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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.

Innovation Summary

Innovation Overview

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.

Innovation Description

What Makes Your Project Innovative?

The PPIR programme's economic impact is given by:

1) Its approach further streamlines existing innovation procurement programmes adopted by a number of countries, including the EU, the US, and Korea. The programme works in conjunction with associated public R&D projects to identify technological novelty and highlight potential social, economic impacts, building confidence basis for subsequent government and public procurements. The procurement service can access wider pool of innovative technologies along with expert researchers. Researchers now have a leeway to push their technology into markets. Governments can leverage a network of suppliers and buyers in developing more effective sectoral policies.

2) It improves the quality of public services to citizens. Instead of vague R&D goals, projects are clustered and connected, and the public policies are designed with higher resolution, for more effective public service delivery.

3) Most importantly, it enhances policy credibility.

What is the current status of your 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.

Innovation Development

Collaborations & Partnerships

The Ministry of Science designs and implement policies for the PPIR, along with actual design and execution of certification processes, securing necessary budgets, mobilizing experts, and conducting publicity efforts. The Public Procurement Service works with the programme in evaluating products for their procurement worthiness, as well as registering the products before and after certification for the actual procurement processes. The Industrial Technology Association runs the expert panel reviews. Researchers & private companies.

Users, Stakeholders & Beneficiaries

Small and Medium-Sized Innovative companies benefits from early sales and opportunities to forge their innovative products through public procurement.

Universities and Government Labs benefit from their research results channelling through market. Their work could be better evaluated for a virtuous cycle of re-investment.

Government, both central and municipal, benefit from more innovative public service offerings.

Citizens also benefit from higher levels of public service.

Innovation Reflections

Results, Outcomes & Impacts

The programme was able to reconcile a number of national agencies because of differences among ministries. For an example, a technology has been developed by a certain ministry, however, the public procurement services were only offered to a handful of ministries with limited scope and classifications. The programme was able to pull a wider technology and innovation base into the innovative product procurement processes, with much more expertise support.

The model is quickly taking hold across different agencies. It will gradually expand into other agencies. Public response is extremely positive. Quite a few researchers, scientists, and innovative entrepreneurs were waiting for a programme such as the PPIR.

Challenges and Failures

While it has wider positive public response and potential for effectiveness, it requires more attention than the traditional approach. There is the need to run 24 expert committees and knit together voices from government, industry, academia and citizens. It is quite a burden. The objective is to secure the necessary budget and organisation to match the increasing demand for PPIR.

Conditions for Success

The process is extremely interwoven by design. While such design is intentionally put in place, it demands much efforts from public officers and experts participating in the process. Probably the key success factor for the project is speed to implement, as many of the similar initiatives have dwindled because the speed to implement policies was not on part with speed of innovation in the market.

Replication

The PPIR model is being replicated by other agencies with necessary modifications, in order to suit their own policy goals. Factors that would condition replication can include:

- Availability and access to R&D resources with sufficient technical discussions.
- Availability of experts who can analyse different innovations from a technical perspective, as well as a social and economic one.
- Ministries willing to take risks and change course of their routines and policies.
- Officials who are willing to test different approaches to their policy making process.

Lessons Learned

One of the most important lesson from using the model was the leveraging of untapped motivations of stakeholders. While researchers and scientists are willing to help the market leverage their technologies, many of the government systems do not allow ready access to unproven technologies. With the help of the Office of the President and the Ministry of Economy, the programme was able to include the scientific community into the government procurement processes, and stakeholders were able to settle their differences. Often different agencies speak different technical languages and bring in different perspectives. The gap was narrowed.

Project Pitch

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

Innovation provided by:

Date Published:

18 March 2021

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