GATE 1: DISCOVERY OF INNOVATIVE SOLUTIONS

What is Pre-Commercial Procurement?

Pre-Commercial Procurement (PCP) is an approach to public-procurement of research and development services. It is designed for the commission of R&D services from multiple suppliers who develop alternative solutions in parallel.  It allows an organisation to competitively test numerous solutions and then down-select at each phase of the trial. 

Designed, at most, as a four-phased approach, PCP allows for a trial to be developed at each stage. As each stage is reached, the authority demonstrates feasibility or provides prototypes to address the challenge. 

As PCP is for the award of R&D service contracts, the exemption is made in the Public Contracts Regulations.

There are two conditions for R&D exemption: 

• The services are intended by the authority to be for, or to result in, benefit to the public; and
• The contract does not also provide for the provision of goods or works.

The authority should ensure the R&D services consist of at least one of the following activities:

• Research aimed at acquiring new scientific or technical knowledge without any particular application or use in view;
• Research primarily directed at generating scientific or technical knowledge for a specific objective;
• Development that draws on existing knowledge to initiate the manufacture of new materials or products, establish new processes, systems, or services, or achieve substantial improvements in existing materials, products, processes, systems, and services;
• and the manufacture and testing of prototypes.

Why is PCP still a relatively unused procedure in UK?

Due to the exemption, PCP  can follow a light-touch procedure. However, it is also viewed as a long-term process. Authorities often do not have the budget and resource for an unknown outcome. In addition, it is discouraging that a multi-stage process cannot be used for the purchase of commercial volumes of products or services. Therefore, the resource to procure may outweigh the appetite to address the challenge. 

• Authorities may not be prepared to embrace an open approach.
• Some authorities may not be in accustomed to  the supplier predominantly owning the Intellectual Property Rights. For further guidance, please read the Intellectual Property Rights Guidance Note (HTML) on GOV.UK.

Arguably, PCP is more appropriate to larger organisations as joint investment is required.

The new regulations (refer to Gate 2: The Procurement Act 2023) support and encourage the use of PCP; however, it is not a newly introduced concept. This procurement exemption applies to contracts primarily focused on the R&D process, including prototype development and testing phases, rather than the large-scale purchase of a finished product. While the regulations promote PCP, and can be included within a Competitive Flexible Procedure (for further information, refer to Gate 3: Routes to Market to Scale); the exemption does not apply if commercial scaling is involved.

Resources & Support

• Read this case study available on Connected Places Catapult’s website to understand how the Small Business Research Initiative (SBRI) model helped Belfast City Council transform its approach to problem solving. 
• Read this case study available on Innovate UK’s website to gather insights on how Transreport has developed an award-winning Passenger Assistance app which makes travel more inclusive for passengers requiring assistance using Contracts for Innovation funding. 
• Read this case study available on Innovate UK’s website to learn how Watermarq developed innovative water supply and demand analytics solutions with Contracts for Innovation’s support.
• Read this case study available on Innovate UK’s Website to find out about NHS Wales Challenge and its innovative solution from Ibex Medical Analytics.
• Further guidance on exemptions: Guidance: Exempted Contracts (HTML) - GOV.UK