Public Procurement of Innovation (PPI) and Its Traceability: How to Accelerate Documentary Audit

Public procurement accounts for around 14% of GDP each year in the European Union. Directing part of that expenditure towards innovative solutions makes it possible to modernise public services and stimulate the business fabric. Public procurement of innovation (PPI) provides public authorities with a framework for acquiring technologies that do not yet exist in the market, driving R&D&I from the demand side.

However, PPI files accumulate complex documentation and, when European funds are involved, audit requirements multiply. The traceability of every decision, document version and milestone certification becomes an operational challenge that traditional systems struggle to resolve. Infrastructures such as blockchain open up a way to transform this process.

Public procurement of innovation (PPI) is an administrative action that allows public sector bodies to acquire innovative goods or services in order to meet needs that the solutions available on the market do not cover. This instrument turns public procurement into a lever for modernisation by encouraging the development of new products and technologies driven by demand from the public sector itself.

The difference from traditional procurement is substantial. In an ordinary procedure, the administration describes what it needs and the market offers what it already has. In PPI, the starting point is an open functional challenge that pushes companies to develop new solutions. The administration stops buying what is available and instead directs innovation towards specific problems of public interest.

This approach is supported by regulations and institutions at several levels. The European Commission considers PPI one of the pillars of its strategy for smart and sustainable growth. In Spain, Law 14/2011 on Science, reformed in 2022, establishes that ministerial departments must approve innovative public procurement plans, aligning public demand with private technological supply. The objective is to improve public services and infrastructures, stimulate innovative companies and generate savings throughout the life cycle of the solutions acquired.

PPI is structured around three main modalities, distinguished by the level of technological maturity they cover and the legal framework governing them. Each responds to a different public need scenario and determines how risks are shared between the administration and participating companies.

The Map of Public Procurement of Innovation in Spain, prepared by the Ministry of Science and Innovation, and the PPI Guide 2.0 consolidate these three categories as the reference point for administrations and economic operators.

Pre-commercial procurement (PCP)

Pre-commercial procurement (PCP) allows the administration to contract R&D services while sharing risks and benefits with companies, without reserving the results exclusively to itself. It covers low and medium technology readiness levels, from the idea stage to the prototype validated in a real environment.

PCP is excluded from Law 9/2017 on Public Sector Contracts (LCSP), although it remains subject to the principles of publicity, competition and transparency. Its regime is based on the Science Law and State aid rules. The procedure is structured in competitive phases with a progressive reduction in participants according to the results obtained at each stage.

The Centre for the Development of Industrial Technology (CDTI) has promoted several PCP tenders in areas such as surface water quality monitoring and infrastructure inspection, co-financed with funds from the European Regional Development Fund (ERDF) through the Innovation from Demand Promotion Line (FID Line).

Procurement of innovative technology (PIT)

Procurement of innovative technology (PIT) consists of acquiring a good or service that does not exist at the time of purchase but can be developed within a reasonable period. The administration acts as the first reference customer, facilitating the commercial scaling of the solution and its possible internationalisation.

Unlike PCP, PIT is fully subject to the LCSP and is processed through ordinary procedures such as open, restricted, negotiated tendering or competitive dialogue. The tender specifications are defined in functional terms, directing award criteria towards innovation and value for money. Technology readiness levels are higher than in PCP, as the work is carried out with near-market prototypes or products ready for deployment.

According to the Ministry of Science and Innovation’s PPI Map, PIT is the most widely used modality in Spain, reflecting a preference for acquiring innovation outcomes rather than contracting R&D services at earlier stages.

Innovation partnership

The innovation partnership is a procedure regulated in Articles 177 to 182 of the LCSP, derived from Article 31 of Directive 2014/24/EU. It allows an innovative solution to be developed and acquired within the same contractual scheme, eliminating the need to tender twice.

Its structure links an R&D phase and a deployment phase within a single procedure, with the possibility of reducing the number of partners as the stages progress. It covers the full technological maturity cycle, integrating elements of both PCP and PIT. The LCSP requires performance levels and maximum costs to be set from the beginning and allows the contract to be terminated after each phase if the objectives are not achieved.

Despite its potential, practical use of this procedure in Spain remains limited. Many contracting authorities perceive it as complex and opt for more familiar modalities, according to sectoral guides and analyses by the Public Procurement Observatory.

The PPI process begins with the identification of unresolved public needs and is organised in preparatory phases, dialogue with the market and monitoring, all of which require rigorous planning. Each phase generates documentation that must be traceable and auditable, especially when European funds are involved.

The first phase is the early demand map (MDT), an instrument through which the administration identifies and publishes its future innovation needs before launching tenders. The MDT describes challenges in functional terms and sends signals to the market so that companies and technology centres can anticipate solutions. Since 2023, the development of a national MDT has been considered a significant milestone in Spanish PPI policy.

Once the challenges have been defined, Article 115 of the LCSP enables preliminary market consultations (CPM), through which the administration tests the technical and economic feasibility of its proposals with economic operators and experts. These consultations are organised through public notices, workshops and interviews, while seeking to avoid undue competitive advantages.

