Pre-Commercial Procurement [email protected] EU Commission, DG INFSO Strategy for ICT research and innovation unit PCP website: .

Pre-Commercial Procurement

[email protected] Commission, DG INFSOStrategy for ICT research and innovation unitPCP website: http://cordis.europa.eu/fp7/ict/pcp/home_en.html

Why PCP?Why PCP?

• Public expenditure is 47% of EU-25 GDP, but ~20 times less is spent on R&D procurement in EU (~2,5 Bn€) versus US (~50Bn€)

• More demand to develop new innovative solutions for public sector challenges for which there are no products on the market yet (R&D procurement) can fill half of the EU-US R&D investment gap

R&D ProcurementBasic +applied R&D funding

RTD expenditure as % of GDP

00,5

11,5

22,5

33,5

EU US Many public sector challenges unsolvable via public procurement of existing solutions

Forward looking R&D procurement strategy required

… but …

Where do we come from? Where do we come from? December 2007 COM on PCPDecember 2007 COM on PCP

Supplier B

Supplier C

Supplier D

Phase 1 Solution design

Phase 2 Prototype

development

Phase 3 Original development

of limited volumeof first test products /

servicesSupplier A

Supplier B

Supplier C

Supplier D

Supplier B

Phase 0 Curiosity

DrivenResearch

R&D / Pre-commercial Procurement (PCP)

Phase 4 Deployment of commercial

end-productsDiffusion of newly developed

products / services

Supplier D

Public Procurement of Innovative Solutions (PPI)

• Specific approach for public sector to procure R&D services aimed at improving quality and efficiency of public services:

– Competitive development in phases

– Risk-benefit (IPR) sharing between procurers & suppliers

– Separation from deployment phase

… … in line with WTO proc. rules, EU Treaty, State aid freein line with WTO proc. rules, EU Treaty, State aid free

Supplier(s) A,B,C,Dand/or X

Based on good practice Based on good practice

• Procure R&D in steps (solutions, prototypes, test series) to reduce risk for procurer and give SMEs a chance

Grow size of tasks gradually, make bridge from ideas to first test product, procurer = SME first customer reference

• Risk-benefit sharing with suppliers Less risk procurer, commercialisation opportunity suppliers

• Competing development with multiple suppliers Better value for money. US defence report: in-development

competition reduces first unit acquisition cost with average 20%*

• Sharing R&D costs with other procurers Joint PCP procurement to reduce fragmentation of public demand

and foster standardisation/interoperability in areas of public interest

* 'Competitive Dual Sourcing', Jacques Gansler, 7/10/2007. Based on analysis from Annex G, 'International Armaments

Cooperation in a era of coalition security', report US Defence Science Board, August 1996

Win-win for all stakeholdersWin-win for all stakeholders

- New lead markets

- Quality of public services (focus on political priorities)- Improve innovation climate (Attract foreign investment, R&D employment in Europe)

- Reduce cost of procurement

Procurers

Pre-commercialProcurement

-Shared risks & benefits-First buyer in early R&D

- Global competitiveness

PoliticiansSuppliers

Get the ‘Best Product’… … at the ‘Lowest Price’

- Shape industry R&D to public needs- Address ‘public market innovation failure’- Reduce risk in commercial tendering (increase technology knowledge)- Favour supplier competition

- First time right’ product (reduce projects going over budget, EU interoperable from the start)- Pooling of resources (share R&D cost)- Economies of scale, license free use- Attractive to VCs and other investors ( financial viability to deploy innovations)

- Shorter time to market (earlier customer feedback)- Economies of scale (IPRs -> wider market)

- Reduce risk of innovation

Status of PCP implementation across Europe Status of PCP implementation across Europe Update February 2012 status Update February 2012 status

United Kingdom

Framework

identified

Hungary (Eszak-Alfold)

BE (Flanders)

Netherlands

Awareness Raising

Exploring possibilities

Denmark

Austria

FinlandSweden

Poland

Pilots

started

Working on

framework

Germany

France

LuxembourgIrelandCyprus

Romania

Slovenia

Slovakia

Bulgaria

Czech Republic Estonia

Greece

Latvia

Lithuania

Malta

Portugal

Spain

Norway

Switzerland

Italy

SILVER: First EC co-funded PCP pilot started January 2012(Supporting Independent Living of Elderly through Robotics)

