Procurement issues
Public sector procurement is worth approximately £220 billion each year and plays an essential part in the delivery of public services and driving innovation.
Intangible assets may feature significantly in procurement processes and might be a significant driver in the procurement strategy (quality vs price, re-use and access rights, etc.). Therefore, it is important that public sector organisations understand how to:
- Manage intangible assets in procurement processes so that the best value is obtained.
- Maintain the necessary control of IA generated with public funds in procurement processes so that their ability or that of other public organisations to use those IA is not compromised in the future.
If procurement is not managed carefully experience has shown that organisations have been placed in the undesirable situation of having to subsequently pay to use materials which they have funded the development of.
Procurement functions should consider in particular:
- How will the tender safeguard existing intangible assets?
- What are the key intangible assets that are likely to be involved in the tender process?
- How will new intangible assets created by the tender be managed and safeguarded?
The table below sets out some of the key issues around procurement and how the role of intangible assets can be enhanced.
| The issue is listed in the first column. Find one relevant to you and read across the row to find a possible senario, desired or possible outcomes and action to be taken. | |||
Issue |
Possible senario | Desired/possible outcomes | Action |
|---|---|---|---|
| Staff need help to understand the classes of assets involved in procurement. | A range of understanding about classes of intangible assets | The range of possible intangible assets and how these relate to procurement is understood by all relevant staff. New training materials. An IA policy is adopted by the dept and includes procurement provisions |
Staff training on IA, their use and implications in procurement. |
| IA which maybe either lost or gained by procurement as part of specification. | Only certain types of IA are identified-for example patents/copyright and others such as know-how is not taken into account. New staff appointed or current staff leave. |
IA are registered where possible and where appropriate for example IP. New processes in place for identifying and recording IA. |
Develop a comprehensive IA register. Ensure that copyright is appropriately assigned to the Crown or public sector entity. Capture staff-based know in compliance with Transfer of Undertakings (TUPE) legislation. |
| Invitation to Tender (ITT) documentation | Do suppliers have the capacity and capability to develop the IA? Is the eventual ownership of the IA clear? Is the issue of background IA (developed before the contract) and foreground IA (developed under the contract) clear? Are the evaluation criteria clear? Are the award criteria clear to the supplier? |
Develop procurement documents to take account of IA. | Check the pre-qualification questionnaire are clear on IA. Check all necessary provisions are made in the ITT and that it is clear. |
| Ownership of IA. | Suppliers may seek to own all the assets deriving from a procurement. Copyright works produced by employees in the course of employment are owned by the employer, unless other arrangements have been agreed. Copyright produced by contractors or on a commission will be owned by the person who produced the work (ie the contractor or person commissioned) unless agreed otherwise. |
Consider assigning ownership of all IA generated as a result of the tender to the public body commissioning the work as a default negotiation position. Consider granting access rights to the supplier to use the material. Ensure the ability to use any material and IA developed (foreground) under the contract without any restrictions and obtain rights necessary to use any background material owned by the supplier which is necessary to be able to use the foreground. |
Check IA clauses in all contracts. Define ownership terms. Define "rights-to-use" access terms for supplier. Consider making contractual arrangements to own copyright in commissioned works. Consider ownership of any subsequent improvements in IA generated under contract. |
| Research contracts | Poorly drafted research contacts could result in the loss of some control over IP rights (for example in the publication of policy-sensitive research). Equally, the use of too onerous IP clauses in research contracts can inhibit the dissemination of publicly-funded research which could otherwise be disseminated and used to support enterprise and innovation, either within or outside the public sector. |
Consider the purpose of the research and how to put the results to the best use to benefit the economy. The government-backed Lambert tool-kit was developed to facilitate contract negotiations involving intellectual property. It comprises a series of model agreements that provide for different scenarios relating to the ownership of IP and also the rights to access and exploit IP arising from collaborative research. |
Consider in the first instance using the Lambert model agreements and the guidance offered in the Lambert website. The Lambert agreements are voluntary and as with any legal template you should consider whether they are appropriate for your situation. |