1. Danish Efforts in Innovative
Public Procurement
Christian Bruhn Rieper
Head of Secretariat
Nordic Innovation Forum, A Seminar on Green Growth and Welfare, 24th of May 2012, Reykjavik

2. Facts about the
Business Innovation Fund
• A political agreement to establish the Business Innovation
Fund in November 2009
Budget from 2010 to 2012
• Allocation of 760 million DKK in total from 2010 to 2012 300
262 262
• An independent Board of Directors – representatives 236
from Danish companies
200
•
DKK mio.
434 applications so far. Applying for approx. 2,3 billion
DKK.
100
• 91 projects supported so far for approx. DKK 427 mio. kr.
in total grants:
 DKK 226 mio. to Green solutions 0
 DKK113 mio. to Welfare solutions 2010 2011 2012
 DKK 88 mio. to less favoured geographical areas Source: The Danish Finance Act
• Focus on SMEs: 83 pct. of the companies supported have
fewer than 50 employees

3. Economic challenges
Structural budget balance  Growth and innovation not supported by
increased government spending and
Per cent of GDP
Financial crisis
Agreement
Fiscal Consolidation
Per cent of GDP business-oriented grant schemes
 Use existing public spending smarter - The
Danish public sector use DKK 290 billion
annually on procurement!
 Ensure double bottom line:
o More effective public sector performance
o Encourage the development and
market introduction of new innovative
solutions
 Focus on the Public-Private Innovation
Without areement With areement
through more intelligent public demand
Source: Ministry of Finance, Economic Outlook, May2011

4. Innovative Public Procurement
– An international trend
 European Commission:
• Pre-commercial procurement (PCP) is an approach for procuring R&D
services.
 United Kingdom:
• Small Business Research Initiative (SBRI)
• Forward Commitment Procurement (FCP)
 Finland:
• Support of functional requirements in public tenders (TEKES)
 Sweden :
• Pilot projects on public procurement of innovative solutions (VINNOVA)
• Education and training in innovative public procurement (Tillväxtverket)

5. Why are special initiatives needed?
 Lack of strategic focus. Procurement is traditionally a tool for buying a
very specific product or service that everyone knows. Not a tool for
change!
 Lack of connection to process. Procurement is normally not linked to
the processes involved in producing the public services. An advanced
business case includes Total Cost of Ownership (TCO), the possibility of
optimizing resources, getting a smoother workflow etc.
 Lack of incentives. Rules and regulations are interpreted very strict.
Better safe than sorry. That explains the use of more and more
specifications in public tenders instead of functional requirements.

6. Our approach to innovative procurement
 Focus on areas where the public sector are to make major investments
in the years to come (such as climate change or elderly care)
 Create and fund partnerships between public purchasers and private
companies to make sure that the public investments can become a driver
for innovation
 Make a strategic choice of public partners that are ready for change
(create the coalition of the willing)
 Experiment with different methods of innovative procurement to gain
experience and establish best practice

7. Three Danish initiatives
1. Procurement of innovative solutions in the welfare sector
2. Partnership for health and medical innovation
3. Partnership for adaptation to climate change Supply
Demand

8. Procurement of innovative solutions
in the welfare sector
• Purpose:
Enhance the possibility of new and innovative solutions being introduced in
the public sector to help cutting costs and improving services
• Support for:
• Market analysis
• Establishing overview of needs and baseline
• Draft procurement, incl. functional requirements
• Validation of offers, including business cases
• For whom?
Only public sector bodies can apply for support.

9. 2 cases of the 6 projects supported so far
The virtual reception Concept on hospital catering
The local authority of the city of The Region of Southern Denmark
Skanderborg is procuring a virtual is procuring for a concept of
reception for its elder care homes. catering for hospitals that can
The reception has to make it easier combine the wishes of the patient
and less resource demanding for and the needs according to
the caregivers to greet and guide patient record e.g. with regard to
visiting family members and others monitor intake of calories.
coming to the elder care homes.

