The discussion paper by Jon Mikel Zabala-Iturriagagoitia and me has now been accepted for publication in Science and Public Policy.
Public procurement accounts for a very large share of most economies worldwide. It represents more than 15% of global GDP, which is many times larger than the world expenditures on research and development. Besides its direct purchasing power, public procurement has an enormous potential to become one of the most important mission-oriented policy instruments in the context of the Sustainable Development Goals.
This conceptual paper argues that the key to achieving more innovations when pursuing public procurement is to describe problems to be solved or functions to be fulfilled (functional procurement) instead of describing the products to be bought (product procurement). We contend that if products can be described in the procurement documents, it is because they exist, and hence, they cannot be regarded as innovations. It is therefore not accurate to talk about ‘innovation procurement’, in the sense that non-existing products are described and demanded. It is simply not possible to describe ex ante something that does not exist. Accordingly, the only way to achieve an innovation by means of procurement is by describing the functions it is to fulfill or the problems it is to solve. For public procurement to become an effective policy instrument supporting innovation, product procurement should thus be transformed into functional procurement. The text of the published version can be found here.