Pre-Commercial Procurement for Intelligent Transport Systems The P3ITS Handbook A Guide for PCP ActorsProduced by the P3ITS consortium.June 2011 1
P3ITS is a coordination actionfunded by the European Commission,DG Information Society and Mediaunder the 7th Framework Programmefor Research and TechnologicalDevelopment.P3ITS launched a dialogue between procurementexperts, innovation agencies and industrialexperts from the Intelligent Transport Systemsand Services (ITS) sector to understand howthe wider use of Pre-Commercial Procurementcould help enhance the market take-up ofITS innovations.More information can be found at:www.P3ITS.euDisclaimer:The views expressed in this handbook are those of the authorsand do not necessarily reflect the European Commission’sofficial view on the subject. Neither the European Commissionnor any person acting on its behalf is responsible for the usewhich might be made of the information contained in thepresent handbook. The European Commission is notresponsible for the external websites referred to inthe present handbook.
Forewords from the It is a common belief and driver of the P3ITS consortium that IntelligentEuropean Commission Transport Systems and Services (ITS)and the Project can help solve mobility issues, whilst being an innovative and growing sectorCoordinator where the competitiveness of European businesses creates growth and jobs. ToFor a decade, the European Commission support the uptake of ITS innovations,has supported the development of PCP is promoted by the EuropeanIntelligent Transport Systems and Commission as a new tool to bring moreServices (ITS) to make mobility in Europe innovation into the public procurementsafer, smarter and more sustainable. process.Although many successful projects havedemonstrated that ground breaking But as promising as it sounded,technologies can achieve this goal, PCP was somehow ignored, widelycitizens still fail to see the benefits of underutilised and largely consideredITS in their daily lives. Over the last few as too risky or complex to be used.years, the European Commission has Through its forum, its workshops andtherefore been supporting the use of its written publications, P3ITS has triedPre-Commercial Procurement (PCP) to change this situation and spread theas a tool to support innovation based vision, reflections and experiences ofon the needs of the public sector. those who believe that PCP should beIt is recognised that the public sector considered as part of the solution for thehas a huge role to play in solving the deployment of ITS in the public sector.mobility issues, and also that any public P3ITS also presents the difficulties orinvestment in the future will have to be risks inherent in the use of new financialcarefully considered, as public buyers support mechanisms in an open andare facing the challenge of doing more transparent manner.with less. This handbook has been designedMore innovation for European citizens to help you understand the underlyingthrough an efficient and end-product questions behind the use oforiented use of the public budget: this Pre-Commercial Procurement for ITS.is what PCP is about. This is why the It should be considered as a detailedEuropean Commission believes that introduction to a PCP process.PCP is a promising tool, and why we In the name of the P3ITS consortium,strongly support the P3ITS project. I hope you will find this document usefulEnjoy your reading! and interesting to read, and we hope itEuropean Commission, will convince you that PCP is not out ofDG INFSO. your reach but that it is an opportunity ready to be used! Rasmus Lindholm P3ITS Project Coordinator, ERTICO – ITS Europe 3
IntroductionMobility is a pillar of society, and it puts PCP is based on the applicationever increasing requirements on public of risk-benefit sharing accordingauthorities to find appropriate answers to market conditions: following theto enhance mobility conditions whilst special exemptions of Article 16fdecreasing its harmful effects. This task is of the 2004/18/EC Directive andbecoming increasingly complex, as mobilityis developing as a multi-dimensional Article 24e of the 2004/17/ECdomain: multiple goals, multiple types of Directive (the “European Publicactors, multiple potential measures and Procurement Directives”), the R&Dmultiple levels of barriers. results coming out of a PCP cannot be reserved by the public purchaser.Pre-Commercial Procurement (PCP) isan approach that could help the public PCP is a method whichauthorities answer these complex needs should ensure equal treatment,for mobility solutions, but some guidance is non-discrimination andneeded before it can be properly used. transparency, based on aThe P3ITS Handbook will guide the reader competitive development inthrough the necessary questions that the phases, ensuring maximumpublic authorities will have to answer before competition, openness, fairnessengaging in a PCP for Intelligent Transport and pricing at market conditions.Systems or Services. But first things first,here is an initial set of high level questions Why would a public authority needwhich will give an introduction to the topic: Pre-Commercial Procurement? Public authorities have several major rolesWhat is Pre-Commercial to play in the deployment of innovativeProcurement? ITS, not least acting as an innovationPre-Commercial Procurement is demanding first buyer. A complex set ofa method for public purchasers goals create different needs at differentto finance the development of levels for public buyers, varying fromground-breaking solutions to the optimised use of a specific locala problem, in view of future network to the implementation of the pan European services mentioned in the EU’scommercial procurement of large ITS Directive. These needs often requirevolumes of end products, when a groundbreaking solution, i.e. somethingthey have identified that the that is not currently available on the market.problem cannot be effectively In this case, a traditional procurementand efficiently solved by a mechanism is not enough, and PCP canstate-of-the-art solution. be used to support the research and development of the new solution. An analysis of the needs of several regions or countries possibly leading to the use of PCP in ITS has been performed by the P3ITS consortium in its WP1 Deliverable (available at www.P3ITS.eu)
Why would a supplier engage in PCP? What will this handbook help with?Supporting their early effort towards This handbook is designed to help theinnovative products and services as well as reader understand the challenges raisednew market opportunities, the by the use of Pre-Commercial ProcurementPCP process is positively received by for ITS. It gathers the main steps of theindustrial suppliers. The benefits for preparation of PCP, and details the pointssuppliers notably include: that the public authorities will have to answer according to their objectives and• better preparation to address their situation. the future market through the early collaboration with the What this handbook is not public authorities This handbook is not a detailed legal• lower investment to generate new handbook. It cannot replace the analysis market opportunities, thanks to the that any public procurer will have to financial support from the public side conduct before deciding to launch a PCP.• positive emulation coming from a Who are P3ITS? the collaboration/competition with P3ITS are a consortium of European other suppliers companies and public authorities• focus on the core tasks of R&D a supporting the exchange of views with the public side supporting the and experiences on Pre-Commercial creation of a new market Procurement, in view of making it a well spread tool for the deployment of ITS.What are the benefits ofPre-Commercial Procurement? The P3ITS consortium are:For the public purchaser, PCP is a ERTICO - ITS Europe, POLIS, Ministryway to: of Infrastructure and Environment – the Netherlands, North Denmark Region,• ake available on the market a m Connekt – ITS Netherlands, AustriaTech, groundbreaking solution adapted Mobiliteit en Openbare Werken to a specific public need – Flemish Government, Egis Mobilité,• avoid an exclusive development of CDV - Centrum dopravního výzkumu, a new product or service, which is TTS Italia, ITS Bretagne, Evolving both costly and risky for the public Systems Consulting. side, and could lead to - market fragmentation - l ower competition because of financial barriers - issed opportunities for more m innovative solutions 5
