The history of humanity is also the history of human beings’ incessant search for better life conditions, a search which is currently based on scientific knowledge.
If, since time immemorial, or at least since the Celts, human beings have been in search of a myth – the Holy Grail, today we seek planned and intelligent solutions as a way of responding to a multiplicity of social needs, which are ever-growing and never fulfilled.
It is in this context that the concept of smart cities takes shape, as cities increasingly use information and communication technologies (ICT) to improve the quality of life of their inhabitants, enhance the efficiency of public services, reduce environmental impacts, and promote economic development. In addition, smart cities promote citizen participation, transparency in public management, and collaboration between different sectors of society, aiming to build more connected, innovative, and sustainable cities.
Thus, public procurement of innovation is unquestionably a tool placed at the disposal of public authorities to solve societal challenges in different sectors, from health to environmental protection (in this regard see, recital 47 of Directive 2014/24/EU).According to “The European Assistance for Innovation Procurement (EAFIP) Toolkit – Module 1”, innovation procurement is identified as an important tool to solve societal challenges in various sectors, such as healthcare, climate change, and energy efficiency, among others, providing an opportunity for policy makers to tackle important issues and achieve effective solutions.
It thus appears justified that both the European and the national legislator have addressed public procurement for innovation.
At the European level, in particular, Directive 2014/24/EU on public procurement addresses the subject of innovation and public procurement for innovation in multiple provisions. More importantly, innovation is defined as: “the implementation of a new or significantly improved product, service or process, including but not limited to production, building or construction processes, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations inter alia with the purpose of helping to solve societal challenges or to support the Europe 2020 strategy for smart, sustainable and inclusive growth” (see Article 2(22) of Directive 2014/24/EU).
Regarding public procurement procedures for innovation, emphasis should be given to the provision of innovation partnerships.
Innovation partnerships are a specific procurement procedure that can be used as a solution for Member States that do not have access to innovation, as defined above. This procedure allows the creation of long-term innovation partnerships for the development and subsequent purchase of new and innovative products, services or works, provided that they can be made available according to agreed performance levels and costs (cf. recital 49 of Directive 2014/24/EU).
Also noteworthy is the European Commission’s Guidance on Innovation Procurement, a document providing guidelines on how public authorities can use public procurement to promote innovation and support the development of new technologies, including in smart cities.
At the Portuguese level, the Public Procurement Code (PPC), which transposes Directive 2014/24/EU to the national level, is the main normative instrument in this area.
In the PPC we can find mechanisms that do not lead to the conclusion of contracts, but which may be relevant in the context of smart cities, as explained below.
Firstly, we highlight the design tender and the ideas tender.
The design tender is provided for in Title IV, Chapter I of the PPC. According to Article 219-A(1) of the PPC, this special procedure aims to select one or more design projects, at the basic programme level or similar, namely in the artistic, land use planning, urban planning, architecture, engineering or data processing fields.
By stimulating the creative, inventive, and even artistic capacity of stakeholders, this procedure may have relevance in the context of smart cities. In fact, it is a valuable source of ideas to the promote involvement of third parties [SSPC1] [JCC2] in urban development. The design tender, typically used in architecture, can also be used in other areas, resulting in an architectural project, an urban plan or a computer program (Pedro Costa Gonçalves, “Smart Cities e Contratação Pública” (2021), European Review of Digital Administration & Law, Vol.2, 132.) ·
On the other hand, the ideas tender, a special procedure regulated under Article 219-J of the PPC, aims to acquire one or several ideas proposals, which are remunerated through the attribution of an appropriate award which shares in common with the design tender the objective of promoting the formulation of creative proposals to be implemented at a later stage. If, on the one hand, the ideas tender has a “more open and less dense” character (Pedro Costa Gonçalves, “Smart Cities e Contratação Pública” (2021), European Review of Digital Administration & Law, Vol.2, 132), being used to obtain a first idea or outline of a project (when the contracting authority does not yet have all the necessary information to provide to the participants), the design tender, on the contrary, is more detailed and corresponds to the initial execution phase of a project.
