Israel is using a new procurement approach to buy tech from startups and smaller businesses, the Chief Technology Officer of Digital Israel has told GovInsider.
“We are trying to switch to what we refer as challenge-style tenders,” Dror Margalit said.
Rather than tendering for a pre-defined solution, Israel is asking startups to submit ideas in how to solve specific problems. “We say, ‘Okay, let’s go one step back’. We have a problem, now let’s tender a challenge to address the problem. Let’s not define a solution,” Margalit said.
Shortlisted startups will then pitch their solutions to the government. These solutions will be selected for trials which, if proven successful, will lead to wider implementation of their technologies.
“I think this is the way to inject innovative and creative solutions even from startups, and not just from the traditional big companies, into the government,” Margalit explained.
Startups are willing to take risks that governments are not, and therefore, come up with more innovative solutions, Margalit believes. “If you are in a startup, you maximise risk. You want to change the world,” he said. With a challenge tender, “there’s a chance that you will get the best ideas from within the market,” he said.
These government trials could help startups to gain the confidence of investors, he added. “They will be able to raise money from the venture capitalists because their solution is being tested by the government.”
Israel’s Ministry of Health is already using this approach for certain tenders. Pilots and proof-of-concepts of shortlisted solutions will be fully funded by the ministry, according to its website.
The administrative and legal barriers have been “softened” for challenge tenders, the ministry adds, to encourage applications from companies that are “not accustomed” to government tendering processes.
The ministry has three active challenge tenders online at the moment: how to tackle overcrowding in emergency rooms and internal medicine departments; how to cope with obesity; and how to handle medical errors resulting from patient misidentification, according to the website.