III.A.2.1. Options:

Option 1: Cover the legal aspects in a PCP

• Be aware that PCP falls outside the scope of the European Directives, so these cannot be relied upon for legal protection. However, the principles of non-discrimination, transparency and open and free competition remain applicable.
• Use an open and competitive procedure. This ensures that you comply with the legal principles governing the PCP and increases the chance of the best solution to be developed.
• Ensure competition among suppliers in all stages of the PCP. This shall be ascertained by inviting a number of companies that are sufficient to guarantee a gradual decrease on innovations provided, and only the best suppliers that meet the desired requirements  will continue to the next stage. The process should be performed in at least three clear phases as indicated in the EU Commission’s Communication COM (2007) 799 of 14.12.2007 (check in resources), indicating:
  • 1) the design of solutions giving ample room to suppliers, this stage includes the structuring of technical specification and the conceptual design;
  • 2) the prototype development where the suppliers are reduced and finally;
  • 3) the development and testing of a limited volume of the pilot innovative solution by at least 2 different suppliers.

• In the case of a collaborative PCP, you undertake the procurement jointly with other procurers that have identified the same unmet need and want to invest in R&D to address it. This increases your buying power, enables you to share the costs and risks among the procurers and creates a bigger mass of demand for innovative solutions. Decide between a coordinated procurement or a joint procurement.
  • In a coordinated procurement, the procurers carry out together the preparation but not the execution of the procurement procedures. There is no single joint tender, and each procurer signs its own supplier contracts.
  • In a joint procurement, one joint tender is launched, and the procurers carry out together both the preparation and the execution of the procurement procedure. In that case, it is important to design a consortium agreement or a memorandum of understanding between all involved procurers.

The lead procurer should make clear agreements on who is responsible for managing/financing different parts of the procedure (check III.A.1). If the procurers are located in different Member States (cross-border collaboration), make clear arrangements on which national law is applicable, and which courts will be competent in case of legal disputes.

• Consider whether you want to allow third-country economic operators to participate in the procurement procedure. Since PCPs fall outside the scope of the Directives, you are free to decide if you want to allow third-country providers or not. Be transparent about this and state it clearly in the tender. In case of Horizon funding, assess impact of funders requirements.
• Remain SME/startup friendly. For example: don’t require too high financial and historical credentials or overly restrictive financial requirements, as this could possibly exclude SME’s or startups from participating.
• Make sure that in the call for tenders you:
  • Clearly state that the PCP is governed by the principles of non-discrimination, transparency and open and free competition;
  • Explain the regime regarding IPRs: each R&D provider that generates results in the PCP owns the IPRs attached to its own results. The procurer obtains license free rights to use the R&D results for its own use, and the right to require participating R&D providers to grant non-exclusive licenses to third parties to exploit the results under fair and reasonable market conditions without any right to sublicense. Add a call back provision to ensure that if an R&D provider fails to commercially exploit the results within a given period after the PCP (identified in the contract) or uses the results to the detriment of the public interest, it shall transfer any ownership of results to the procurers upon request;
  • Put the following elements:
    • A clear description of the unmet need you want to address through the process of R&D and what you would want to buy eventually, how you will evaluate the bids and what measurable requirements you will use for this evaluation;
    • Exclusion, selection and award criteria and how much weight they are each given, described in a transparent way that allows bidders to estimate how their bids will be scored. Do not include disproportionate selection criteria and only use award criteria that are relevant and related to the subject matter of the PCP
    • The process of the PCP: the different phases and their duration (typical durations for the different phases in PCPs are: 3 to 6 months for phase 1 (solution design), 6 to 9 months for phase 2 (prototyping), and 6 to 9 months for phase 3 (development of limited test series), but you can add another few months of preparation and finalisation for the PCP project on the procurer side), the number of suppliers per phase, the submission of performance reports after each phase, evaluation criteria after each phase, the monitoring and how the overall performance will be evaluated, the price per phase and payment conditions;
    • Potential confidentiality requirements.
  • Incorporate legal disclaimers on the non-commitment to procure commercial volumes of the end product after the R&D phase.
• Ensure proper use of TED, national portals and other announcements;

Option 2: Cover the legal aspects in a PPI

• Beware that PPIs follow EU public procurement rules and corresponding national implementation provisions. Compliance with procurement principles and procedures must be guaranteed at all stages of the process;
• Choose the appropriate procedure (open, restricted, competitive procedure with negotiation, competitive dialogue or innovation partnership) as best-suited for the innovative solution desired. Note the different status of the innovation partnership procedure and what it entails under Article 31 of Directive 2014/24/EU, which can also cover R&D and contract execution elements.
• Consider the option of collaborative PPI. Same as with a PCP, you can opt for a coordinated or a joint procurement;
• Consider whether you want third-country economic operators to participate in the procurement procedure. Third country economic operators have the right to equal treatment, in so far the country is party to the GPA or a free trade agreement with the EU, according to Article 25 of Directive 2014/24/EU. So, these providers have the right to participate in the procurement procedure and have the right to be treated equally. Third countries that are not party to the GPA and do not have an agreement with the EU, can be excluded from the tender;
• Make sure that in the call for tenders you:

• Clearly state the type of procurement procedure you chose;
• Put the following elements:
  • A clear description of the unmet need you want to address and what you wish to procure (innovative solutions: goods/works/services), how you will evaluate the bids and measurable requirements for this evaluation. Do this in a way that complies with the EU directives;
  • Exclusion, selection and award criteria and how much weight they are each given, described in a way that allows bidders to estimate how their bids will be scored. For PPIs, the directives provide as the sole awarding mechanism the Most Economically Advantageous Tender (MEAT), which means that the award of the offers shall not be based on price only, but other factors shall be taken into consideration. So, define MEAT award criteria;
  • The process of the PPI: how the procedure will go, expected timelines, the monitoring, price and payment conditions…;
  • How the performance will be evaluated: align with the innovation at stake. Be aware that this will be different for goods and services contracts (testing the product, meeting certain milestones, KPIs, …). Explain what the consequences will be in case of non-satisfactory and/or non-successful performance;
  • Potential confidentiality requirements.
• Clearly describe any requirement related to testing of the innovative solution prior to or following the award of the PPI contract
• Ensure proper use of TED, national portals and other announcements.

III.A.2.2. Maintenance of full records for legal compliance.

• Each decision, phase, procedure, meeting, event, report, etc., should be duly documented to allow a full audit trail to guarantee good administration and legal compliance.