Innovation Procurement in Croatia

Executive summary

In Croatia, public procurement accounted for close to one-fifth (19.98%) of GDP in 2023, well above the OECD average (12.9%) and even the EU average (14%). Its economic significance offers a wealth of opportunities to use it as a strategic governance tool to support economic growth and prosperity. Using public procurement to support innovation has been identified as a strategic priority for Croatia’s recovery from the multifaceted effects of the COVID-19 pandemic. Yet, as in many other OECD countries and EU member States, the uptake of innovation procurement is still limited in Croatia.

With the active engagement of major stakeholders such as the Ministry of Economy (MINGO) and the Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO), Croatia could develop the foundations of a robust innovation procurement ecosystem. Doing so requires concerted action from multiple stakeholders and changes in the mindset of those involved in procurement processes, not only in public administrations but also in the private sector. Creating an innovation procurement ecosystem is also an incremental process in which new or innovative practices build on lessons learned from previous experiences.

This report, Innovation procurement in Croatia: Boosting innovation in the public sector, was produced in the framework of the European Union’s Technical Support Instrument (TSI) project “Supporting the Implementation of Innovation Procurement in Croatia”. It provides an overview of the current state of play, focusing on the building blocks conducive to a procurement framework supporting innovation, namely (i) the regulatory and institutional frameworks of innovation procurement, (ii) the capacity-building system related to innovation procurement, (iii) links between public administration and the innovation ecosystem, (iv) the monitoring and evaluation system for innovation procurement, and (v) an assessment of the potential to use innovation procurement in Croatia. Furthermore, the report offers recommendations for addressing existing challenges and exploring new opportunities.

Key findings and policy recommendations

Aligning the institutional design and the strategic framework to develop new opportunities to use public procurement for innovation.

With the transposition of the 2014 EU Directives in its national regulatory framework, Croatia has developed all the procedural means to harness public procurement to support innovation. However, an overarching vision, enshrined in a dedicated strategy, would provide contracting authorities and contracting entities (hereinafter referred to as contracting authorities) with a better understanding of the rationale for using public procurement to diffuse innovation and demonstrate a greater commitment to common objectives. Contracting authorities should also be provided with a better understanding of how this strategy translates into daily procurement practices, through dedicated guidance or support. Furthermore, Croatia could benefit from establishing a formal institutional mechanism to co-ordinate innovation procurement policies at a higher level.

Strengthening and structuring capacity-building initiatives to train the procurement workforce and make the public sector an innovation partner of choice.

The assessment of public procurement competencies using the European competency matrix (ProcurComp^EU) led to the design of a tailored training programme covering the innovation procurement cycle. Fifteen trainers from key entities (MINGO, HAMAG-BICRO, the Central State Office for Central Public Procurement, and SAFU) participated in hands-on, case-based training, refining the programme’s content. To ensure long-term benefits, Croatia could expand knowledge sharing, commit to ongoing innovation procurement training, and update programmes based on feedback. Additionally, introducing a specialised certification for innovation procurement could be considered, requiring a separate, legally recognised programme. Updating manuals, creating an excellence award system, and developing educational programmes for bidders would further support innovation in procurement.

Reinforcing a competence centre for innovation procurement.

A competence centre for innovation procurement, with a legal mandate to promote innovation-friendly procurement methods, could drive nationwide adoption by providing practical and financial support to public procurers. In the medium term, Croatia could improve access to training, technical support, and best practices through a user-friendly platform. In the long term, developing an independent portal would further expand resources, fostering interaction between contracting authorities and economic operators. Strengthening stakeholder collaboration and securing sustainable resources would ensure the centre’s effectiveness and longevity.

Implementing a comprehensive monitoring system for innovation procurement would provide evidence to better inform decision making.

A comprehensive monitoring system for innovation procurement provides insights into procurement effectiveness, promoting data-driven decision making, accountability, and stakeholder confidence. Croatia could adopt the OECD's performance measurement framework, which includes 33 indicators and 56 sub indicators, to address monitoring gaps. While most indicators could be readily implemented, some, such as those for pre-commercial procurement, may require further work. Ensuring data quality and testing the framework across procurement procedures will be key to successful implementation.

Mobilising all stakeholders to support the uptake of innovation procurement.

The success of innovation procurement relies on the active engagement and understanding of all relevant stakeholders, including economic operators, senior management at contracting authorities, and control and remedy bodies. To ensure stakeholders’ buy-in, Croatia could, for instance, provide targeted training and outreach to key stakeholders such as economic operators, DKOM (the remedy body), and control bodies to enhance their understanding and support for innovation procurement. Moreover, increasing market interest could be achieved through mechanisms such as the Best Price-Quality Ratio (BPQR) criterion and effective market consultations. For this, contracting authorities should acquire a better understanding of qualitative criteria and incorporate market consultations as standard practice before initiating procurement procedures. Such actions could be promoted through targeted training and experience to ensure the proper application of innovation procurement methods. Finally, collaboration among key entities such as MINGO and SAFU is also crucial, particularly in raising awareness and strengthening the capabilities of control bodies to oversee and support innovation procurement. This could involve the establishment of a joint task force and co-ordinated training initiatives to ensure effective oversight and support for innovation procurement.