadfast ESG accountabilities and have recourse to all decisions and promises that were made during the procurement process.
Non-compliant ‘ESG innovation’ implementers will be prosecuted for non-compliance by regulators such as the Securities and Exchange Commission which is focused on prosecuting “greenwashing” of promised project innovations.
In the past, considerations of procurement societal impacts were generally limited to “value for money.” Now, additional filters are being applied to projects that include:
- value for people
- value for the future
Mandated infrastructure innovations (often tied to SDG goals) are increasingly monitored to address accusations of “green washing.”
One way that procuring agencies and bidders can protect themselves against potential nefarious litigations is to ensure that a procurement archive is established, with a reputable project and procurement management platform that records all decisions, innovative promises, and tangible objective delivery.
Increasingly, government agencies are exploring opportunities to promote innovative procurement, through Unsolicited Proposals (USPs) for example. In Pennsylvania, the state government has established an innovative procurement infrastructure e-portal where vendors of Public-Private Partnerships (P3s) innovation can register (pre-qualify) and share their innovative ideas on how to deliver much needed transportation infrastructure. This idea should be widely adopted as it opens the gate to innovation through an innovation enabling environment.
The right steps forward
It is beyond doubt that for innovative infrastructure to be procured, innovation needs to be incentivized in an enabling procurement ecosystem. This requires a mindset change, institutional cultural change, and the creation of avenues for this to be implemented.
Supporting data capture and storage tools also need to be embraced. We need to move away from an environment where bureaucracy stifles innovation, where built-in biases to innovation abound and where tools to identify, manage, filter, and adopt innovation are missing.
Procurement innovation saves time and money. It also allows the construction of future-proof infrastructure that is safe, people and environmentally friendly, and where project risks are proactively mitigated.
The author, David Baxter, is a Senior PPP Advisor to the International Sustainable Resilience Center (ISRC) located in New Orleans. Additionally, he is a steering committee member of the World Association of PPP Units and Professions (WAPPP). During 30 + years of international development consulting he has worked in Asia, Africa, the Middle East, Europe and North and South America. David has collaborated on infrastructure policy, project development, and project procurement for institutions such as the World Bank, Islamic Development Bank, African Development Bank, USAID, and the Millennium Challenge Corporation (MCC).David Baxter, Senior PPP Advisor, International Sustainable Resilience Center (ISRC)