Buying Ideas: Procuring Public Sector Innovation in Canada

Today, the Council of Canadian Innovators published "Buying Ideas: Procuring Public Sector Innovation in Canada," — an in-depth look at how to fix government procurement in Canada. CCI has been calling 2024 the "Year of Procurement" because we believe the time is now to get serious about procurement reform, especially when it comes to technology services.

"When Canadian governments do a poor job of buying innovative technologies it significantly undermines our innovation economy," said Benjamin Bergen, President of the Council of Canadian Innovators. "And when the government disproportionately relies on large foreign technology service providers to offer sub-par solutions, that impacts Canadian companies’ ability to compete and succeed globally."

Procurement amounted to 14.6% of Canada’s GDP in 2021; this is hundreds of billions of dollars, and a meaningful force that shapes our economy.

The fact is that the current culture of government procurement — both federally and provincially — is not serving the Canadian economy, and it is not serving the government’s own purposes. A recent Auditor General report found that about a third of the 1,480 mission-critical government digital applications are rated to be in poor health.

Government’s procurement failures fall into a few key categories:

• Overspecification at the outset of a procurement process, and a lack of ongoing dialogue with vendors who may be able to innovate to better meet government’s needs.

• Long and cumbersome procurement processes that discourage nimble innovators to invest time and effort for an uncertain outcome that may take months or years to fully play out.

• Lack of in-house capacity and expertise among public servants to meaningfully engage with vendors.

• Institutional culture and career incentives which create a risk averse culture that steers government buyers towards the “safe” choice.

"Looking around internationally, we can see examples of how to do things better," said Laurent Carbonneau, CCI Director of Policy and Research. "In the United States, the Small Business Innovation Research program has a long history of success. In the 2000s, the United Kingdom pioneered the Forward Commitment Procurement model which has been adopted around the world. In Finland, a network of agencies have created an ecosystem for government procurement that routinely leads the European Union."

While no one can simply snap their fingers and fix Canadian procurement with a single agency or a policy change, we can learn lessons from all of these countries. We can imagine policies which bend the curve, score tangible wins for government innovation procurement, and create a culture of success that we can build on.

As a first step, CCI has a suite of six recommendations that Canadian government leaders can implement today.

1. Create a Small and Medium Enterprise Procurement Target
2. Create a Framework for Forward Commitment Procurement
3. Develop and Recognize an Innovation Procurement Standard
4. Prioritize Commercialization in Procurement Programming
5. Empower the Industrial Research Assistance Program to drive Innovative Procurement
6. Create a Federal Procurement Concierge

The stakes are high. Public procurement of innovation is an important lever on Canada’s innovation performance and contributes to correcting our historic innovation underperformance.

We can identify the problems, and we can find solutions. Buying Ideas: Procuring Public Sector Innovation in Canada is a first step for policymakers who want to do better. You can download the full report here, and you can watch our launch event, including a conversation with Careteam CEO Dr. Alexandra T. Greenhill, and Thrive Health Executive Board Chair David Helliwell:

Media Contact:

James McLeod
CCI Director of Communications

jmcleod@canadianinnovators.org

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About the Council of Canadian Innovators

The Council of Canadian Innovators is a national member-based organization reshaping how governments across Canada think about innovation policy, and supporting homegrown scale-ups to drive prosperity. Established in 2015, CCI represents and works with over 150 of Canada’s fastest-growing technology companies. Our members are the CEOs, founders, and top senior executives behind some of Canada’s most successful ‘scale-up’ companies. All our members are job and wealth creators, investors, philanthropists, and experts in their fields of healthtech, cleantech, fintech, cybersecurity, AI and digital transformation. Companies in our portfolio are market leaders in their verticals, commercialize their technologies in over 190 countries, and generate between $10M-$750M in annual recurring revenue. We advocate on their behalf for government strategies that increase their access to skilled talent, strategic capital, and new customers, as well as expanded freedom to operate for their global pursuits of scale.