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.