Table of contents..............................................................................................................................................Forewords from the European Commission and the Project Coordinator 3..............................................................................................................................................Introduction 4..............................................................................................................................................Table of contents 6..............................................................................................................................................How to use this handbook 7..............................................................................................................................................Actors 8..............................................................................................................................................The five steps to prepare a PCP process in the ITS domain 9..............................................................................................................................................Step 1. Preparatory phase 10..............................................................................................................................................Step 2. Planning and set-up of the framework 13..............................................................................................................................................Step 3. Link to the subsequent procurement 18..............................................................................................................................................Step 4. Publication and awareness strategy 21..............................................................................................................................................Step 5. PCP operations 24..............................................................................................................................................Proposed chronological process for the PCP operation 26..............................................................................................................................................PCP through a national or regional programme? 27..............................................................................................................................................Multi-national PCP 28..............................................................................................................................................Conclusion 29..............................................................................................................................................Indicative list of documentation required 30..............................................................................................................................................Glossary 30..............................................................................................................................................References 31..............................................................................................................................................
How to use this handbookWho is it for? StructuringThis handbook is primarily targeted The handbook describes a 5 step processat public authorities looking for more to help setting up a PCP. Each step of thepractical guidelines before setting up handbook is described in a similar way:a PCP process for Intelligent Transport Summary: At the beginning of each step,Systems or Services. For reasons of a box containing a short summary willsimplicity, “you” in the handbook, will give an overview of the points that will berefer to the party, on the public side, addressed in the step.who is leading the PCP process. Sub-step: After the summary, the step isHowever, the handbook is designed to broken down into sub-steps which are morebring knowledge to all parties interested detailed. The sub-steps correspond directlyin the research and development of ITS to actions that should be carried out.products and services in Europe, as it isbelieved that PCP will grow as a more Suggested method: Where appropriate,widely used way of including innovation the sub-step description includes ain public procurement, involving all types method that is suggested to carry outof actors. a specific action. The suggested method can also be a tip, e.g. a practical aspectThe authors of this handbook indeed to keep in mind before engaging inbelieve that this document also responds the action.to private suppliers’ needs, and hope thatthey will find this handbook useful. R ole of the actors: The specific role that the parties play at the different stages of the PCP process are expressed in a nutshell, to provide a simple overview. Documentation required: Basic documents that will be produced or used during each step. Risks: Details a short list of the main risks at each step, to make sure they are not missed. Case study: At the end of the step, a case study from a PCP case or programme will be described to provide an example of real implementation. As in all real cases, the solution described in this section can have benefits and drawbacks. 7
ActorsTo be successful, a PCP must ensure commitment from all parties. In this handbook,four key actors have been identified: three actors from the public side, the fourthactor being the innovation suppliers.Convincing these four main actors to support and participate in the PCP process will be acornerstone for success! Legal & Political Public procurment Innovation level department experts suppliersStrategy owner Project owner Procedural Advisors, Innovation andDefine the politcal Sector experts, legal expertise solution providers,goals and problem owners, researchers andinnovation policy implement and developers operate the technologyThe public side: one party but different functional departments advisors, Procedural legal expertiseThe public side, which will initiate a The legal and procurement expertsPCP based on its needs, can be seen supply technical and procedural advice onas a unique side composed of different legal questions to the public department.departments (or indeed contracted It is recommended that the project ownerexternal expertise on the client side), set up and chair a PCP project boardbringing complementary knowledge composed of the three public actors.and levels of implications. The board will be the core group for theThe political level is responsible to the process, responsible for taking the initialcitizens for the public actions, and will decision of launching a PCP, based on atherefore define the general strategy, bear broad innovation strategy. The board willthe ultimate responsibility and give support allocate the tasks of setting-up andto the project. carrying out the PCP process to the different public actors and theirThe public department is the problem representatives. The board will monitorowner: it has needs based on a the process and will take decisions at theday-to-day operational experience of different PCP steps and phases.mobility issues, and will initiate theprocess of developing new solutions. The innovation suppliers can be anyIt has the technical expertise, as well industrial actor interested in the topic ofas the market knowledge. the PCP. They may not necessarily be traditional members of the ITS sector, but can also come from sectors such as engineering, telecom, space, IT, etc., depending on the type of the project.e
