Innovative public procurements

Who can apply?

Funding is targeted at public procurement units that aim to renew their services and operations.

What do we fund?

The Finnish public sector spends some €27 billion on procurement. By harnessing innovation, the public sector can provide citizens with better services at lower cost. Responding to challenges requires an open-minded search for solutions and operating practices. More innovations should be demanded from service and product providers. With the help of cutting-edge innovations, the public sector can overcome the demands it will face in the coming decades. In the best-case scenario, the public sector can create whole new markets.

When?

The target group consists of procurement units with:

• An opportunity and need for long-term development of services and operations.
• The ability and the resources to conduct innovative procurement.
• The willingness and strategic commitment to thoroughly reinvent their procurements.

What can the funding be used for?

Goals

The promotion of innovations in public procurements requires that those procurements are specified, in cooperation between providers and end users, in order to create a need for the markets to develop new solutions. This could mean setting goals that are challenging or creating new kinds of parameters for procurements. The goal is to create added value, for example, by:

• Having lower life cycle costs
• Offering better quality
• Employing innovative and more efficient production processes
• Environmental friendliness

Three types of procurement

1 Purchase of a new product or service

If a product or service that satisfies the requirements of the procurement unit cannot be found in the markets, the procurement should clearly improve the existing solutions, or lead to the development of a brand new or improved version. For example, stricter environmental demands may require innovations. The procurement focuses on the purchase of a product or service that is to be developed.

2 Pre-commercial procurement

If the market does not offer a product or a service that would satisfy the requirements of the sought procurement, and the demand at that time is too meagre to motivate companies to carry out development at their own risk, the public authority can resort to competitive tendering for the research and development work.

Also, in pre-commercial procurements, the aim is that more demand is created for the product or service being developed. For companies, procurements can offer a development environment and close cooperation with top users, which will help in finding access to the markets. Pre-commercial procurement focuses on purchasing research and development.

3 Catalyst procurement

There may be demand for a new solution that is under development in the prototyping phase. But a lack of trust concerning the performance or operation of the solution may act as a bottleneck in accessing the markets. In this case, a public authority can act as a top user and offer a test environment for the completion, operational testing and verification of performance for the new solution.

Catalyst procurements reduce companies' risks on the market and speed up market access. Unlike pre-commercial procurements, catalyst procurement mainly targets a nearly new product or service.

Funding levels

Procurement size and cooperation

The procurement size must be large enough to boost the sector in question, at least on a regional scale. The planning and preparation of innovative public procurements must include cooperation with potential providers and end users.

The amount of Business Finland funding

Business Finland typically grants funding for 50% of the project's total costs. We pay the funding retrospectively, based on the recipient's project report and cost statements.