What is an Innovation Partnership?
An innovation partnership (Innovationspartnerschaft) is a specialized procurement procedure introduced by the 2014 EU Procurement Directives, designed for situations where a contracting authority needs a product, service, or work that is not yet available on the market and requires development. Unlike other procurement procedures that presuppose the existence of a solution to be procured, the innovation partnership integrates the research and development phase with the subsequent acquisition, allowing the contracting authority to procure the innovative solution without conducting a separate procurement procedure after development.
The procedure begins with a participation competition (Teilnahmewettbewerb) in which candidates demonstrate their research, development, and innovation capabilities. Selected partners then enter a structured development phase, during which they work to create the innovative solution in accordance with predefined performance levels and cost parameters. The partnership can involve multiple partners initially, with the contracting authority retaining the option to reduce the number of partners at predefined stages based on intermediate results.
A key feature of the innovation partnership is that it bridges the gap between development and procurement. At the successful conclusion of the development phase, the contracting authority can acquire the resulting products or services from the partner without a new tender, provided the final solution meets the agreed performance levels and the price does not exceed the agreed maximum. This continuity eliminates the so-called "valley of death" where innovative solutions developed with public funding fail to find a public sector buyer.
Why It Matters for Bidders
The innovation partnership presents unique opportunities for companies with strong R&D capabilities. It allows these companies to co-develop solutions with public sector clients, securing both development funding and a potential procurement contract. This is particularly attractive for technology companies, startups, and research-intensive enterprises that can offer novel approaches to public sector challenges.
However, the procedure is complex and resource-intensive. Bidders must demonstrate genuine innovation capability in their application and be prepared for a potentially lengthy development process with performance milestones and evaluation gates. The risk of being eliminated at an intermediate stage means that companies must carefully evaluate whether the potential reward justifies the investment.
Legal Framework
The innovation partnership is regulated in Section 19 VgV for above-threshold procurement, implementing EU Directive 2014/24/EU Article 31. The procedure requires a prior participation competition and publication on TED. Detailed rules on the structuring of development phases, intellectual property rights, and the transition from development to procurement must be defined in the tender documents.