gracia vara arribas, · -consultancy research eipa, 1/10/2018 - ©learning and development european...

EIPA, 1/10/2018 - WWW.EIPA.EU © learning and development - consultancy - research

European Institute of Public Administration - Institut européen d’administration publique

© EIPA, 1/10/2018

Innovative procurement

Gracia Vara Arribas, Expert EIPA Barcelona

EIPA, 1/10/2018 - WWW.EIPA.EU ©

AGENDA

Background

Conceptualisation of PCP and PPI – the phases

The take aways for the public and the private sector

The Innovation Partnership

Case study – The “BCN Open Challenge” competition


Background


Background

Source:

http://www.innobuild.eu/sites/innobuild/files/Implementention%20Guide_Methodology%20Step%20by%20Step_Jan%

202013_5.pdf

http://www.innobuild.eu/sites/innobuild/files/Implementention Guide_Methodology Step by Step_Jan 2013_5.pdf




The what and the why of PPI

Facilitates wide diffusion of innovative solutions on the

market.

Provides a large enough demand to incentivise industry to invest

in wide commercialisation to bring innovative solutions to the market with the quality and price

needed for mass market deployment.

This enables the public sector to modernize public services with

better value for money solutions and provides growth

opportunities for companies.


What is Public Procurement of Innovative Solutions?

(or innovation Procurement)

Public Procurement of Innovative solutions (PPI) happens when

the public sector uses its purchasing power to act as early

adopter of innovative solutions which are not yet available on

large scale commercial basis


What is Innovation Procurement?

Two types:

a) Procurement of R&D services to tackle specific public needs when solutions are not yet

on the market (PCP)

b) Procurement of solutions new to the market where the public sector acts as first

customer (PPI)


Pre Commercial Procurement (PCP)

Phase 0 - Challenge needs radical innovation, no solution 'on' or 'close to' market yet

Phase 1 - Public sector buys R&D from several suppliers in parallel (comparing alternative solution

approaches)

Phase 2 – Public sector in form of competition evaluates progress after critical milestones (design,

prototyping)

Phase 3 – Testing, risks & benefits of R&D (in particular related to IPRs) shared with limited number of

suppliers to maximise incentives for wide commercialisation


Pre Commercial Procurement (PCP)

• It may end (or not ) in PPI (phase 4)

• And not all PPI needs to be preceded by a PCP


State Aid for RDI = PCP is state aid free

Page 16 Article 33 of the Framework for state aid for R&D&I/ C(2014) 3282

PCP is a state aid free case if implemented according to COM(2007) 799

In particular:

- the price paid for the relevant services fully reflects the market value of the benefits received by the public purchaser

and the risks taken by the participating providers.

- the selection procedure is open, transparent and non-discriminatory, and is based

on objective selection and award criteria specified in advance of the bidding procedure

- the envisaged contractual arrangements describing all rights and obligations of the parties, including with regard to

IPR, are made available to all interested bidders

in advance of the bidding procedure

- the procurement does not give any of the participant providers any preferential

treatment in the supply of commercial volumes of the final products or services to

a public purchaser in the Member State concerned

- any service provider to which results giving rise to IPR are allocated is required to grant the public purchaser unlimited

access to those results free of charge, and to grant access to third parties, for example by way of nonexclusive licenses,

under market conditions.


A challenge requires solution which is almost or already on the market in small quantity

but not meeting requirements for large scale deployment yet.

Desired solutions would be provided if clear

requirements/sufficient demand would be expressed

by the market.

No procurement of R&D involved : Incremental innovation (production adaptation, scaling up of production)

or non-R&D innovation (e.g. organisational/process innovation) can deliver required quality/price

PPI – Public Procurement of Innovative Solutions


PPI for the Public Sector

• in PCPs, suppliers can be required to do the majority of R&D in Europe

It can create growth and jobs in Europe

• support to the economic activity in sectors related to the innovative solutions purchased or developed

Benefits to the local economy

• In times of economic distress innovation procurement can boost innovation in a country/region without extra funds – only by shifting existing procurement budget towards R&D and Innovation

