Innovation Partnership
A procurement procedure combining R&D and subsequent purchase for solutions not yet available on the market.
Definition
Innovation Partnership is a procurement procedure that combines research and development of a new solution with the subsequent purchase of the resulting goods or services. The procedure is used where the buyer's requirement cannot be met by solutions already available on the market and where development of a new solution is needed. Innovation Partnership is structured in phases (research, prototyping, production) with go/no-go gates between phases. It is one of the least-used PCR 2015 procedures but PA 2023 retains a similar concept under the Competitive Flexible umbrella.
How it works in practice
Innovation Partnership is structured to manage R&D risk while preserving competition. The buyer publishes a contract notice describing the unmet requirement and shortlists candidates with relevant R&D capability. Selected candidates develop solutions in parallel through defined phases (typically initial research, prototyping, pilot, scale). At each phase gate the buyer assesses progress and either continues all candidates, narrows to the most promising, or terminates with payment for the work done. The eventual production contract is awarded to one or more partners based on the developed solutions; no further procurement is needed because the Innovation Partnership notice covers both the development and production phases. The procedure is most suited to genuine innovation projects: cutting-edge medical technology, novel construction methods, unprecedented IT capability. For incremental improvements to existing market offerings, Competitive Dialogue or Competitive Flexible procedure is usually more appropriate. The 2010s UK use of Innovation Partnership has been limited; under PA 2023 the relevant concept lives within Competitive Flexible procedure design. The European Commission published case studies on Innovation Partnership use in EU member states which remain a useful reference for the procedural design.
Common questions
When should a buyer use Innovation Partnership?
When the unmet requirement genuinely cannot be addressed by existing market solutions and substantive R&D is needed. For incremental adaptations or solutions that exist but need integration, Competitive Dialogue or Competitive Flexible procedure is usually more appropriate. Genuine cases are rare.
How are R&D payments handled in Innovation Partnership?
The buyer pays for the R&D work through each phase, typically as fixed-price milestones with go/no-go gates. Candidates terminated at a gate retain payment for completed work but their IP position depends on the contract terms. The eventual production contract is at the published price model in the contract notice.
Does Innovation Partnership survive under the Procurement Act 2023?
The PCR 2015 procedure name does not survive as a separate procedure under PA 2023. The underlying concept (combined R&D and procurement with phase gates) can be implemented within the new Competitive Flexible procedure which gives more design freedom for innovative procurement designs.