The five steps to prepare aPCP process in the ITS domainThe process diagram below presents the five steps that the P3ITS consortiumrecommends following before setting up a PCP process. A detailed explanationof the five steps follows. Step 1 Preparatory Phase Step 2 Planning & set-up of the framework Step 3 Link to the subsequent procurement Step 4 Publication & awareness strategy Step 5 Although some of the public actors will not have a specific Operations role during all steps, they will all be monitoring and supporting the process through their representation in the PCP project board. 9
Step 1. Preparatory phaseThis step is targeted at defining the problems that can be solved through a PCPprocess. It should answer a specific need or set of needs and lead to the formulationof a set of goals. The complexity of innovation will be addressed during this step.During the preparatory phase, the public authority will make sure that, based on astate of the art analysis, they can identify at what level innovation is mostly needed.1.1 dentify the socio-economic needs I of potential solutions. You should and challenges therefore avoid a pre-definition of The political priorities defined by the solution, which would greatly high-level decision makers will set out reduce the opportunity for new the public authorities’ lines of actions. ideas to emerge. From these, you will identify the Example of top innovation level: challenges that you need to take up in improve sustainable travelling; example of the sector of mobility and ITS. lower innovation level: Cooperative Consider especially the EU ITS Directive, Systems road side units. the EU ITS Action Plan and their national 1.4 dentify the missing links or gaps in I implementations, which will provide ITS systems important challenges to be solved. o enable the value chain that will T Consider also any national ITS plans, policies answer the needs you have defined, you or architectures that may exist or be under need to make sure that you identify any development in your country. missing links or gaps in ITS systems or1.2 dentify the goals from the public I services. These gaps will be specifically demand side targeted in the PCP process. the framework of the high-level In 1.5 nalysis of the limits of available A needs, the public sector should come solutions and opportunities for up with specific needs as a first buyer. innovations through a PCP These needs may come from a bottom- the gaps or missing links you have For up approach, i.e. a local authority spotted, perform a market study to identifies a product or service it wishes see what product or service is already to offer to citizens, or be a top-down available that could answer your needs. process, as with new regulation. Propose to launch a PCP process As a public buyer, you will identify the specifically to tackle gaps where it will extent of the public needs and the extent have the highest impact. of a realistic future public procurement. Involve some suppliers if you also need 1.3 Identify the innovation levels their expertise. Gather some experts and go through 1 .6 Budget and resources the goals to identify the appropriate this stage, you need to have an At level at which innovation is needed. estimation of the budget that will be The solutions developed at high level available for your PCP process. You won’t be the same as those developed also need to secure the resources at a lower level. However, defining the you might need: staff, legal experts, level should not lead to a limitation industry experts.
Role of the actors Role of Role of the Role of the legal and the public political level procurement department expertsThe political level The public department The legal experts willhas to formulate and will be the key driver provide information onpromote their strategies consolidating the needs the different mechanismsfor transport and for and requirements coming available to supportinnovation, including from all levels, and matching innovation. They havegoals and objectives. them to the political goals to highlight the benefits and ambitions. and limits of the differentThey also have to make tools. They explain whatsure that budget is They will also have to find is feasible according toallocated specifically solutions to finalise a the objectives. If theyto the support of budget for a potential PCP, are not familiar with PCP,innovation in the ITS which means finding the they will have to studysector through the use resources to complement the principles of PCP andof Pre-Commercial co-financing. legal foundation for PCPProcurement. to make it one of their available tools. Documentation required Risks• Expression of the political ambition and the societal challenges O ver-definition of the solution: don’t come with a• Needs of the public solution in mind, leave room for new inventions demand side Wrong level of innovation: avoid selecting a • Market study or high-level solution for a specific low level need, or vice- identification of the versa technological gaps U sing PCP when inappropriate: PCP is very promising (e.g. strategic research but might not answer all your needs. Consider all types agenda, system of support measures before taking your final decision, deployment including the traditional procurement procedure which roadmaps, etc.) could be more appropriate• Budget allocation for the procurement of innovation 11
CASE STUDY: The objective of the InnovationThe procurement of innovation Platform is to consult the market andin Flanders (Belgium) develop a technical dialogue between the procurer, knowledge centres andIn 2008, on the basis of companies. The aim of the Innovationrecommendations from the Flemish Platform is to cross-check the degreeInnovation Agency (IWT), the Flemish of innovativeness of the procurer’sgovernment approved an Action Plan on purchasing needs (as formulated in theProcurement of Innovation. Master Plan) against the state-of-the-The plan focused on procurement where art technology available. The expectedpre-commercial R&D is necessary and outcome of the innovation platformIWT was given the mandate to test such is a refined and more technicalprocurement in a pilot scheme, with Master Plan and a decision on whichprojects running from 2010-2014. mix of policy instruments is best suited for achieving the outcomeTwo main components of the model are foreseen in the Master Plan.the set-up of a Master Plan and of an Policy instruments could includeInnovation Platform: procurement, launching basicThe Master Plan is formulated by research initiatives at researchthe different policy domains and is institutes, starting industrial R&Dpolitical in nature. It analyses a specific with or without grants, startingsocio-economic challenge or operation standardisation activities orof a public service and determines a launching new governmentalvision or future goals to be reached in fiscal, regulatory, education/the area. Based on this Master Plan training or equity supportvision, the opportunities for innovation measures. This will result inare defined by detecting the limits of the a decision regarding choiceactual solutions available on the market. of procedure; whetherThe Master Plan forms the input for the it is going to be pre-innovation platform. commercial procedure or just a commercial procedure.You have defined yourneeds; you know what youwant to achieve at the endof the process.The next step will helpyou detail the set-up ofthe process which willhelp you achieveyour objectives...
