Knowledge-Intensive Business Services (KIBS) are the cornerstone of innovation in a knowledge-based economy. Acting as facilitators, carriers, and sources of innovation, KIBS firms play a pivotal role in enhancing both public and private sector capabilities. These services encompass a wide range of expertise, from accountancy and management consultancy (Professional KIBS or P-KIBS) to IT and R&D services (Technology-based KIBS or T-KIBS).

Public procurement offers an invaluable opportunity for fostering innovation through KIBS. By serving as suppliers to government agencies, KIBS firms contribute to technological advancements, public service transformation, and regional economic growth. Our research analyses the dynamics of KIBS engagement in UK public procurement from 2016 to 2022, shedding light on patterns, trends, and opportunities.

Key Findings:

• Innovation Amplification - KIBS suppliers show significant innovation, particularly in digital and technological domains. This is evident in their strong representation in computer programming and management consultancy services.
• Typological Dynamics - Firms providing IT, engineering, and R&D services (T-KIBS) excel in central government procurement, meeting technical and digital demands. Accountancy and consultancy services (P-KIBS) support broader management and administrative needs across various government levels.
• Geographical Patterns: KIBS suppliers are predominantly concentrated in London, benefiting from urban networks and knowledge spillovers. However, non-KIBS firms display broader regional dispersion, particularly in the Southeast.
• Sectoral Growth: T-KIBS suppliers have seen robust growth, reflecting the increasing digitalization of public sector operations, including the adoption of AI and cloud technologies.

To maximise the contributions of KIBS, especially SMEs, to public procurement and innovation, the following strategies are essential:

• Streamline Procurement Processes: Simplify access for SMEs by reducing procedural barriers and enabling smaller contract lots.
• Focus on Innovation: Embed criteria that prioritise innovative solutions in public contracts.
• Promote Regional Participation: Encourage the involvement of regional KIBS firms to address geographical imbalances and foster local innovation ecosystems.

KIBS firms hold immense potential to drive innovation, economic growth, and public service transformation. However, achieving this requires a nuanced approach that balances the strengths of T-KIBS and P-KIBS, promotes regional diversity, and ensures sustainable procurement practices. By addressing these challenges, public procurement can unlock the full potential of KIBS to reshape the innovation landscape.