The impact of public procurement of innovation

Policy makers at all policy levels have in recent years shown an increased interest in the use of public procurement to harness innovation. The aim of this chapter is to review the upsurge of initiatives to support public procurement of innovation and to offer insights into the effectiveness of these policies. To do so, it proposes a delineation of these policies, including their academic rationales for intervention and the types of instruments used. The chapter further considers the specific conceptual and methodological issues characterising the assessment of such policies. It examines a variety of measures to facilitate the promotion of innovation through public procurement, ranging from legislative measures to financial incentives, targets, information provision and mechanisms to secure dialogue between users and producers. They range from more formal interventions, to umbrella programmes and strategies, to concrete instruments. Evidence of impact is fragmented. The effectiveness of certain instruments such as procurement plans in national ministries has been hampered by a lack of key performance indicators and a clear commitment and sanction mechanisms. More promising have been initiatives to support training and networking to support capability building in the public sector. Instruments to support the joint definition of needs and solutions, such as the competitive dialogue and the Lead Market Initiative of the European Commission, have been found to be conceptually sound and to be able to deliver, but have often been applied inappropriately. Finally, instruments seeking to deal with the risks associated with procuring innovations, such as forward commitment procurement (UK) and a Korean insurance programme, have had positive impact. But, for most of the measures for which some evidence exists, the main problem is not the basic concept, but the lack of rigorous implementation and assessment.