Innovative Public Procurement
What are Innovative Public Procurements?
They are instruments for promoting innovation, arising from the subject or entity that needs a creative solution not present in the market for a problem or need ("demand-driven innovation"). This contrasts with the traditional model of "supply-driven innovation," in which actions are taken to stimulate, finance, or subsidize ongoing or already developed projects in the innovative sector (Cf. Gabriel Delpiazzo).
While applicable to various sectors, in other countries the IPP model was well received in the technological sector (Cf. CAF - Development Bank of Latin America and the Caribbean - https://bit.ly/48BV0Zj), where it is common for buyers to view the incorporation of innovation in products or services with suspicion due to the lack of clarity in purchasing options, compliance with deadlines, and quality standards. This, in turn, makes suppliers less inclined to invest in new products or services without clear evidence of demand that will make such an investment profitable.
In this context, IPPs enable state agencies to meet unmet needs, improve services through orders for goods and services that do not exist in the market, and promote innovation.
Regulation and characterization of IPPs.
Our country has specific legislation to promote Public Procurement for Development since 2008 (Law No. 18,362, regulated by Executive Decree No. 191/019 of 07/28/2019), and focuses on promoting public procurement in the following sectors:
a. Development of Micro, Small, and Medium Enterprises (MSMEs), under the coordination of the Ministry of Industry, Energy, and Mining.
b. Development of Small Agricultural Producers, under the coordination of the Ministry of Livestock, Agriculture, and Fisheries.
c. Scientific-Technological Development and Innovation - specifically IPPs - under the coordination of the National Agency for Research and Innovation (ANII).
Under this regime, the State is allowed to define the object of procurement according to functional or performance requirements (rather than technical specifications), and acquire solutions not available in the national market (allowing adaptations and improvements available in other markets).
The regulations also provide for the creation of the Advisory Commission on Innovative Procurement and innovative merit (CACI), with mandatory involvement from early stages (specifically, from the identification of the need). It will be composed of the buying entity (convener), ANII, and the competent entities that can collaborate with the identified need.
Likewise, there is provision for open technical dialogue with the market, with the clear purpose of maximizing possible solutions to the identified need.
Finally, the specifications will be prepared by the contracting entity with the advice of the CACI.
IPP Modalities.
There are two modalities or phases of IPPs, at the discretion of the contracting entity:
(i) Pre-commercial phase: Contracting of innovation services plus development, including prototyping and initial production tests.
(ii) Commercial phase: Acquisition of final solutions on a commercial scale in the form of goods or services.
Beneficiaries and benefits of IPPs.
Under Uruguayan regulations, the beneficiaries will be:
(i) companies of goods and/or services located in the country, and/or
(ii) academic institutions or research institutes located in the country.
Notwithstanding, the aforementioned beneficiaries may associate with business, academic, or research entities located abroad.
The beneficiaries will receive the following benefits:
- Exclusive participation in the pre-commercial phase, reserving up to 100% of the quantities to be acquired in the commercial phase in case of satisfactory results.
- Public support for innovation.
- Obtaining intellectual property, ensuring the contracting entity the use and exploitation free of encumbrances (although there are exceptions).
Final considerations.
IPPs are then positioned as suitable mechanisms to stimulate scientific-technological development and innovation, while improving the efficiency of the public sector and the quality of its services, addressing specific needs through public-private collaboration.
Montevideo, December 27, 2023.
