Public procurement of innovation (PPI), and its antecedent public technology procurement (PTP), is one of modern demand-side innovation policies being bolded over the last decade, which could complement the classic approach of local content policies (LCPs). In Public procurement of innovation (PPI), the goal is to utilize the capacity of public procurement and to target development of innovation and technology in procured products, instead of procuring routine goods and services for public body. It should be said that the two concepts of innovationfriendly public procurement and pre-commercial procurement (PCP) are close but distinct to public procurement of innovation. Due to the changes required in public procurement process and behaviors and capabilities of procurer and also tenderers, there are considerable challenges before success of this demand-side innovation policy. Amongst them, we could point to risk management of public employees and managers, monitoring and evaluation of the policy and tender process and tenderers, need to promote tenderers’ capabilities, need to promote absorptive capacity of public procurer, need to define a multi-task interdisciplinary intermediation structure, compliance with routine temporal and financial obligations of tenders, legal challenges and compensation. Furthermore, in developing countries such as Iran where technology transfer needs are bolded more than technology and innovation development, it is necessary to develop a literature consistent with technology transfer needs. Fortunately, there have been a start of some researches and practices in oil industry of Iran, and previously in the defense industries.
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