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Review of pre-commercial procurement approaches and effects on innovation

Nesta Working Paper 13/14
Issued: November 2013
JEL Classification: O38
Keywords: Pre-commercial Procurement PCP innovation


This paper is part of the Compendium of Evidence on the Effectiveness of Innovation Policy Intervention. The paper reviews the literature that discusses the effects of policies which employ pre-commercial procurement to encourage and stimulate innovation. Precommercial is public procurement of research that will lead to innovation, and does not involve the purchase of a good or service that already exists. One of the best known precommercial approaches is the US SBIR Programme. In Europe, there is increasing interest in pre-commercial procurement approaches, but here, a different legal framework results in important differences in the way pre-commercial procurement can operate. The paper is in four main parts: a) firstly a short definition of pre-commercial procurement is offered, and an explanation is provided of the link between pre-commercial procurement and other demand side initiatives of which pre-commercial procurement can be considered an example; b) the reasons for using PCP are then considered, i.e. the justifications for this type of policy; c) then the forms affecting implementation are considered, paying close attention to the legal rules that define its application; d) evidence of impact is then considered in a section that looks very largely at the US implementation of the concept, the US SBIR; e) in section five, some general lessons and observations are provided. Annexes contain various reference materials including a bibliographic review of publications, and at a glance list of evaluations and the references.


John Rigby

The Nesta Working Paper Series is intended to make available early results of research undertaken or supported by Nesta and its partners in order to elicit comments and suggestions for revisions and to encourage discussion and further debate prior to publication (ISSN 2050-9820). The views expressed in this working paper are those of the author(s) and do not necessarily represent those of Nesta.