Public Procurement of Innovation within the COSME Programme

Background

SMEs or small and medium-sized enterprises play a vital role within markets, as they are considered crucial engines for growth and job creation. However, their competitiveness in the single market is limited, since they do not have the reach for international opportunities and innovation prospects. The importance of fostering public procurement for SMEs becomes more obvious when looking upon the statistics:  Public Procurement represents approximately 14% of the EU GDP. However, less than half of this budget is purchased from SMEs. Nevertheless, experience shows that SMEs are more likely to be involved as suppliers of innovation than as suppliers of conventional products and services; so far they won 2.5 times more contracts than in standard exercises.

Therefore, the Programme for the competitiveness of enterprises and small and medium-sized enterprises (or “COSME”) was introduced by the European Union to promote growth and to strengthen the competitiveness and sustainability of enterprises.

One vital aspect of this is public procurement of innovation (or PPI), which refers to either the aspect of buying the process of innovation or buying the outcomes of innovation. It may commence with research and development of products, services or processes that do not yet exist. In that framework:

“Public buyers state their need with little to no concrete idea of the solution and support innovative businesses and researchers in finding the perfectly suited product, service or process. In this way, the public buyer effectively becomes part of the innovation lifecycle from the very beginning of product or service development.”[1]

Nevertheless, PPI currently faces a couple of issues: A lack of knowledge and expertise, wrong incentives, a lack of perception or innovative capability and a fragmentation of demand.

Objective and Expected impact

As a result, the European Commission intends to strengthen the competitiveness and sustainability of the Union’s enterprises like SMEs via the use of innovation-oriented procurement as a major contributor to smart, sustainable and inclusive growth as well as potentially boosting the overall development of innovative companies in Europe. Since SMEs access to public procurement remains difficult, the specific objective of this call is to improve their access to markets inside the Union. It should also increase the visibility and awareness of the advantages of procuring innovation for a constantly increasing greater number of public buyers.

The three main objectives are therefore:

1. The first objective is to encourage cooperation between public buyers to promote the use of public procurement to contribute to the development of innovation.
2. The second objective is to use public procurement as a mechanism to pilot innovation in areas of strong public interest such as, for instance, clean energy (contributing to Paris targets for fighting climate change) or healthcare. This will in turn encouraging innovative EU companies, in particular SMEs, to develop new solutions to address societal challenges.
3. The third objective is to link and establish synergies with research and innovation projects funded by the EU (via Horizon 2020, COSME or EU funding programmes) whenever possible.[1]

Note: This article is based on the COSME Work Programme 2018

References

European Commission. Horizon 2020 Work Programme 2018-2020. Co-Financing of Consortia for Public Procurement of Innovation