Innovation Procurement

The European Union (Award of Public Authority Contracts) Regulations 2016 define “innovation” as

What is Innovation Procurement?

“Innovation procurement” refers to any procurement that has one or both of the following aspects:

• buying the process of innovation – research and development services – with (partial) outcomes
• buying the outcomes of innovation

European Commission Guidance on Innovation Procurement

Types of Innovation Procurement

There are various types of procedures that contacting authorities can use when developing or purchasing innovative solutions. Please see below further information on the following procedures:

Why do we need Innovation Procurement?

• Innovation can be the tool used by contracting authorities to achieve their goals or objectives in any area.
• Innovation procurement supports research and development into new products and new ways of doing things.
• Innovation procurement is a way to challenge the market to create products, solutions and tools that do not currently exist.
• By bringing together interested market participants, it has the potential to revolutionise the way public bodies purchase goods and services.
• Innovation procurement has the ability to stimulate growth, drive new solutions and deliver transformational change.

Preliminary market consultation allows contracting authorities to engage with suppliers and expert bodies before deciding to commence an innovation procurement. This enables contracting authorities to gain a better understanding of what solutions are currently available in the market. Further information on preliminary market consultation can be found here.

When should you use Innovation Procurement?

Innovation procurement can be considered when the need for a new or improved good or service is identified. A preliminary market consultation should be undertaken to assess what is currently available on the market. If a suitable solution is not available, or not currently commercially ready, an innovation procurement should be considered. A preliminary market consultation will also inform the market’s ability to provide a solution. Innovation procurement can also be used as a tool to further assist the contracting authority in achieving their organisational objectives and wider government goals. Please see below section on Horizontal Policy for further information on this.

The European Commission has published the Public Procurement Procedures and Instruments in Support of Innovation which explores the area of innovation in procurement and provides useful information to any contracting authority considering an innovation process. In this publication the European Commission created a decision tree to assist contracting authorities in choosing a procedure that would be most suitable for their procurement.

Key Terms to understand when carrying out an innovation procurement process

Preliminary Market Consultation (PMC) – Contracting authorities may conduct market consultations before undertaking a procurement procedure to gather knowledge and information while also alerting economic operators to their upcoming plans and requirements. Further information on PMC can be found here.

Research and Development (R&D) – This is the process of which examination, exploration and testing of ideas take place. This can be further divided into the following classifications as outlined by the Department of Further and Higher Education, Research, Innovation and Science:

• Type of Activity
• Fields of Research
• Socio-economic Objective

Intellectual Property Rights (IPR) - This is particularly important in the procurement of innovation. The IPR can be retained by the supplier or bought buy the contracting authority, and depends on the good/service itself which is the most suitable option. Please see below section on Intellectual Property Rights.

Pre-commercial Procurement (PCP) - PCP is the process of buying and engaging with R&D through phases and competitive development to produce a new innovative good or service.

Public Procurement of Innovative Solutions (PPI) - PPI is the procurement of innovative solutions that have already completed the R&D process but are not yet available on a large commercial scale.

Innovation Partnership - Innovation partnership is when a contracting authority partnerships with one or multiple suppliers to create and develop a new product/service to meet the needs of the contracting authority. It is a type of procurement procedure, which incorporates R&D elements and does not involve an open tender once the R&D has completed.

Funding Opportunities

There are a variety of supports available in the area of innovation. Please see below further information in relation to possible funding options:

Top Tips

The EU Directives and Innovation

EU Directive 2014/24 promotes the use of innovation in public procurement and cites research and innovation, including eco-innovation and social innovation, as being among the main drivers of future growth. Innovation is highlighted as contributing to achieving best value for public money and wider economic, environmental and societal benefits. This can be as a result of generating new ideas and translating them into innovative products and services which promote sustainable economic growth. Buying innovative products, works and services is identified as playing a key role in improving the efficiency and quality of public services while addressing major societal challenges. For these reasons, contracting authorities are encouraged to make the best strategic use of public procurement to spur innovation.

