This report investigates whether the Small Business Research Initiative (SBRI) for procuring R&D is driving innovation in the UK.

Key findings:

• Europe has so far failed to fully exploit the opportunity of using public procurement to drive innovation.
• Our analysis indicates that the SBRI scheme has finally taken a form in which it can deliver on its potential.
• The SBRI promises three-way benefits: driving improvements in the quality and cost-effectiveness of public services and helping solve policy challenges; accelerating the commercialisation of technology and filling a gap in innovation financing; and supporting the growth of small companies and consequently economic growth and recovery.
• To maximise its benefits, we make three main recommendations: scale up the SBRI scheme; focus on quality with any increase in the number of competitions; and recognise the SBRI as a powerful tool in driving innovation.

At a time when the UK government is acutely aware of the need to drive economic growth whilst cutting public spending, it has sought ways to make better use of its buying power.

With around £220 billion a year spent every by the UK government on goods and services, public procurement represents a potentially powerful lever for innovation. Yet until now many policies have failed to bring about the desired results. The reformed Small Business Innovation Research Initiative (SBRI) may be a potential solution.

The SBRI is a procurement programme is modelled on the highly successful American Small Business Innovation Research (SBIR) scheme. After a faltering start and a campaign for renewal, a reformed version was launched in 2008. Although the outlook is promising, the SBRI faces a number of challenges.

In this report, we analyse seven of the most advanced competitions, from the perspective of public sector bodies and small businesses, and outline a set of recommendations on how to build upon the early successes of the reformed SBRI to ensure it reaches its full potential.