Step 2. Planning and set-up of the frame-workThis step will focus on the details of your PCP procedure. Now that you haveidentified your goals and your needs, you want to establish all the details of thephases that will comprise the PCP process.Throughout the PCP process, your main driver will be to identify the most innovativeand promising solutions and bring them along as far as possible in the developmentof their product. Throughout the process, the main principles of equal treatment,transparency and non-discrimination should be ensured. These considerationsshould therefore be kept in mind as the process is set-up.2.1 pecify the general requirements S 2.2 Design the competition phases From the PCP process, you expect The PCP process is built on R&D tasks a ground-breaking innovation. It may performed by several suppliers during come from a field of activity you may one or more competitive phases. not have expected. To make sure After each phase, the different parallel this can happen, you will use as few projects are evaluated against criteria, requirements as possible. However, and only the best ones may advance to it might be beneficial to require the following phase. The scope of each that the PCP participants develop phase depends highly on the product interoperable solutions, e.g. in the or service expected at the end of the case of transnational PCP. This is a process. You will adapt the number and way to minimise the risk for the public the scope of your phases according to department, and it will enhance the your objectives. competition and the opportunities for Based on its experience, P3ITS the use of the solutions at a later stage suggests applying three phases to for the commercial tender. Similarly, ITS PCP processes: you could consider a requirement for compliance with certain European Phase 1: Feasibility study standards to be relevant. Phase 2: Product development Your national/regional situation may require Phase 3: Field testing or piloting additional general requirements. In the ITS 2.3 efine the evaluation and D sector, you should also consider whether award criteria the use of a specific ITS architecture or a Define the selection criteria way to handle privacy issues are for participating in the PCP appropriate to become requirements. Y ou will define the criteria for The EC recommends using functional suppliers to enter in the PCP process. specifications to formulate the object of the The selection criteria might be based PCP tender to avoid prescribing a specific on experience of the bidders (e.g. in solution. the development of solutions similar to the PCP object or with R&D in general in certain technical field) or based on a call for initial ideas or solutions, or on a combination of both. 13
Define the award criteria for 2.4 efine the time plan and the D each phase detailed budget An evaluation and award process will According to the scope of the different take place at the end of each phase phases, you will specify their duration, of the PCP. The evaluation will be as well as the maximum budget performed against given criteria, which that can be allocated to each of the you will have to define in advance to participants for the tasks performed ensure the transparency of the process. during each phase. The criteria can be different for Time and budget depends on the product each phase. or service. An estimate from the Dutch Criteria can encompass: price, degree of SBIR programme: innovation, technological quality, added Feasibility study: 6 months and value for society, economic perspective … €50 000 per project S elect your evaluation committee Research phase: 2 years and T his will be composed according €500 000 per project to the topic of your PCP process. You may want to use the same 2.5 Decide on the contract details type of committees you usually use Share the IPR for commercial procurement, but You will decide how much of the IPR make sure that the members of the will remain with the suppliers. For evaluation committee have the skills your process to be legally valid, it is required to assess early stage product mandatory to share the IPR at market development as well as the innovation terms. You should therefore find the process. appropriate balance. Keep in mind that the evaluators will gain Remember that IPR sharing will reduce the very valuable experience on a product or remuneration of participating suppliers and a service from the PCP process. You may the costs of maintaining the IPR. Also, want to keep them for a subsequent sharing IPR will often be a crucial commercial tender. prerequisite for the suppliers to participate as this paves the way for using the Define the number of projects supplier’s investment on a broad through each phase commercial basis. You will decide how many projects you wish to accept in each of the Request a right of use phases. The number of projects A method to ensure that you are should be chosen to create true and handling the IPR under market fair competition during the PCP conditions could be to request licensing process, but also to improve future rights. market conditions. For example: a royalty-free right for The PCP pilot Programme from the authorities to use the IPR in future Eszak-Alföld Region (Hungary) advises: commercial tenders combined with an obligation for the PCP suppliers to Phase 1: Minimum 4 projects grant non-exclusive licenses to third Phase 2: Minimum 3 projects parties on fair and reasonable conditions Phase 3: Minimum 2 projects without rights to sub-license.
Role of the actors Role of Role of the legal and the public procurement experts departmentThe public department The legal and procurement experts will perform thewill provide its sectoral appropriate legal analysis and define procedures toexpertise to make sure ensure that every step of the PCP process strictlythat the PCP framework follows the law. They will make sure that all risks areis appropriate for the minimised.identified needs. 15
Documentation required• Contract Notice• eneral Conditions for PCP procedure and competition, containing (inter alia): G Description of Procuring Authority, general description of PCP, scope of PCP, road map for selection and award (including a precise description of selection criteria for PCP contract awards and award criteria for each phase), time-frame, technical specifications/general requirements, minimum requirements (selection and/or technical)• ny necessary supplements to the General Conditions or Contract, A e.g. business case, pilot study reports, etc. • raft contract governing all phases in the PCP (inter alia): scope, pricing, D remuneration, IPR sharing (back- and foreground IPR), confidentiality, IPR licensing (on fair and reasonable conditions), and call-back provisions on IPR, liability limitation, disputes and applicable law • f the procuring authority is a consortium (two or more public bodies, or I multi-national cooperation) the consortium needs to draw up a Consortium Agreement, governing at least: - Decision making during evaluation of phases, project committee - Common frames of award criteria during evaluation of phases - Cost allocation - Internal allocation of IPR and/or licensing expenses after the PCP - Applicable law governing the Consortium Agreement RisksState aid: ensure the sharing of risks and benefits according to market terms toavoid the risk of state aid.Failure of procurers’ commitment: make sure that the procurers involved arecommitted and secure the supportof high level authoritiesProcess not appropriate for SMEs: make sure that the time, cost andadministrative part do not prevent SMEs from participating in the PCP, becausethey could bring a high innovation potentialLow budget: make sure that the budget available is sufficient for a PCPprocess with multiple R&D phases. Consider operating with target prices