The Directive promotes the use of innovation in a number of ways. Unlike a standard procurement process, with an innovation procurement a solidly defined solution is not required. Instead, there is openness to allow the market to create solutions. Contracting authorities are encouraged to use variants as often as possible, which supports suppliers to offer innovative and creative solutions. Variants are alternative and often innovative suggestions that will fulfil the procurement needs but may not be the obvious solution. This can be a simple way of including and supporting innovation in public procurement. The use of functional specifications can be used to direct, encourage and allow the market to design a suitable solution.

In addition, the Directive introduced a specific procedure to allow contracting authorities establish long-term innovation partnerships for the development and subsequent purchase of a new, innovative product, service or works.

Horizontal Policy Objectives

There are a number of national strategies that promote a culture of innovation. These include, but are not limited to:

• Buying Greener: Green Public Procurement Strategy & Action Plan encourages contracting authorities to consider using an innovative procurement procedure or the innovation partnership to find goods, services, or works to address a specific environmental need that cannot be otherwise met.
• Public Services Transformation 2030 Strategy encourages public servants to embrace a culture of innovation to ensure the best possible outcomes are achieved for the Government and the people of Ireland.
• Making Innovation Real, the Public Service Innovation Strategy sets out a vision of harnessing the power of innovation to deliver world-class public services in Ireland.
• Impact 2030: Ireland’s Research and Innovation Strategy commits to continuing to unlock the potential of public procurement to drive innovation and to develop solutions for the citizen that do not exist yet.
• Harnessing Digital: The Digital Ireland Framework aims to maximise the benefits of the digital transition for the wider ecosystem, across productivity, innovation and competitiveness. The strategy identifies a focus on digital and innovation as being crucial for the achievement of our climate targets.

Innovation Procurement & SMEs

Creative ideas for new and innovative solutions and products often come from SMEs and the award of a public contract can act as a springboard for emerging SMEs to expand and export. The Department of Public Expenditure, NDP Delivery and Reform published Circular 05/2023: Initiatives to assist SMEs in Public Procurement. This circular was developed with a view to encourage public bodies to adopt measures that will further enable SMEs to compete for public contracts. Preliminary Market Consultations are highlighted to assist in determining the potential for innovation and facilitating the development of the procurement strategy. The circular highlights the that the 2016 Regulations provide for the use of procurement procedures that can facilitate innovation including Competitive Procedure with Negotiation, Competitive Dialogue and Innovation Partnership. Contracting authorities are also encouraged to consider the use of pre-commercial procurement to promote the development of innovation solutions.

Intellectual Property Rights

The management of intellectual property rights is an important consideration when considering an innovative approach to procurement. Intellectual Property Rights (IPR) are the creation, development and use rights of the new good or service. These rights can be purchased by the contracting authorities, usually at a higher price, or can be retained by the supplier. It is important that IPR is considered by contracting authorities when undertaking an innovative procurement. It can be of particular significance when a PCP has taken place and the PPI process has begun that contracting authorities can use information in their competition notice. It varies depending on the good/service itself whether contracting authorities should consider purchasing the IPR and may not be suitable in all circumstances. It is recommended contracting authorities seek legal advice in relation to IPR.

The Intellectual Property Office of Ireland (IPOI) is the official Irish government body responsible for intellectual property (IP) rights and can provide additional information on Intellectual Property Rights and helpful resources on IPR management.

Knowledge Transfer Ireland (KTI) is Ireland’s central point of reference for industry-academia partnership and research commercialisation. It provides practical resources to support research and development collaboration, consultancy, and licensing.

Procurement of Innovation - eForms

The new eForms (digital public procurement notices) have been available for use on eTenders since 25 October 2023. These notices contain a new field relevant to the Procurement of Innovation. Buyers should complete this field to allow Economic Operations to see quickly if innovation is relevant to the competition announcement. Further information on the implementation of eForms can be found here.

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 innovation procurement can contact the OGP via support@ogp.gov.ie