Fostering Innovation through Public Procurement

The total volume of public-sector contracts in Germany is estimated at some 300 billion euros per year, giving public procurement the potential to be a driver of innovation. By opting for state-of-the-art products and technical solutions, public-sector entities can ensure that they are capable of offering modern services whilst also reducing long-term costs, particularly energy costs. At the same time, companies are being encouraged to engage in R&D work and if they succeed in selling their innovative products to public-sector entities, they can use these contracts as a selling point. These are all ways in which government can do a lot to foster innovation.

This is why the Federal Ministry for Economic Affairs and Energy provides incentives for public-sector entities engaged in public procurement to opt for products, services, and IT systems that are new on the market.

The ministry has set up a dedicated Centre of Excellence on public procurement, which is run by the Federal Materials Management, Purchasing and Logistics Association. The centre is tasked with advising those responsible for public procurement when it comes to purchasing new products, services, and IT systems solutions. It also operates an online platform, which serves to promote best practices of innovative public procurement. A virtual market place brings together procurement officials and providers of innovative products and services and allows them to communicate and there are multiple events at regional level, where those in charge of procurement and other decision-makers can learn more about cost-effective ways of introducing innovative products and services. The Centre of Excellence also provides information and advice on public procurement at the pre-commercial stage, a new instrument which works by having several companies compete for a contract by developing new solutions.

In co-operation with the Federal Materials Management, Purchasing and Logistics Association, the ministry holds an annual "Contracting Authorities Day", at which public-sector contracting authorities can discuss current procurement issues. The "Innovation schafft Vorsprung" ("innovation creates a lead") prize for an outstanding, innovative procurement procedure and/or the procurement of an innovative product is awarded at the event each year. Public contracting entities are invited to submit examples of exemplary projects. Please contact the Federal Materials Management, Purchasing and Logistics Association (BME) for further details.

In addition, the Economics Ministry is providing funding for "REPROC", a pilot project that aims to promote standardised digital procurement procedures.

With regard to the procurement of energy-efficient products and services, the Federal Cabinet has adopted "General administrative rules on the procurement of energy-efficient products and services" and accompanying "Guidelines" as part of its efforts to mitigate climate change. These rules are binding for all federal ministries.