10. Evaluation of the initiative
A pilot initiative:
This an experiment. Will the use of functional requirements in public
tenders open up for innovation?
Learnings and effect: Projects are monitored closely on two levels:
 Will the projects realize the potential effects regarding introducing new
products and services in the public sector and regarding better and more
effective service?
 What conditions and competencies are key if the process of procuring in a
new way is to succeed?
Evaluation early 2013:
First learnings, including case studies to be published.

11. Partnership for health
and medical innovation
Public investments for DKK 40 billion in new
and better hospitals
• Modern hospitals DNU
Need for a significant effort to accelerate development and market
maturation of modern Danish health and medical solutions
• New business opportunities for Danish companies
Need for a focused and coordinated effort to ensure exploitation of
the commercial potentials
• No local solutions to national or global challenges
Need for coordination and sharing of knowledge – no development
of unique solutions to common problems Bispebjerg

12. Facts about the partnership
 Participants: Business Innovation Fund and all five Danish Regions
 Objective:
 To help realize the business potential in the hospital building by promoting development,
standardization and market maturation of modern Danish health and medical solutions
 Approaches:
 Identifying common challenges and pooling demand for new innovative solutions
 Development seperated from procurement (according to EU rules on public procurement)
 Public-Private Innovation – new solutions are developed and tested in partnerships with
Danish hospitals
 Incentives:
 DKK 100 million in co-funding of innovation projects in 2012-2013
Advisory Board suggests Steering Committee Applications received Public-Private Innovation Tenders form the
focus areas decides on focus areas and processed of new solutions Danish Regions / hospitals

13. Focus areas in 2012
1. Hospital acquired infections and hygiene
Infections acquired during hospitalization is causing the death of 3000 Danes each year
 New innovative solutions that can contribute to reducing hospital acquired infections
2. Logistics and traceability
Daily handling af large amounts of patients and equipment requires optimal planning,
management of transportation and organization of services and traceability
 Solutions which supports a cost-effective management of logistics at hospitals and /
or improve traceability in hospitals
3. Telemedicine and self-reliance
Increasing number of patients with long-term and chronic illnesses an a growing need for
aftercare and rehabilitation at home
 Solutions that support treatment, care and rehabilitation at home or support self-
reliance both in and outside the hospital

14. Partnership for adoption
to climate change
Every Danish municipality must have a strategy
for adaption to climate change within the next 2 years
 To develop innovative solutions (products and services) in relation
to rain and wastewater management – solving local water related
climate change challenges cheaper and more efficient
 To develop generic solutions – creating growth, jobs and export in
Danish companies
 To reduce economic risk in buying new innovative solutions
 To disseminate the use of new methods of public procurement

15. Facts about the partnership
 Participants: Municipalities and their utility companies from across Denmark
 Approaches:
 Identifying common challenges and pooling demand
 Tender based on functional requirements - combining innovation and acquisition
 Public-Private Innovation - Municipalities and waste water utility companies will contribute
with their experience and knowledge in the development process
 Incentives:
 DKK 30 million in co-financing from The Business Innovation Fund
 Municipalities and utility companies will buy developed solutions if they satisfy requirements
set in the tender
Common challenges Tender – based on State aid for development Acquisition
Pooling demand functional requirements Public-Private Innovation commitment

16. What is the next step?
 A national strategy for intelligent public procurement is
announced in the Government platform ”A Denmark that stands
together”:
“About a third of the total demand in society comes from the public
sector.
There is great potential in using this demand so that
it promotes innovation in both the public and the private
sector e.g. through the use of the functional requirements.
The Government will therefore provide a strategy for intelligent public
procurement across ministries and levels of authority.”
 The Danish efforts in innovative public procurement are likely to
be further strengthened in the years to come!

17. Thank you!
E-mail Christian Bruhn Rieper:
chburi@erst.dk
Read more:
www.fornyelsesfonden.dk