CASE STUDY: European Commission regarding PCPThe Small Business Research (for example participating companiesInitiative (UK) do not remunerate the contracting authority for IPR or share risks with theThe Small Business Research Initiative contracting authority) it does respect EUwas launched in the UK in 2009 and is principles such as non-discriminationled by the Technology Strategy Board, and transparency.which assists different governmental By early 2011, 28 eight calls had beendepartments that may wish to procure published, resulting in more than oneresearch and development services thousand applications with contractsthrough the SBRI programme. The awarded to 283 different suppliers,Initiative is targeted at SMEs (though not 90 of which have continued and haveexclusively) and aims to bring innovative been awarded contracts in phase two.solutions to specific public sector The total value of all contracts awardedneeds, by engaging a broad range of in both phases has already reachedcompanies in competitions for ideas £24 million and the budget wasthat result in short-term development increased to £35 million in the fiscalcontracts between the company year of 2010-2011.and a government department. Theinitial feasibility phase is limited tosix month duration with a maximum You now have your detailedcontract of £100 000, with the most PCP project. The next steppromising companies awarded a will bring you a couple ofsecond (development) phase contract years into the future to helpof up to 2 years and £1 million. While you plan the subsequentthe SBRI programme does not followall recommendations made by the commercial procurement. Why do it so early? To make sure that your PCP process will not have negative legal implications on your commercial procurement... 17
Step 3. Link to the subsequent procurementProcurements carried out in accordance with the exemption in Article 16f(Directive 2004/18/EC) or Article 24e (Directive 2004/17/EC) cannot include asubsequent procurement on a commercial basis. Therefore, to be legallyacceptable, your PCP and the subsequent commercial tender will have to be fullyseparated. However, on both the side of the public procurer and of the suppliers,it is very likely that the actors will remain the same, not to mention that the objectof the two processes will be similar. To make sure that this apparent contradiction(two separated processes involving potentially the same actors on the same object)doesn’t infringe public procurement law, you will have to consider certain aspectswhich are detailed in this step.3.1 stablish your strategy for the E procurement. The information regarding subsequent tender the commercial tender is therefore equally From step 1, you know whether the available for all potential suppliers. purpose of your PCP is to procure the 3.3 nsure that you avoid supplier E developed products/services after the exclusion PCP. If that is the case, you should Supplier exclusion will often be the specify (e.g. in your business case) result if the participants in the PCP the details of such purposes following process have an unfair advantage commercial procurement. You should over potential bidders who haven’t establish a budget and a time plan, participated in the PCP process. If as well as a contracting authority such unfair advantage is deemed to be (if different from the one leading the present, the PCP suppliers may have PCP). All this is common procurement to be excluded from participating in the routine, but it needs to be given some commercial tender. You should take thought before you launch your PCP. the necessary measures to avoid this Bear in mind that you’re expecting an situation. According to European Court unknown and undefined product/ of Justice case law the burden of proof service from your PCP process, that supplier exclusion doesn’t apply therefore you will not be able to write the rests upon the procuring authority. technical specifications of your commercial You should make sure that the commercial tender before the end of the PCP. You will tender doesn’t refer to information or have to take that reality into account whilst technical details only available to the PCP writing the scope of your PCP. participants. One way to prevent supplier 3.2 nsure that you avoid discrimination E exclusion is to make all relevant information Discrimination will happen if your developed during the PCP available for the commercial tender is not equally open bidders in the later commercial tender, to suppliers that haven’t participated in e.g. descriptions of the IPR developed. the PCP process. Take the necessary Another way of minimising the risk measures to avoid this possibility. of supplier exclusion is to draft the A solution chosen to address this point technical specifications through could be to simultaneously publish functional specifications. the details of both PCP and commercial
Role of the actors Role of Role of the Role of the legal and the public procurement political level department expertsDecision makers should The public department will The procurers will makerefrain from commenting formulate the expected sure that the strategyon the PCP process at outcome of the PCP and for the PCP and thethis stage to avoid any of the subsequent tender. commercial procurementrisk of interference with It should consider how to are legally sound.the neutral process of implement the technical They will especially ensuredesigning the tender. specifications from that supplier exclusion the PCP into the later and discrimination technical specifications are avoided and that of the commercial tender, the pre-decided including the format and documentation for the layout of IPR (foreground) commercial procurement developed during the is produced during the PCP. The question of their PCP procedure. publication to potential bidders should be answered. Risks Documentation required Illegal public procurement: the use of PCP should not• cope or technical S lead to an economically bring extra risks to the specifications of the advantageous commercial procurement product or solution commercial solution, to be developed i.e. that the criteria for Supplier exclusion: make under the PCP (to be the PCP and for the sure that the suppliers included in the General commercial procurement who perform and deliver Conditions or business are in line with each during the PCP phase will case of the PCP) other. be allowed to participate in the commercial tender• xplanatory note of the E • eport on the information R award criteria for the PCP collected during the Two phases to get where and for the commercial PCP process which you want to be: ensure tender if they are should be published for that the results of the applicable to both. If they the commercial tender, R&D tasks performed are not (or only partially), e.g. test results, test during the PCP can the note should explain facility specifications, and will be used in how the PCP criteria documentation, etc the commercial should also potentially tender 19
CASE STUDY: • he consortium of public TEU Framework Programme 7, purchasers should verify that theICT Work Programme 2011-12, topic proposed for the joint PCP callcall 8 for PCP for tender would fit the scope of an R&D services contract.The following requirements (extract) • he practical set-up foreseen for Tare applicable to PCP calls for tender the PCP shall be clearly announcedlaunched under actions requiring PCP in the PCP contract notice. Thisto ensure that the conditions for the shall include the intention to selectArticle 16f/24e exemption of the public multiple companies to start theprocurement directives are respected, pre-commercial procurement inthat the risk-benefit sharing in PCP parallel, as well as the number oftakes place according to market phases and the expected durationconditions and that the Treaty principles of each phase.are fully respected throughout the PCPprocess, in particular the fundamental • unctional specifications shall be FTreaty principles on the free movement used in order to formulate theof goods, the free movement of workers, object of the PCP tender as athe freedom to provide services, the problem to be solved withoutfreedom of establishment and the free prescribing a specific solutionmovement of capital, as well as the approach to be followed.principles derived therein, such asthe principles of non-discrimination,transparency and equal treatment:You have now a welldefined PCP process, linkedto a future commercialprocurement. You haveminimised the risks, so thenext step is to publish yourPCP and meet a challengingnew objective: get suppliersto participate into your PCP,a type of competition theymight not be so familiarwith!
