Every year, the federal government, states, municipalities, and public companies in Germany purchase services worth over €350 billion, according to the Federal Ministry for Economic Affairs and Energy. Across the EU, the purchasing power of public contracting authorities amounts to approximately 14 percent of GDP. The EU Commission wants to enable public authorities to use this enormous market volume to support innovations in procurement and has therefore launched a guide published.
The guide states that the rules governing public procurement are no longer just about how something should be procured. The rules now also allow for incentives for what should be procured, but without specifying this in detail. In other words, the procurement of innovative services is intended to promote innovation in Europe. The guide states the following background:
“In any public procurement, the public has a legitimate interest in knowing whether the chosen solution not only meets the formal requirements but also offers the greatest possible added value in terms of quality and cost-effectiveness, as well as environmental and social impacts, and whether it offers opportunities for the supplier market.”
Public sector as venture client
In the aforementioned supplier market, the EU Commission is particularly targeting startups "that may have solutions for a previously unmet need but still face difficulties in bringing their solutions to market." Public contracting authorities could then act as "lead customers" and "give innovative companies an opportunity to test their new solutions under practical conditions."
The public sector should therefore be available to innovative start-ups as a pilot customer and thus encourage other financiers to invest in the relevant business activities — public contracting authorities as Venture Clients.
Startup-friendly procurement and less bureaucracy
The EU Guidelines identify one of the biggest challenges of innovation-promoting procurement as “attracting innovators, particularly high-tech startups and innovative SMEs.”
To achieve this, the Commission proposes a range of procurement procedures designed to engage innovative companies, such as innovation partnerships and competitions. It also proposes reducing bureaucratic hurdles to encourage startups to participate.
For example, self-declarations from companies confirming their compliance with all administrative requirements are now only required if they are considered for a contract award. Submitting certificates immediately before contract signing makes more economic sense than submitting them at the very beginning of a procedure. The electronic version of this self-declaration—the Single European Procurement Document (SEPD)—further simplifies this process. The SEPD enables the reuse of data to expedite the processing of tender documents for bidders. This significantly simplifies the process for both contracting authorities and bidders.
