State of PlayPCP & PPI piloting in FP7 and CIPHorizon 2020 perspectivesLieve BosEuropean CommissionDG CONNECT (Communication Networks)F2 unit (“Innovation”)
Health care Climate Change Energy Efficiency Transport Security Public sector efficiency…Why? To get best value for money solutionsdeveloped for public sector challenges• Public sector is faced with important challenges.• Addressing these, often requires public sector transformations forwhich no commercially stable solutions exist yet.• In many cases, solutions are near the market and would be provided if clearrequirements/sufficient demand expressed by the market (PPI)• In other cases, still R&D required to de-risk technology, still differentcompeting solution approaches to compare before committing to deploy (PCP)• Public procurement is the tool that enables the buyers to steerindustrial R&I to its needs. However, public procurement drivingR&I from demand side is underutilised in EU.
Why? To shorten time to market & provide firstcustomer reference for innovationsMarket Share %Innovators2,5%EarlyAdopters13,5%EarlyMajority34%25%50%75%100%LateMajority34%Laggards16%PCPH2020, SFPPIH2020, SFPPICEF, SFNormally functioning procurement market (e.g. in US, Asia):2,5% of ‘innovator’ type customers (PCP)Who invest in R&D with suppliers ($50Bn/Y in US <-> €2,5Bn/Y in EU)16% of ‘early adopters’ (PPI)ICT public procurement market in Europe:0,5% of ‘innovator’ customers (PCP)5% of ‘early adopters’ ofnew tech in e-gov (PPI)CEF = Connecting Europe FacilitySF = Structural/Cohesion FundsH2020 = Horizon 2020
Supplier BSupplier CSupplier DPhase 1Solution designPhase 2PrototypedevelopmentPhase 3Original developmentof limited volumeof first test products /servicesSupplier ASupplier BSupplier CSupplier DSupplier BPhase 0CuriosityDrivenResearchApplied R&D / Pre-commercial Procurement (PCP)Phase 4Deployment of commercialend-productsDiffusion of newly developedproducts / servicesSupplier DPublic Procurement ofInnovative Solutions (PPI)• PCP to steer the development of solutions towards concrete publicsector needs, whilst comparing/validating alternative solutionapproaches from various vendors• PPI to act as launching customer / early adopter / first buyer ofinnovative commercial end-solutions newly arriving on the marketSupplier(s)A,B,C,Dand/or XAlso normally multiple sourcinghere to keep competition goingWhy? To create growth and jobs in EuropeHow? PCP-PPI comboBecause of split between PCP and PPI:• PCP falls outside WTO rules & proc directives (can encourage job creation in Europe),even if the large scale PPI that may come afterwards would not be exempted
PCP based on good practice• Procure R&D in steps (solutions, prototypes, test series) toreduce risk and give large and small companies a chance Grow size of tasks gradually, make bridge from ideas to firsttest product, procurer = first customer reference• IPR sharing as form of risk/benefit sharing with suppliers Less risk for procurer, faster time to market + increasedcommercialisation opportunity for suppliers• Separate PCP – PPI, competition also in R&D phase Better value for money: Competition after PCP for PPI +competition during R&D -> higher quality products + reducesfirst unit acquisition cost with 20-30%*• Sharing R&D costs with other procurers Cooperation across borders can help develop a Europeanmarket, common standards etc* Competitive Dual Sourcing, Jacques Gansler, 7/10/2007. Based on analysis from Annex G, InternationalArmaments Cooperation in a era of coalition security, report US Defence Science Board, August 1996
EC support to PCP & PPI• Why EC support needed?– PCP /PPI in some EU countries but not spread across rest of Europe– Defragmenting demand side for challenges of common Europeaninterest (common requirements setting, de facto standard creation)• 2008-2009: EU calls for proposals for European networks of publicprocurers on PPI (e.g LMI in CIP) and on PCP (ICT theme in FP7)• 2011-2013: EC support for PCP via FP7 and for PPI via CIP– DG CNECT and ENTR are piloting support to PCPs by procurers(FP7 grant: co-financing up to 75% of the price of procured R&D)– DG ENTR, ENV and CNECT are piloting support to PPIs by publicprocurers (via CIP grant: co-financing up to 20% of the price of theinnovative solutions procured/deployed)– DG RTD, ENER, MOVE supporting networking of procurers• 2014-2020: Horizon 2020 (similar possibilities as before)– EC can co-finance PCPs/PPIs carried out by grant beneficiaries– EC or EU funding bodies (e.g. agencies) can carry out PCPs/PPIs ontheir own behalf or jointly with Member States
