How to Innovate in the Public Sector Without Changing Procurement Law

By Idoia Ortiz de Artiñano

Co-founder and CEO of Gobe

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Fecha de publicación
11/12/25
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How to Innovate in the Public Sector Without Changing Procurement Law

"Under this procurement law, it’s impossible to buy innovation." This phrase has become a mantra across public institutions. But our real-world experience tells a very different story.

At Gobe, we work every day with public administrations striving to adopt emerging technologies and better serve their citizens. Yet we encounter the same roadblock time and again: the deeply ingrained belief that current regulations make procuring innovation impossible. In practice, this mindset blocks opportunities, delays progress, and dampens institutional willingness to experiment.

However, working alongside government entities, technical teams, and startups has taught us one clear lesson: the current legal framework—for all its constraints—already permits far more innovation than most people realize.

Public procurement is not merely an administrative chore; it is a strategic lever. It dictates which technologies public bodies adopt, which companies gain market access, and which solutions ultimately impact citizens' lives. When treated as a rigid, bureaucratic formality, innovation is inevitably locked out. But when approached as a tool for design, exploration, and collaboration, procurement becomes a launchpad—a way to activate new workflows, open markets to emerging players, and foster experimentation without amending a single law. At its best, strategic procurement can create new markets, drive sustained innovation cycles, and strengthen the global competitiveness of European tech firms.

This perspective is especially timely as Europe debates a new Public Procurement Directive. Experience proves that changing a law on paper does not automatically transform how public funds are spent—especially within organizations bound by deep-seated inertia and decades of entrenched habits. This gap between legal intent and operational reality is particularly acute in technology acquisition, right as digitalization permeates every public service and administrative process. Without new internal capabilities, practical implementation mechanisms, and an innovation-driven culture, updated laws risk becoming missed opportunities—leaving administrations using analog-era procedures in an overwhelmingly digital world.

Beyond the legislative debates in Brussels, the real breakthrough lies in how existing rules are interpreted and applied today. Genuine procurement innovation does not depend on new legislation; it depends on an administration's ability to use its current toolkit with strategic intent: choosing the right procedures, writing open specifications, engaging directly with the market, and creating internal dynamics that encourage safe-to-fail experimentation.

When day-to-day practices shift, the procurement system becomes an engine for modernization. That transformation can start today—without waiting for a new EU Directive.

Here are three practical, battle-tested pathways operating successfully within the current legal framework that can accelerate tech adoption in the public sector.

1. Using an Old Tool in a New Way: The Design & Idea Competition

The first pathway repurposes a traditional procurement mechanism—historically reserved for architecture and urban planning—and applies it to tech challenges.

Under Spain’s Public Sector Contracts Law (LCSP), the Project and Idea Competition (Concurso de Proyectos e Ideas) allows an administration to define a public problem clearly and contextually, focusing on outcomes rather than prescribing technical or functional specs ex ante.

Furthermore, it requires proposals to be submitted anonymously, leveling the playing field between specialized startups and established incumbents. And perhaps most importantly, price is not a factor in the initial evaluation. Assessment relies strictly on qualitative criteria, reducing the risk of a cheaper, outdated option pushing out a more innovative solution.

The value of this approach is twofold. On one hand, it gives tech companies—including highly specialized startups—the freedom to propose solutions without the constraints of overly technical or closed tender specifications. On the other, it allows the administration to award prizes to one or several winning proposals and subsequently launch a negotiated procedure without prior publication with those winners.

This model has been applied in various ways. One common approach helps overcome the usual €15,000 threshold of a quick pilot: multiple winning proposals are selected, followed by a negotiated procedure among them to award the proof of concept. This was the approach used, for example, in the competitions held under the TwIN project in Navarre, where innovative digital twin solutions were piloted.

In other cases, the prize itself is a fully funded pilot, giving the company the chance to deploy its solution in a live environment and refine its value proposition for future public-sector clients. At the same time, the administration can evaluate the utility, feasibility, and scalability of the innovation before committing to a larger contract. This is the approach used by initiatives like Las Naves in Valencia or the Basque Government's public enterprise Parke, where the competition has served as a transparent, effective bridge between an idea and its practical implementation.

2. Include innovation clauses within large contracts

The second pathway involves taking advantage of something that already exists in the law. Article 202 of the LCSP requires every contract to include at least one special performance condition related to social, environmental, or innovation goals. This opens the door to introducing requirements linked to experimentation, collaboration, and continuous improvement within contracts that are already routinely tendered. In other words, there is no need to launch new or dedicated procedures to innovate; it is enough to include clear obligations within broader contracts.

A very practical example: requiring the contractor, during the execution of the contract, to carry out open innovation processes to identify niche tech providers, run technological pilots, collaborate with startups, or integrate new functionalities based on emerging technologies—always within the scope of the contract.

This approach offers two key advantages. First, it significantly reduces the administrative burden by avoiding a new procedure for every experiment. Second, it turns contracts into levers for continuous innovation. Instead of maintaining a static service for years, the provider is forced to stay connected to the tech ecosystem and evolve alongside it.

In this way, major public contracts can be transformed into engines for experimentation and scaling, rather than barriers to entry. An interesting example setting this trend is a tender from the Las Rozas City Council led by its Department of the Environment, or the Madrid City Council’s tender on smart urban spaces.

3. Leveraging Hyperscaler Framework Agreements to Procure Niche SaaS

The third pathway is probably one of the fastest and most efficient: leveraging the framework agreements that many administrations already have in place with major cloud providers. These frameworks—originally designed to acquire cloud services from so-called hyperscalers—can also be used to buy SaaS solutions from smaller companies that deploy their technology on those very same clouds.

In practice, this means that if a startup offers a SaaS solution built on AWS, Azure, or Google Cloud, the administration can acquire it using the existing framework agreement, without needing to launch an entirely new procurement process.

The advantage is immense: it increases speed, reduces legal risk, and, above all, avoids locking out niche companies, which are usually the ones delivering the most innovative solutions. The law isn't being forced to open a new path; it simply uses a door that is already open. And that allows for much more immediate tech adoption. We have found a prime example of this in the Community of Madrid.

And What Role Should Europe Play?

Meanwhile, the European Commission is working on a new regulation for tech procurement. It is important, yes, but it is worth remembering one thing: a new regulation, on its own, will not transform the system. Real change will depend on how we use the tools we already have and what capabilities administrations develop to apply the law strategically.

That is why the key question is not whether we need a new law, but what we need from Europe to truly transform how we buy technology. More flexibility? More standardization? More mechanisms to experiment without fear of making mistakes? More guidance on integrating innovation into routine procedures?

These are the discussions we need to open up. And the sooner we address them, the sooner we can build a public sector capable of experimenting, learning, and evolving at the pace of technological innovation.

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