Comparative Conceptualisation of ‘Public Procurement for Capability Building’ (PPCB) In Relation to Public Procurement for Innovation (PPI): A Step Towards Implementation of Iranian Technology Annex

Considering the failure of local content policies (LCPs) in Iran and many developing countries, ‘Public procurement for innovation’ (PPI) as a trending demand-side innovation policy could provide a new theoretical basis for implementation of Technology Annex in the country. However, developing countries are of specificities compared with advanced economies, from which lack of technological capabilities of suppliers has a pivotal role in technological catch-up. The present paper suggests the new concept ‘public procurement for capability building’ (PPCB) based on the technology transfer projects of ten strategic groups of high-tech products based on the evidences of the case of Ten Strategic Equipment Groups in the oil industry of Iran, which is in fact an extension to PPI concept. The suggested concept puts building suppliers’ capabilities as the main goal of the policy. The study showed various commonalities between these two policies, including needs for organisational changes in public procurers, risk management, utilising innovation (knowledge) intermediaries, and legal adjustment. However, two critical distinctions were conceptualised for PPCB, including 1) capability building as the main goal of the policy, and 2) establishment of a dual-track evaluation system which monitors and evaluates both the suppliers’ capabilities and the procured products.