Community Research and Development Information Service - CORDIS

Public technology procurement as an innovation policy instrument: Policy implications

Most of the innovation policy instruments available refer to the supply side of technological change, such as R&D subsidies, the improvement of the technological infrastructure, or the encouragement of innovation networks. However, developing demand-side policy instruments is equally relevant for European and for national innovation systems. Examples of such instruments are public technology procurement, laws, regulations, standards, and related institutions, which help to shape the demand for technological solutions.

Two main dimensions of EU policy - and national government policy - regarding public procurement and its effects on public technology procurement conducted at the level of individual member states can be identified:
- The first of these dimensions concerns the regulatory aspect of policy - i.e. the creation of rules governing public procurement, including public technology procurement. Here a relevant question is how the new EU procurement regulations affect the role of national agencies involved in technology procurement.

- The second dimension concerns the strategic aspect of policy-i.e. the actual practical use of public technology procurement as an instrument of innovation policy.

The research conducted by the ISE sub-project on public technology procurement as a policy instrument provides the basis for developing a critical perspective on current EU policy regarding public technology procurement. The theoretical and research literature reviewed, together with the analysis of the case studies, indicates that successful examples of ‘developmental’ public procurement aimed at achieving important technological innovations typically build on and bring to fruition longer-term innovation trajectories involving close collaboration and interactive learning between users and producers.

To establish such trajectories, a number of important preconditions must be met, through a variety of policy instruments. Market regulation, competition policy, industrial policy, and the mandates of public agencies must combine to produce a competitive environment providing strong incentives for both public agencies, as users, and private firms, as producers, to invest in the development of new technologies. Through policies supporting scientific research and technological development, ‘poles of competence’ have to be brought into existence in economic sectors of major importance. Further, through the sectoral organization of firms and public agencies that can function in relation to industry as ‘focal organisations’, ‘frameworks for learning’ have to be established that will allow for the development of balance and complementarily between user and producer competence in the new technologies.

We can relate the findings and conclusions from the ISE case studies on public technology procurement to the current EU policies on public procurement by referring to the two dimensions of policy that were introduced and explained at an earlier point in this discussion. The first of these dimensions was identified as the regulatory aspect of policy. This concerns the rules governing public procurement, including public technology procurement. The second dimension was identified as the strategic aspect of policy. This involves the use of public technology procurement as an instrument of innovation policy.

The findings of the project indicate that innovative public technology procurement relies on institutional and organisational arrangements that allow for close relationships and interactive learning between public agencies and their suppliers. Interactive learning is fundamental to innovation in the context of public technology procurement. Some clear policy implications follow from this basic and centrally important finding. Most concern the regulatory dimension of policy, but there are also some related considerations about the strategic dimension.

With respect to the regulatory dimension of policy, the main lesson to be drawn from the findings of the ISE sub-project on Public Technology Procurement is clear. The rules and laws designed-by national governments and the European Commission - to govern the relations between procurers and suppliers must allow for close interactive learning between them. They must certainly not be confined to arm’s-length market relationships. This has radical implications with regard to existing regulation at the European level, which currently does not recognise the need for such interaction, except in a negative way.

EU procurement rules have, it is true, allowed for the continuation of user producer interaction in public goods markets through certain special tendering procedures, allowable exemptions from the regular procurement rules, and a flexible regime of enforcement. This has been done, however, without an explicit policy rationale-only the implicit understanding that these are necessary accommodations of national and sectoral interests. Hence, for the benefit of innovation, the regulations should be changed. In a positive way, the regulations should be changed to encourage, stimulate, and spur interaction between procurers and suppliers in fields where public technology procurement is appropriate.

More direct EU action in public technology procurement could have two objectives. In the first place, it could help in co-ordinating and catalysing (well or weakly articulated) national actions. A decided EU action in this sense could have the benefit of avoiding duplication of efforts undertaken at national levels, as discussed earlier (i.e., the 15 train systems). A second role for direct EU involvement in this area could be to complement the actions already undertaken under the EU innovation policy strategy. EU innovation policy has been criticised on several occasions for being too supply side -oriented. The introduction of EU-wide technology procurement tenders would certainly stimulate technology development in some concrete technological areas with large potential for European industry as a whole.

Needless to say, the role of a hypothetical EU agency for that purpose should be based on the idea of working as a catalyst, with a strategy combining development-oriented and adaptation-oriented tenders, and encouraging cross- European co-operation among firms as a requisite for obtaining the contract.

Reported by

Linkoping University
581 83 Linkoping


Evaluation - Policies
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