Innovation Partnership

What is an Innovation Partnership?

An Innovation Partnership is a specific procurement procedure, which is provided for by the EU Directives, and involves a combination of the purchasing of research and development (R&D) by one or more suppliers and the subsequent purchase of the resulting innovative product or service. It is a combination of the stages involved in a Pre-Commercial Procurement (PCP) and Public Procurement of Innovative Solutions (PPI). An Innovation Partnership can involve multiple suppliers, however it is also possible to undertake a single-source innovation partnership. It is important any type of partnership should establish structured contract performance and monitoring.

Innovation Partnership offers contracting authorities the opportunity to collaborate with suppliers to create and develop a tailor-made solution to meet their needs and aims. Therefore, it is essential that a detailed exploration of their main challenges currently experienced and the objectives aimed to achieve are outlined to construct the functional specifications required. Contracting authorities should develop their award criteria using functional specifications as it will allow the market flexibility to create, innovate and design a solution.

The aim of an innovation partnership is the development of innovative goods, works or services and its subsequent purchase provided it corresponds to the performance levels and maximum costs agreed between the contracting authority and the participants. Contracting authorities are required to record unambiguous and justifiable reasons for selecting this approach.

The European Commission developed an Innovation Partnership Quick Guide from Practitioners which can be downloaded here. This guide provides useful and detailed information and practical direction when undertaking an Innovation Partnership.

Scope for using an Innovation Partnership Procedure

EU Directive 2014/24 established a new procurement procedure, in the form of the Innovation Partnership, in recognition that contracting authorities should have access to a specific procurement procedure for instances where there exists a need for the development of an innovative product or service or innovative works and the subsequent purchase of the resulting supplies, services or works cannot be met by solutions already available on the market. Regulation 31 of S.I. No. 284/2016 sets out the rules for conducting an Innovation Partnership.

How to conduct an Innovation Partnership

An innovation partnership is a procedure that allows for the combination of research, innovation and procurement. In accordance with EU Directive 2014/24, the innovation partnership should be based on the procedural rules that apply to the competitive procedure with negotiation and contracts should be awarded on the sole basis of the best price-quality ratio, which is most suitable for comparing tenders for innovative solutions. An Innovation Partnership consists of three stages with the tendering phase taking place at the beginning of the procedure.

Selection Stage: The contracting authority, issues a Contract Notice via eTenders. This notice must identify the need for an innovative good or service that cannot be met by purchasing goods or services already on the market and set out the minimum requirements that all tenderers must meet. Any supplier may make a request to participate in response to a Contract Notice. However, only those tenderers invited by the contracting authority following the assessment against the ESPD and Selection Criteria can participate in the procedure. A contracting authority, in selecting tenderers for an innovation partnership must apply criteria concerning the capacity of the candidate in the field of research and development and of developing and implementing innovative solutions. There is the possibility of reducing the number of tenderers during the process by applying published Award Criteria. This must be set out in the Contract Notice.

Research and Development Stage: An Innovation Partnership must set intermediate targets to be attainable by the participants and must provide for payment in appropriate instalments and on the basis of these targets. Based on targets provided the contracting authority may decide after each phase to terminate the innovation partnership, or, where there are several partners on the innovation partnership, provide an option to reduce the number of partners by terminating individual contracts.

Commercial Stage: The commercial stage of the resulting innovative good, service or works can then take place provided that they correspond to the performance levels and maximum costs agreed between the contracting authority and the participants. A contracting authority must define the arrangements applicable to intellectual property rights and must not disclose partners proposed solutions or confidential information without that partner’s agreement.

When Should Innovation Partnership be used?

The Innovation Partnership procedure can only be used where there is no existing good or service currently available on the market that meets a contracting authority’s needs. The European Commission’s Innovation Partnership Quick Guide flags market consultation as being an essential task prior to commencing an innovation partnership for two reasons:

• to determine that nothing on the market exists and so the process can be used; and
• to prepare the market for a new type of procurement.

Further information on preliminary market consultations can be found here.

It is up to each individual contracting authority to determine on a case-by-case basis which approach is most suitable. An appropriate risk assessment should also be undertaken to examine the suitability of an Innovation Partnership.

Contracting authorities should not use innovation partnerships in such a way as to prevent, restrict or distort competition.

Estimating the value of an Innovation Partnership

In accordance with Regulation 6 (9) of S.I. No. 284/2016, the estimated value of the procurement to be taken into consideration shall be the maximum estimated value, net of VAT, of the research and development activities to take place during all stages of the envisaged partnership as well as of the supplies, services or works to be developed and procured at the end of the envisaged partnership.

Further information

For frequently asked questions in relation to Innovation Procurement please see our Innovation Procurement Frequently Asked Questions.

Any public sector body interested in learning more about an innovation partnership can contact the OGP via support@ogp.gov.ie