PPI: Public Procurement of Innovation

Public procurement offers an enormous potential market for innovative products and services, being a great opportunity to stimulate growth and jobs.

Intro

Even though it could create a huge market for innovative products and services, the potential of public procurement remains vastly untapped. The European Commission (EC) aims to improve public procurement practices, promote the demand of innovative goods and services in Europe, and foster the uptake of innovation in the EU. This point was initially set in 2007 through the communication on pre-commercial procurement, and boosted in the 2017communication “Making public procurement work in and for Europe”, that established six strategic policy priorities on public procurement. Thus, we can find two different kind of tenders refereeing to innovation in public procurement:
Pre-commercial procurement or PCP, that refers to the procurement of R&D services. It offers a way for contracting authorities to share risks and benefits of procuring R&D to address challenges of public interest for which no technological solution isavailable on the market yet.
Public Procurement of Innovative solutions or PPI, when contracting authorities act as lead customer by procuring innovative solutions (not the R&D to develop them) that are newly arriving on the market but that are not yet available on large scale commercial basis due to a lack of market commitment to deploy.

250 000 public authorities in the EU spend €2 trillion per year

Public procurement accounts for about 19% of GDP in the European Union

The Europe 2020 Strategy sets a target of 3% of the EU´s GDP to be invested in R&D by 2020

SMEs gets 45% of public contracts in the European Union

PPI offers SMEs an opportunity to enter in larger markets

SMEs can prove the viability of new products through their participation on PPI tenders

For the approach of HAePPI project and taking into account the final objective, to boost and support innovation on SMEs through public procurement, innovation procurement or public procurement of innovation in HAePPI project considers both PPI and PCP instruments, and also innovation partnerships. This approach is also included in the guidebook published by the European Commission, which sets “where reference is made to both instruments, PPI and PCP, the wording innovation procurement is used”.

Public Procurement as a Driver of Innovation in SMEs and Public Services

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