Why separate PCP-PPI in FP7/CIP & H2020 iso longterm partnership contract incl. R&D+deploymentSequence of separatePCP + PPI procurement• PPI also usable for non-R&D innovations• More open to radical/breakthrough R&D,(no commitment to deploy before R&Dover, specs for PPI can be fully changedbased on PCP learning)• Facilitates access to market of new playersincl SMEs, avoids supplier lock-in (shortterm/ small value contracts phase perphase, typically no selection criteria onfinancial guarantees/customer referencesin PCP, only at PPI stage)• Better value for money (higher quality &20-30% cheaper products)• Exempt from WTO: can encourage jobcreation in Europe• Choice of most suitable procedure for PPI(comp dialogue, open/neg procedure etc)• Complements other R&D policy support:Allows also companies that funded R&Dthrough other means to compete for PPI• No State aid (open competition for R&Dand commercial phase)Long term partnership contract incl.R&D + purchase end-products• Usable only for innovations resulting from R&D• Tendency to attract close-to-market 0 riskcommercial development, less real R&D(commitment on what/how much to deploy neededbefore R&D starts, tender specs cannot besignificantly changed based on learning from R&D)• Tends to favour large established suppliers overSMEs, higher risk of long term supplier lock-in(long term / large value contract, selection criteriafor financial guarantees/customer references usedfrom start of contract, incl. for R&D phase)• Normally not exempted from WTO (because caninclude purchase of large commercial volumes)• Restricts choice of procedure (neg. procedure)• Blocks road to market for main R&D policy support:Does not allow companies that financed their R&Dthrough other means (e.g. R&D grants) to competefor the deployment phase any more• How to guarantee up front there will be no Stateaid/no foreclosing of competition? (when restrictingchoice of suppliers for commercial purchase beforeproof exists that R&D will deliver better value formoney than other competitors on the market)
Status of PCP implementationacross EuropeUpdate March 2013 statusMore info about EU funded cross border PCP projects: http://cordis.europa.eu/fp7/ict/pcp/projects_en.htmlMore Info about national PCP initiatives in Member States: http://cordis.europa.eu/fp7/ict/pcp/msinitiatives_en.htmlPilotsstartedFramework identified and/orPilots in preparationHungaryBelgiumNetherlandsAwareness RaisingExploring possibilitiesDenmarkAustriaFinlandSwedenPolandWorking onframeworkGermanyFranceLuxembourgIrelandCyprusRomaniaSloveniaSlovakiaBulgariaCzech RepublicEstoniaGreeceLatviaLithuaniaMaltaPortugalSpainNorwaySwitzerlandItalyProjects in dotted-line are cross-border EC funded PCP projects that have started:SILVER: started January 2012 (Supporting Independent Living of Elderly through Robotics)CHARM: started September 2012 (Common Highways Agency / Rijkswaterstaat Model for traffic management of the future)V-CON: started October 2012 (Virtual Construction / Modelling of Roads)SMART@FIRE: started Nov 2012 (Integrated ICTs for Smart Personal Protective Equipment for Fire Fighters and First Responders)DECIPHER: started February 2013 (new applications based on Distributed EC Individual Personal Health Records)PRACE 3IP: started July 2012 (PRACE 3rd phase on high energy efficient high performance computing)SILVERUKIcelandCHARMV-CONSMART@FIREDECIPHERPRACE 3IP
PCP2009 2011-12 2013DG INFSO (CSAs)FP7-ICT-2009€1,5M3 €500K networkingactions for procurers(ICT for health,transport,egov for NMS)DG INFSO (CP-CSAs)FP7-ICT-2011/12 €24MFP7-INFRA-2012 €4,5MCo-financing 6 cross borderPCPs:(in robotics for ageing well,mobile health services,traffic management,embedded ICT for firefighter garments, energyefficient supercomputing)DG CNECT(CP-CSAs)FP7-ICT-2013 €32,5MFP7-INFRA-2013 max €19,5MCo-financing 7-8 cross border PCPs:(€8M health/active ageing,€5,5M elearning, €4M open call€5M digital preservation,€10M cloud computing,Up to €x19,5M DANTE, GEANT)DG ENTR (CP-CSAs)FP7-SEC-2012 €10MCo-financing 1 joint PCP:(maritime bordersurveillance)DG ENTR (CP-CSAs)FP7-SEC-2013 €18MCo-financing 2 bottom-upcross border joint PCPs on landand maritime bordersurveillance)PCP related calls so far
PCP-PPI related calls so farPPIDG ENTRCIP-EIP-2009Lead MarketsNetworks €3M)3 €1M networks ofProcurers (healthcare,embedded textilesfirefighters, sustainableconstruction)DG RTDFP7-ENV-WATER-INNO-DEMOCSA for PCP in EIP on water mgtFP7 2013 FOOD/AGRI WPCP (€6M) on opening market forbio-based products via procurementDG ENTR & ENV(PPI Pilot)CIP-EIP-2011/12 €17MCo-financing cross border PPIs:8 on areas of EIPs (climatechange, active ageing, energyefficiency, mobility, healthworking conditions) &1 on eco-innovationDG ENTR (PPI Pilot)CIP-EIP-2013 €6,3M(sustainable construction,recycling, clean vehicles)DG CNECT (PPI pilot & TN)CIP-PSP-2013 €12MPPIs in health/active ageingThematic networks preparing PPIsin ICT for sustainable mobility,energy efficient servers for citiesDG RTD (CSAs)FP7-COH-2012 €2MTransport & healthprocurer network2009 2011-12 2013FP7 2013 TRANSPORT WPCP to demonstrate electric busesshould facilitate PCPDG ENERCIP-IEE (2008…)Series of networks of procurerson sustainable energyprocurement
