Rail Industry Focus

17.07.17

A win-win procedure for buyers and suppliers

Source: RTM Jun/Jul 17

David Clarke, technical director at the Railway Industry Association (RIA), argues that a new partnership procurement mechanism might just be the key to developing innovative, transformational and truly sustainable solutions for the sector. RTM’s Luana Salles reports.

The Digital Railway programme is all about the sustainability of the industry in the long term; it’s no wonder the organisation’s own strapline is ‘supporting sustainable growth’. With increasingly congested lines, ageing infrastructure and limited budgets, it’s an ever-greater challenge to meet ambitious performance and reliability targets all whilst rolling out hundreds more trains. Sustaining the industry now to safeguard its long-term prosperity will be key. 

Standing in for Digital Railway boss David Waboso at a session during this year’s Railtex, David Clarke, the technical director of the RIA, argued that while sustainability and innovation are mainly about people and processes, transformative technology will be its true enabler. 

“My question is, how do we innovate to maintain the railway’s competitive edge?” he asked the audience. “Because you don’t innovate – or I’d suggest you shouldn’t innovate – for the sake of innovation. You’re innovating to improve your business. So, what are the challenges for introducing the next generation of complex, safety-critical technology into the railway? 

“If you’re thinking about digital railway, whichever country is successful in delivering the first ETCS level 2 or 3 mixed-traffic railway has got an exportable world-first. How do we make that happen in the UK?” 

Focusing on the output 

An effective way to approach this is to focus on the output specification – that is, what you’re trying to achieve, in terms of trains per hour, capacity, performance or customer satisfaction. If the solution to your problem is truly innovative, it will by definition not have been done before, meaning the usual market is off the table. 

“This is often the sticking point: how are we going to procure the solution? We tend, in the Western world, to procure on the basis of low risk – so that usually means proven technology – and very often, we’re procuring against detailed specification. Often, it’s all about lowest price,” explained Clarke. 

“All of those things can be appropriate if you want to buy yesterday’s output. But if you want something that’s truly transformational and is not already available on the market, those sorts of approaches are probably not appropriate.” 

A recent example of thinking in terms of output specification is the Thameslink programme: where “conventional wisdom” would’ve dictated that maximum capacity via the project’s central tunnel with usual signalling should have been capped at 16-18 trains per hour, the government understood that wouldn’t make its business case work – it needed 24 trains instead. 

“It hadn’t been done before, but it wasn’t inconceivable. Instead of going for a detailed input specification and proven technology, they structured the procurement around running 24 trains an hour and, hopefully, that’s exactly what we’ll see happening next year,” he said. 

While this line of thinking might sound radical, Thameslink is by no means a singular example. In fact, way back in the 1800s, railway engineers chose to focus on the output when building the Liverpool-Manchester line. “They said: ‘well, we know the conventional technology is either horses or rope haulage from steam engines, but we quite fancy the idea of these things they’ve been using on the mining railways called locomotives’,” the technical director reminisced. “They weren’t convinced it would work since it had never been done before, so they ran a competition – and the rest is history.” 

The industry has proven time and again that it is capable of transformation. In fact, as Clarke put it, “we potentially have a burning platform for innovation”. But can we truly be part of the transport revolution? 

Enter the innovative partnership procedure 

Many argue that current procurement laws can hamper, if not stifle, innovation – especially in the public sector. Often, innovative concepts are developed but collapse into the so-called ‘valley of death’: a conundrum whereby a lot of effort goes into research, perhaps even into building a prototype, but once it’s all said and done, funding is scarce and buyers aren’t interested. Unfortunately for suppliers, a lot of resource and effort needs to be injected over a period of time before determining whether a product is saleable – and thus many innovations die in the valley. 

ThinkstockPhotos-484096470

But a relatively new concept, which came into existence a couple of years ago under the EU Public Procurement Directive, could be just the fix the industry needs. While it has hardly ever been used in rail, it has immense potential. 

The innovative partnership procedure, part of what’s called a pre-commercial procurement arrangement for the public sector, allows organisations such as Network Rail, Digital Railway or TfL, for example, to team up with suppliers to develop pioneering solutions in order to achieve ambitious outputs. 

A historic example of this – back before the procedure was even legislated, in ye olde days of British Rail (BR) – took place in the 80s, when the industry recognised the need to upgrade expensive, time-consuming and all-around cumbersome relay interlockings. After running a small competition, BR picked two suppliers – GEC and Westinghouse – for a collaborative commercial arrangement to develop prototypes of Solid State Interlockings at its research centre in Derby. 

Benefits on both sides 

According to Clarke, modern days have seen an increasing emergence of collaborative R&D, with the European Shift2Rail initiative – which the Rail Supply Group hopes to mirror in the UK – a notable example of this. To ensure R&D solutions don’t disintegrate in the valley of death, the innovative partnership procedure can come to the rescue. 

“Public sector organisations are in a situation where they want to solve a tricky problem but there’s nobody on the market making what’s needed,” he said. “The competition here is not to find the product, but to find a partner to develop a product. What this does is combine the solution development and the purchase.” 

The Small Business Research Initiative (SBRI) is its predecessor of sorts, but under this new mechanism companies can buy as many of the final product as they’d like, have multiple partners or even develop several alternative products. 

In a sense, it’s similar to the existing Niteworks programme created by the Ministry of Defence, which brings together more than 170 organisations – including SMEs and academia – in an open and collaborative environment to provide effective decision-making and improve solutions across all areas of defence. The scheme has been so successful – with over 200 projects undertaken since 2013 – that Digital Railway has committed to learn from it. 

“The innovative partnership procedure allows for a phased development: you can go through stage gates, spend a little bit of money with quite a number of companies to do some feasibility studies, and then you could downselect to a small number, take it forward to some simulation, and downselect again. And you can stop this at any stage,” explained Clarke. 

“This is a win/win in my mind. For the client, it allows them to test the market and look at multiple solutions. It de-risks the development. You’re taking it through stages, so you can kill it off if it’s not working and you can modify it at each stage gate. Compare that to the alternative of trying to buy something that’s never been done before, where you run a competition, suppliers declare they can deliver it, you choose a single supplier, and the result is of high risk for both the supplier and the client. 

“This allows for requirements to be changed as your knowledge develops through the programme, as well as for good budget control. The fundamental point is that it’s solving what was previously an insuperable problem, something that’s never done before. 

“And for the supplier, it’s potentially a route into rail or into a new part of the rail market. It’s an opportunity to showcase what you can do; it’s helping co-develop your new product. Importantly, the IP [intellectual property] that’s developed remains with the supplier, so they can take that to market worldwide. 

“It’s a collaboration between client and supplier or suppliers: it solves the client’s problem and it gives the supplier a new product. What’s not to like about that?”

Image - © Rob Finney/Railtex

TELL US WHAT YOU THINK
opinion@railtechnologymagazine.com

Comments

Dr Tony Cash   18/07/2017 at 14:17

SMEs welcome flexibility in the supply chain. We are nimble, swift and versatile, not having the behemoth style intractable constraints of global conglomerates and multinationals. The response from large and small firms alike has to be "Get On! Collaborate..." Thank you.

Lutz   20/07/2017 at 16:57

Has the supply chain engaged with the potential impact of the GBP 6 Billion excess expenditure incurred in CP5 and restrictions on borrowing by NR in CP6 yet?

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