This paper investigates supplier involvement in new product development (NPD) driven by public procuring organisations. It stresses the role of small suppliers in leading the development of products that fulfil unmet public sector needs. Under high technological uncertainty, innovative SMEs can assume NPD responsibility at product level. Contracts for product development contribute to the establishment and growth of innovative small suppliers which, in many cases, would not otherwise exist. This supply network creation function is in stark contrast with supplier involvement in NPD occuring in pre-existing supply networks.