A pre-commercial procurement allows you to:

• contract for research and development (R&D) services in a competitive way
• engage with innovative suppliers
• identify the best offer(s) the market can deliver to meet your organisation’s needs 

PCP contracts are exempt from the Scottish public procurement regulations as defined in The Public Contracts (Scotland) Regulations 2015.

When to Use a PCP Notice?

PCP is an R&D services exemption.  The exemption only applies to the award of public service contracts for R&D if:

• specific CPV codes are used in Public Contracts Scotland and
• one of two conditions can be met 

What does the exemption mean? 

PCP is exempted from the World Trade Organisation (WTO) Government Procurement Agreement (GPA). There is therefore no requirement to follow Procurement Regulations.  

Although PCP Notices are exempt from the Public Contracts (Scotland) Regulations 2015 you are strongly recommended to:

• follow the principles of procurement
• encourage competition
• treat suppliers equally and without discrimination and
• act in a transparent and proportionate manner

Commercial volumes of products and/or services should not be purchased via a PCP Notice.  If you progress to procuring commercial volumes you will need to undertake a separate procurement exercise.

Where there is likely to be a future procurement, you should carefully consider how to use the rights obtained through the PCP/R&D service. For example, you may consider making the rights obtained available to other suppliers to create a level playing field for the future procurement.

Pre Commercial Procurement Award Notice

To ensure transparency and clarity it is good practice to describe how the PCP competition will be awarded within the contract notice or documentation.

When awarding your PCP you should advertise this by using the new PCP Award Notice in PCS.  Doing so will allow the tracking of “innovation” contracts within your organisation which can then be included in your annual procurement report.

Benefit Sharing Approach

With PCP any benefits must be shared with bidders under market conditions in line with the Subsidy Control Act 2022 (please see more information on this below). 

This means that under this benefit sharing approach:

• You may leave any new intellectual property rights resulting from the PCP’s R&D activities with the participating bidders but
• You (the public sector buyer) retain the right to:
  • use the R&D results and/or
  • require the bidders to licence the R&D results to third parties under fair and reasonable market terms/rates

Subsidy Control

Any purchase of goods or services (including research and development) through an open competitive process shouldn’t confer a subsidy as the purchase of the goods and services has been advertised/put on the open market for all bidders.

However for procurements which use a direct award process, buyers must ensure compliance with the Subsidy Control Act 2022.

PCP - Selection Process

As the PCP process uses public funds, buyers are encouraged to check that bidders have the capacity and capability to deliver prior to awarding a PCP contract. The Single Procurement Document (SPD) may be used for this purpose, as it allows bidders to self-declare that they meet any minimum requirements relating to suitability, financial standing, and technical and professional ability, without the need to provide evidence ‘up-front’. Only ‘winning’ bidders are required to submit evidence, which should be done prior to contract award.  It is best practice to use Part II (information concerning the bidder and Part III (exclusion criteria) for all PCP Notices.

The SPD module within PCS or PCS-Tender can be used to create and issue SPD requests. 

However, it should also be recognised that the SPD was designed to be used in a wide variety of public procurement procedures and that bidders for PCP contracts may be small and at a very early stage in their development.  As a result you must take extra care to ensure that any minimum requirements for participation are not disproportionately high, and that only criteria relevant to the contract are included.

With many lower value PCP contracts, it is often the case that payment is not made until specific milestones are reached therefore the risk to the public sector buyer may be low. Setting too high a barrier for participation risks excluding the very bidders that innovation is seeking to encourage.

Notices have been developed in Public Contracts Scotland (PCS) to:

• assess what the market can provide
• stimulate innovation
• procure research and development
• procure a limited number/test run/prototypes of innovative solutions

A Preliminary Market Consultation Notice

Before starting any procurement activity it may be appropriate to conduct some market consultation. Regarding innovation, it may be helpful to seek or accept advice from:

• independent experts
• authorities or
• market participants

to help assess the development of the market and to plan subsequent procurement processes.

Previously you may have published a Prior Information Notice (PIN) to advertise your planned procurements.  However you may not know whether to pursue a public procurement and you want to find out whether the goods and/or services:

• exist in the market or
• could exist in future
• could exist with the resources available to you

Using a Preliminary Market Consultation Notice (PMC Notice) in Public Contracts Scotland (PCS) can help you investigate the above and prepare for possible future procurement exercises. 

