The effects of national security assessments in public procurement on competition, sustainability, innovation, and critical technology procurement

By strategically leveraging public procurement, governments can harness market competition to drive business innovation and sustainable development. It remains unclear, however, how this premise is affected by heightened security awareness due to increasing geopolitical tensions. Focusing on European Union (EU) member states, we examine how security-oriented practices in public procurement affect tender outcomes. Using data from a recent pan-European survey of 1613 procurement projects, coupled with data from the EU's tender platform Tender Electronic Daily, we test the effect of using national security assessments (NSAs) during tender preparation on competition, innovation, sustainability, and critical technology procurement. We find that conducting such assessments has positive effects on innovation and on critical technology procurement, but only for tenders won by domestic suppliers. NSAs can thus create urgency and mobilize resources to innovate through public procurement, but possibly in a way that reinforces national rather than EU-wide technological development. We identify a tension between the need for research and coordination of NSA development at the EU level to avoid market distortions arising from uncontrolled NSA proliferation versus a heightened bureaucratic burden for suppliers. We also argue that stimulating joint cross-border innovation procurement, particularly of critical technologies, is key to fully leveraging the benefits of the EU internal market when pursuing strategic policy goals.