What is
research and development
Also known as: R&D, R&D services
Research and development (R&D) in public procurement refers to contracts aimed at producing new knowledge or developing solutions that do not yet exist on the market. R&D service contracts occupy a special position in EU and EEA procurement law, with a dedicated exemption that allows contracting authorities to procure them outside normal competitive procedures.
How does the R&D exemption work?
Under Article 14 of EU Directive 2014/24/EU, R&D service contracts covering specific CPV codes (73000000-2 to 73430000-5) are only subject to the Directive when two conditions are both met:
- Full funding by the contracting authority: The contracting authority pays entirely for the R&D service.
- Exclusive benefit: The results of the research accrue exclusively to the contracting authority for use in its own affairs.
When either condition is not met — for example, if the supplier co-finances part of the development or retains intellectual property rights — the contract falls outside the Directive's scope. This gives contracting authorities significant flexibility to structure R&D partnerships without full competitive tendering.
In Norway, the equivalent exemption is found in the Public Procurement Regulation (FOA) § 2-5, which follows the same two-condition model.
Pre-commercial procurement
The most established method for procuring R&D services under the exemption is pre-commercial procurement (PCP). In PCP, development is carried out in phases — from solution design through prototyping to testing — with competing suppliers being reduced at each stage. The actual purchase of commercial volumes happens through a separate procurement process afterwards.
PCP requires risk-benefit sharing at market conditions: suppliers retain ownership of intellectual property rights while the contracting authority receives usage and licensing rights. This model encourages industry co-investment and avoids state aid concerns. Tools like Cobrief can help suppliers identify R&D-related contract notices and voluntary ex ante transparency notices early, allowing them to assess whether their capabilities match the development need.
Research and development is a key driver of innovative procurement across the EU and EEA. The R&D exemption in Directive 2014/24/EU enables contracting authorities to form close partnerships with the market to develop solutions that do not yet exist — benefiting public services and fostering innovation across the single market.