Procurement Precertification for Innovative Research

The Government of Korea has begun to implement a new Public Procurement of Innovation (PPI) policy, aiming to facilite the diffusion of innovation on the wider market. The Ministry of Science and ICT's new approach takes the existing innovation practice a step further by working in conjunction with associated public R&D projects to identify technological novelty and highlight potential social, economic impacts. This builds confidence for innovative companies and further facilitates public research.

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Public procurement for innovation is one of the major policy tools to stimulate innovation and promote growth. Innovative economies around the world are setting targets within their public procurement budgets and policies, in order to achieve a number of policy goals:

- to deliver higher quality public service
- to respond to changing social needs
- to support innovative companies to launch & grow
- and to encourage markets towards innovation.

In Korea, public procurement for innovation has been operationalised around four government programmes.

- "Excellent Product Procurement" by the Public Procurement Service
- "Technology Development Preferential Purchase" by the Small and Medium Business Administration
- "New Excellent Product Mandatory Purchase" by the Ministry of Industry

However, these programmes only received lukewarm responses from both public and private stakeholders. There were three key problems associated to the existing programmes:

- Korean SME policy has been developed to protect small and medium size businesses, with little consideration for fostering technological innovation.
- The public procurement process focuses on pricing rather than quality of products or innovative value of products.
- It is difficult to engage innovation stakeholders in the procurement process.

It is in this context that the Government of Korea has designed a new Innovation Public Procurement Model. In order to address these issues, the Government of Korea piloted a new investment process, the Procurement Precertification for Innovative Research (PPIR), aiming to innovate national procurement system towards sustainable innovative path. The PPIR works in conjunction with national research projects conducted by the Ministry of Science and ICT, which spends nearly a half of Korea's R&D national budget of approximately 22 billion USD. Compared to previous Innovation Procurement Programmes, PPIR can approach procurement with much wider source of innovation, as well as deeper understanding of the innovation. The Ministry and its affiliated agencies that have managed the research projects not only have accumulated knowledge of innovations for potential procurement, but also have the authority to coordinate relevant programmes and to manage policies targeting specific innovation sector. Rather than simply reviewing an innovation procurement application, the ministry can mobilize relevant researchers, scientists, policy analysts and industry stakeholders to shape innovation sourcing proactively. Academic research, public-private development efforts, economic/social impact, and market information work together in the PPIR programme.

Whereas previous programmes vaguely defined the scope of innovation procurement, the PPIR targets innovations developed by public R&D programmes. This addresses two problems. Previous programmes did not attract much attention because of unclear boundaries of innovation, leading to no clear-cut stakeholders and lukewarm procurement participants. The PPIR provides basis for pubic-private partnerships and consortium building, as well as inter-agency efforts for innovation procurement. The Ministry of Science works in conjunction with Ministry of Economy and Public Procurement Services (PPS) in order to reflect and shape the innovation procurement processes. Furthermore, the system enables ‘fast-track’ implementation of public procurement by allowing non-competitive contracting for innovative products — such exception has been made possible jointly thanks to the Ministry of Economy and PPS.

The Ministry of Science works with 3,000 expert panellists covering 24 technical sub-fields in order to pre-certify products for innovation procurement. This is in addition to the readily available assistance from researchers and scientists participating in 60,000 public R&D projects annually. In collaboration, the review processes identify technological novelty, social/economic impacts, potential for innovating public procurement and market contributions. Once selected as an innovative product, after expert panel reviews, innovative products are qualified for ’fast-track’ access to public procurements, apart from typical bureaucratic processes. They can seek early markets, which help creating initial sales and scaling up production, benefiting both companies, customers, and researchers who created the relevant innovation.

Motivated by the EU’s PPI programme, the Ministry of Science has formed a conceptual framework jointly with the Office of President, the Ministry of Economy, and the PPS in 2019. The PPIR was approved internally in September. Experts from academia, industry, central and municipal government participated to develop the programme. In January 2020, the programme became official after a 30 day public notice, and work is currently being conducted with applicants to help their products reach public procurement in the field of biotechnology, emergency food supply, smart cities, AI based public services, etc.

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Year: 2020
Level of government: National/Federal government

Status:

  • Identifying or Discovering Problems or Opportunities - learning where and how an innovative response is needed
  • Generating Ideas or Designing Solutions - finding and filtering ideas to respond to the problem or opportunity
  • Developing Proposals - turning ideas into business cases that can be assessed and acted on
  • Implementation - making the innovation happen

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