Pre-Commercial Procurement

What is PCP?

Pre-Commercial Procurement (PCP) is an approach to public procurement of research and development (R&D) services that is outlined in the PCP communication and associated staff working document. Pre-Commercial Procurement challenges industry from the demand side to develop innovative solutions for public sector needs and it provides a first customer reference that enables companies to create competitive advantage on the market.
CircularPSP drives innovation from the demand side by acting as technologically demanding customers that buy the development and testing of new solutions. PCP enables public procurers to compare alternative potential solution approaches and filter out the best possible solutions that the market can deliver to address the public need. This enables European public authorities to modernize public services faster and to create opportunities for companies in Europe to take international leadership in new markets.

Join or watch one of our Tender Events to learn more about the PCP Process, our challenge and your funding opportunity.

How does PCP work?

Competitive development in phases:

In PCP, public procurers buy R&D from several competing suppliers in parallel to compare alternative solution approaches and identify the best value for money solutions that the market can deliver to address their needs. R&D is split into phases (phase 0 – preparation and call for tender, phase 1 – solution design, phase 2 – prototyping, original development and phase 3 – validation/testing of a limited set of first products) with the number of competing R&D providers being reduced after each R&D phase.

Encouraging the creation of growth and jobs in Europe:

PCP falls outside of international public procurement agreements alike the WTO Government Procurement Agreement. Therefore PCPs can use place of performance conditions that require (for example, as done in Horizon 2020) participating contractors to locate the majority of the activities performed for the PCP contract, including in particular the principal staff working for the PCP contract, in the EU Member States or associated countries. For PCPs in the field of security, there may be additional stricter requirements.

Risk-benefit sharing under market conditions:

In PCP, public procurers share the benefits and risks related to the IPRs resulting from the research and development(R&D) with suppliers at market price. Suppliers retain IPR ownership rights, while procurers keep some usage and licensing rights.

Separation from the deployment of commercial volumes of end-products / services:

PCP can go up to the development and the purchase of a limited volume of first products or services developed in the PCP(‘limited’ because in a services contract like PCP the total value of supplies purchased needs to remain below 50% of the total PCP contract value). As R&D cannot include quantity production (large scale production to produce commercial volumes of end-products), PCP does not cover large scale commercialisation. The deployment of commercial volumes of end-products is the remit of PPI. PCP is thus complementary to Public Procurement of Innovative Solutions (PPI).

PCP phases

Applied R&D / Pre-commercial Procurement (PCP)

Phase 0

Preparation phase
Jan ’23 – Oct ’23

Tender phase

Jan ’23 – Mar ’24

Phase 1

Solution design
Apr ’24 – Aug ’24

Phase 2

Prototype development
Sep ’24 – Apr ’25

Phase 3

Implementation and testing
Mar ’25 – Mar ’26
January 2023 - October 2023
10 months
Phase 0

Curiosity driven research and Open Market Consultation.

20 December 2023 - 1 April 2024
5 months
Call for Tenders

Call open for industry participation.

June 2024 - October 2024
5 months
Phase I - Solution Design

Suppliers develop the CE-solution Design and its components.

November 2024 - July 2025
8 months
Phase II - Prototype development

Suppliers develop and test the CircularPSP prototype systems in two iterations.

July 2025 - June 2026
11 months
Phase III - Pilot systems

Implementation and testing, original development of limited volume of first test products/services.

Why is PCP beneficial?

Opening a route-to-the market for new market players

73.5% of PCP contracts are won by SMEs, 61.5% of total values of PCP contracts, more than twice the average in public procurement across Europe (29%)

Impact on stimulating cross-border company growth

33.1% of PCP contracts are awarded cross-border, 20 times more than the average in public procurement across Europe (1.7%)

Bringing research results to the market

30% of contracts have universities or research centres as partners in the winning consortia (often together with university start-ups)

Contribution to growth and jobs in Europe

Nearly all bidders (99.5%) are doing 100% of the R&D for the PCP contract in Europe

Steady business growth

~50% of all companies are already generating revenue from commercialising their PCP solution

Deployment of solutions by procurers from the project

Procurers from 55% of the completed PCPs have already deployed developed solutions