Chapter 12: The impact of pre-commercial procurement on innovation
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Pre-commercial procurement is procurement by public sector organisations of research and development services with the aims of developing the prototype of a product or service for which the public sector may be a customer, or where there is a public policy need for that good or service to be produced, and with the additional effect of supporting industry in its attempts to innovate. Pre-commercial procurement is typically conducted through an R & D competition, usually in two stages. In Europe, the European Commission has defined a specific pre-commercial procurement procedure, and the Community supports such procurements in a limited number of cases. Member states have also developed their own approaches, and in the UK and the Netherlands the naming of these approaches (the SBRI in the UK, the SBIR in the Netherlands) indicates that such schemes are based on the US SBRI programme. Pre-commercial procurement normally results in a contract being placed for an R & D service, although the US scheme includes both contract- and grant-based financial support. Both contract and grant approaches are discussed in the chapter. Pre-commercial procurement is a demand-side measure when, as in the case of contract-based procurements, a specification is used to identify a need; but it may also exhibit supply-side aspects when grants are issued and specifications are informed by industry or technology priorities. Recently, within the European context, pre-commercial procurement has been formally linked to procurement of actual goods and services within a complex legal process which is part of the new procurement directives. This development, known as the Innovation Partnerships Procedure, is new and as yet untried and untested.

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