EU ponders 'more risky' procurement rules

Pre-commercial proposals to push R&D

By OUT-LAW.COM, 27th March 2006

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The EU Commission is considering new proposals that would require public procurers to purchase innovative products and services still in need of further research, alongside the more traditional, risk-free approach of buying only established products.

The proposals, which were presented yesterday in Vienna by an ad-hoc working group of ICT experts from all national administrations, takes the view that such "pre-commercial procurement of innovation" could be an important new driver for research and development in the EU.

"Europe must create a commercial environment that encourages more rapid innovation and take up of research results," said Viviane Reding, the EU Commissioner responsible for the Information Society and Media. "The public sector has massive buying power, but it needs the right incentives to share the risks as well as the benefits of investing in new technologies and services."

The classic approach to public procurement is one of buying established products and services in order to minimise the risk and to maximise the benefit to buyers. In contrast to this, yesterday's proposals suggest that buyers should come together to share the risks and the benefits of pursuing novel services and products with the providers themselves.

Such an approach would greatly stimulate innovation, increase investment levels and stimulate take-up of related R&D, and at the same time reduce risks through a pooling of resources, the working group says.

In a report, "Pre-commercial procurement of innovation: A missing link in the European innovative cycle", the group reveals that US and Asian economies are already procuring pre-commercial R&D services in line with WTO rules.

It says that such an approach could have a profound impact in the EU, where R&D investment by member states is much lower than in other regions of the world, and represents only a very small fraction of their public procurement expenditures.

The commission now proposes to follow up on the report by exploring with those directly responsible for public procurement – in particular national authorities – opportunities for a number of joint actions in domains such as health, transport, security and government. It will also consider whether further legal guidelines are required to facilitate pre-commercial public procurement.

See: the report (33 page/322KB PDF)

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