Christian Bruhn Rieper at Innovation Forum in Reykjavik, May 2012
Danish Efforts in Innovative Public Procurement Christian Bruhn Rieper Head of SecretariatNordic Innovation Forum, A Seminar on Green Growth and Welfare, 24th of May 2012, Reykjavik
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
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 demandSource: Ministry of Finance, Economic Outlook, May2011
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)
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.
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
Three Danish initiatives1. Procurement of innovative solutions in the welfare sector2. Partnership for health and medical innovation3. Partnership for adaptation to climate change Supply Demand
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.
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.
Evaluation of the initiativeA pilot initiative:This an experiment. Will the use of functional requirements in publictenders 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.
Partnership for healthand medical innovationPublic investments for DKK 40 billion in newand 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
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 2012-2013Advisory 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
Focus areas in 20121. 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 infections2. 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 hospitals3. 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
Partnership for adoption to climate changeEvery Danish municipality must have a strategyfor 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
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
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!
Thank you!E-mail Christian Bruhn Rieper:firstname.lastname@example.orgRead more:www.fornyelsesfonden.dk