Public Technology Procurement and Innovation

The present study describes the introduction of the Austrian digital switching system, OES, and evaluates the technological, economical, and societal effects of this step. The system has been procured by the public Austrian telecom providerÖsterreichische Post-und Telegraphenverwaltung(ÖPTV), and is thus an example of public technology procurement.

Our investigation and analysis of public technology procurement has demonstrated that, as argued in Chapter 1 of this book, it is a concept with salient features. These distinguish it from other types of public procurement. With this particular type of procurement, policy makers are faced with new challenges. The reasons pursuing for public technology procurement, and consequently its processes and rules, are different from those of the usual, off-the-shelf, or ‘regular’, public procurement. Rules and procedures for conducting the latter kind of procurement are by now well tested and internationally established. But public technology procurement, as procurement under uncertainty, runs the risk of failing to meet the initial milestones set for it. In particular, the chances of total failure are often much higher than the average decision maker in the public service would be willing to bear. Generally, utility managers and the public service are risk-averse. They therefore tend to disregard the likelihood of potential above-average (or even spectacular) returns, which can be realised in the form of social and economic benefits from the rapid introduction of technological change and its ‘spillover’ effects.