Innovation Procurement in the EU

Europe’s Economy is challenged constantly in the globalised world, having to compete with international actors, networks and consortiums. In this environment, it is necessary understand important movements and to adept.

A vital aspect of this is innovation procurement. It can help to drive the innovation, not from the researcher but the demand side. On the one hand, this opens market opportunities for European companies; while on the other hand, it enables a faster modernisation of public services.

The European Union aims to support this movement significantly. Therefore, to start innovation procurements Horizon 2020 also provides funding, targeted at the relevant stakeholder groups (like researcher, public authorities, procurers, and policy makers) and potential buyers.

Types of innovation procurement

In this regard, two complementary types of procurement are supported: Public procurements of innovative solutions and pre-commercial procurements. The European Commission defines them as follows:

“Public Procurement of Innovative solutions (PPI) can be used by procurers when challenges of public interest can be addressed by innovative solutions that are nearly or already in small quantity on the market. PPI can thus be used when there is no need for procurement of new R&D to bring solutions to the market, but a clear signal from a sizeable amount of early adopters/launch customers that they are willing to purchase/deploy the innovative solutions if those can be delivered with the desired quality and price by a specific moment in time. A PPI may still involve conformance testing before deployment.”[1]

“Pre-Commercial Procurement (PCP) can be used by procurers when there are no near-to-the-market solutions yet that meet all the procurers’ requirements and new R&D is needed to get new solutions developed and tested to address the procurement need. PCP can then compare the pros and cons of alternative solutions approaches and de-risk the promising innovations step-by-step via solution design, prototyping, development and first product testing. PCP is a public procurement of R&D services that does not include the deployment of commercial volumes of end-products.”[1]

Therefore it is very important to understand what exactly the preconditions for the aimed procurement approach are.

Types of support

For procurers the Horizon2020 work programme also provides two different types of support:  

“Coordination and Support actions (CSA) support coordination and networking activities for groups of procurers to investigate the feasibility and/or prepare the ground for concrete future innovation procurements. CSA grants do not provide EU co-financing for an actual procurement.”[1]

“PCP or PPI actions co-finance both the procurement cost for groups of procurers to buy the research, development and validation (PCP) or deployment (PPI) of innovative solutions as well as coordination and networking costs to prepare, manage and follow up such procurements. Minimum 2 public procurers from 2 different EU Member States or countries associated to Horizon 2020 are required in the buyers group, one of which will act as lead procurer to coordinate and lead one joint PCP or PPI procurement or several separate but coordinated PPI procurements for the buyers group. In addition other procurers, e.g. private or NGO, can be part of the buyers group. Other entities (e.g. experts, certification bodies) can participate also in the supporting coordination and networking activities part of the action, except entities that are potential suppliers of solutions for the procurement or have another potential conflict of interest with the procurement (same goes for CSAs). In total there must be minimum 3 participants from 3 different Member States or countries associated to Horizon 2020 in the action. Entities formed by several public procurers from different countries that satisfy the minimum requirements and have a mandate to procure on their behalf can apply alone (as sole participant) for this funding (e.g. European Groupings of Territorial Cooperation- EGTCs, European Research Infrastructure Consortia – ERICs, Central Purchasing Bodies etc.).”[1]

In conclusion, innovation procurement is an important new approach to drive innovation from a different angle, namely the demand side. The European Commission has understood this as a chance that needs to be fostered an therefore included it in its work program. If one aims to apply for support, it should be checked what type of procurement is relevant and how to approach it.

Note: This article is based on the European Commission’s Online Manual on Innovation Procurement.

References

[1] European Commission (2015). Innovation procurement

Keywords

Innovation Procurement, European Commission, Pre-commercial Procurement, Public Procurement of Innovative solutions