Boost innovation in a country/region without extra funds

• Smart use of the procurement budget to remove supplier lock-in and obtain more open, standardized and better value for money solutions in a cost effective manner

Cost effective

• improving the quality and efficiency of public services and tackling societal challenges with innovative / breakthrough solutions for the benefit of the citizens

Modernization of public services


PPI for the private sector

The power of the public purse can open up

market/sales opportunities for innovative companies

in Europe

Public sector can act as launch customer to help start-ups in Europe scale

up and finally go to market

Demand driven Innovation (through Procurement)

helps shortening time-to-market for innovative

products/services


Setting targets in the EU

“Tell me what I need to do to help startups to scale up in Europe and together we will do it.”

Commissioner Günther Oettinger

SCALE – UP EUROPE MANIFESTO http://scaleupeuropemanifesto.eu/

Calls on the Member States :

-to open public procurement by supporting more Innovation

-to allocate of their annual procurement budget 3% to Pre-Commercial Procurements and 20% to Public

Procurements of Innovative Solutions

http://scaleupeuropemanifesto.eu/

http://scaleupeuropemanifesto.eu/


Growing impact at European level


Growing impact at Member State level


What can countries/regions do?


The new procedure:

INNOVATION PARTNERSHIPS


INNOVATION PARTNERSHIPS Article 31 Directive 2014/24 -Article 49 Directive 2014/25

- - Content: Combination of the purchase of R&D and the subsequent

purchase of the resulting supplies, services or works in one

procedure

- - Set up: The procurer may decide to set up the innovation

partnership with one or several suppliers

- - Execution : Innovation partnerships are structured in successive

phases following the sequence of steps in the R&I

- - Termination: procurer may decide after each phase to terminate the

innovation partnership or, in the case of an innovation partnership

with several partners, to reduce the number of partners by

terminating individual contracts, provided that the contracting

authority has indicated in the procurement documents such

possibilities / conditions.


INNOVATION PARTNERSHIPS

VS

PCP/PPI


MAIN DIFFERENCES BETWEEN PCP/PPI – INNOVATION PARTNERSHIPS .1

- PCP/PPI : Legal separation between R&D and purchase /deployment of

the innovative solution

- Innovation Partnerships – combination of R&D and

purchase/deployment of the innovative solution in one procedure

(Commitment to purchase the outcome of R&D – Procurer may decide

to terminate earlier the contact . The procurer must evidence the reason

for the early termination of the contract / not satisfied with the R&D

outcome)

- PPI cannot be implemented through Innovation Partnerships

MAIN DIFFERENCES BETWEEN PCP/PPI – INNOVATION PARTNERSHIPS 1


MAIN DIFFERENCES BETWEEN PCP/PPI – INNOVATION PARTNERSHIPS .2

PCP = multi phased / multi sourced procurement –

competition is kept at the execution stage (MUST)

Single sourced PCPs are not possible

Innovation Partnerships=The procurer decides

whether an innovation partnership with one or

more suppliers will be executed

Single sourced innovation partnerships are

possible




- PCP doesn’t fall under the scope of the EU Procurement

Directives / WTO Rules – R&D can be done in Europe

- Only PPI falls under the scope of the EU Procurement

Directives / WTO Rules but PPI does not contain R&D and is

only about deployment of innovative solution

- Innovation Partnerships fall under the scope of the EU

Procurement Directives / WTO Rules – R&D cannot be limited

in Europe

BARCELONA OPEN CHALLENGE CASE STUDY BARCELONA OPEN CHALLENGE CASE STUDY

EIPA Barcelona Authors: Gracia Vara Arribas & Anthony de Bondt Study delivered in March 2015

http://bcnopenchallenge.org/

http://bcnopenchallenge.org/

Barcelona Innovative city

• Barcelona is renowned for its efforts to boost innovation

• Barcelona as a people city

• Barcelona UrbanLab (pilots)

• BCN Open Challenge (BOC) = ONE STEP BEYOND :

Purchase of innovation

What and why BCN Open Challenge?

What is BOC?

An international call for businesses and entrepreneurs to propose their innovative solutions to six different challenges to transform public space and services in the city.

Why?

