Commission publishes guidance on 'Innovation Procurement'

On 15 May 2018 the European Commission published its Guidance on Innovation Procurement. The relatively brief guidance is aimed at buyers, policy makers and suppliers. It sets out why innovation procurement is important, who has an interest in it, and how it can be done: 

• Section1 clarifies the innovation procurement concept, its overarching dimension and added value.
• Section 2 outlines the policy framework that is necessary to make strategic use of innovation procurement.
• Section 3 illustrates how to open the doors of public procurement to innovators, including start-ups and innovative SMEs.
• Section 4 describes how to put procurement procedures to work to modernise public services with innovative solutions and to create growth and jobs.

 'Innovation procurement' refers to:

• the buying of research and development that leads to innovative products, services or processes; or
• the buying of products, services or processes that are new to the market and contain novel characteristics.

Innovations, whether in the form of R&D or new entrants to the market, are inherently more risky than established solutions. The guidance recognises this challenge and stresses that any decision to buy innovation brings clear benefits to the public buyer and purse. The guidance provides some ideas on how to build business cases and political support for innovative projects.

The guidance gives many examples of innovative procurements from around the EU, from energy saving lighting schemes, through vehicle fleets, to PVC-free catheters. The latter being a good example of how what was at the time a new innovation (and the procurement of which was legally challenged, though unsuccessfully) has now become the standard product in the market.

A key focus of the guidance is innovation as a means of achieving policy goals, in particular social and environmental benefits, helping to make the most of the more flexible provisions around contract award criteria introduced by the Public Contracts Regulations 2015.[1]  The guidance also reminds contracting authorities that other changes brought in by the 2014 Directive, such as requirements in relation to lotting and bidder turnover, are already in place as a means of making public contracts accessible to innovative SMEs and start-ups.

Pre-market engagement can be key to identifying potential for innovation in a market, which the guidance suggests can then be tested through employing such novelties as "hackathons, idea markets or category innovation roadmaps". The guidance also provides some helpful observations about the benefits of functional as opposed to descriptive requirements, the latter being more likely to describe what already exists and therefore less likely to encourage innovation. Functional or outcome-based specifications can of course present challenges, particularly with evaluation, but effective pre-market engagement and the use of negotiated procedures and variants can help to overcome these.

The guidance (which is not legally binding) is relatively short and will be useful to those who procure and bid for public contracts, as well as policy makers. It does not offer any new tools or approaches but rather seeks to encourage commissioners to make the most of the tools that already exist, and offers a wide range of interesting examples from around the EU of how innovation in its broadest sense has been procured.

For further information please contact Trevor Watt

[1]  Regulation 67 provides that award criteria may comprise social, environmental and innovative characteristics.