Step 4. Publication and awareness strategyOnce you have achieved the first three steps, you will be able to publish yourtender. But the publication will not be enough. Your main interest is to get asmany bids as possible, and you need to have a broad outreach to make sure thatall kind of solutions for your problem are envisaged. You will therefore make surethat you have a strategy to reach different sectors. You should also advertise thatit is very beneficial for suppliers to participate in your PCP. To that end, you willhighlight the benefits that the PCP participants will receive, no matter how far theygo in the process. For all participants, explain that the PCP will lead them towardsa new market.4.1 onsider making a business case for C 4.3 Publish your tender potential suppliers You should consult your legal expert first, the suppliers may feel unsure At to find the appropriate method for this that the PCP process is beneficial for point. EU-wide tender: is it mandatory? them. You will put them in competition Is it necessary? Bear in mind that it is to develop a product, which they are not only about the choice between a not sure they will sell eventually. You will foreign and a local company, but it is therefore need to develop a business also about the potential of innovation case, including the forecasted market behind an EU-wide tender versus a development, some other potential regional/national tender. buyers, or sources of profit. Both national and EU tenders have been Make sure that your business case is used in PCP programmes so far. positive for all participants and at all The UK SBRI programme is using a national phases. The PCP process is also an call for tender, whereas the Flemish Region opportunity for you to increase the (Belgium) PoI programme is using EU competitiveness of the companies you are tenders. The European Commission working with. is in favour of EU tenders, but the current European legislation does not specify this 4.2 escribe your support means for D point. product take up One of your main objectives is to 4.4 Advertise your tender enhance the market conditions for the Once you have published your tender wide adoption of innovations. Therefore, and setup the support means and you may take measures that will help documents, find a way to advertise it the winners of the PCP process to in the most effective way. The success commercialise their new product or of your PCP process will mainly service, and not only through the depend on the innovation resulting subsequent tender. from the participation of new players, small businesses, in competition Support means can be as simple as a with experienced companies. commitment to generate some publicity for the winning companies. This is the method A dedicated website grouping all that the Dutch SBIR programme is using. this information (and not only the legal You may want to link this part to the tender publication) is a must. You can refer relevant innovation agency. to the websites set up by the Dutch SBIR (www.senternovem.nl/sbir) or UK SBRI programmes (www.innovateuk.org/sbri). 21
Role of the actors Role of Role of the Role of the legal and the public procurement political level department expertsDecision makers, due The public department The legal experts willto their high degree of will be responsible for verify that all publishedpublic exposure, can the development of the documents are consistentefficiently contribute to tender documentation, and in line with theadvertising the tender business plan and planned proceduresby referring to it in their communication plan. and the legislation.public communication They will make sure thaton their transport strategy all relevant information isand innovation policy. available on a website,This would contribute as well as on theto reaching out to relevant databasenew players and (e.g. TED).businesses. Role of the Documentation suppliers requiredOnce the requirements of the procurer are known, the • usiness case for Bsupplier would need to decide at an early stage whether the potential solutionor not it is potentially capable of developing a solution coming out of the(or contributing towards one, as part of a group involving PCP processother companies – in which case a consortium-building • ortfolio of support Pprocess is needed). measures forThe commercial case for proceeding with the PCP business start-up(Go/No go) can depend on the likely market to be • Official publication developed and possible competition. Therefore an of the tender,internal business case/market analysis is needed, translation if relevantin conjunction with any business case provided by • Communicationthe contracting authority. plan Risks The PCP is not attractive for the suppliers: ensure an attractive business model The market opportunities are not clear: issue a proper business case The publication of the tender is not appropriate: according to your need, open your tender to receive as many new ideas as possible
CASE STUDY: Several pilot projects planned a Europe-wide publication of their PCP, and(Various examples) published their Prior Information Notice onIn the Netherlands, the SBIR programme the Official Journal of the European Unionis publishing its calls on the SBIR and the related TED (Tenders Electronicwebsite, through press releases and by Daily) website (ted.europa.eu). Theemails sent to possible interested parties. Movele project, addressing the need ofwww.senternovem.nl/sbir three Spanish cities for Electric VehiclesFor a PCP pilot in Poland, the charging points, combined the use of TEDKujawsko-Pomorski region planned with advertisements on mass media andto advertise their call in professional websites, and organised a seminar to meetICT-related magazines, on several internet potential suppliers.portals and in national newspapers. With the publication of theIn the UK, it is the Technology Strategy tender, the process hasBoard that is responsible for the publicationof the call and the business outreach. been officially launched. Thewww.innovateuk.org/sbri next step will focus on the operation of the PCP; that is when the actual R&D process will begin. 23
Step 5. PCP operationsNow that you have specified all the aspects of your PCP, you can proceed. In thisstep, the actual process is started. You should make sure that you have engaged allthe necessary and appropriate means and resources to carry out all tasks properly.You should make sure that the process of the PCP is clear for all actors, includingyour own staff, and of course the suppliers.5.1 repare for the arrival of the P Make sure that the main principles applications of the PCP contract (risk and benefit for any procurement routine, you As sharing) are known and understood should establish a procedure to receive by the suppliers, in order to make the applications and make sure that it is the negotiation phase as smooth as appropriate to the PCP process. possible. In order for your PCP process to be efficient, you should aim to5.2 rganise the evaluation O reduce as much as possible the buffer You should make sure that your time between the operating phases. evaluation committee has been properly trained and informed to 5.4 Manage your phases understand the specific stakes implied You should closely follow the by a PCP process. development phases of your PCP The evaluation may need specific process to ensure that the time plan resources other than a paper-file and budget is respected. You should evaluation (e.g. physical demonstration, decide whether and how you want to proof of concept, negotiations, testing enable a procedure permitting some infrastructure, etc.). dialogue between the suppliers and the procurers, e.g. for the question of5.3 Award the contract interoperability between the different Once the participating suppliers have solutions. been selected to participate in the PCP, you will award them the PCP contract Remember: You are not allowed to alter being a part of the General Conditions the award criteria for each phase during for the PCP procedure. the PCP as this would violate the principle of transparency. Remember that your PCP evaluation and award procedure can contain 5.5 rain your staff on the T one or more negotiation phases (if product/service published in the call for tenders). You don’t The development phases will be an need to award the contracts purely on the opportunity for you to involve the basis of the written applications/tenders. members of your staff who will be However, the negotiations must not result potentially involved in the commercial in altering the fundamental principles of tender, and eventually, at a later the PCP contract, e.g. conditions on IPR stage, in the operation of the product sharing and phase divided evaluations. or service. Involving them in the monitoring of the development phases will give them a better understanding of the product, hence a more professional opinion for the tender evaluation, and an easy adaptation to the operation of the product once it is up and running.
