EC recommends pre-commercial procurement to bridge the innovation gap from the demand side

Brussels, 30 April 2008 – For the commission, public procurers can drive innovation from the demand side by acting as technologically demanding first buyers. Not only this could improve the quality and effectiveness of public services, but this could also help create opportunities for European companies to take international leadership in new markets.

The public sector in the EU is faced with important challenges, including ensuring high-quality affordable healthcare to cope with the impacts of an ageing population, fighting against climate change, improving energy efficiency, ensuring higher quality and better access to education, and being more effective dealing with security threats. Addressing such challenges requires new and better solutions.

Some of the required improvements are so technologically demanding that either no commercially stable solution exists yet on the market, or existing solutions exhibit shortcomings which require new R&D. By developing forward-looking procurement strategies – that include R&D procurement to develop new solutions to these challenges, the public sector could have a significant impact on the efficiency and effectiveness of public services (both on mid and long terms), as well as on the innovation performance and the competitiveness of European industry.

This is generally not the case yet in Europe: because public procurement uses taxpayers’ money, it is traditionally risk averse, meaning that procurement by the public sector does not stimulate innovation as much as it could.

However, these risks in R&D procurements could be reduced to a level public authorities are used to work with in public procurement in general, whilst still resulting in better-value-for-money products at the end for the procurer and in more interesting market opportunities for participating companies.

Pre-commercial procurement is an approach for procuring R&D services which enables public procurers to:

  • share the risks and benefits of designing, prototyping and testing new products and services with the suppliers, without involving State aid;
  • create the optimum conditions for wide commercialisation and take-up of R&D results through standardisation and/or publication;
  • pool the efforts of several procurers.

This would enable European public authorities to innovate the provision of public services faster, whilst creating opportunities for companies in Europe to take international leadership in new markets. Last December, the commission adopted a Communication and associated Staff Working Document on pre-commercial procurement

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