Public procurement plays a huge role in delivering not only good value for (taxpayers’) money, but also social value, economic growth and better services for communities.
With the introduction of the Procurement Act 2023, UK public sector organisations now have a significant opportunity to rethink how you buy, moving away from some of the more traditional, rigid, compliance-led approaches toward more flexible, outcome-driven procurement that actively encourages innovation.
This shift represents a pivotal moment. Framework providers, contracting authorities and suppliers can all play a central role in unlocking new solutions and processes, engaging a broader market and delivering improved outcomes for the general public.
This guide explores why innovation matters in public procurement and outlines four practical ways procurement teams can integrate innovation into their processes.
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Why innovation is so important in public procurement
The public sector is understandably sometimes hesitant to take risks in procurement; this is public money we’re talking about after all. The reality is that innovation isn’t about paying lip service to emerging technologies in procurement, it’s actually about creating better ways to solve public challenges, deliver services more efficiently and respond to rapidly changing needs.
The benefits of embedding innovation into procurement include:
Better public outcomes. Innovative solutions can improve service quality, accessibility, and user experience, whether in housing, healthcare, infrastructure, digital services or social care.
Improved value for money. New approaches often deliver efficiencies over the long term, reducing operational costs while improving performance.
Economic growth and resilience. By opening opportunities to new suppliers, particularly SMEs and start-ups, public procurement can stimulate local economies and support emerging industries.
Faster response to change. Innovative procurement processes allow organisations to adapt quickly to evolving policy priorities, technological advancements and societal needs.
Risk reduction through diversification. Engaging a broader supplier base reduces over-reliance on a small number of large contractors, helping to strengthen the supply chain.
The Procurement Act 2023 recognises these benefits. The new legislation, which rolled out from February 2025, aims to simplify the regulatory landscape, increase transparency and give contracting authorities greater flexibility to design procurement processes that deliver the best outcomes, not just the lowest upfront cost.
Use the new flexibility to design outcome-focused procurement processes
One of the most transformative aspects of the new regulations is the flexibility now available. Procurement teams are no longer confined to highly prescriptive procedures. Instead, you can design processes that suit the nature of your requirement and the market.
This flexibility enables teams to:
Focus on outcomes rather than detailed specifications
Engage the market earlier to understand available solutions
Use phased or iterative approaches
Incorporate dialogue and negotiation where appropriate
Rather than asking suppliers to deliver a predetermined solution, contracting authorities can describe the problem they need to solve and invite innovative proposals.
How frameworks support this approach
Framework agreements have already been around for some time, and will continue to be a crucial tool, but under the new regime they can be more tailored and dynamic. Bespoke frameworks can be designed around specific sectors, technologies, or policy priorities, allowing buyers to access pre-qualified suppliers that are well positioned to deliver innovative solutions.
For procurement teams, this means:
Choosing frameworks that allow flexibility in call-off processes
Ensuring supplier evaluation criteria reward innovation and quality
Using multi-supplier frameworks to maintain competition when appropriate
Considering utilising dynamic markets for relevant projects, where suppliers can join at any point over time
As specialist procurement solutions providers, we can support innovation by curating supplier pools that include both established providers and emerging innovators, giving public procurement teams the best of both worlds.
Remove barriers and open opportunities for SMEs
SMEs are often the source of many of the most innovative ideas, yet historically they have faced significant barriers to entering public sector markets, including complex processes, high administrative burdens and disproportionate requirements.
The Procurement Act 2023 introduced measures designed to make procurement more accessible to SMEs, such as:
Simplified procedures
Greater transparency of opportunities
Reduced duplication of information
More proportionate selection criteria
By lowering these barriers, the Act helps to encourage broader participation and increase the diversity of the supplier base.
Why SME participation drives innovation
SMEs tend to be:
More agile and responsive than many large suppliers
Specialists in niche areas
Willing to challenge conventional approaches
Focused on emerging technologies or methodologies
A more open market leads to fresh thinking, competitive tension and new solutions that might not emerge from established suppliers alone.
