BENEFITS OF PRE-COMMERCIAL PROCUREMENT
According to document PRE-COMMERCIAL PROCUREMENT "Public sector needs as a driver of innovation" released by European Commission, the main benefits of the using PCP can be concluded in a few points :
- First-buyer involvement in the early phases of industry R&D delivers better products at lower costs.
- PCP dramatically reduces the risks and the cost of failure at deployment stage both for procurers and for suppliers.
- PCP shortens the time-to-market by better aligning product developments with customer needs.
- Putting several suppliers in competition in developing solutions at the pre-commercial stage ensure healthy competition and contributes to ultimately get the best product at a favourable price.
- PCP can also attract venture capitalists looking for promising opportunities offered by SMEs involved in such projects.
- PCP enables to create long lasting growth and jobs and new sectors of industrial leadership through planned innovation of public services.
- Investing in PCP procurement is also investing in a strong and sustainable local European supplier base.
In Review of Pre‐commercial Procurement Approaches and Effects on Innovation by Manchester Institute of Innovation Research, Manchester Business School, University of Manchester (2013) we can find clear overview of justifications and explanations of PCP.
| Justification | Explanation |
| Externalities from R&D support | Public goods aspects of innovation |
| Reduces market failures of information | Government support identifies firms most likely to benefit from investment from venture capital (post PCP competition) |
| Testing of innovations reduces risk for pub lic sector |
|
| Increases the quality of the public services | Innovation rate of public services is increased with PCP approach over other less innovation activities |
| Government develops technologies with public good for ultimately for private purchase where private markets don't yet exist |
Government acts as sponsor for a product ultimately sold to the public (catalytic procurement) only |
| Government procurement of technologies (ultimately from a PCP) will lead to wider private adoption | Government supports innovation, ultimately acquires the technology and this demonstrates the technoloy leading o greater private adoption |
| Gives greater access to small firms | Style of operation and scale of PCP approaches encourages small firm participation |
| Gives greater access to minorities | PCP approaches may by being open to small firms encourage greater participation in the economy by minorities |
| Capability development of participating firms | Participation in PCP approaches gives small firms enhancement of their capabilities |
| New employment | PCP opportunities may lead to the creation of new jobs |
| New firms | PCP opportunities may create new firms and, in the long term, new industrial sectors |
| A major policy goal of increasing European innovation and economic growth and social cohesion, achieved with higher levels of research and development | The Lisbon Strategy argued that the European Union must be "the most competitive and dynamic knowledge‐based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion" by 2010 |
