Pre-commercial procurement: a demand or supply policy instrument in relation to innovation?

In 2006, the European Commission introduced the concept of ‘pre‐commercial procurement’ (PCP) as an instrument to promote innovation and to mitigate grand challenges. One of the main motives for the support of PCP schemes was to use public needs as a driver for innovation. This concept was also introduced as a response to the need to reinforce the innovation capabilities of the European Union while improving the quality and efficiency of public services. But what is meant by PCP? Is it a demand‐ or a supply‐side instrument in relation to innovation? This is the research question addressed in this paper, the goal being motivated by the lack of academic discussion in this direction. The paper is based on three cases, one from the Netherlands, one from the United Kingdom and one from Australia. These cases provide evidence that PCP is a matter of research and development (R&D) funding of a targeted kind, geared toward very specific goals and in a focused way. This leads the authors to conclude that PCP is a supply‐side policy instrument in relation to innovation. In this sense, they would like to raise a flag for going back to the origins of the PCP program and calling it a ‘precompetitive R&D program’, rather than labeling it as an innovation procurement instrument.