Revamped model for Public Services Procurement Holds Key to Small Business Growth

15/06/10
'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.'

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.

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. 90 per cent 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.

Notes to editor

For further information contact Catherine Anderson, NESTA Press Officer, on 0207 438 2609 or email Catherine.anderson@nesta.org.uk  

For Technology Strategy Board related media inquiries, please contact Claire Cunningham, Media Relations Manager on 0755 4115745 or email claire.cunningham@tsb.gov.uk

About NESTA
NESTA is the largest independent endowment in the UK. Its mission is to support innovation to drive economic recovery and solve some of the UK's major social challenges. NESTA is a world leader in its field and promotes innovation through a blend of practical programmes, policy and research and investment in early-stage companies.

About SBRI
SBRI stands for Small Business Research Initiative and significantly reworks the previous scheme that was launched into the UK in 2001. The Technology Strategy Board champions SBRI which is now focused on technology development and specific competitions. The SBRI is designed to benefit both the public sector and the recipient companies, having a significant effect on the wider economy.

http://www.innovateuk.org/deliveringinnovation/smallbusinessresearchinitiative.ashx

Key facts about SBRI

• Over £27m has already been invested in SBRI since the new programme began;

• The new SBRI programme was launched 12 months ago, in April 2009;

• Over 425 contracts have been awarded to companies so far;

• 13 public sector bodies are currently involved in the SBRI programme including central Government departments including the Department of Health, the Ministry of Defence, Defra, the Home Office and regional bodies such as East of England Strategic Health Authority and the East of England Regional Development Agency;

• SBRI procurement contracts have been awarded in a broad range of business sectors such as construction, life sciences, defence and security;

• The UK now takes the lead in the EU when it comes to pre-commercial procurement activity;

• The types of innovative technologies developed as a result of SBRI contracts range from a secure form of m-commerce for mobile phones, the transfer of technology used on racehorses to detect asthma into an exhalation test for humans, and a revolutionary hand hygiene technique that could have a major impact on the health of our hospitals.

It enables the public sector to:

• Use innovation and technology to deliver step function improvements in operational performance or in progress towards policy objectives.

• Rapidly access companies, new ideas and technologies that would not be reached through normal channels.

• Encourage innovation by defining and broadcasting challenges and desired outcomes and then procuring and supporting the R&D effort of contract winners.

It supports innovative businesses by providing:

• An intelligent lead customer to help validate and refine an idea and provide a route towards market for new ideas and technologies.

• 100 per cent funded R&D contracts (from the customer - in this case the public sector) to develop the idea.

• Credibility for follow-on investment from private sector, assuming rigorous public sector due diligence and clear market potential.

• A simple means of engaging with the public sector and a link into mainstream public procurement.

The Technology Strategy Board is a business-led executive non-departmental public body, established by the Government. Its role is to promote and support research into, and development and exploitation of, technology and innovation for the benefit of UK business, in order to increase economic growth and improve quality of life. It is sponsored by the Department for Business, Innovation and Skills (BIS). For more information please visit www.innovateuk.org.