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Global Procurement and Supply Chain

Thierry Desaleux Deputy Director for Procurement and Strategic Partnerships (French Alternative Energies and Atomic Energy Commission). Global Procurement and Supply Chain Implementing Strategies To Improve Efficiency of Procurement Cycle. Innovation in Public Procurement

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Global Procurement and Supply Chain

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  1. Thierry Desaleux DeputyDirector for Procurement and StrategicPartnerships (French Alternative Energies and Atomic Energy Commission) Global Procurement and Supply Chain ImplementingStrategies To ImproveEfficiencyof Procurement Cycle Innovation in Public Procurement Someeasyideas to implement… 24 & 25 mai 2012 - 1

  2. Contents • Procurement Strategies (a team work) • Using Public rules as tools • Development of Public Industrial Strategies • Conclusion 24 & 25 mai 2012 - 2

  3. Contents • ProcurementStrategies (a team work) • Using Public rules as tools • Development of Public IndustrialStrategies • Conclusion 24 & 25 mai 2012 - 3

  4. Procurement Strategies – A Team Work (1/3) • The implementation of an efficient procurementimplies : • Anticipation and professionnalism. • The definition of procurementstrategies. • Properrisk mitigation in relation with the stakes. • The choice of the relevant procedure. • Cost control. • An effective follow up.  Key element : creation of apartnership , a ‘joint team’ with a technicalresponsibleofficer, a procurementresponsibleofficer (supported by Budget and LegalOfficers).

  5. Procurement Strategies – A Team Work (2/3) • Pre information (anticipation) is a keyelement : how to do it ? • Publication of an annualWork Programme. • Pre information and dedicated workshops for important or complex tenders. • Betterunderstanding of Industrial or Services capacities in relation with the project. • Market intelligence (enablecompetition ? Risk management in case of monopolies or poorcompetition ? Subcontractingpolicies ?) • Preevaluation of firms in a dedicated portal (allowingmappings ). • Necessity of the inclusion of clearindustrialstrategies in projectspecifications (impact in the optimisation of the procurement). • Full ‘innovative’ use of procurementrulesimplementedfromEuropean Directives (competitive dialogue procedures), moments of dialogue especially in the restrictedprocedures etc. • Careful identification of the selectioncriteria and awardcriteria 24 & 25 mai 2012 - 5

  6. ProcurementStrategies – A Team Work (3/3) • The definition of technicalspecifications must be made carefully : • avoiding "tough" or "unrealistic" specificationsmakingit impossible for suppliers to answer tenders and increasingcosts and delays, • usingexternal experts fromlaboratories or industry to limitspecifications to the strict minimum. • For High Tech Projects, a clear estimation of the innovations necessary must beundertakenso as to : • identifywhatisreallyneeded, • avoidexpensive and time consumingprocesses, • think of the ways and means to getthese innovations (fromindustry ? FromEuropeanlaboratories ? FromSMEs ? Fromoutside Europe ?). • The assistance of intense external consultation of technological and industrial experts is all the more important when the projectiscomplex and costly : • the technologies chosencan have a veryhigh impact on production costs, running costs, deadlines etc., • mistakes made in the beginningneed to beavoidedsincetheymay have important consequenceslater in the project phases. 24 & 25 mai 2012 - 6

  7. Contents • ProcurementStrategies (a team work) • Using Public rules as tools • Development of Public IndustrialStrategies • Conclusion 24 & 25 mai 2012 - 7

  8. Using Public Rules as Tools (1/5) Reminder : Public Contracts have to comply with the principles of: • transparency, proportionality, equal treatment and non-discrimination. But Best Value for Money must be a constant objective => ‘tax payer money’ • with a strong cost and quality awareness, • with pragmatic risk assessment . Tenders must be opened to all economic operators through fair competition allowing: • cost containment & innovation to get the most effective solution, • industrial dynamism through the creation of strong and sustainable consortia. Take industry’s considerations on contractual conditions • terms of payment, • insurance and Liabilities, • intellectual Property Rights. 24 & 25 mai 2012 - 8

  9. Using Public Rules as Tools (2/5) • And Calls for tenders and contractsneed to beframeworks for action instead of constriction : • Impose "model contracts" maybe an obstacle to efficient dealing ("infiniteliability", "fixed and firmprices"), • the definition of specificationsissometimessohighthatthey are oftenconsidered to belacking in practicability, • The more constraintsithere are, the lessanswersthere are, withrisk of overcosts.  It is possible… 24 & 25 mai 2012 - 9

  10. Using Public Rules as Tools (3/5) • It is possible (and necessary) to use procurementrules as tools : • to allow an efficient use of the European Directives (e.g. competitive dialogue), • to choose the best legalprocedure(s) so as to integrateneeds and constraints, • to identify the best criteria to allow an appropriateanswer to the performances required in the specifications, • to definefunctionalspecifications to allowcreativityfromsuppliers, • to allow moments for a "dialogue" between the Project Procurer Teams and the firms (betterunderstanding of specifications + possible variations  good offer, betterunderstanding of the answer to a tender  good contract), and • to avoid « beingcaught » in mechanicalprocedureswhichfavour the lowestbidder and not the best bidder, • to takeintoaccount the impact of technical and industrial solutions in terms of maintenance and operationcosts on the sites, • to reduceamendments (causing extra costs and delays) •  A practical example… 24 & 25 mai 2012 - 10