The drafting of tender documents incorporates functional specifications and award criteria based on the best quality-price ratio, where innovation, environmental impact and life-cycle cost gain weight over price as the dominant factor. During implementation, PPI contracts require intermediate milestones with objective acceptance criteria and performance indicators, since the high degree of uncertainty inherent in R&D may require adjustments to the specifications as the project progresses.

The LCSP incorporates innovation as a strategic objective of public procurement, moving beyond the traditional approach focused on procurement at the lowest price. This law provides the legal tools to articulate PPI within the Spanish legal framework and aligns procurement with European priorities for smart and sustainable growth.

Several articles shape the normative ecosystem of PPI within the LCSP. Article 28 requires contracting authorities to justify the need for the contract and its suitability, opening the door to innovative solutions instead of standard options. Article 115 regulates preliminary market consultations, a fundamental preparatory tool in these processes. Articles 177 to 182 regulate the innovation partnership as the specific procedure for contracts that combine R&D and subsequent acquisition.

This framework is reinforced by recent instruments. In April 2024, the Interministerial Commission for the Incorporation of Innovation Criteria into Public Procurement was created, with the mandate to promote good practice and assess possible improvements to the legal framework. At European level, the European Parliament’s resolution of September 2025 recognises that procurement rules for innovation remain underused and calls on Member States to promote their application. Measure 24 of the Digital Spain 2025 agenda adds to this momentum by proposing a culture that promotes innovative public procurement in the public sector.

Despite this regulatory and institutional support, effective implementation remains modest. Many contracting authorities perceive innovative procedures as complex and continue, by inertia, to rely on ordinary tenders with a heavy weighting on price. This gap between the legal framework and practice reinforces the need for technological infrastructures that provide legal certainty and simplify the documentary management of these files.

ISBE, the Spanish Blockchain Services Infrastructure, makes it possible to register every milestone of a public procurement file with immutability, timestamping and verifiable authorship. This capability transforms the documentary audit of public procurement of innovation, where the complexity of files and European co-financing demand a level of traceability that traditional systems can hardly guarantee.

Current problems are well known to managers and auditors. Documentation is fragmented across multiple systems and formats, versions of tender documents and reports accumulate without a consolidated register, and reconstructing the full history of a file years after its processing is slow and costly. The European Court of Auditors has identified shortcomings in the coverage and quality of public procurement data, making systematic analysis and ex post verification more difficult.

ISBE addresses these problems by design. Every relevant milestone in the file, from publication of the early demand map to payment certifications, is anchored on blockchain with timestamp and signature linked to the digital identity of the participants. Controlled document versioning makes it possible to know precisely which version of a tender document or report was in force at a given moment, who modified it and with whose approval. The milestones required to justify ERDF funds or funds from the Recovery, Transformation and Resilience Plan (PRTR) are also recorded, facilitating verification by management and control authorities.

For auditors, this translates into direct access to cryptographic evidence of non-manipulation that allows the chronological integrity of the file to be checked without depending on internal documentary folders. ISBE integrates regulatory compliance by design, aligned with the eIDAS2 Regulation, which guarantees the cross-border legal validity of records. Blockchain traceability applied to public procurement strengthens transparency, reduces verification times and frees up resources so that control bodies can focus on analysing legality, efficiency and impact.

Do you manage public procurement files and need to guarantee their traceability for European audits?

Discover how ISBE makes it possible to register every milestone of your public procurement processes with immutability, timestamping and legal validity. We invite you to watch the ISBE video to learn in detail how the infrastructure works, its real use cases and the impact it is already generating in administrations and companies.

What is the difference between public procurement of innovation and an ordinary tender?

In an ordinary tender, the administration acquires goods or services already available on the market and competition focuses on price. In PPI, the starting point is a need that existing solutions do not cover. The administration defines open functional specifications, uses preparatory instruments such as preliminary market consultations and may share R&D risks with participating companies.

How does ISBE blockchain help a public procurement auditor?

ISBE provides an immutable register of every milestone in the file with timestamping and verifiable authorship. This makes it possible to verify the chronological integrity of documentation without depending on dispersed internal files. The auditor gains access to cryptographic evidence of non-manipulation, reducing verification time and providing greater legal certainty in the face of possible discrepancies between document versions.

What is the early demand map in the PPI process?

The early demand map (MDT) is an instrument through which the administration identifies and publishes its future innovation needs before starting tenders. It describes challenges in functional terms so that companies and technology centres can anticipate solutions. It also facilitates the aggregation of demand among different administrations sharing similar needs.

Is it mandatory for pre-commercial procurement (PCP) to include traceability of results?

Spanish and European regulations do not require the use of a specific technology to guarantee traceability. However, they do impose obligations of documentation, transparency and archiving, especially when co-financing with European funds is involved. Adopting infrastructures such as ISBE is therefore a decision aimed at improving efficiency and legal certainty, rather than compliance with a specific technological mandate.

Can an SME participate in innovation procurement with the same guarantees as a large company?

Yes. Directive 2014/24/EU and the LCSP encourage SME participation through division into lots, reduced administrative burdens and the early publication of needs. Subcontracting and alliances with other companies are also facilitated. Despite these legal guarantees, practical barriers to access remain and require specific support and training programmes.