Due to the declining economy public sector has pressure to provide services that are more efficient and more cost-effective than the current ones. Since many of the public services have been outsourced purchasers need to procure services that not yet exist or favor those having innovative characteristics (Georghiou et al 2009). In addition, in recent years EU policies have emphasized the important role of public procurement in alleviating the financial challenges by stimulating innovations (COM 2011). Procurement practices and policy measures that are said to trigger innovations are e.g. intelligent procurement practices, such as the outcome specification, the full life-cycle costing and sustainability criteria in contracts (Edler et al. 2011; Georghiou et al. 2009).

Due to the complex nature of health and social services related to e.g. the asymmetry of information, uncertainty (Arrow 1963) and fragmented supplier networks (Teperi et al. 2009) we wanted to explore whether it is possible and plausible to apply innovation supportive practices in public health and social service procurement and what challenges purchasers face if applying them. For this study, 18 public sector representatives conducting public procurements were interviewed.

According to results, the purchasers would have wanted to give providers room to be innovative as they recognized several problems in defining detailed service production criteria in tenders. However, they found it even more problematic to define indicators to measure the outcome of the intelligent procurement practices. One of the reasons was the challenges in defining effectiveness based measures. This was due to the complicated health and social service process where providers have no influence on all the resources that are partly related to the outcome, for instance. Because of these challenges purchasers ended up measuring process performance extensively instead of applying innovations supportive procurement practices and measuring the effectiveness of the outcome.