Innovation Partnerships: Procuring R&D Solutions in the Public Sector

The innovation partnership procedure, introduced in EU Directive 2014/24/EU Article 31, is designed for situations where a contracting authority needs a solution that does not yet exist on the market and cannot procure one through standard procedures. It allows the authority to develop the solution in partnership with a supplier through structured R&D phases before purchasing the resulting product or service, all within a single procurement procedure.

The threshold for using innovation partnership is that the need cannot be met by solutions already available on the market. Authorities must be able to justify that existing products, services or works are insufficient — a genuine gap rather than a preference for something new. The procedure is particularly suited to healthcare technology development, smart infrastructure solutions, digital public service innovations and environmental technology development where public procurement can act as a demand-side pull for new innovation.

Innovation partnership proceeds in phases modelled on a commercial R&D process. After competitive selection of partners (against published financial, technical and innovation capacity criteria), the authority and partners agree a research and development programme structured into milestones. At the end of each phase, the authority reviews progress and may end the partnership with those partners who have not met the phase targets, gradually narrowing down to the most promising solutions.

The final phase is the procurement of the resulting product, service or works. Because the entire process from R&D to purchase is conducted within the framework of the original competition, there is no requirement for a new procurement — the authority may purchase the developed solution from the successful innovation partner provided the agreed prices do not exceed the market level for comparable products or services. This end-to-end structure is what distinguishes innovation partnership from pre-commercial procurement (PCP), under which the authority retains rights to the IP and the purchase phase remains a separate procurement.

The management of intellectual property is one of the most complex aspects of innovation partnership. The Directive is silent on IP allocation, leaving it to negotiation between the authority and partners. In practice, most Irish innovation partnership arrangements follow one of three models: the authority retains ownership of developed IP; the partner retains IP with a non-exclusive licence to the authority; or IP is jointly owned with defined commercialisation rights. Each model has different implications for the cost of the R&D phase (partners working for IP rights may accept lower fees), for the authority's ability to re-use the solution across other public bodies, and for the partner's ability to commercialise the solution in private markets.

Confidentiality during the dialogue and R&D phases is protected by explicit rules in the Directive — the authority must not reveal one partner's proposed solutions, concepts or IP to another without consent. Partners should be given contractual confidentiality commitments that survive the end of the partnership, whether or not their phase was successful, to encourage genuine innovation disclosure.

Ireland has participated in EU-funded pre-commercial procurement programmes managed through Horizon Europe and earlier framework programmes, most notably in eHealth, smart cities and public safety. These PCP procurements are distinct from the innovation partnership procedure but serve a similar market-development function. Learnings from PCP have informed how Irish authorities approach innovation procurement more broadly, including the importance of early market engagement before a procedure commences and of writing technical requirements in terms of functional outcomes rather than prescriptive technical specifications.

The HSE has used innovation procurement mechanisms for digital health infrastructure, and Local Government bodies have engaged with innovation partnership concepts for smart waste and lighting solutions. The OGP is developing updated guidance on innovation procurement that will align with the European Commission's Innovation Procurement Action Plan. Authorities considering innovation partnership should engage with the OGP's procurement consultancy service at the early concept stage to assess whether the procedure is appropriate for their specific need.