Innovation Procurement instruments: PCP, PPIs & Innovation Partnership

The process of Innovation Procurement: key steps and existing instruments

Innovation Procurement instruments: PCP, PPIs & Innovation Partnership

Innovation Procurement is a key instrument not only for public investment but also for the overall economic development. Public procurement/demand-driven innovation can open markets for industry/researchers creating growth & jobs over Europe. This methodology introduces new opportunities into the market, fostering the demand for innovative solutions that are incipient in research centres, and creating new business opportunities between start-ups and companies already established in the productive sector. This is why Innovation Procurement is considered a public policy strategy that favours the creation of synergies within the market and stimulates investment by private sector agents in the public administration, thus establishing a new path for job creation.

Although Public Procurement of Innovation is a very powerful instrument to boost innovation, it is important to bear in mind that, depending on the strategic priorities of the region or country, different types of public procurement can be configured: Pre-Commercial Public Procurement, Public Procurement of Innovative Solutions, and Innovation Partnership. Every Innovation Procurement project should follow a series of stages to be developed successfully, including from the shaping of the project idea, identification of the unmet needs, open market consultation, funding opportunities identification, to the launch of the public procurement of Innovation tender, the award of the contract(s), its implementation and closure.

Innovation Procurement enables provision of basic services, such as healthcare, infrastructure and energy. Healthcare is the second largest spending area for governments (over 9% of GDP)

The Public sector is facing important challenges. Tackling these challenges often requires public sector transformation. In many cases, solutions are close to market and would be provided if clear requirements and/or sufficient demand was expressed by the market. In other cases, R&D is still required to de-risk technology and competing solutions need to be compared before committing to large scale deployment.

To achieve this, several instruments have been designed to start an Innovation Procurement process:

Pre-Commercial Public Procurement (PCP): PCP consists of procuring research and development services with advantageous conditions from several economic operators. Its objective is to steer the development of solutions towards clearly defined public sector needs, whilst comparing/validating alternative solution approaches from various vendors. It can be used when there are not yet near-to-the-market solutions and new Research & Development (R&D) is needed. PCP can then compare the pros and cons of alternative competing solution approaches. This will in turn de-risk the most promising innovations step-by-step via solution design, prototyping, development and first product testing.

Public Procurement of Innovative Solutions (PPIs): PPIs’ objective is to act to launch customer /early adopter / first buyer of innovative commercial end-solutions newly arriving on the market. It is used when challenges can be addressed by innovative solutions that are nearly or already in in the market in small quantities and do not need new R&D.

Innovation Partnership (IP): The aim of an innovation partnership is to develop ‘an innovative product, service or work and to subsequently purchase ‘the resulting supplies, services or works’ providing that they correspond to the performance levels and maximum costs agreed between the contracting authority and the participants.

The EU’s research and innovation programmes have been funding projects in which groups of procurers from different countries around Europe are jointly implementing Pre-Commercial Procurement (PCP) or Public Procurement of Innovative Solutions (PPIs), as well as coordination and networking projects that prepare the ground for future PCP or PPIs. As an example, a list of projects on the ICT domain, most of them on the Digital Health field, are included in the following link to the European Commission.

To learn more about EU funded projects implementing Pre-Commercial Procurement (PCP) or Public Procurement of Innovative solutions click here EU funded projects implementing Pre-Commercial Procurements (PCP) or Public Procurement of Innovative Solutions (PPIs) | Shaping Europe’s digital future (europa.eu)

If you liked this article about the Innovation Procurement instruments, don’t miss the Procure4Health Insight #2. The process of Innovation Procurement: key steps and existing instruments 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: The Process of Innovation Procurement

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