In relation to procedures that effectively lead to the signing of research and development (R&D) contracts, the procurement of R&D services stands out.
In accordance with Article 5, no. 4, paragraph j) of the PPC, these contracts are excluded from the scope of application of the PPC (Part II), except if they are covered by CPV codes 73000000-2 to 73120000-9, 73300000-5, 73420000-2 and 73430000-5, and provided that the following two conditions are cumulatively met: (i) the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs; and (ii) the service provided is wholly remunerated by the contracting authority (conditions for non-application). Thus, if these two conditions are cumulatively met, the procurement of R&D service contracts with the codes listed above are excluded from the application of the PPC. However, if one of the above conditions is not met, the PPC is still compulsorily applicable. In that case, the direct award procedure may be applied. It should be noted that Directive 2014/24/EU treats this matter in its Article 14, which states that the Directive shall only apply to public service contracts for the acquisition of R&D
services covered by CPV codes 73000000-2 to 73120000-9, 73300000-5, 73420000-2 and 73430000-5 when the following two conditions are met: “(a) the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs; and (b) the service provided is wholly remunerated by the contracting authority” (conditions for application).
The transposition of this provision into the Portuguese legal system has not been without criticism. As pointed out by Pedro Costa Gonçalves (Pedro Costa Gonçalves, Direito dos Contratos Públicos, 2nd ed, Vol. 1, (Almedina 2018) 285-287[ 1] [JCC2] ), the criterion followed by the legislature in the PPC “is quite different and more demanding than the one that would have been reached if the Directive had been correctly transposed, establishing the same two conditions of the PPC, but with diametrically opposed formulations”. Thus, while the Directive assumes that the public procurement rules do not apply to such contracts, applying only when the two conditions listed above are cumulatively met (as set out in its Article 14), the PPC assumes that the public procurement rules do apply to R&D service contracts unless the same two conditions for application are met (as set out in its Article 5).
Regarding pre-commercial procurement contracts, Pedro Costa Gonçalves (Pedro Costa Gonçalves, “Smart Cities e Contratação Pública” (2021), European Review of Digital Administration & Law, Vol.2, 133) explains that the objective of the contracting authority is not to purchase the product, service or work, but only to contract R&D activities, such as the study and design of solutions, the creation of prototypes and, possibly, the original development of a limited quantity of first products or services in the form of an experimental series.
Finally, we highlight the following procedures: competitive dialogue and the abovementioned innovation partnerships.
Competitive dialogue,regulated under Article 204 et seq. of the PPC (Chapter V), is governed, with the necessary modifications, by the provisions regulating the limited tender by prior qualification, in everything that is not especially provided for in that chapter. The adoption of this procedure is intended to allow the contracting authority to discuss, with those potentially interested in the performance of the contract to be executed, any details requiring definition (see Article 213 of the PPC).
Innovation partnerships, a procedure provided for in Article 30-A of the PPC, enable research and development activities to be carried out with respect to innovative goods, services or works, regardless of their nature and fields of activity, with a view to their subsequent acquisition.
This complex procedure is characterised by the fact that it depends on the fulfilment of certain material requirements: in particular, it requires that the contracting authority obtain goods, services or works that are not already available on the market, and which must therefore be developed under innovative terms, in order to be subsequently produced and acquired, if appropriate, by the contracting authority (cf. Article 218-A et seq. of the PPC).
As we have already seen, this procedure is also regulated in Directive 2014/24/EU.
The public procurement of innovation is a valuable tool available to public authorities to address societal challenges in different sectors, especially in the framework of smart cities. Through this type of procurement, public authorities can promote innovation and the development of new technologies to improve public services and citizens’ quality of life. As long as there are human beings, the search for innovation will continue…!