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Public technology procurement as a strategic innovation policy mix instrument

Final Report Summary - OMC-PTP (Public technology procurement as a strategic innovation policy mix instrument)

The OMC-PTP project had as an overall objective to explore the potential of public technology procurement as a new instrument to stimulate innovation by tapping the innovation opportunities that are present in the business-to-government (B2G) market that accounts for 16 % of the European GDP.

While PTP can be used as innovative and more strategic innovation policy tool, it has to comply with European Union (EU) regulation. In particular, Directive 2004/18/EC is the important procurement directive. As this directive and its translation into national law and application is still not fully determined, it was necessary throughout the project, to monitor current developments and interpretations. The objective of this work package is to analyse the legal framework of public procurement rules and state aid in its connection to the new innovation policy tool and analyse the needs of PTP design to comply with the existing rules.

At the end of the first year of the OMC-PTP project, it was concluded that there are no (major) obstacles under the EU procurement directives that prevent countries from implementing PTP, including pre-commercial procurement. However, practical implementation of methodology for PTP is missing. By the end of year 1, the question was no longer: PTP, can it be done? But PTP, it can be done, but how to process it?

In order to stimulate mutual learning, workshops were organised. In total, six successful workshops were held. An intranet section on the project webpage (please see online) served as place to exchange information between project partners. Project partners informed the consortium by email about new developments or publications in their countries. The OMC-PTP findings were also communicated to the outside world on different occasions.

Practice cases- very few, if any of the cases are really about radical innovation- confirm the findings of other studies that public procurement of innovation is not very much visible, not well structured and efficient tools are not in use to deliver innovative solutions to the challenges we are facing. Most cases are dealing with integration type of technology, incremental innovation or diffusion. It turns out that the topic of PTP is rather new in Europe. A few countries are frontrunners and have shown first steps to implement innovation procurement in their policy and practice. In most countries, however, the topic is being followed with interest, but hardly any initiatives can be identified. Based on the rather thin practical experience it was considered premature to try to build a manual. We therefore call the final deliverable a brochure.

Based on the findings of the project the PTP brochure focuses on policies and concepts topped with some own conceptual thinking. The aim of the document is neither to prescribe how policy makers should handle procurement of innovation nor how to procure innovation but more to present a dish to the readers from which they can choose the bits that are applicable in their national/local context.

In the document, it is explained that all necessary conditions and tools can be put in place to benefit from innovation while at the same time transforming the business-to-government (B2G) market into an attractive market for innovative companies.

Public procurement of innovation is more than just applying a procurement procedure; it is a whole process whereby the procurement procedure is just one building block in the procurement process. Embedding the above mentioned procurement procedures in a process with systemic features facilitates public procurement of innovation. This will bring the demand and the supply side on the same wavelength in their search for change for the better through innovative solutions. While analysing the procedures suitable for procurement of innovation it became clear that some are innovative or can be applied in an innovative way such that public procurement facilitates the acquisition of innovative solutions.

There is a wide variation in procurement situations: there is no single procurement process that fits all situations. Depending on the type of procurement, a suitable procurement process can be put together comprising the appropriate building blocks. These building blocks can be grouped according to the different procurement phases: the preparation phase, the procurement phase and the contracting / execution phase.

During the project, it was soon realised that public procurement besides stimulating innovation in the B2G can also have an impact on the B2B and B2C market since the public sector can also act as launching customer or take a catalytic role in the interest of society. The catalytic role of the government is especially relevant to tackle environmental challenges and promote renewable energy or more generally if the government wants to transform markets in the interest of society.

In conclusion, only a balanced interaction between the policy making world and the operational world can lead to a public service equipped for procurement of innovation. Policy makers should define the strategic role of public procurement of innovation in relation to other innovation policy measures. At operational level, the rules of the procurement framework should be exploited at best using the procurement position and the position of the innovation on the innovation cycle as a frame. This frame allows the roll-out of public procurement of innovation in the broadest way possible aiming at change for the better, contributing to the 3 % research and development (R&D) goal and transforming the B2G market into an attractive market for innovative companies. In this setting pre-commercial procurement deserves special attention but is not the exclusive focus of procurement of innovation.

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