Innovative public procurement 

Continuous call – Applications are processed continuously.

Funding from Innovation Funding Agency Business Finland (hereinafter referred to as the Funding Agency) is intended for procurements in which the public sector is modernising its services and operations, while at the same time accelerating market development and the emergence of new expertise and solutions. Its aim is for public entities to use procurement as an active tool for developing and piloting new solutions in real-world operating environments.

The total annual volume of public sector procurement in Finland is approximately EUR 47 billion, and there is significant potential for procurement that opens up markets and focuses on new solutions. Innovative procurement aimed at finding new solutions can also produce higher-quality, more effective and more user-centred public services, reduce life-cycle costs and promote areas such as the circular economy and digitalisation. At the same time, this creates demand for new solutions and provides companies with valuable customer references.

The funding is granted in accordance with the Act on Discretionary Government Grants (688/2001), and internal funding within the central government’s on-budget finances is governed by state budget regulations.

Funded projects typically have a duration of 2–4 years.

The amount of funding to be granted is set in the Government’s annual budget.

The applicant must be a contracting entity in accordance with the Public Procurement Act (1397/2016) or the Act on Public Procurement in the Utilities Sectors (1398/2016), such as a local authority, a government agency or another publicly owned entity subject to the Public Procurement Act.

Funding is provided in the form of a grant. The grant may not exceed 50% of the project’s eligible costs. 

The funding may be used for preparing procurements, carrying out competitive tendering, developing new solutions and conducting pilot projects. At least 80 per cent of the project’s costs must be attributable to research and development work. The funding is not restricted to any particular procurement procedure.

The project must have between two and five concrete and partially measurable objectives, which are to be set out in the funding decision and monitored for achievement. The objectives must relate to the project’s concrete outcomes. Examples of project objectives:

• developing and piloting a new product or service
• improving the quality, effectiveness or user experience of a service
• the opening of new markets
• successful market dialogue
• strengthening partner networks
• developing the organisation’s procurement expertise
• strengthening innovative procurement management

Eligible costs are defined in the standard terms and conditions for development projects carried out by public sector entities. 

Project costs can be approved no earlier than the date on which the Funding Agency has received all the information required for an application that meets the requirements, including the project plan.

The applicant must be a contracting entity in accordance with the Public Procurement Act (1397/2016) or the Act on Public Procurement in the Utilities Sectors (1398/2016), such as a local authority, a government agency or another publicly owned entity subject to the Public Procurement Act.

General barriers to granting and payment of funding: Barriers to funding

Funding is competitive and discretionary. In addition to the overall evaluation, applications will be evaluated according to the following criteria, provided there are no obstacles to granting funding as mentioned in the preceding paragraph:

• The novelty value and scalability of the solution being procured. The solution being procured offers significant novelty value compared with the alternatives available on the market and can be scaled to meet the needs of more than one purchasing entity.
• The procurement’s impact on opening up markets and developing the sector. The impact on the development of the sector is at least of national significance.
• The impact and benefits of the solution. The solution has clear potential to improve aspects such as service quality, user or customer experience, or productivity.
• Cooperation in preparing the procurement. Close cooperation with tenderers (e.g. market dialogue) and, where appropriate, with end users, other contracting entities and partner networks.
• The organisation’s motivation, capability and resources for carrying out innovative procurement, as well as its commitment to modernising its procurements.

The standard terms and conditions for public sector development projects (pdf)