Report on functional specifications for achieving innovations by means of public procurement

As reported here before, Charles is chairing an EU project (A Mutual Learning Exercise MLE) on innovation related public procurement. The first report in this initiative has now emerged and will soon be formally published by the European Commission. It is written by Charles Edquist and has the title “Developing Strategic Frameworks for Innovation Related Public Procurement”.

This report addresses frameworks for innovation related public procurement. It focuses on four specific kinds of procurement, namely (1) direct innovation procurement, (2) catalytic innovation procurement, (3) functional regular procurement, and (4) Pre-Commercial Procurement (PCP). (1) – (3) are also called Innovation-Enhancing Procurement (IEP).

MLE Report

The report empahasizes  the importance of functional procurement and functional specifications for innovation. Functional procurement can be defined as the procurement of products by an authority/unit that describes a function to be performed (or a problem to be solved) instead of describing the product that is to perform the function. In functional procurement, a public agency specifies what is to be achieved rather than how it is to be achieved. Functional regular procurement is pursued by means of functional specifications instead of product specifications. Hence, it is a matter of the manner in which a procurement call is set up and the tender documentation is formulated. Needs are translated into functions to which potential suppliers can respond. It opens up for innovation but does not require it. The general conclusion is that functional specification is needed for all the four different kinds of procurement addressed in this MLE. To achieve innovation through public procurement it is, somewhat paradoxically, more important to emphasize functional specification than to pursue innovation procurement.

In the 2014 EU Procurement Directives it is stated that “Functional and performance-related requirements are also appropriate means to favour innovation in public procurement and should be used as widely as possible.” Sweden is the only country where the government has developed – in 2016 – a national strategy for public procurement where innovation procurement – actually meaning functional procurement – is central. This strategy is described in some detail in the report.

The final version in terms of content can be downloaded here.