For many industries contracting has become a global affair, governments are rightly keen to gain economic advantages from a global economy but need to ensure that contracting can also be used as a driver to create jobs and innovation within their own region. This use case describes the use of procurement analytics and datasets to drive economic development forwards across particular industries or geographical regions within an economy.
By encouraging economic development public procurement can be used to increase skills and create jobs, particularly in areas of financial deprivation or within an industry that has the potential to create significant growth. Properly implemented, a good economic development policy can result in more diverse economies and greater growth. In some cases it can in turn reduce poverty and inequality, increase integration within an economy, and increase tax revenue.
Analysing public procurement’s impact on an economy can have a range of positive effects for suppliers and entrepreneurs who believe that they can support government with their products or services.
<aside> 🗣 Research shows that spending with smaller companies provides greater returns for tax authorities and new jobs can reduce govt costs.
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<aside> 🔉 Most innovation happens in smaller companies, engaging with them can deliver significant advances for governments.
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<aside> 👉 It is possible to create a virtuous cycle that helps small companies grow into large companies just from government business.
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Data on local firms, supplier’s commitments to apprenticeship schemes or commitments to using local subcontractors can all be used to monitor and measure the efforts associated with economic growth. By simply measuring the number of contracts won by local firms is a good way to start measuring the impact that purchasing can have.
Economic development is a rich area for analysis, with governments often being able to draw on their own economic data from tax records and public company registers. We outline some simple steps that can be taken to analyse the impact of procurement in economic development.
Buyers can measure the value and number of contracts awarded to suppliers based according to location, size or industry. Simply recording this and looking to see if the number of awards increases is the simplest way to start measuring economic development impacts.
The more and better data that exists around supplier and contracting and spend, the more buyers can analyse not only how much money is going to their local regions but also compare public spend with other important economic development metrics such as deprivation indexes, location of minority owned businesses.
Buyers can search for local firms who have performed similar contracts based on category, specification, and value. A register of contracts with clean and complete OCDS data will enable this.