The NHS National Innovation Centre
Pre-Commercial Procurement, Prizes and Grant-making
The NHS National Innovation Centre (NIC) has been operating in the area of health technology innovation development since September 2006. During this time, the NIC has gained extensive experience in the commissioning of innovation, and this experience has led the NIC to one firm conclusion: there is no one-size-fits-all approach to procuring the development of innovations. Instead, the NIC has found it beneficial to take a flexible, context-specific approach to the procurement of innovation.
A critical starting point for the NIC’s work is the answer to this question: Who identified the need? As discussed in more detail below, the answer to this question takes the NIC down one of two paths, either a Reactive path or Proactive path. And, irrespective of which path is followed, they both end at the same point: the development of technological innovations likely to benefit patients and industry.
Reactive
If a need and a potential solution are identified by an innovator – and not the NIC - then this sits outside of Pre-Commercial Procurement. The NIC is very interested in capturing these needs and potential solutions, as it complements the more formal approach used in the NIC’s proactive approach.
Scorecard: To support the Reactive approach, the NIC built and validated – with venture funders, technology developers, innovators, and others – an online tool called Scorecard. This tool enables innovators to assess the potential for their innovation through a series of 48 questions that consider the concept, its value, and the capability of the innovator to deliver.
It should be noted that the vast majority of innovators that approach the NIC are not seeking funding, or only seek a small amount of funding. What they often are looking for is contact with other experts with whom they can collaborate, or access to the NHS to conduct clinical trials or gain expert healthcare advice.
Proactive
If the NIC, as a commissioning authority, identifies a need and has a requirement that cannot be met by the existing marketplace, then this represents a potential Pre-Commercial Procurement opportunity.
The NIC uses a formal process to identify, validate and rank need, and this is informed from structured ‘Wouldn’t it be Great If...(WIBGI)’ workshops involving clinical teams from NHS healthcare settings. During a WIBGI workshop, an expert facilitator works with the clinical team to identify, validate and rank-order their perceived clinical needs. The ranked needs are then considered against published literature, resulting in a formal needs assessment document that is presented to the NIC. This results in three possible alternatives for each ranked need:
1) There is technology already available in the market that can meet the need. In this case traditional procurement is used.
2) There is no technology already available in the market that can meet the need, but NIC’s horizon scanning activities generates evidence that it likely that there will be soon or that it could be soon if industry where aware of this requirement. In this case, the NIC will not engage in a PCP but will publicise the need in the Statement of Clinical Needs section on the NIC website, thus affording industry the opportunity to address the need in the free market.
3) There is no technology already available in the market that can meet the need, and NIC’s horizon scanning activities do not generate any evidence to indicate that there will be soon or that it could be soon if industry where aware of this requirement. In this case, the NIC will engage in a PCP via the Competition Tool on the NIC website.
Each competition is run via open, fair and transparent processes using the Competition Tool. For any given competition, the NIC may decide in advance to:
1) award one contract, or award several contracts.
2) issue contract(s) just for one stageviz: design, prototype develop, and small-scale trial; or issue
contract(s) to cover all stages.
3) own IP and full exploitation rights, or not to own IP but own exploitation rights commensurate with the size of the contract.
As a commissioning authority, the NIC designs a PCP competition for each need with the aim to create conditions where a successful outcome is most likely to happen. The more difficult it is to create a technological solution for a challenge, and the more urgent it is that a solution be created, then the more likely it is that the NIC will design a PCP which gives the NIC, as the commissioning authority, more control over the development of the innovation. The converse is also true.
Under EU PCP rules, commissioning authorities such as the NIC must generate a return on their investment that is commensurate with the size of a contracted award. For the NIC, the setting for the size of a royalty payment or equity stake back to the NIC is achieved through a competitive process; to explain, as part of the tendering process, bidders compete to win a contract to deliver R&D services and it is in their submission that the bidder states the amount of money they require to deliver the R&D as well as the royalty payment or equity stake back to the NIC. On receipt and evaluation of the bids, then NIC either accepts or rejects each offer against criteria stated in the Invitation to Tender.
