The Glass Ceiling of Public Procurement Is Holding Back Infrastructure Innovation
Ragnar Kangro, CSO at Verston Group
Estonia’s infrastructure construction sector faces an intriguing yet frustrating challenge. While technology is advancing rapidly, public procurement conditions often prevent the adoption of innovative solutions. Instead of focusing on outcomes, tenders still emphasize in detail what and how the contractor must deliver. This approach stifles innovation and limits the implementation of more sustainable and cost-effective practices.
Shifting Toward Outcome-Based Thinking
In practice, even when we want to implement a more sustainable solution on-site, rigid contract terms may block it. This leads to a paradox: the government’s own goals for efficiency and sustainability are undermined by the very rules meant to achieve them.
Moreover, current procurement models place a heavy administrative burden on clients, who are expected to verify every detailed requirement. A shift toward outcome-oriented procurement would not only encourage innovation but also simplify oversight.
Success Stories from Flexible Procurement
The Sopi-Tootsi wind farm project is a prime example of how outcome-focused procurement creates value. The original design called for the excavation and replacement of up to two meters of peat.
Because the tender allowed for innovative alternatives — defining only the desired outcomes — we proposed a different solution. Using geotextiles and geogrids, we stabilized the soil without removing the peat. The results:
- 200,000 m³ of soil left undisturbed
- 200,000 m³ of new material not needed from quarries
- 50% lower material costs
- Significantly reduced CO₂ emissions
- €7 million cheaper than the next closest bid
The Tallinn Airport runway extension offers another strong case. The design required excavating and replacing a moraine layer. We proposed mixing local moraine with ash to improve its properties — eliminating the need for 100,000 tons of new material, or about 4,000 truckloads (equal to 160,000 km of haulage).
Four Proposals to Modernize Procurement
- Encourage innovation – allow space for new and better solutions.
- Link sustainability with economic efficiency – eco-friendly does not mean more expensive.
- Make outcomes measurable – to enable fair and transparent comparison.
- Follow circular economy principles – prioritize local material reuse over long-haul imports.
Our proposal is simple: define clear, measurable outcome goals — like road load capacity or snow removal response time — and give contractors the flexibility to determine how to meet them.
Contractors Have the Best Insight
Construction companies work on-site every day. They understand the practical implications of different methods and can often deliver better results with fewer resources.
When contractors are empowered to offer more sustainable materials, better quality, or faster service through innovation, everyone benefits — the client, the public, and the environment.
Digital tools also remain vastly underused. For instance, automated road condition monitoring in maintenance zones could enable smarter resource planning and better financial forecasting for public clients.
We Need a Mindset Shift
The Estonian Transport Administration has taken small steps — for example, factoring in machine emission classes in asphalt procurements. But these are cosmetic adjustments, not structural change. Buying a new machine is not innovation — it’s just expenditure.
The reality is that in road construction, fuel use is the largest contributor to CO₂ emissions. Smart logistics and reduced transport needs have a huge impact — both environmentally and financially.
This doesn’t require complex reform. What we need is flexibility to implement smarter solutions.
Let’s Open a Dialogue
We call on the Transport Administration, local governments, and public clients to engage in an open dialogue. The private sector is ready to contribute and act now.
Let’s jointly develop procurement models that reflect today’s challenges and support our shared goals. Outcome-based tenders, rather than process-bound ones, will allow us to build infrastructure that is high-quality, affordable, and sustainable.