The procurement of research and development (R&D) is an important tool to stimulate innovation. It allows public authorities to steer the development of new solutions directly towards their needs. However, the procurement of R&D remains underused in Europe. Under Horizon 2020, the EU increases support for groups of public procurers who work together on joint Pre-Commercial Procurements.
What is Pre-Commercial Procurement?
Pre-Commercial Procurement (PCP) is the procurement of research and development of new innovative solutions before they are commercially available. PCP works in conjunction with Public Procurement of Innovative Solutions (PPI).
How does PCP work?
PCP involves different suppliers competing through different phases of development. The risks and benefits are shared between the procurers and the suppliers under market conditions.
For PCPs, risk-benefit sharing under market conditions is when procurers share the benefits and risks related to the IPRs resulting from the research and development (R&D) with suppliers at market price.
Competitive development in phases is the competitive approach used in PCP by procurers to buy the R&D from several competing R&D providers in parallel, and then compare and identify the best value for money solutions available to address the PCP challenges. R&D is split into phases (solution design, prototyping, original development and validation/testing of the first products) with the number of competing R&D providers being reduced after each evaluation phase.
Separation from the deployment of commercial volumes of end-products is the complementarity of PCP that focuses on the R&D phase before commercialisation.
Why we are supporting PCP?
The European Commission supports PCP as it enables public procurers to:
- Share the risks and benefits of designing, prototyping, and testing new products and services with the suppliers
- Create optimum conditions for the wide commercialisation and take-up of the results of R&D
- Pool the efforts of several procurers
- Develop innovative solutions for the societal challenges of the future
- Encourage companies to invest in highly qualified R&D in Europe
- Act as a "seal of approval" confirming the market potential of new emerging technological developments, thereby attracting new investors
By acting as first buyers of new R&D with important technological needs, public procurers can drive innovation from the demand side. This enables European public authorities to innovate upon the provision of public services faster and create opportunities for companies in Europe to take international leadership within new markets. Creating a strong European market for innovative products and services is an importsant step towards creating growth and jobs in quickly evolving markets such as ICT.
What are we doing to support PCP?
Since 2009, the Commission has launched calls for proposals to support the establishment of networks of public authorities on PCP. These actions have raised awareness and helped share best practices. This has encouraged cooperation among public procurers from different Member States and has led to jointly implemented pre-commercial procurements.
Since 2012, the Commission has gone even further by co-financing a pan-European consortia of public procurers who wish to undertake pre-commercial procurement together on topics of common European interest.
This support is being extended under Horizon 2020, with financial incentives such as the PCP Co-Fund actions available for consortia of public procurers working together on joint PCPs within the domain of research and innovation defined under each different programme.