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).

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:

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 selected suppliers will refine their proposed concept designs, solution architecture and technical specifications, in accordance with the input provided by the Buyers Group. It is expected that six suppliers will be selected to take part in this phase. 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 selected suppliers are expected to deliver their prototypes in two iterations.  It is expected that out of the total number of suppliers in the previous phase, four suppliers will be selected to take part in this phase. 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 selected suppliers will implement and test their pilot systems in a set of six selected pilot buildings (one per procurer). Out of the suppliers involved in the previous phase, two suppliers are selected to take part in this phase. The total procurement budget in Phase 3 will be 4.22 million euro.