Definition
Innovation Partnership
A procedure combining research, development and purchase of a new solution.
An innovation partnership is a procurement procedure, available under both the Procurement Act 2023 and PCR 2015, that lets a contracting authority develop an innovative product, service or works with one or more partners and then purchase the resulting solution, without needing a separate procurement for the purchase stage.
Development and purchase in one procedure
The procedure is used where no existing product, service or works on the market meets the buyer's need. Suppliers are selected through a competitive process similar to the restricted procedure, and the resulting partnership can be structured in phases — research, prototyping, testing — with go/no-go decision points, potentially ending the partnership with underperforming partners at each stage.
Once a phase produces a solution meeting the agreed performance levels and cost, the buyer can purchase it directly from the partner without running a fresh competitive tender, because the original procurement covered both development and eventual purchase.
- Used only where the market has no existing solution to the buyer's need
- Can involve one or several partners working in parallel, narrowed down over successive phases
- Structured around phased targets with defined intellectual property and pricing arrangements
- Purchase of the final solution does not require a separate procurement
Why it is rarely used
Innovation partnerships are complex to set up, requiring careful drafting of intellectual property terms, phased milestones and exit provisions for partners who do not progress. They suit large research-led buyers such as government departments, NHS bodies developing novel technology, or defence and transport authorities pursuing genuinely new solutions.
Most public sector requirements can be met through the open, restricted, or competitive flexible procedure, so this route remains a minority option reserved for genuine R&D-style procurements.
Frequently asked questions
- When would a buyer use an innovation partnership instead of a normal tender?
- Only when the buyer has a need that cannot be met by any product, service or works already available on the market, and genuine research and development is required to create a solution. If an existing solution could be adapted through ordinary tendering, this procedure would not normally be justified.
- Does the buyer have to re-tender after developing the solution?
- No. One of the key features of an innovation partnership is that the original procurement covers both the development phase and the eventual purchase of the resulting product or service, so the buyer can move straight to purchasing from the successful partner without a further competition.
- Can more than one supplier be part of an innovation partnership?
- Yes. Buyers can set up partnerships with several suppliers working in parallel, particularly in early phases, and then reduce the number of partners at agreed milestones based on performance, before selecting who ultimately delivers and supplies the finished solution.
Related terms