Northern Connections

Innovative public procurement – the potential and the challenges

24 October 2019 - Published by Anne Katrine Arentsen
Do you sometimes wish for other solutions on the market? Do you wish to adjust or customize the solutions to your needs within public buildings, public transport or heating? Innovative procurement or public private innovation partnerships could be the answer – and can play a key role, when cities or regions wish to push innovation, push the green transition. With large procurement budgets, cities and regions can make difference.

The potential of using innovative public procurement in large scale was discussed by the Danish partners during a training seminar this year. The training seminar brought the Danish partners together to learn and exchange experiences on the use of public private innovation partnerships and innovative procurement – and to discuss, how we can use it to push innovation.

Why all the fuss about innovative public procurement? Because cities and regions procure for millions of Euro each year and by using public private innovation partnerships as a procurement method, we can bring purchase and development into one procurement. The legal basis is there, so we need to dare change our traditional way of procurement and not ask what product we need but what challenge we have.

At the regional level, the largest region in Belgium, the Flemish region, has an advanced policy and legal framework for innovation procurement. Its Government adopted a structured and comprehensive program - Programme for Innovation Procurement (PIP) - to finance innovation procurement, support local authorities and rise competences. With the Programme, the Government of Flanders aims to use its substantial purchasing power strategically as a catalyst for innovation.

Flanders spends more than 30 to 40 billion annually on public procurement. This represents an important economic potential. The aim is to convince every Flemish policy maker, public manager and purchaser in the broader public sector of the added value of innovation procurement. It is PIP’s goal to make innovation procurement a structural tool for optimising the functioning of the public sector and its services, and for achieving forward-looking policy objectives

Thanks to this program, all Flemish government and public sector organizations that fall under the Belgian Public Procurement Act can contact PIP for information, advice, guidance and co-financing for innovative purchasing projects.” Says Stef Denayer, Business Developer at Cleantech Flanders and a partner in the Northern Connections project.

The different kinds of PPIPs and their potential is an very important learning. The application of explorative cooperation is fairly common and widely used for co-development of prototypes, test and adaptation. However, with no formal buyer-seller relation, the potential for pushing larger scale innovation is minimal. To push larger scale innovation, innovation procurement is a way to go – but rarely applied. Innovative procurement is public-private cooperation on a solution of a specific problem with intention of purchase at end.

A process and the full potential of innovative procurement
It is a process, where the challenge for the public actor is to identify the need and not a product to buy. Through market dialogue via for example Living Labs, innovation challenge competitions, the market is searched for potential solutions and after that an agreement is made with one or more companies to adjust and develop a solution. The public actor has an option to buy one or more of the products.

Northern Connections have provided cities and regions the possibility to see the potentials of Living Labs and acknowledging that cities and regions can have a role as drivers of innovation through Living Labs. But our Living Labs is only one step towards full scale application of innovative procurement to push innovation.

During the training seminar, we learned that the opportunities are plenty in the existing legal framework, it is primarily a matter of daring to use the opportunities and getting the knowledge out in our organizations”, says Christina Christina Folmand Knudsen, International Coordinator at Aalborg Municipality and WP1 lead for the Project Management on Northern Connections.

To use innovative procurement to the full potential we need to raise the knowledge level of PPIP, we need to change the tender/procurement habits of public organizations, but first, we need to get started. We need to take the first steps, trying to identify challenges and needs, and set visions for where we want to go. One way of approaching this is the Oslo Climate Budget.  

Northern Connections has been a steppingstone. It has helped the partners work with Living Labs as one way to identify challenges and search for solutions. This is the first of many steps towards larger scale innovation procurement.