Barriers to innovation through public procurement: A supplier perspective

Public procurement is increasingly viewed as having important potential to drive innovation. Despite this interest, numerous barriers prevent the public sector from acting as an intelligent and informed customer. This paper seeks to understand how barriers related to processes, competences, procedures and relationships in public procurement influence suppliers׳ ability to innovate and to reap the benefits of innovation. We address this by exploiting a dedicated survey of public sector suppliers in the UK, using a probit model to investigate the influence of structural, market and innovation determinants on suppliers׳ perception of these barriers.
The main barriers reported by suppliers refer to the lack of interaction with procuring organisations, the use of over-specified tenders as opposed to outcome based specifications, low competences of procurers and a poor management of risk during the procurement process. Such barriers are perceived most strongly by R&D intensive organisations. Our results also indicate that certain organisations, particularly smaller firms and not-forprofit organisations, encounter greater difficulties with innovation arising from the procurement process, for instance in relation to contract size, lack of useful feedback and communication of opportunities. Government procurement policies are queried in light of the findings.