Article / General / Working Paper

Functional Public Procurement and Innovation – the Concept

The literature on the relations between public procurement and innovation has been growing rapidly during the latest couple of decades. However, there are still conceptual problems and unclarities with regard to key concepts. The purpose of this conceptual paper is to sort out and specify the notions of “innovation”, “public procurement”, “product procurement”, “functional procurement” and “innovation partnerships” – as well as the relations between them.

Some findings in this paper are:

  • The distinction between product specifications and functional specifications is a useful dichotomy when discussions of the relations between public procurement and innovation are pursued and when public procurement is carried out in practice. It can be instrumental in transforming procurement that prevents innovations into procurement that enhances innovations. The development of this dichotomy means that we have changed the conceptual framework needed to understand and explain the relationships between (different kinds of) public procurement on one hand and innovation on the other hand.
  • Functional procurement is not only allowed by the EU procurement directives. It is strongly encouraged “and should be used as widely as possible”, according to the EU directives.
  • “Innovation partnership” is a new procedure in the EU procurement directives. It is intended to also address R&D results and innovations as outcomes of public procurement processes. However, this procedure has not been used very much. One reason is that the directive needs a much higher specificity to become operatively useful. This procedure should also be related to functional public procurement.