Can service innovations be procured? An analysis of impacts and challenges in the procurement of innovation in social services

This paper addresses the challenges that arise when service innovations are being promoted through public procurement. The academic and policy debate on public procurement of innovation has recently been very vivid, but it has mostly focused on procurement of technologies and tangible goods while considerably less attention has been paid to public procurement of innovation in services. By drawing on conceptual tools from the literature on service innovation and public procurement of innovation, the paper examines an empirical case of procurement of social services for substance abusers carried out by the city of Helsinki, Finland. In particular, the article analyzes whether the characteristics of services and service innovation are compatible with processes and requirements of public procurement. The article shows that service innovations can be procured, but the features of services and service innovation such as intangibility, interactivity, and difficulty to measure the impacts of new services affect the procurement process and set particular requirements for it.