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This research investigates how challenges, as a specialized form of innovation contest, function within public procurement, an area underexplored in existing PPI literature. While public procurement of innovation (PPI) is widely studied, most research focuses on traditional instruments, with limited attention to competition-based formats like challenges. To address this gap, we conduct a qualitative case study combining document analysis and expert interviews. The study explores key characteristics, processes, and success factors of challenges in the public sector. Elements such as motivation, task specificity, degree of elaboration, and organizational structure were identified as critical to their success. This research contributes to the literature by introducing a process-oriented model and provides guidance for public authorities. This research delivers both a conceptual typology and an applied framework, enhancing understanding of how open innovation contests can support innovation-oriented procurement strategies.JEL Codes: L32, L38, O11, O31, O32