• To promote business growth and job creation by linking public procurement with innovation

• To improve public services and the quality of life in the city

• To attract investment to the city

What’s in it for companies?

BCN Offers:

• Winners = real contracts !

• A total budget of €1,000,000

• Services for growth and a landing space

• A certified reference by the City Council of Barcelona

What is Innovative Public Procurement?

BCN OPEN CHALLENGE

Benefits of PPI • Share risks and benefits of development of ideas,

in particular important for young companies

• Develop better products

• Use of economies of scale/ Increased competitiveness

• Through involvement of the entire market, PCP/PPI makes way for developing products or services that are better matching the needs of the public sector

Companies

• Improving public services

• Improving the quality of life

• Better prices due to increased competitiveness Citizens

Benefits of PPI (cont.)

• Public procurement as a tool to promote innovation (PPI)

• Innovation in processes, efficiency and transparency in public spending

• Cooperation between municipal departments

The administration

Politicians

• Increased quality of public services • PPI offers a lens to focus on political

priorities • Successful innovative projects can

attract investors • Increase employment

Why Open?

Non-prescriptive approach, interested in IDEAS, not in particular product/service Foster innovation

6 lots/challenges: Companies of all sizes can apply

Support for growing businesses

Opening up competition

Transparency! All info is accesible via website

What is so innovative?

For the administration internally • The mainstreaming of a new way of

working with public procurement • The promotion of interdepartmental

cooperation • The reinforcement of Barcelona’s

international position as an I-city • Setting new standards for accountability

and transparency in public procurement

For the outside world

• The offer of a real contract • The offer of a business package for

startups • Validated project references for the

winners with the Barcelona Brand

The six Challenges

Reducing bicycle thefts in the city

Empowering support systems to reduce social

isolation

Monitoring pedestrian flows

in the city

Tools for digitization of museum and

archive collections

Automatic detection and

alerts of damaged road surfaces

Empowering local retail through

technology

The participation rates

Reducing bicycle thefts in the city

Empowering support systems to

reduce social isolation

Monitoring pedestrian flows in

the city

Tools for digitization of museum and

archive collections

Automatic detection and

alerts of damaged road surfaces

Empowering local retail through

technology

23

6 10

17 13

50

119 proposals

Criteria

Winning solutions

Innovation

Capacity to execute

Sustainability & ecology

The process

Differences with other European examples European examples Barcelona Open Challenge

Usually Pre-Commercial procurement (PCP)

- There are always a number of applicants

that get funds to conduct a feasibility study

(phase 1).

- Thereafter, a smaller number gets a

contract to produce a prototype or to run a

pilot (phase 2).

- The government is not involved in

marketing the end product. After phase 2,

the innovative product of service can be

procured by the government or any other

potential entity.

Public procurement of innovative solutions

(PPI)

- Competition does not involve a feasibility

study

- Smaller number of candidates is invited to

the Contracting Committee

- The City Council purchases the end product

or service, provides free office space and

business support

The takeaways

• BCN Open Challenge offers public buyers solutions beyond what’s already known on the market, while fostering entrepreseurship

• It is in line with the new legislative package of EU legislation

• It is open to companies of all sizes

• It requires administrative effort and coordination among departments.

• It mainstreams the culture of public investment for innovation within the City Council

• It changes the working methods of public buyers, requiring a coordination strategy among departments that was not there before

• It has been a learning process with positive collateral impacts, ready to be replicated with a few adjustments

Suggestions for the future

• The selection of challenges would need a deeper market analysis.

• The amount of money per challenge should be higher .

• Electronic procurement should be implemented: this would also enhance transparency and efficiency in the process.

• The requirement of anonymity would need to ensure by technical means that companies are not disregarded because of breach of this requirement.

• The Public Procurement for Innovation triggers the need for a long term innovation Plan within the City Council.

• Barcelona Open Challenge has been a learning process and the momentum needs to be uphold through dissemination of the case study and preparation of a new edition, where

scalability of the project can be promoted.

41

Thank you very much for your attention

Gracia Vara Arribas

gracia vara arribas, · -consultancy research eipa, 1/10/2018 - ©learning and development european...

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