  11. Using Public Rules as Tools (4/5) Commercial risk Commercial risk is in most cases referring to a lack of competition on European market. Technical risks are mostly: • lack of capability/technology on European market • weakness in design maturity or completeness • uncertain areas in technical specs • high complexity of the required product or service • performance risks in the needed manufacturing processes and/or tools. Other factors are also taken into account such as: • Resources and specifications availability • Time constraints (1) Open and Restricted procedures are standard procedures and are legally relevant for any call. (2) Excluding low value contracts and specific cases. (3) Competitive Dialogue is in particular recommended in case of high Technical risk due to Industrial complexity (first-of-a-kind for instance) High Medium Low Technical risk Low Medium High 24 & 25 mai 2012 - 11

  12. Using Public Rules as Tools (5/5) •  A focus on our relations with suppliers … • The knowledge of the market and of the suppliers : • to beaware of the best suppliersavailable, • to integrate an "industrialapproach" within the Project Team, • to informthem and update themwith the project challenges through a web site, • having an electronicdatabase (via a web site) to enablefirms to register and allow for a pre-qualification for bids, • to avoidunreliable candidates onlywishing to have a contractwith the projectwithout a real ability to fulfiltheircommitments, and • having a post contractevaluation of the supplier according to differentcriteria (quality / time schedule / price / social and environmentalmatters), • to strengthen the positions of the project team and procurers vs the suppliers, • to work more and betterwithSMEswhichcanoftenbeat the origin of innovations. • The promotion of incentives : • to motivate the winningfirms to complete the contract on time at the right price and according to the expectedquality. 24 & 25 mai 2012 - 12

  13. Contents • ProcurementStrategies (a team work) • Using Public rules as tools • Development of Public IndustrialStrategies • Conclusion 24 & 25 mai 2012 - 13

  14. Public IndustrialStrategies (1/4) Public Bodies should have an Industrial Policy relying on a set of principles, tools and measured actions, which should form a global framework for relations with industries, laboratories and public bodies in order to match EU industrial capacities with Innovative Public Bodies missions. One purpose of an Innovative Public Body should be to enable EU industry to develop, to attract other partners, to increase their competitiveness through proper contractual strategies and help create future ‘leaders’. It is also to build a repository of knowledge that can be used to develop spin-offs and technology transfer. 24 & 25 mai 2012 - 14

  15. Public IndustrialStrategies (2/4) Objectives European Industry Contracts Procurements or grants and related Industries SMEs Laboratories Public bodies Industrial Policy Industrial Components / Services 24 & 25 mai 2012 - 15

  16. Public IndustrialStrategies (3/4) • Deliver through European capabilities as much as possible Industries SMEs Labs Public bodies Enable SMEs access to Public Business Make EU laboratories stronger (joint IPR is an option) Make public Innovative project visible and understood by other public bodies 24 & 25 mai 2012 - 16

  17. Call for Tender Contract with supplier Supplier Evaluation Public Body Work Programme Procurement strategy Market Analysis Delivery Public IndustrialStrategies (4/4) • Industrial Policy • Industrial Policy Pre-procurement phase Procurement & contract phase 24 & 25 mai 2012 - 17

  18. Contents • ProcurementStrategies (a team work) • Using Public rules as tools • Development of Public IndustrialStrategies • Conclusion 24 & 25 mai 2012 - 18

  19. 3 key points as a conclusion… Innovative Public Procurementrequires a strong cultural evolution to have : • effective Procurementstrategies, • to manage the projectwith the necessarycompetences, • information on Work Program in advance to facilitate European grouping, • adapted selection and award criteria, • to make the right decisionswith the appropriatereactivity and the right level of control whilebeingresultoriented. • a ‘clever’ use of public rules : • allowing action ratherthan constriction, • implemented by ‘modern’ public procurersthrough ‘joint teams’… • …via efficient purchasingstrategies. • open Public Industrial Strategies : • developing clarity in relations with suppliers, • creating shared understanding between public procurers and suppliers. 24 & 25 mai 2012 - 19

  20. Back Up Slides 24 & 25 mai 2012 - 20

  21. IP Models: International Consortia / Industry • Contractors • EADS is full owner of subcontracted research • EADS Loose control over IP at long term but enjoys immediate benefits. • Technology Transfer is usual practice because supply is also subcontracted Who is responsible for R&D? Who owns the results of R&D? Management of IP Exploitation of IP and technology transfer 24 & 25 mai 2012 - 21

  22. Procedures • Open procedure • All interested economic operators can submit a full tender • Restricted procedure  2 phases • 1: Pre-selection following a Call for Expression of Interest • 2: Call for Tender: only pre-selected companies may submit a tender. • Competitive dialogue • For particularly complex contracts; collaboration with industry to clarify technical specifications • Negotiated procedure • Only for contracts below threshold and in exceptional cases (justification required) 24 & 25 mai 2012 - 22

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