Successful bidders are awarded a contract from the NIC to deliver R&D services to develop a new innovation, as outlined in their tender submission. As part of the management of these contracts, suppliers must provide a regular update of their contracted work using the NIC’s web-based Performance Management Project Tool. This ISO9001-accredited tool enables both innovators and NHS project managers to track the performance of contracts, including achievement of milestones and the management of any risks and issues, as well as financial payments against the contracted service. Complementing this back-office system, suppliers are also expected to give regular updates on the progress of their innovation using the NIC’s website resource called Project Tool. This tool enables open collaboration and also offers transparency of the NIC’s PCP commissioned work.
Dealing with Intellectual Property
The NIC seeks to position Intellectual Property where it is most likely to be exploited successfully. Therefore, in most R&D procurements, the NIC will position the resulting IP with the supplier who developed it; and, in return, require the supplier to give a license to the NIC for rights of use. This mechanism helps to ensure that the NIC, as a commissioning authority, generates a return on the cost of the commission; and it also ensures that a supplier cannot block the further development of a project by failing to exploit the IP.
In situations where there is both a high degree of urgency and difficulty to create an innovative solution, the NIC will seek to own IP throughout entire commissioning process and to use a staged approach with multiple cohorts invited to bid for each competition. In this way, the NIC is most able to control the direction of the project and the speed that it can progress. (It should be noted that there is always the risk – if the IP resides solely with a company – that the company will decline to progress to the next stage of the project, potentially leaving the project stranded.)
In a multi-staged approach, not all IP (or Suppliers) will advance from one stage to the next. The NIC aims never to do anything which would block IP from reaching the marketplace and being exploited; but, at the same time, what the NIC would not do is give a supplier IP freely, as this would be anti-competitive. In such circumstances, the NIC would consider a number of competitive options, including: auction, negotiation, or open source licensing.
Auction: When the NIC owns all the IP and exploitation rights for the innovation R&D that it has commissioned as part of a PCP, the NIC is able to runs an open, fair and transparent competitive auction to sell the IP to the highest bidder at any stage of the innovation’s development. This can happened at any stage in the PCP process. In an auction, the bidders compete both on price as well as the royalty payment or equity stake back to the NIC. On receipt and evaluation of the bids, then NIC either accepts or rejects each offer against criteria stated in the Invitation to Tender.
Negotiation: When the NIC owns all the IP and exploitation rights for the innovation R&D that it has commissioned as part of a PCP, the NIC is able to run an open, fair and transparent competitive auction to sell the IP to the highest bidder at any stage of the innovation’s development. This can happened at any stage in the PCP process. As in an auction, the bidders compete both on price as well as the royalty payment or equity stake back to the NIC. The negotiated procedure should used only in highly complex situations, and will follow strict procedures as outlined by the Office of Government Commerce.
Open Source Licensing: The NIC may opt to make the IP arising from its commissioned work freely available to the market. The freeing up of the IP in this way seeks to create conditions where new innovations can be developed which add to greater social benefit. An additional benefit of this approach is that it relieves the NIC of the administration and enforcement costs of IP. Creative Commons has websites where, for example, the NIC can file for alternative “licenses”, or levels of restriction, for their works. These protections free the general society of the costs of policing IP infringement. Thus, on several fronts, there is an efficiency argument to be made on behalf of open sourced goods.
Prizes
In addition to running formal competitions against need (i.e. a PCP), the NIC works collaboratively with DotGovLabs to identify solutions that meet challenges that could be met with digital solutions.
DotGovLabs, which is a programme provided by Central Government, is aligned with a new way of thinking about the role of government that reflects the opportunities presented by a digital world. By looking at a problem from an online perspective, with fresh combinations of people and collaborative ways of working, innovations can be made for the benefit of all. It is the digital opportunities that government must now seize with solutions focused on the outcomes for the citizen and making use of the rapidly changing digital environment. The NIC offers prizes to innovators who have developed the top three solutions.