Practical steps to engage SMEs
Procurement teams can actively encourage SME participation by:
Breaking large contracts into lots where appropriate
Using pre-market engagement to raise awareness
Setting proportionate financial thresholds
Simplifying documentation requirements
Offering clear guidance and support
Frameworks and other procurement solutions also play a vital role by creating SME-friendly routes to market and reducing the administrative burden of bidding repeatedly.
Find out more about how to boost SME procurement involvement.
Use collaboration to help innovations to break through
Innovation cannot be achieved by procurement teams working in isolation. It requires collaboration across departments, leadership support and engagement with suppliers and end users.
The Procurement Act 2023 emphasises transparency and planning, encouraging organisations to think strategically about procurement pipelines and stakeholder engagement.
Internal collaboration
Procurement teams should work closely with:
Service managers and commissioners
Finance and legal teams
Digital and transformation leaders
Policy teams
Early collaboration ensures that procurement strategies align with organisational priorities and that innovative options are considered before requirements become fixed.
Supplier collaboration
Engaging suppliers early, within the boundaries of fairness and transparency, enables contracting authorities to better understand what the market can offer. Techniques such as market engagement events, supplier days and even soft market testing can surface new ideas and identify potential risks in the planning stages.
Cross-sector collaboration
Public sector organisations often face similar challenges, even when operating in very different areas of public service. Sharing experiences, lessons learned and successful approaches can accelerate innovation across the sector. Along similar lines, working with a public procurement support specialist with significant experience across multiple projects can make a tangible difference to your planning and project outcomes.
Find out more about how collaborative procurement works.
Embed innovation into strategy, governance, and culture
For innovation to be sustainable, it must be built into procurement strategies and organisational culture, rather than being treated as a one-off initiative.
Strategic planning
The Procurement Act 2023 encourages forward planning and transparency, including the publication of procurement pipelines. This creates an opportunity to:
Identify areas where innovation could deliver the greatest impact
Engage the market early
Align procurement activity with long-term objectives
Evaluation and incentives
Procurement processes should reward innovation explicitly. This may involve:
Including innovation as an evaluation criterion
Assessing whole-life value rather than just upfront cost
Considering social value and sustainability
Allowing suppliers to propose alternative solutions
Using specific innovation metrics in your project KPIs
Skills and capability
Procurement teams need the skills and confidence to manage flexible processes. Investment in training and knowledge sharing will be essential to help drive processes that encourage innovation.
Areas for development may include:
Commercial negotiation
Market engagement techniques
Outcome-based commissioning
Governance and risk management
Innovation inevitably involves some level of risk. Governance frameworks should enable informed risk-taking rather than defaulting to the safest option.
Clear approval processes, transparent decision-making, and strong contract management can help organisations innovate responsibly.
Making the most of innovation opportunities with emerging procurement technologies
While the new regulations have helped to create a more flexible environment for public procurement, tools and technology are one way that will help procurement teams to make the most of these opportunities for greater innovation.
Emerging procurement technologies can help to streamline processes, improve decision-making, enhance transparency and open the market to a wider range of suppliers. For organisations using procurement frameworks and other solutions, these tools can significantly strengthen the ability to deliver innovative outcomes.
Using data analytics and market intelligence
Data-driven decision-making is becoming more important in innovative procurement, as it builds on past performance and current market conditions to help teams better understand areas like cost patterns, supplier performance and predicting upcoming trends. The insights gained can help procurement teams:
Identify opportunities for aggregation or collaboration
Detect risks earlier
Benchmark costs and outcomes
Assess the likely impact of procurement strategies in the early stages
Utilising digital collaboration and engagement tools
Innovation thrives on communication. Digital collaboration tools enable procurement teams to engage more effectively with stakeholders and suppliers throughout the procurement process.
Examples include:
Virtual supplier engagement events
Online market consultations
Collaborative specification development
Feedback platforms for end users
These tools support the collaborative approach encouraged by the Procurement Act 2023, making it easier to gather diverse perspectives and refine requirements.
The combination of technology’s capability, alongside a procurement strategy that encourages innovation at all levels, can help your team to run projects that deliver quantifiably better outcomes and make a tangible difference to communities.