Basics of Innovation Procurement

Basics of Innovation Procurement: what is it and why is it important?

Basics of Innovation Procurement

Innovation in the healthcare sector is key for addressing today and tomorrow’s societal challenges, and Innovation Procurement is one of the tools to foster innovation. By buying and implementing innovative solutions and products, the healthcare services provided will improve resulting in a positive impact on the quality of life of citizens.

This article outlines what innovation procurement is, why it is important, its main instruments and the major steps for buying innovation. If your organisation is interested in Innovation Procurement, follow us and take your skills to the next level!

The European Commission supports Innovation Procurement as a tool to deliver solutions to economic and societal challenges. Following the European Commission’s definition, “Innovation Procurement” refers to any procurement that has one or both of the following aspects:

  • buying the process of innovation – research and development services – with (partial) outcomes
  • buying the outcomes of innovation

An Innovation Procurement process can be implemented when an organisation with capacity to procure (probably like yours) has identified an unmet need that might match with some available solutions in the market. Such an organisation and suppliers should have innovative ideas that might lead to improved solutions with a higher impact. In addition, it might also be important when a specific unmet need cannot be identified by the market, and it takes research and development for suppliers to develop and provide new innovative solutions.

If you are wondering how Innovation Procurement can help your organisation and the rest of the stakeholders you are working and collaborating with, have a look at the reasons listed below.

Innovation Procurement can help to:

  • Respond to unmet needs or new expectations which are not adequately addressed through the existing solutions already on the market.
  • Deliver higher quality public service on an optimal budget.
  • Seek the way that public services are provided based on the expectations of citizens by improving the public service experience.
  • Provide opportunities to SMEs and new innovative companies which may have solutions to unmet needs but face difficulties in bringing them to the market.
  • Boost the market towards innovation.
  • Spur the economic recovery, the green and digital transition, and the creation of a more resilient economy in the EU.  

Currently, several instruments co-exist at European level, allowing procurers to drive innovation from the demand side. The two most relevant ones that could be used in a complementary way are:

  • Pre-Commercial Procurement (PCP) can be used when there are no near-to-the-market solutions yet and new Research & Development (R&D) is needed. PCP can then compare the pros and cons of alternative competing solutions approaches. This will in turn enable to de-risk the most promising innovations step-by-step via solution design, prototyping, development and first product testing.
  • Public Procurement of Innovative solutions (PPI) is used when challenges can be addressed by innovative solutions that are nearly or already in small quantity on the market and only need limited R&D efforts.

Innovation Procurement in health is key in the European context. Every year, over 250,000 public authorities in the European Union (EU) spend about 14% of GDP on the purchase of services, works and supplies. Many are in the health sector, a sector in which public authorities are the main buyers in many countries. When these purchases exceed threshold values, EU public procurement rules apply. Public procurement is increasingly being promoted as a tool for improving efficiency and contributing to better health outcomes, and as a policy lever for achieving other government goals. This is why the European Commission is reinforcing the policy framework in Europe for procurers to use PCP and PPI through several initiatives such as the creation of a benchmarking and measurement framework for innovation procurement in Europe, a guidance on innovation procurement and the European Assistance on Innovation Procurement, among other initiatives.

From Procure4Health community we are glad to guide you during the Innovation Procurement process and provide materials to upgrade your competences. The process has been split in 4 major steps:

  1. Exploration & initiation: Identify the unmet need from your organisation and then decide to do something about it.
  2. Procurement path and process (building): Choose the appropriate procurement path through a well-executed analysis of needs and a wider context.
  3. Innovation procurement, collaborative development: Define the process for implementing a procurement (or collaboration) of an innovative solution as a key for proceeding from analysis to results.
  4. Deployment & impact: Measure the results in terms of deployment, implementation and utilisation, since it is only when implementation has been achieved that the real impact can be measured.

For further information on what innovation procurement is, and how to implement it, you can visit the European Commission website.

If you liked this article about Basics of Innovation Procurement, don’t miss the Procure4Health Insight #1. Basics of Innovation Procurement: what is it and why is it important? that you will find in the Procure4Health community platform. Join our community and enjoy the reading!

An associated webinar is available in the Procure4Health YouTube channel!

Procure4Health Webinar: Basics of Innovation Procurement

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