The Commission proposed today a new strategy for harnessing the innovative potential of public spending in Europe in the field of Research and Development (R&D). Europe lags considerably behind the US in terms of R&D spending and has made catching up a priority of the renewed Lisbon strategy. Where Europe could do substantially more is at the pre-commercial stage, where products and services are not yet ripe for the market, and where investment is particularly risk-prone, but is key for research breakthroughs. This is why the Commission decided today to advocate the procurement of public R&D spending already in this pre-commercial phase. For the Commission, such pre-commercial public procurement could tap unused potential especially in high tech areas, such as research into information and communication technologies for health care and medicine. Important technological innovations such as the Internet Protocol or the Global Positioning System (GPS) would have been unthinkable without combined spending by the public sector and private companies.

“Europe's public sector has massive buying power, but until now it has not found a clear way to strongly link mid to long term public purchasing needs with research and development programmes. This could become a lost opportunity for Europe if we do not act quickly," said Viviane Reding, Commissioner for Information Society and Media. "Only with a more pro-active, pro-innovative use of public spending will Europe be able to equip itself to meet structural challenges such as an ageing population and the transition to a low carbon economy. This is why in high-tech research, we must have more public procurement of R&D spending already at the pre-commercial phase "

"Increasing the level of research in Europe involves creating the right environment.", said Janez Poto?nik, European Science and Research Commissioner. "A clever use of the power of public procurement could be a great force for developing new, innovative solutions to existing challenges facing the public sector."

The US public sector spends $50 billion per year on research and development (R&D) procurement - half the research investment gap between the US and Europe. Therefore it is clear that pre-commercial procurement of R&D would help Europe meet its target to invest of 3% of its GDP into research.

Today's strategy will be the starting point for a debate with the 27 EU Member States on where and how to focus pre-commercial procurement of R&D. The Commission will follow-up in 2008 with concrete actions to encourage Member States to launch such procurement actions in key areas such as in health, transport, security, environment, ageing and energy efficiency.

The Commission Communication lays out an open and competitive approach that allows the risks and benefits of developing new solutions to be shared between private and public players, in line with state aid rules. This form of R&D procurement is called "pre-commercial" because it applies to areas in which there is no commercial offer.

By sharing the risks, public service innovations can be introduced faster and European industry will be able to move quickly to exploit new lead markets. Cooperation between procurers also helps to create economies of scale, especially important for driving innovation in fast moving, globalised markets such as information and communications technologies (ICTs).

Ground breaking technologies have been developed in this way, such as the Internet Protocol, Global Positioning by Satellite (GPS), high performance computing, and many advances in chip technology.