15 December 2021

KOINNO aims to successfully use the leverage of innovative public procurement

KOINNO aims to successfully use the leverage of innovative public procurement

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The promotion of innovations in public procurement is an important element of the economic and energy policy of the Federal Republic of Germany. And goals such as resource conservation and energy efficiency are often associated with innovations.

These goals cannot only be achieved on the political side, but also on the demand side through the public purchase of innovative products, system solutions and services. Public clients can play a certain pioneering role here. The following consideration makes this particularly clear: According to estimates, the annual volume of public procurement in Germany is around 350 billion euros.

If it were possible to use one percent of the procurement volume for innovative products and services, this would result in an innovation impulse of more than 3.5 billion euros per year. A comparison with the current funding for research and innovation in companies in 2015 in the amount of 2.3 billion euros illustrates the immense leverage potential of public procurement on innovation activity in the economy.

The demand for new products and services not only stimulates the innovation activity of the economy, but also supports the rapid introduction of new technologies in the markets. Political decision-makers can and should therefore be proactive promoters of innovations.

At the latest, the following advantages should convince you to anchor the objective of innovative procurement even more firmly in the future:

  • Cost savings and increased performance are the consequences of innovative public procurement
  • Better assessment and evaluation of potential risks
  • Positive external impact through communication of innovative procurement projects
  • Faster responsiveness
  • Guarantee of security of supply
  • Contract and legal security as well as compliance with legal requirements (e.g. procurement law)
  • Internal and external reporting (e.g. for control and for more transparency; relevant for committees and auditors)
  • Procurement standards simplify the procurement process for everyone involved

Create framework conditions for the leverage effect

In order for public clients to actually be able to implement the advantages described above, a certain amount of preparatory work is necessary and purchasing or procurement must be set up accordingly. The following pre-requisites must be created so that innovative public procurement can be implemented:

1. Target a procurement strategy
Of course, it is possible to procure innovative products and services even without a procurement strategy. However, it is probably not done systematically and innovations are more a result of chance. The goal of the innovative public procurement or the procurement of innovative products and solutions should therefore be included in the strategy, on the one hand to create a starting point or binding documentation and, on the other hand, to record the objective in quantitative terms. This is the only way to measure the success of the measures! If there is no strategy, there is no long-term and coordinated orientation of the procurement/awarding office.

2. Building resources and skills
Before the actual instruments for implementing innovative public procurement can be applied, organizational aspects such as the skills or competencies of the employees, the (innovation) culture, the resource and IT equipment (e-procurement), the understanding of economic efficiency as well as the status of the awarding/procurement office must be aligned with the requirements of innovative public procurement.

3. Use of innovative methods and instruments in the procurement process
There are numerous instruments that favour the procurement of an innovative product and service. On the basis of the effects or the importance for innovation procurement, however, some instruments can be identified which should be applied with priority. These are among others:

  • Explicit mention of the innovation goal in the tender
  • Carrying out a market research
  • Admission of variant solution in the award procedure
  • Calculation of the life cycle costs and inclusion of benefit criteria in the offer evaluation

When is the goal of KOINNO actually considered fulfilled? When do we talk about innovative public procurement? Section 97 (3) of the Act against Restraints of Competition (GWB) explicitly mentions the strategic goal of innovation, which can be taken into account when awarding public contracts and concessions. However, this is only possible when the procurement office has a corresponding degree of maturity. First of all, in addition to the principles according to Section 97 GWB, other goals such as meeting needs and conformity with public procurement law are in the foreground.

This means that efficient and effective procurement processes are the basis for the actual procurement of innovations (source: FoRMöB / BME (2016): "Conception of an innovative public procurement - definition and approaches for innovative procurement in the public sector"). This shows that it is important to first create the framework conditions described above in-house.

An innovation can be anything that is fundamentally new, renewed or further developed. According to the OECD, an innovation is the introduction of a new or significantly improved product (or service), a new process, or a new marketing or organizational method into business practice, work processes, or external relations (source: OECD/Eurostat (2005): "OSLO Manual: Guidelines for collecting and interpreting innovation data," 3rd ed. Paris: OECD/Eurostat.). In the public sector, particular attention is paid to product and service innovations as well as process innovations.

If the appropriate prerequisites have been created, the goals of innovative public procurement can be achieved in the long term and the leverage effect can unfold.