Public procurement and water specificities

European innovation potential in the water sector is blocked by a number of bottlenecks and barriers. Despite excellent knowledge and technology there is a lack of applicable solutions.

A range of institutional and industrial bottlenecks, such investments are hardly channelled towards innovative solutions. A non-exhaustive list of bottlenecks may include:

  • Water sector is very fragmented, with many ‘point solutions’ and a very large number of small management bodies. That implies that public sector often lacks the necessary expertise to assess and value correctly new approaches and technologies, thus preventing existing resources to flow to these new domains.
  •   Fragmentation and limited dimension of many management bodies also imply that, even when public entities intend to purchase advanced technologies, their demand is not “appealing” for the supply side. The value of the procurement is often in fact too modest for the technology providers to ensure an adequate return on the investment needed to develop the technology.
  •   The public sector is hesitant to act as a launching customer often related to EU tender regulations.
  •  The specific regulatory structure of public procurement markets, where tenders and subcontracts rely on process guarantees, tends to favour technologies which already have a tracked record of successful operations, thus making this sector tendentially risk-adverse.

It was also said that external drivers are partly responsible for that:

  •  Water is predominantly a public sector domain which has been confronted by severe budget cuts and cost savings.
  • In many cases European or national law specify explicitly how a water management activity needs to be performed, …, yet existing regulation is blocking market acceptance.
  •  Water treatment technologies (processes in general and specifically separation components or additives) in contact with water for potable use, suffer from non-harmonized regulation across the EU
  • Another barrier for innovation is innovation funding within the European Union. Funding instruments EU-wide as well as these on national level are at present not coordinated and not compatible, which leads to rework on the national level.
  • There are usually very few incentives to public authorities active in the water sector to look for innovative solutions.

 

Public procurement represents around 19% of the EU’s GDP, an important lead market for innovators in particular in the water and climate change sectors.

Innovation procurement of products and services can:

  •   be used to deliver societal objectives requiring new solutions that are not available on the market or are too expensive,
  •   solve problems related to the commercialization of innovative solution breaking the vicious circle: no demand, no investment, no innovation,
  •   improve quality and efficiency of public services with a better value for money.