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Incentives for innovative business: Commission or grant?

14 July 2011

Will government purchases encourage innovative business? How can it be done to stop them being an obstacle for innovations? These questions were the topic of discussion “Government Purchases as a Tool for the Promotion of Innovation Business” that was conducted on the first day of work of the Ural International Industry and Innovation Exhibition and Forum “Innoprom-2011”.

The starting point of the discussion was the recognised fact that with the conditions as they are the Government purchase system is not at all innovation-oriented. The legislation and regulations are the key limiting factors; the main criterion for purchases is not the quality of goods and services but a lower price-tag.

While discussing possible areas for the system of the improvement of Government purchases and making them more innovation-oriented, the participants tried to outline the basic steps that have to be made in this area.

According to the Minister for Economy of the Government of the Moscow Oblast Lidiya Nikiforova “first of all a methodological issue must be resolved, that of classifying the whole range of products as innovative”. Moreover, according to the expert, the process of passing the law on innovation businesses must be pushed forward, a certification institute must be established, and a several changes must be introduced into the Federal Law №94 on Government Purchases.

Oleg Fomichev, a Deputy Minister for the Economic Development of the Russian Federation, emphasised that among the requirements set for a purchase there must be those on the production technology. Moreover, regular purchases must be viewed as different from the search process.

According to Yuri Udaltsov, the Director for the Innovation Development of the State-owned Corporation Rosnano the Fedaral Law №94 does not preclude the buyer making a purchase of a ready innovative product. However, if a buyer is in the process of seeking out the product needed then this Federal Law cannot be used. In this situation one could either use a system of grants or clearly state the buyer’s responsibility in legislation.

The participants of the discussion achieved a consensus in that a transparency system must be developed so that there is a particular person responsible for each governmental contract. This means that the Government purchase system will have to become personified.

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