The PMC Notice lets you seek information from market participants and you can:

• post specific open challenges and/or specifications
• post outcome based requirements
• ask questions of the supply market
• add documents to the notice
• seek notes of interest
• allow organisations to give information through the PCS postbox
• allow suppliers to network/collaborate with one another via the Supplier Collaboration Tool

When consulting the market, you must not distort competition or violate the principles of non-discrimination and transparency.

When using the PMC notice you must:

• give suppliers appropriate time to respond
• ensure an appropriate range of PCS CPV codes are chosen to enable the issue of PCS alerts across the right range of suppliers for your consultation.  This is very likely to be a much broader range of codes than you would normally use for regulated procurements 
• use the information obtained from the market in a way that doesn’t discriminate against future competition
• ensure you do not disclose information forwarded by suppliers, which they have designated as confidential, under normal circumstances e.g. technical or trade secrets/commercial data etc.

You can add a market consultation document to a PMC Notice to gather information on specific projects.  A blank example template is included below.

Supplier Collaboration Tool

Sometimes a solution to a public sector issue does not exist.  Innovative solutions therefore need completely new supply chains or input from several suppliers with differing specialisms e.g. in situations where one supplier does not have all of the core competencies needed.

Encouraging the formation of new supply chains can be highly desirable, particularly if SMEs can play an active role in the creation of innovative goods and services.

To help form supply chains for innovation projects, functionality has been added to Public Contracts Scotland to allow suppliers to seek collaborative partners. This is called the Supplier Collaboration Tool.

Within the PCS postbox of the new Preliminary Market Consultation Notice, organisations can choose to seek a partner(s) to potentially work together for an innovative procurement that may occur in the future.

When using the Supplier Collaboration Tool organisations will be asked to provide information on:

• their core competencies and
• what competencies they are looking to obtain through working with an external partner

Organisations wishing to use this functionality are asked to sign a disclaimer and a non-collusion agreement before their details are entered into the pool of suppliers for a particular PMC Notice.

When more suppliers request to join the pool, existing pool suppliers will be sent an email alerting them to new suppliers joining.

Suppliers’ contact details are supplied in PCS and it is the responsibility of the suppliers to contact one another via the information provided here. All subsequent communication between suppliers will happen outwith PCS and the buyer will not be involved in the process. 

Please note that suppliers' contact information is deleted when the PMC Notice is closed.

Public sector organisations looking to innovate can sometimes carry out trials and pilots that may not have been subject to a formal procurement.

You are encouraged to add information on any research and development (R&D) work or innovative projects being undertaken in the Research, Pilot and Innovation Register in Public Contracts Scotland (PCS).

This will provide visibility of innovation projects to:

• understand projects that are underway or being planned.  This information could potentially give public sector bodies a more effective route to market if something is already being developed
• provide improved governance on what projects are underway, what their status is and support smarter decision making on these activities
• reduce possible duplication and overlap of innovation activities
• provide collaborative opportunities with other public sector buyers
• provide additional reports on innovation activity

You are asked to update the register at regular intervals, under guidance from your public sector organisation’s local governance arrangements.

This register is not linked to public procurement notices and is not published externally on PCS.  Access to the register is a separate permission on PCS and can be requested from your organisation’s PCS Controller.

When creating a Contract Notice in Public Contracts Scotland (PCS) for a regulated procurement you will need to answer two new questions which are:

Highlighting innovation within public sector contracts is important for a number of reasons:

• it allows organisations to report on the creation of innovative goods and services
• by reporting on innovation, it provides the potential to commercially scale opportunities
• by understanding contracts for innovative goods and services it will allow other organisations to learn and benefit from the work of others
• it highlights the Sustainable Procurement Duty to promote innovation before a regulated procurement is carried out

When looking to create a new or significantly improved product and/or service it is important that users recognise the importance of understanding the problem they are trying to solve before implementing a solution.

The Innovation Life Cycle model is based on the Scottish Approach to Service Design and the methodology of the British Design Council Double Diamond.

During the definition and discovery phase of the innovation cycle, innovation work will typically use challenges or outcome-based specifications. This is often referred to as “Open Innovation”.

When looking to procure innovative goods or services, it is vital that you understand that the goods and services may not exist in the market yet, or may require work to adapt them for a specific application in the public sector.

Understanding both what the market can deliver and what work/effort may be required is crucial, particularly before making a decision on whether to pursue innovation activity.  This includes what type of procurement process may be applicable.

Public sector buyers should work together with other stakeholders to define the problems (engaging fully with users) before moving to create solutions.