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CHALLENGES IN USING PRE-COMMERCIAL PROCUREMENT (PCP) FOR ENHANCING INNOVATION FOR CITIES: RESULTS FROM AN EMPIRICAL STUDY ON SMART CITIES

J. Ojasalo, K.M. Holopainen

Laurea University of Applied Sciences (FINLAND)
Background:
Pre-commercial procurement (PCP) is an opportunity to universities for their applied research collaboration with industry partners and working life, because a large number of winning PCP-contracts (33%) have university center partner in consortium (European Commission DG Innovation Unit, 2015). Winning SMEs are also often university start-ups. PCP is the procurement of research and development of new innovative solutions before they are commercially available (EU 2015, Pre-commercial procurement). PCP refers to the procurement of (expected) research results and is a matter of direct public R&D investments, but no actual product development. Moreover, it does not involve the purchase of a (non-existing) product, and no buyer of such a product is therefore involved. This type of procurement may also be labelled “contract” research, and may include development of a product prototype (Edquist and Zabala-Iturriagagoitia 2012). The procurement is an R&D service contract, given to a future supplier in a multi-stage process, from exploration and feasibility to R&D up to prototyping, field tests with first batches and then, finally, commercialization (Edler and Georghiou 2007). PCP is an instrument for enabling and enhancing public innovation.

Knowledge Gap:
PCP has not become a popular or widely known way to foster innovation for cities’ needs –neither among cities nor companies. The knowledge of using pre-commercial procurement for enhancing innovation in cities is almost non-existent. There is an evident need for increasing our understanding about the challenges in using PCP for collaborative innovation in cities.

Purpose:
The purpose of this study is to increase knowledge of the challenges in using pre-commercial procurement for enhancing collaborative innovation with external actors in cities.

Method:
The present findings are based on an empirical study on open innovation platforms in Smart Cities. The research method is qualitative and draws on 48 in-depth interviews and 4 co-creative multi-actor workshops. The informants of the in-depth interviews came from Finland, Spain, Netherlands, China, Italy, Denmark, and USA. The interviews were audio recorded, transcribed, and analyzed with open coding and selective coding in terms of the grounded theory method (Glaser, 1978).

Findings:
This study identifies and describes a large number of challenges in using PCP for enhancing innovation in cities.

Originality and Value:
This paper reports on novel findings on the challenges in using PCP for enhancing innovation for cities’ needs. The findings explain why pre-commercial procurement has not become a popular method for enhancing public collaborative innovation in cities. The findings enable city employees and policy makers to develop better approaches for using pre-commercial procurement.

References:
Glaser BG 1978. Theoretical Sensitivity, The Sociological Press, CA.
Edler J & Georghiou L. 2007, “Public Procurement and Innovation..”, Res. Pol., 36, 949-63.
Edquist, C & Zabala-Iturriagagoitia JM 2012, “Public Procurement for Innovation..” Res. Pol., 41, 1575-69.
European Commission DG Innovation Unit 2015,
http://www.mizs.gov.si/fileadmin/mizs.gov.si/pageuploads/Znanost/doc/Horizon_2020/doc/Razpisi/H2020-ICT-2016-2017/ICT-34-2016_Pre-Commercial.pdf , Acc 25. Apr 2016
EU (2015, Pre-commercial procurement, http://ec.europa.eu/digital-agenda/en/pre-commercial-procurement#Newsroom , Acc 16 Apr 2015