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This chapter is a review of the literature on government procurement of R&D services that seek to stimulate innovation. This activity is often termed pre-commercial procurement (PCP), and this term will be used here in this chapter to refer to this family of approaches. PCP is not the purchase of innovation. Rather, it is an activity that is undertaken, usually by a government or a public private partnership, to support innovation through the purchase of R&D services, which normally includes the delivery of a prototype. The purchase of innovation through the direct acquisition of products or services, what the European Union terms public procurement of innovation or PPI, is not covered by this chapter.

PCP is undertaken for two main purposes. Firstly, it is undertaken to support the procurement needs of government by conducting necessary pathbreaking research to develop a prototype of a product or service. Secondly, it …