Innovation Partnerships: The End of the Square Peg?

Posted by Cathrine Bryant on
Sometimes, no matter how hard you look you never can quite find exactly what you are looking for and despite endless frustrating attempts to fit a square peg into a round hole, the end result is often nothing more than “that will do”.

This is where innovation partnerships step in to help out. However, the word “innovation” is often quickly followed by thoughts of spiralling costs, missed deadlines and uncertainty, which inevitably impact on the delivery of services. On the other hand, there are many positives attached to innovation in public procurement including increased competition, creation of jobs, investment in small and medium enterprises, and reduction of waste and impact on the environment, often with the result that overall efficiency is improved.

Innovation partnerships will allow contracting authorities to advertise opportunities to work with one or more partners to carry out research and development to develop new products, services and works. It is a flexible procedure which allows solutions to continue to be developed with a partner after the award of a contract, as a contract can be awarded to a successful tenderer based on its ideas for development of an innovative product, service or works.

Innovation partnerships are likely to be particularly attractive to public bodies looking to let contracts which are complex for financial, technical or legal reasons or where development and innovation are the main purpose of the contract. A contract can be awarded with the objective of developing an invention or a new or significantly improved product, service or process leading to the subsequent purchase of it by the contracting authority.

The procurement documents must identify the need for innovation and indicate which elements constitute the minimum requirements, which must be met by all tenders. These minimum qualitative requirements cannot be negotiated.

The procurement documents must also set out any arrangements to deal with intellectual property rights, which are likely to be at the heart of any innovation partnership. These intellectual property rights could be reserved by the economic operator or the economic operator may agree to transfer, or assign, these to the contracting authority (most likely for a fee). If there is a transfer of intellectual property rights then this is likely to add to the cost of the procurement for the contracting authority.

In establishing an innovation partnership, the contracting authority can negotiate with the tenderers, always ensuring equal treatment. The contracting authority may elect to have one or multiple partners, which must be chosen by applying criteria relating to their capacity for research and development, and innovation. The negotiations can take place in stages to enable the contracting authority to reduce the number of tenderers. Only those tenderers invited by the contracting authority following its assessment of the requested information may submit research and development or innovation projects. The successful tenderers must be chosen on the basis of the best-price quality ratio (i.e. value for money). The award criteria, which should also link to the contracting authority’s minimum requirements, cannot be negotiated.

The newly-constituted innovation partnership will develop an innovative product, service or works for the contracting authority that best meets its needs. The contracting authority may then purchase the resulting supplies, services or work. The partnership must always attain the performance levels and must not exceed the maximum costs agreed between the contracting authority and its partner(s).

An innovation partnership could go through successive phases with the contracting authority able to terminate it after each phase or alternatively reduce the number of partners involved with it after each phase. Intermediate targets may also have to be attained for the innovation partnership to continue. Using innovation partnerships means that contracting authorities will not have to run a fresh procurement process for each stage of the development process of their idea.

A few words of warning

  • Contracting authorities should always bear in mind that the estimated value of the contract must not be disproportionate to the investment required from the tenderers.
  • Contracting authorities must always ensure that the structure, duration and value of the phases of the partnership reflect the degree of innovation of the proposed solution and the sequence of the research and innovation activities required for its development.
  • Precise information is required in the procurement documents, including whether phases will be used and under what circumstances the contracting authority may decide to terminate or reduce the number of partners after a phase.
  • If any changes are made to either the specification or procurement documents, the contracting authority must inform all of those tenderers which have not been eliminated to preserve the principle of equal treatment.
  • Confidentiality must always be preserved. The contracting authority cannot reveal the solutions proposed or confidential information shared by a partner with one of the other partners in the innovation partnership or with anyone else without that partner’s agreement.

About the Authors

Photograph of Cathrine Bryant

Cathy is a partner in the firm's corporate team. As a dual qualified lawyer Cathy brings a depth of experience to her role as an adviser on tax matters in corporate transactions.

Cathrine Bryant
Email Cathrine
029 2068 6198

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Photograph of Charlotte Cheetham

Charlotte is a Senior Solicitor, currently sat in our Commercial team, based in Wales.

Charlotte Cheetham
Email Charlotte
029 2068 6216

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