A study from the Danish Chamber of Commerce shows that one of the biggest reasons why entrepreneurs do not bid in public tenders is because it requires too many resources (Dansk Erhverv 2018). When public procurement is specified with precise solutions and details in the tender, it hampers the opportunity for new thinking in public procurement. A report from the Danish business authority examines challenges and opportunities for innovation procurement in the public sector (Erhvervsstyrelsen 2019a). The report points towards four barriers: 

Lack of incentives and clear cooperation frames: The public sector lacks a clear strategic and operational objective for innovative procurement, most likely because it is difficult to evaluate and measure both the prevalence and the results/effects of the innovative purchases. Another issue is the lack of clarity of the societal value across the cooperation levels along with the requirements to select the least expensive options when using public expenditures. Furthermore, the long timespan from economic investment to seeing the social gains makes it risky for actors to procure from impact start-ups.  

The innovative procurement processes with impact start-up companies may require more resources and more time, and the derived gains in the form of better welfare solutions can be difficult to estimate. Upfront costs needed to establish new partnerships with impact start-ups often overpower (and are easier to estimate than) the potential long-term savings; therefore, it is difficult to build a case around establishing alternative procurement processes with new social innovation partners. 

Lack of resources and competences: Employees in the public sector who want to establish new collaborations with impact start-ups often lack time and resources. There also appears to be a lack of knowledge and experience regarding the different public procurement legislations and value-based contracts. Often the public authorities do not feel well-equipped to use the flexible forms of tender. There is a tendency for buyers to choose a form of tender and a form of cooperation so that they are sure of the rules and avoid mistakes (Erhvervsstyrelsen 2019a; Regeringen 2013). 

Lack of collaboration and innovation culture: The public sector generally has a low willingness for taking risks or altering the status quo. The absence of a culture that can change the standard silo approach in terms of procurement, welfare services, and preventive measures prevents authorities from trialling innovative methods.

Legal framework: The EU maintains a set of procurement and tendering rules, but there is some uncertainty among public purchasers about these rules, including when it is possible to use more flexible forms of tender (Erhvervsstyrelsen 2019a). Therefore, innovative procurement is perceived as a legally complicated exercise.