Role of the actors Role of the Role of legal and Role of the the public procurement suppliers department expertsThe public department The legal experts will Bidding for the differentwill be the project leader make sure that all stages of the PCPfor the operations of the procedures established contract. Given thePCP. They will manage during the preparatory pre-commercial nature,all phases according phase are strictly emphasis would needto the procedures. respected. They will to be on innovativeThey will closely follow supervise the contract solutions to meet thethe development awarding process and the project goals.process, be in charge of awarding process during Undertaking thecommunication with the each phase of development worksuppliers, and involve the PCP. according to the contractthe staff who are directly (if selected). IPRs shouldconcerned by the future be shared with the publicproduct. They are in contracting authority incharge of the evaluation, the best possible andand as such will make Risks transparent manner,available the relevant hence making theinfrastructure and testing Failure to comply quality of actual R&Denvironment, especially with time and budget work transparent to thefor phase 3. They constraints: make sure contracting authority andwill process the you stick to the plan hence again, improvingpayments. the supplier’s Evaluation of innovation chance to win. does not spot the most promising ideas: train Documentation the evaluators on the required assessment of potential innovation• ademecum of the V Suppliers fail to provide process targeted both a successful solution: at the project staff ensure a diversity of and at the suppliers suppliers to minimise• Evaluation the risk of unsuccessful templates for development each phase Suppliers disagree with decisions: refer to the contract and the section on the management of disputes 25
CASE STUDY: weeks, 21 proposals were received, 15PCP in the Netherlands: coming from SMEs, including 5 start-The Digital Dyke case ups. An expert committee ranked the proposals and advised the Ministry ofFacing unexpected dyke problems, Water Management. 5 companies werethe Dutch Ministry of Economic Affairs awarded to do a feasibility study. Outstarted in 2003 to experiment with of these 5 feasibility studies, 3 projectsPre-Commercial Procurement looked very promising, and 2 wereprogramme. In 2007, the Ministry of selected for prototype developments.Transport and Water Management To lower the risks, the developmentinvited, in a tender, “companies to was followed very closely by thesubmit proposals for feasibility studies public authorities, including theon new monitoring techniques for dyke field operating staff, the “problemand dam management and for early owners”, and visits were organisedwarning systems on weak spots, in order 2-3 times a year.to prevent damage to dykes and damsand thus to prevent disasters.” Within 8Proposed chronological process for the PCP operationThe following diagram pictures the work flow as it will happen during the operationof the PCP. Step 1 Preparatory Phase Step 5 Operations Step 2 Evaluation, selection and contract award Planning & set-up of the framework Evaluation Evaluation and selection and selection for next phase for next phase Step 3 Phase 1 Phase 2 Phase 3 Link to the Product subsequent Feasibility study Testing/piloting development procurement Step 4 Publication Commercial tender & awareness strategy
PCP through a nationalor regional programme?Up to now, the most successful procurement of innovation took place through theSBRI and SBIR programmes, which are based on the American SBIR programme butstill very similar to PCP and respect all European laws. The UK and the Netherlandshave been able to demystify the procedure and make it usable for all procurers.Other European countries are following general support for research, developmentthe good example and starting up and innovation. This would, during theprogrammes on their own, which are first years until the PCP concept is morenow true to the European Commission’s thoroughly mastered, encourage publicrecommendations for PCP. Experiences authorities to use PCP and provideand recommendations from these assistance when needed. The legal issuesprogrammes are not yet available as the would thereby be settled centrally whichprogrammes have only just started in 2010. would take away much of the uncertainty of using the procedure, e.g. with regardsOn the other hand, P3ITS has not been to the consideration of the subsequentaware of any single procurers exploiting commercial tender. Such an organisationPCP, though many have shown an interest could also be able to act as a helpdesk,in the method. When procurers are on their and provide specific guidelines, whichown they tend to choose known and tested could further contribute to the objectiveprocedures. It is therefore difficult to collect of raising awareness of PCP.lessons learned or to formulate guidelineswith regards to this specific case, as no realfeedback on experiences is available.In that sense, a national or regionalprogramme can be understood as astructure able to identify the properneeds of public purchasers, and supportthem throughout the process of runninga PCP, as it requires specific skills andexperiences that single procurers may nothave. However, P3ITS does not believe thatnational or regional programmes shouldbe set up just for limited areas or topicssuch as transport or ITS, but instead thatthey could apply PCP in a broader way,according to regional or national priorities.The recommendations from P3ITS are thusfor national or regional administrations(according to the usual practice forinnovation in each EU Member States) tolaunch PCP programmes as part of their 27
Multi-national PCPMany European countries, regions or cities face the same issues and share the sameneeds, such as avoiding traffic congestion or enabling access to real-time trafficinformation. Moreover, with huge volumes of goods and people crossing bordersevery day, and challenges such as lowering CO2 emissions and combating globalwarming that need to be tackled at a transnational level, transportation and mobilityin Europe is strongly affected by cross-border questions.The question of putting in common the • utual agreement on the technical Mneeds, the expertise and the budget of solution(s) to be developed andpublic buyers to develop a more innovative a mutual agreement on what isproduct is strongly recommended by the considered to be the “best solution”European Commission, which published – award criteria, the cost allocation,in the ICT Work Programme 2011 different the applicable law, etc.calls for proposals setting up transnational • etting up a European consortium as SPCP projects, involving at least three a procuring authority for a PCP, theindependent public bodies from three members of the consortium shoulddifferent countries. make sure they have disclosed allWhen talking about a joint procurement relevant documents for a successfulthat tackles a common need in different international cooperation, such ascountries, EU funding is needed in order national legislation, national politicalto overcome legal and organisational decision making processes, nationalchallenges. It is hard to imagine two or technical standards, potential parallelthree countries investing national funding national projects, etc.into a procurement process that could As an alternative, a multi-national PCPaward a contract to a supplier coming could be handled by setting the samefrom non-involved country. This scenario requirements, but running the procurementmight, in the real world, dissuade countries in parallel in each country. The commonfrom participating in multi-national standards and framework or the sharedpre-commercial procurement. requirements would be defined among theP3ITS considers that the use of different countries involved before the PCPmulti-national PCP is of high relevance, but would even start. After that, each countryP3ITS has also identified a number of limits would be in charge of implementing thewhich should be additionally considered process independently. This would easecompared to a normal PCP process set-up: the legal aspect.• he procuring authority: in the case T of a trans-national PCP, a consortium of procuring authorities would be created. This potentially involves a more complex preparation process, as several internal technical and legal issues should be solved before the actual PCP tender documentation can be prepared.
