Seminar on Pre-Commercial Procurement EU project PROGR-EAST

1. Innovative PROcurement techniques to support the GRowth of competitiveness for public services in EASTern Europe Seminar on Pre-Commercial ProcurementEU project PROGR-EAST “Raising awareness on PCP in Eastern European countries” BUDAPEST, Hungary June 9th, 2011 Rebeca Lucas – INNOVA (Italy)

2. The PROGR-EAST Project Objectives • Create awareness on Pre-commercial Procurement (PCP) practices among public administrations and interested stakeholders in 5 target European Countries (Poland, Czech Republic, Slovakia, Hungary and Slovenia) • Stimulate and encourage the use of PCP in the 5 target countries • Facilitate dialogue on PCP issues between European stakeholders • Support PCP strategies and policies in Eastern Europe • Create the conditions to favour a PCP approach diffusion for the implementation of innovative public services • Boost the creation of transnational Public Private Partnerships

3. Procurement of Innovation and Pre-Commercial Procurement (PCP) New concepts in Europe, esp. among NMS Public procurement of Innovation: “the purchase of innovative products & services through public demand with the aim of improving the performance and functionality of public services and solving important socio economic challenges” When this purchase includes R&D services this “exploratory” phase is called Pre-commercial procurement (PCP) 3

4. Pre-Commercial Procurement (PCP):why is it so important? (1) PCP is essentially an approach to procuring R&D services Triggered by procurers who need to find a solution to a societal challenge/problem of public interest for which they cannot find solutions on the market Public sector is faced today with important societal challenges(aging population, health care, climate change, energy efficiency, transport, security…) Adressing these challenges, often requires new & better solutions. Some of the required improvements are so technologically demanding that either no commercially stable solution exists yet on the market, or existing solutions show shortcomings which require new R&D 4

5. Pre-Commercial Procurement (PCP):why is it so important? (2) Public needs as important driver of innovation in many sectors (telecom, energy, health, transport, security) In a globalised competitive environment, the role of public sector in benefiting from and driving forwardinnovations needs to be revisited This has been done in the US and in Asia where the procurement of R&D to address public needs for which no solution exist on the market is used as a mechanism to stimulate innovation Results: improved quality of public services and emergence of globally competitive companies Examples: Internet protocol, GPS, first single chip processor (Intel) 5

6. In Europe… Usually procurement of either: Off-the-shelf-solutions, that are not always fit for projects of high innovative nature Exclusive development contracts, where the procurer reserves all the outcomes of the development work for itself. This results in: expensive procurements stall innovation at the supply side lack of competition 6

7. Distinguishing characteristics of PCP (1) PCP is an approach for procuring: R&D services R&D cover activities such as: solution exploration & design prototyping development of a limited volume of first products or services It involves: Risk-benefit sharing at market price Competitive development in phases 7

8. Distinguishing characteristics of PCP (2) Risk-benefit sharing at market price Public purchaser does not reserve the R&D results exclusively for its own use. Public authorities and industry share risks & benefits Technically: means that PCP falls under an exemption from the procurment directives Practically: In PCP suppliers obtain IPR ownership rights, which enable them to commmercialize the new solutions to other markets The public purchaser gets a better price for the development when asking only for those rights needed to secure a continuous competitive supply of solutions for the operaton of its public services 8

9. Distinguishing characteristics of PCP (3) Competitive development in phases PCP is organised as a step-wise R&D process, with intermediate evaluations after each R&D phase, in order to select progressively the best solutions 9

10. Benefits of PCP PCP can improve the quality and efficiency of public services PCP can help strengthen the innovation climate & stimulate additional private investment in R&D PCP is a way to optimise public R&D spending For the industry PCP provides opportunities to acquire international leadership in new markets PCP shortens time to market (suppliers can better anticipate demand for new solutions and better align their product developments to fulfill concrete customer needs) PCP can lead to wider market size (IPR to companies enables them to address wider markets beyond the procurer that initiated the development) 10

11. What is the situation in Europe? Little R&D procured… Main barriers: Lack of awareness of how to do it in line with legal framework for R&D procurement Fragmentation of demand Lack of awareness of how to optimise risk-benefit balance for procurer and supplier A PCP Communication addresses these 3 barriers: (COM(2007)799 & SEC(2007)1668) 11

12. How EU MS are approaching PCP? Results of an EC survey carried out in 2010 12

13. What type of framework are MS developing for PCP? Some take all-hands approach (e.g. UK, Flanders) - Innovation Procurement/Master Plans Defining mid to long term procurement priorities (pre-commercial + commercial) for all government department - Consultation with stakeholders Checking identified procurer needs against state-of-the-art industry developments & citizen/interest group expectations (innovation platform meetings, interactive websites) - Support from Innovation Ministry UK TSB, Flemish IWT offer support (incl. financial) to procurers for first PCPs Some start with a pilot region - Eszak-Alfold region (Hungary): PCP financing from structural funds Some transform existing R&D competitions or innovative procurement support programmes into PCP UK SBRI Dutch SBIR Norway 13

14. EU support for PCP Growing momentum in Europe to strengthen the public demand drive for innovation to better address societal challenges PCP top priority on the political agenda: Innovation Union Communication proposes that from 2011 onwards Member States should set aside government procurement budgets in the order of €10 billion a year, for PCP procurements for deploying innovative products and services. Digital Agenda for Europe identifies a wider utilisation of PCP as a key factor in reaching its target to double annual total public spending on ICT R&D by 2020 from €5.5bn to €11bn. Regional Policy flagship calls on all regions in Europe to mainstream the use of PCP in the operational programs for the structural funds 14

15. EU support for PCP The EC is strongly promoting PCP: 2009 Calls for proposals Projects: (CSAs in FP7 ICT): P3ITS: PCP in intelligent transport systems PreCo: PCP in ICT for health and energy domains Progr-EAST: PCP in e-government in Eastern European countries INTERREG Rapide Making Knowledge work New support: FP7-ICT-WP2011-12 Support for public authorities planning joint implementation of PCP on topics of common European interest Interesting link: Pre-Commercial Procurement (PCP) website Info on Calls, EU funded projects, Member States initiatives, Background docs, FAQs, Events, News, etc. http://cordis.europa.eu/fp7/ict/pcp/home_en.html 15

16. Thank you for your attention! Rebeca Lucas r.lucas@innova-eu.net