11Potential £160mp.a. savingPotential £30m p.a. saving£4,000 per HCAI avoidedPotential £19m p.a. savingExample projects inHealthcarePotential Value PCP-like projects to NHS: Improve the quality of the patient experienceand generate significant cost savings (£236m).Value to the economy: A number of innovations have been able toattract significant extra investment (£290m).NHS UKLombardia ItalyPCP Niguarda Hospital – Lombardy regionEasy-to-use automated universal systemfor moving hospital beds, with anti-collision and safety systems, not needingguide lines or tracks even on nonrectilinear routesPCP call for tender open
Regulatory requirement to seriously reduce CO2 emissions by 2016 without negative effectson health/environment, beyond what market is able to offer PCP started in 2011, currently comparing solution approaches of 5 vendors, time-to-marketshortened Follow-up procurement for deployment in preparation for 2014 (open to whole market)More info on this case on: http://cordis.europa.eu/fp7/ict/pcp/docs/statoil-pcp-case-v2.pdfPCP example on CO2 emissions Large projectCarbon capture – Norway attracting large firmsStatoil/Gassanova
Example EU funded cross-border PCP (DG CNECT)7 Local and regional contracting authorities from 5 EU Member States carrying out this PCP jointly:city of Odense and region of Southern Denmark (Denmark), city of Västerås (Sweden), city of Vantaa andOulu (Finland), city of Stockport (UK), city of Eindhoven (Netherlands).SILVER contracting authorities procure R&D services via the PCP to get robotics solutions developed andtested in the 5 participating countries that will allow by 2020 to care for 10% more elderly people livingindependently at home with the same amount of care staff.SILVER call for tender is OPEN NOW.Potentially invited tenderers are invited to info meetings in March-Apriland to make offers by 12 June (see SILVER website and tender publication in OJEU) !www.silverpcp.eu
For more info: http://lowcarbon-healthcare.eu/UK brand name for PPI = Forward Commitment Procurement (FCP)Low carbon healthcare PPI started 2006Introducing more energy efficient LEDs innetwork of over 20 hospitals in 8 EU countries(cross border PPI cooperation funded by EC/DG ENTR)• 30% energy consumption saving• 88% maintenance savingsTotal cost savings enable take-in of +10% patientsSwedish environmental/energy efficiency PPIsdone by NUTEK/STEM agency:• heating-ventilation-cooling of buildings• public transportation (hydrogen busses)• office blocks (sun shading, lighting)• white appliances (washing machines, fridges)• wind energy parksResult: Reduced the SE dependency on nuclear energy with 15% through PPIs incombination with product certification/labeling, take-up subsidies & tax incentivesMore on UK & SE PPI cases: http://cordis.europa.eu/fp7/ict/pcp/msinitiatives_en.htmlPPI examplesIn Europe(PPI is called teknikupphandling in Sweden)
Example EU funded PPI network (DG ENER)5 local authorities lead this project on early market engagement to encourage sustainable energy publicProcurement (low carbon emission technologies): Barcelona (ES), Kolding (DK), Cascais (PT), Londonborough of Bromley and the Eastern Shires Purchasing Organisation (UK).Result: successful PPI procurement deploying various innovative products such as LEDs (over 20.000 units),indoor and street lighting, energy efficient vending machines and electric mobility (e.g. electric mini bus),representing a total budget of around €80 million and involving over 200 municipal staff. The technicalsolutions retained will reduce energy consumption and CO2 emissions by 30-90%, accounting for anestimated reduction of 5.3 GWh/a.www.smart-spp.eu
New innovation related points in revision of publicProcurement directives• Joint procurement• Clarifies legal base also for joint procurement between contracting authorities fromdifferent Member States• Intellectual Property Rights• Clarifies that IPR that contracting authority wants to acquire is part of the subject-matter of the contract and shall be clearly specified in tender specifications• Pre-commercial Procurement• Current provisions (Exemption for R&D services) maintained and clarified in thedirectives• Innovation Partnership• Identifies into a procedure already-used-today-practice of long term partnershipprocurements combining purchase of R&D + subsequent purchase of end-products(is not the same as PCP-PPI, different applicability)
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