Pre-Commercial Procurement (PCP)

Pre-commercial procurement (PCP) allows contracting authorities to invest in innovation at the research and development stage, before a commercially viable product or service exists. It is explicitly carved out of EU procurement rules because it is not a purchase of commercial goods or services: it is a purchase of R&D services, and the public buyer does not retain exclusive rights to the results.

What is Pre-Commercial Procurement?

PCP is based on the European Commission Communication COM(2007) 799 and is supported by guidance from the Commission's Innovation Union initiative. It operates outside Directive 2014/24/EU because the directive explicitly excludes R&D services contracts where the benefits do not accrue solely to the contracting authority and where the services are not entirely paid for by the contracting authority (Article 14).

A PCP programme typically runs in three phases.

Phase 1: Solution exploration. Multiple companies are commissioned to assess the feasibility of different approaches to solving the buyer's problem. This is the widest-field phase: many suppliers may participate, each paid a fixed fee to develop concepts.

Phase 2: Prototype development. A reduced number of companies from Phase 1 are selected to develop and test prototypes. Companies share the risks and costs of development with the buyer.

Phase 3: Pilot testing. The best performers from Phase 2 develop a limited volume of pilot products or services for field testing. After Phase 3, the buyer decides whether to proceed to a commercial purchase, which requires a separate public procurement of innovative solutions or other procurement procedure.

Each phase ends with a competitive evaluation, and the field narrows progressively. Companies retain the intellectual property they develop but grant the buyer a licence to use the results. The buyer does not take exclusive ownership of the IP, which is what keeps PCP outside state aid rules.

Why it matters for bidders

PCP is particularly valuable for early-stage technology companies, university spinouts, and research-intensive SMEs that have novel approaches to public sector challenges but cannot yet demonstrate a proven, deployable product. It provides funded development time, access to public sector testing environments, and a pathway to a commercial contract if Phase 3 is successful.

The connection to preliminary market engagement and market consultation is important: buyers often use these tools before launching a PCP to understand the innovation landscape and frame the challenge correctly.

Example

A consortium of European health ministries, supported by Horizon Europe funding, launches a PCP programme to develop AI-powered tools for early detection of antimicrobial resistance in clinical settings. Twelve companies participate in Phase 1; five proceed to Phase 2 prototype development; two reach Phase 3 pilot testing in hospitals across three countries. Following Phase 3, one participant's tool is purchased via a separate public procurement of innovative solutions.

Frequently Asked Questions

Is PCP subject to EU procurement rules?

No. Because PCP involves the purchase of R&D services under conditions where the buyer does not retain exclusive rights to results, it is excluded from Directive 2014/24/EU. However, buyers still follow transparent and non-discriminatory processes and typically publish calls for competition in order to demonstrate sound use of public funds.

Can PCP be combined with Horizon Europe funding?

Yes. Many European PCP programmes are co-funded by Horizon Europe (previously Horizon 2020) and are coordinated by groups of public authorities across member states. The Commission actively encourages joint PCP programmes as a way to pool demand and scale innovation investment.

What is the difference between PCP and the innovation partnership?

The innovation partnership is a procurement procedure within Directive 2014/24/EU that covers both R&D and the subsequent purchase in one process. PCP sits outside procurement law and does not include an obligation or right to purchase the resulting product. The innovation partnership is used where the buyer is confident it wants to buy the outcome; PCP is used where the buyer is exploring whether a viable solution can be created.

How does a company find PCP opportunities?

PCP calls are often published on TED (as service contracts for R&D) or on the Horizon Europe funding portals. National innovation agencies and Horizon Europe National Contact Points also maintain lists of active PCP programmes.