Integrating cleantech into innovative public procurement process – evidence and success factors

Date05 November 2018
Published date05 November 2018
DOIhttps://doi.org/10.1108/JOPP-11-2018-020
Pages336-354
AuthorKatriina Alhola,Ari Nissinen
Subject MatterPublic policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue
Integrating cleantech into
innovative public procurement
process evidence and
success factors
Katriina Alhola and Ari Nissinen
Finnish Environment Institute, Helsinki, Finland
Abstract
Purpose The purpose of this study is to promote clean technology development and diffusion through
public procurement. Finlandis ranked high among the countries that develop clean technology innovations.
Innovative public procurementcould be one means to boost the diffusion of such technologies. However, this
potential is still somewhat unexploited, as innovative public procurement is an unsystematic method of
procuring in Finland and the EU, partly because of an inability to understand innovation potential in the
market and to implementinnovative procurement.
Design/methodology/approach In this paper, the authors illustrate how cleantech aspects can be
integratedinto the public procurement process. The authors study the key success factorsand conditions that
have led to a successful cleantechprocurement process by exploring realized cases of innovativepublic clean
technologyprocurement.
Findings The results suggest that innovative public procurement, in which clean technology is an
integrated part,may occur in different forms, from a procurement of a highlyimproved product or solution to
a product-servicesystem or a collaborative symbiosis system. Life cycle consideration,strategic commitment
and recognition of needs of the procuring unit were prioritized as the most important factors leading to
successfulintegration of cleantech aspects into procurementprocess.
Keywords Innovation, Public procurement, Procurement process, Cleantech, Procurement strategy
Paper type Research paper
Introduction
Public procurement can be an important demand-side innovation policy instrument to
stimulate novel and innovativeproducts, services, technologies and solutions (Edquist et al.,
2015;Edler and Georghiou, 2007). It can provide a platform and market for new innovative
solutions by ensuring a sufcient criticalmass of consumers, which in turn could encourage
private enterprises to invest in product development(Edquist et al., 2015;Uyarra, 2013). In
addition, public investments may pave the way for the innovationdiffusion from the public
to the private sector by developing the infrastructure that is needed for private markets
(Mazzucato, 2015;Uyarra et al., 2014;Edler and Georghiou, 2007). Generally, innovative
public procurementaims at a more improved and resource-efcient functioning of the public
sector while creating market referencesand providing opportunities for small- and medium-
sized companies to takethe international market leadership (TEM, 2012).
The annual volume of public procurement, beingon the average 14 per cent of the gross
domenstic product (GDP) in the EU and around 35 billion euros in Finland (European
The authors acknowledge Tekes for funding the main part of this research project. The authors also
extend our thanks to the procuring units and interviewees of the cases.
JOPP
18,4
336
Journalof Public Procurement
Vol.18 No. 4, 2018
pp. 336-354
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-11-2018-020
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1535-0118.htm
Commission, 2015a) offersan enormous potential to drive innovations whilealso addressing
the environmental objectives in the elds of renewable energy, resource efciency and
circular economy (European Commission, 2014; European Union, 2014; European
Commission, 2010;European Commission, 2015b). The Finnish government has set an
objective of 5 per cent of the public expenditure to be targeted to innovative procurement
(Finnish GovernmentProgram, 2015). Special attention has been paid to the rapidlygrowing
clean technology (cleantech)sector as Finland has been ranked second among the countries
where cleantech companies are most likely to emerge over the next 10 years (Parad et al.,
2014).
Cleantech refers to products,services and processes of any sector that reduce the harmful
environmental effects ofproduction and consumption on the life cycle basis more than their
alternatives while being competitive on price (Vanhanen et al., 2012;Pernick and Wilder,
2007;OECD, 2005a; Makower, 2001; Lovio, 2013). Cleantech is a subcategory of
(environmental) technology, aiming at process changes that prevent and reduce pollution
and waste (Montalvo and Kemp, 2008). Cleantech solutions represent innovative or novel
technology and improve the economic value, productivity and resource efciency (Stack
et al., 2007;Jalkala et al.,2014). Examples of such solutions include renewable energy
production technologies and smart grids, waste and wastewater management solutions,
alternative fuels and drive technology and sustainable construction and materials (DCTI,
2012).
Despite the 5 per cent governmental target setting, the term innovative procurement has
not been dened in more specic in the governmental program. In public discussion,
innovative public procurement receives different emphasis regarding the denition of the
subject matter, procurement process and/or the degree of solution development during the
contract period (Valovirta et al., 2016).Generally, when public organizations express a need
that cannot be adequately met by any existing product or service, they trigger the
generation of an innovation (Edler and Yeow, 2016) whichmay eventually emerge from an
entirely different area of business(Nissinen, 2013) and require extensive interaction between
different stakeholders (Länsimies, 2014). Common for such complex contracts is the
presence of risk associated for example with the type of service being contracted, contract
partner and the market context of the contract (Brown and Potoski, 2003). Thus, rules that
allow parties to incentivize cooperative behavior increase the chancesof a winning outcome
(Brown et al.,2016).
Academic literature recognizes a variety of terms that describe the procurement of
innovative products, services and solutions. Public technology procurement and innovative
technology procurement (Edquist et al., 2000) emphasize the technological focus of the
innovation which allows public sector customers to benet from the cutting-edge
technologies and processes(Semple, 2015). Innovation-oriented public procurement(Rothwell
and Zegveld, 1981), innovativepublic procurement (Edler and Georghiou, 2007) and strategic
public procurement pay attention to the strategic nature of innovative procurement (Edler,
2010;Rolfstam, 2012) and the type and phase of innovation (Edquistet al.,2000;Edler et al.,
2005, Hommen et al., 2009). Whereas general procurement includes innovation as an
additional criterionin tenders, in strategic procurement, innovation is an explicitgoal (Edler,
2013). In addition, innovation-friendly procurement is carried out in such a way that public
buyer asks for a solution to a specic problem rather than species the concreteproduct or
service (Edquistet al.,2015;Valovirta, 2013).
Despite the denitions and increasing interest towards innovative procurement,
agreement for what shouldor should not be considered, as innovative in public procurement
in terms of novelty is still under debate in Finland (Valovirta et al.,2016). In our study, we
Integrating
cleantech
337

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