Pre-Commercial Procurement

Pre-Commercial Procurement (PCP) is an approach to public procurement of research and development (R&D) services that is outlined in the PCP communication and associated staff working document. Pre-Commercial Procurement challenges industry from the demand side to develop innovative solutions for public sector needs and it provides a first customer reference that enables companies to create competitive advantage on the market.

procuRE drives innovation from the demand side by acting as technologically demanding customers that buy the development and testing of new solutions. PCP enables public procurers to compare alternative potential solution approaches and filter out the best possible solutions that the market can deliver to address the public need. This enables European public authorities to modernize public services faster and to create opportunities for companies in Europe to take international leadership in new markets.

How does PCP work?

Competitive development in phases:

In PCP, public procurers buy R&D from several competing suppliers in parallel to compare alternative solution approaches and identify the best value for money solutions that the market can deliver to address their needs. R&D is split into phases (phase 0 – preparation and call for tender, phase 1 – solution design, phase 2 – prototyping, original development and phase 3 – validation/testing of a limited set of first products) with the number of competing R&D providers being reduced after each R&D phase.

Encouraging the creation of growth and jobs in Europe:

PCP falls outside of international public procurement agreements alike the WTO Government Procurement Agreement. Therefore PCPs can use place of performance conditions that require (for example, as done in Horizon 2020) participating contractors to locate the majority of the activities performed for the PCP contract, including in particular the principal staff working for the PCP contract, in the EU Member States or associated countries. For PCPs in the field of security, there may be additional stricter requirements.

Risk-benefit sharing under market conditions:

in PCP, public procurers share the benefits and risks related to the IPRs resulting from the research and development (R&D) with suppliers at market price. Suppliers retain IPR ownership rights, while procurers keep some usage and licensing rights.

Separation from the deployment of commercial volumes of end-products / services:

PCP can go up to the development and the purchase of a limited volume of first products or services developed in the PCP (‘limited’ because in a services contract like PCP the total value of supplies purchased needs to remain below 50% of the total PCP contract value). As R&D cannot include quantity production (large scale production to produce commercial volumes of end-products), PCP does not cover large scale commercialisation. The deployment of commercial volumes of end-products is the remit of PPI. PCP is thus complementary to Public Procurement of Innovative Solutions (PPI).

PCP is for both, buyers and suppliers, a successful instrument benefiting SMEs in particular:

  • Opening a route-to-the market for new market players

    73.5% of PCP contracts are won by SMEs, 61.5% of total values of PCP contracts, more than twice the average in public procurement across Europe (29%)

  • Impact on stimulating cross-border company growth

    33.1% of PCP contracts are awarded cross-border, 20 times more than the average in public procurement across Europe (1.7%)

  • Bringing research results to the market

    30% of contracts have universities or research centres as partners in the winning consortia (often together with university start-ups)

  • Contribution to growth and jobs in Europe

    Nearly all bidders (99.5%) are doing 100% of the R&D for the PCP contract in Europe

  • Steady business growth

    ~50% of all companies are already generating revenue from commercialising their PCP solution

  • Deployment of solutions by procurers from the project

    Procurers from 55% of the completed PCPs have already deployed developed solutions

The procuRE Timeline

procuRE follows the stages of the PCP process as set-out by the European Commission, i.e. work will be divided into four subsequent phases:

December 2020 - March 2022 15 months
Phase 0 - Open Market Consultation and Preparation of the tender documents

December 2020 - October 2021: Prepraration phase

November 2021 - March 2022: Call for Tender

April 2022 - June 2022 3 months
Phase I

Concept design, solution architechture, technical specifications and assessment framework

July 2022 - February 2023 8 months
Phase II

Development of prototype systems: design level is as detailed as possible, planning and calculations are final

March 2023 - June 2024 16 months
Phase III

Deployment and testing of the solutions: designs are turned into construction drawings, the solutions are installed, made operational, maintained and performance data collected

Phase 0

The Open Market Consultation (OMC) represents a specific phase during the overall Pre-Commercial Procurement preparation. The objective is to actively approach the market to learn more about the state-of-the-art, as well as about envisaged future developments on operating buildings only with renewable energy. A series of OMC events will be organised and announced in section events, newsletter etc.

[Phase 1]

The Solution Design Phase is a 3-month phase in which six contractors apply their Renovation Approach and develop a specific Renovation Package for each of the six Demonstration Sites. The design level is schematic; planning and calculations are preliminary. Contractors and procurers interact via the Co-Design procedure to clarify detail and decision-making. This phase aims to verify the conceptual, technological, organisational, regulatory, safety and budgetary feasibility of the solutions. The total procurement budget for this phase is 1.15 million euro.

[Phase 2]

The Development of Prototype phase is an 8-month phase in which four contractors refine and increase the level of detail of their designs and organise tests of all user-facing ICT-systems. The design level is as detailed as possible without the requirement to constitute construction drawings. Planning and calculations should be final. The use of the Co-Design procedure should be intensified. This phase aims to turn the schematic design to detailed designs preparing all parties involved for rapid implementation; and to give future users the opportunity to test all ICT-systems. The total procurement budget in Phase 2 will be 2.3 million euro.

[Phase 3]

The Development and Testing of Pilot Systems phase is a 16-month phase in which two contractors implement their Renovation Packages at the three Demonstration Sites allocated to them. Designs are turned into construction drawings, the solutions are installed, made operational, maintained and performance data collected. Contractors and procurers interact via the Continuous Commissioning procedure and demonstrate how O&M and contracting plays out in real-life. This phase serves to verify both the prototype Renovation Packages and the whole prototype Renovation Approach. The total procurement budget in Phase 3 will be 4.22 million euro.