ConclusionNow that you have gone through the five steps of the handbook and all points andquestions raised have been answered, you should be better prepared to launch aPCP process for ITS.You have, in turn,1. identified your need as a problem that 5. planned the operations of your you want to address and recognised PCP process, making sure that all that the market was not able to supply procedures and the legal framework a solution to your problem will be respected, and that the early involvement of the “problem2. planned your PCP framework, the owners” will enhance the potential different phases, the criteria and for new ideas contract, the budget and time plan of your process These questions that you have answered3. secured the post-PCP phase, through will help you convince both private and the establishment of a strategy public partners to get involved in a PCP towards the subsequent purchase process, as a procuring authority or of large volumes, to make sure that a supplier, which can be a challenge. your PCP process will not harm the To make this task easier, you may legal conformity of the commercial become involved in a national or regional procurement programme, or the relevant innovation agency, which could provide the initial4. prepared the publication of your momentum needed. For specific needs tender and its advertisement, to and opportunities, you will also consider ensure that many potential suppliers working with partners from another country from different lines of business will to engage in a multi-national or multilateral be interested in participating and PCP, bearing in mind the specific issues bringing ground-breaking ideas implied in such projects. 29
Indicative list of documentation requiredStep 1: Step 3:• xpression of the political ambition and E • cope or technical specifications of the S the societal challenges product or solution to be developed• Needs of the public demand side under the PCP• arket study or identification of the M • xplanatory note of the award criteria for E technological gaps the PCP and for the commercial tender• udget allocation for the procurement B • eport on the information collected R of innovation during the PCP process which shouldStep 2: be published for the commercial tender• Contract Notice Step 4:• eneral Conditions for PCP procedure G • usiness case for the potential solution B and competition + any necessary coming out of the PCP process supplements to the General Conditions • ortfolio of support measures for P or Contract business start-up• raft contract governing all phases in D • fficial publication of the tender, O the PCP translation if relevant• onsortium agreement (if the procuring C • Communication plan authority is a consortium) Step 5: • ademecum of the process V targeted both at the project staff and at the suppliers • Evaluation templates for each phaseGlossaryEC: European Commission R&D: Research and DevelopmentFP7: European Commission’s seventh SBIR: Small Business Innovation ResearchFramework Programme for research and Programme, Dutch Pre-Commercialtechnological development Procurement programme led by the NLICT: Information and Agency (Ministry of Economic Affairs,Communication Technologies Agriculture and Innovation) running,IPR: Intellectual Property Rights http://www.senternovem.nl/english/ITS: Intelligent Transport Systems products_services/encouraging_and Services innovation/small_business_innovation_P3ITS: Pre-Commercial Procurement for research_sbir_programme.aspIntelligent Transport Systems and Services. SBRI: Small Business Research Initiative,PCP: Pre-Commercial Procurement UK Pre-Commercial Procurement programme led by the TechnologyPoI: Procurement of Innovation, Flanders Strategy BoardRegion (Belgium) Innovation Programmeled by the Flemish Innovation Agency (IWT), http://www.innovateuk.org/SBRIhttp://www.innovatiefaanbesteden.be/ SME: Small and Medium Enterprises
ReferencesPre-Commercial Procurement, EC Cordis Website: documentation,FP7 Work Programme call texthttp://cordis.europa.eu/fp7/ict/pcp/home_en.htmlP3ITS Deliverables:Needs and requirements for the innovation and deployment of ITS, Coen Faber,Paul PottersAnalysis of public pre-commercial procurement models and mechanisms, Mai Sloth,Jens Peder Kristensenhttp://www.P3ITS.euDirective 2004/18/EC of the European parliament and the Council on the coordination ofprocedures for the award of public works contracts, public supply contracts and publicservice contractshttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004L0018:en:NOTDirective 2004/17/EC of the European Parliament and of the Council coordinating theprocurement procedures of entities operating in the water, energy, transport and postalservices sectorshttp://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004L0017:en:NOTPCP related initiatives in Belgium (Flanders region), Christophe Veys and Peter Thevissen,IWT Knowledge Center for Procurement of Innovationhttp://cordis.europa.eu/fp7/ict/pcp/flanders-case.pdfPCP related initiatives in Hungary, INNOVA Észak-Alföld Regional Innovation Agencyhttp://cordis.europa.eu/fp7/ict/pcp/hungary-case.pdfPilot Peer Review Report of Small Business Innovation Research programme(SBIR) by Christiaan Holland, Dialogic, June 2010SBRI Programme, technology Strategy Boardhttp://www.innovateuk.org/deliveringinnovation/smallbusinessresearchinitiative.ashxMovele Project (http://www.idae.es/index.php/mod.pags/mem.detalle/id.407/lang.uk),through SMART SPP project (http://www.smart-spp.eu/),Helena Estevan, Ecoinstitut Barcelona,http://www.eszakalfold.hu/uploads/Kulkapcsolatok/PCP2011/eloadasok/2_5_ESTEVAN.pptPre-Commercial Procurement in the Netherlands, Digital Dikes case,Frans Gerritse, SenterNovem 31
The P3ITS Consortium MembersContact us:www.P3ITS.euSébastien Mure email@example.comERTICO – ITS EuropeAvenue Louise 326B - 1050 BruxellesBelgium