There are several different governance logics in the Finnish administrative, all of which are active, to some extent, in municipal decision-making today. These layers—the traditional Public Administrative model (PA), the New Public Administration model (with goals of corporate-type leading and enhanced efficiency), and the New Public Governance model (introduced in the early 2000s and which relies on internal and external networks)—make the procurement process slower to adopt new and innovative models. As a result, the public procurement decision-making process is, in essence, a bureaucratic-legalistic affair with exact definitions of right practices, a risk averse mentality, and little communication. This combination is incompatible with the ideals of open communication, reciprocity, and common goals that could help boost innovative procurement. For example, municipal budgets are not flexible—they would not allow shifting funds from one cause to another in the middle of an election term. Currently, the municipalities have less time to improve the residents’ well-being by conducting preventive and anticipatory work, and they mainly focus on filling their obligations and fulfilling official goals without making mistakes (Kyösti  Airaksinen 2020 2021). 

Related to this, short-term benefits are favoured over long-term ones, making it more difficult for certain innovation schemes to break through. Some innovations generate savings to one city department but bring costs to the department in charge of developing the scheme, so they are likely to be abandoned. Furthermore, institutions tend to take a reactive stance towards innovations, often waiting for private entrepreneurs to make an initiative rather than proactively seeking them out. These traits underline the importance of cross-departmental work ; Moriggi 2020). Also, local city officials see the public procurement rules as cumbersome and inflexible but point out that the system becomes easier to work with if officials are experienced, thus enabling them to interpret the benefit for the innovation (Makkonen  2018). 

According to researchers in public administration, different sectors do not interact with each other enough, and there should be more practices that are able to cross boundaries between sectors. At the moment, services are usually categorised according to different sectors. This becomes a challenge because many impact start-ups that offer welfare solutions are cross-sectoral and fall between local departments. Furthermore, the language used in promoting innovative procurement is often too abstract, originating from the bureaucratic system instead of the lived reality of the client. Instead of dealing with specific social challenges, which is the situation now, Finnish society would benefit from more preventive work that is able to address a problem before it grows  (Kyösti  Airaksinen 2020).

One considerable problem in promoting social innovations based in results-based financing in public procurement is determining when the project has been successful, in other words, finding the right indicators, especially monetary and quantifiable ones, and creating specific models. Problems related to health and well-being are typically complex and long-lasting, which adds to the problem. Partially for this reason, creating new social impact investment models is a long process (Kyösti  Airaksinen 2021; Manninen 2020). These same difficulties in measuring impact and creating interactivity between public and private actors have prevented the introduction of more innovative elements to public procurement practices (Pelkonen  Valovirta 2015). 

Small municipalities find it difficult to allocate time away from their daily responsibilities for furthering social impact-related work. Major barriers are lack of data and know-how and lack of resources such as time and staff. When there is enough data, it may be outdated (due to delays in statistics), or people experience difficulties in combining different types of data and adapting it into local conditions. Without sufficient information, it is difficult for municipalities to initiate collaboration with impact start-ups, and deputies making political decisions of future procurements should have enough information about the municipal conditions well in advance. Furthermore, smaller municipalities must currently use external resources to make procurements because they do not have in-house resources e.g., an in-house lawyer (Manninen 2020). Municipalities believe they would have sufficient know-how to utilize data efficiently if the above-mentioned problems were solved (Kyösti and Airaksinen 2021; Manninen 2020). Current problems are emphasized by the fact that municipal budgets are planned only a few years in advance, which is not enough time for meaningful preventative and innovative work (Kyösti  and Airaksinen 2020). 

In addition, there are some issues that are specific to start-ups active in public procurement, in comparison to established players. These include a lack of expertise and resources (financial and human) in preparing the tender documents, lack of references, and lack of expertise in pricing their offering. Due to their position as newcomers in the market with less-tested solutions, they lack long-term relations with municipal experts and, as a result, are unfamiliar with authorities making the decisions. All these reasons hinder the prospects of social impact start-ups. 

Some of the current problems could be solved if more cooperation and information exchange existed between local city governments, for example, within the Finnish capital region of Helsinki, Espoo, and Vantaa (Makkonen et al. 2018).