SILVER

FP7-WP 2009 EU support for PCP FP7-WP 2009 EU support for PCP Networking & awareness raising activitiesNetworking & awareness raising activities

• 2009 calls for proposals– support the establishment of networks of public authorities on

pre-commercial procurement– promote awareness-raising and experience-sharing on PCP,

debate mid-to-long term public needs requiring R&D of new technology solutions with potential role for PCP strategies

PCP in Intelligent TransportSystems

2 INTERREG IV RFEC fast track networks

3 CSAs in FP7 ICT

PCP in ICT for healthand energydomains

PCP at regional level in Hungary, Poland, UK

New project, speed up innovationtime-to-market from demand side

PCP in egovin easternEuropeancountries

PCP support piloted in FP7 WP 2011-12 PCP support piloted in FP7 WP 2011-12 Cross-border PCPs on topics of common EU interestCross-border PCPs on topics of common EU interest

• Support for public authorities planning joint implementation of pre-commercial procurements on topics of common European interest

• EU contribution (CP-CSA): combination of– CSA: Reimbursement of eligible costs for preparation,

management and coordination of the joint PCP call for tender (100% funded)

– CP: Reimbursement of max 50% of the eligible costs for the development of the new ICT solutions procured through the joint PCP (for financing of the R&D to be performed by the bidders/subcontractors selected via the joint PCP)

* CP-CSA = combination of CP and CSA funding within the same EC grant agreement

FP7 WP 2011-12 support for PCP FP7 WP 2011-12 support for PCP In ICT areas of FP7 programmeIn ICT areas of FP7 programme

Calls for developing new ICT solutions that can improve quality and/or efficiency of public services through joint PCPs:

FP7-ICT-2011-7Deadline: 18/01/2011

FP7-ICT-2011-8

Deadline: 17/01/2012

Objective 5.3(d)

Call for joint PCPin specific domain:

‘services for mobile access to patient

health info’

Objective 5.4(d)

Call for joint PCPin specific domain:

‘robotics solutions for ageing well’

Objective 3.5(d)

Call for joint PCPin specific domain:

‘photonics based solutions to improve

quality/efficiency of public services’

Objective 11.1

Open call for (a) Networking &

(b) joint PCPsin any domain of

public interest:

‘e.g. egov, transport,energy, environment,security, health etc’

3 Mio € 3 Mio € 3 Mio € 5 Mio €

CP-CSA CP-CSA CP-CSACSA & CP-CSA

INFRA-2012-2.3.1Deadline: 23/11/2011

Call for joint PCPin specific domain:

‘high performance computing

resources for PRACE’

10 Mio €

CP-CSA

PCP activities in FP7-ICT-WP2013PCP activities in FP7-ICT-WP2013 Proposal under discussionProposal under discussion

• EC co-financing for cross-border PCP pilots– CP-CSA instrument: Commission not involved in PCP

• Digital preservation (5 €m)• E-learning (5 €m)• ICT for Health / Ageing well (8 €m)• Call open to joint PCPs in any area of public interest (4 €m)

– Joint Commission - MS PCP procurement• eGov / Cloud Computing (10 €m)

• EC support for networking procurers in preparation of PCPs– ICT for health / ageing well– Robotics– Future Internet

Phase 1Solution

Exploration

Phase 2Prototyping

Phase 3Original development of a

limited volume of firstproducts/services

in the form of a test series

Phase 4Commercialisation of products/services

(commercial development)

Large scale public procurementof end- solutions

Supplier A,B,C,D,E

or XSupplier C

Supplier E

Supplier C

Supplier D

Supplier E

Supplier B

Supplier C

Supplier D

Supplier E

Supplier A

ProductIdea

SolutionDesign

Prototype CommercialEnd-Products

Intermediate

Evaluation

Selection

Intermediate

Evaluation

Selectiona

Pre-commercial Procurement

Management/Coordination joint PCP

Pre

par

ing

jo

int

PC

P

Lesso

ns learn

t D

issemin

ation

R&D work

PrototypeSolutionDesign

ProductIdea

First Test-Products

Formation of joint procurementconstellation

P1

P2

P3P4

P5

Preparation phasebefore launching PCP

Consortia of public bodiese.g. P1->P5

ON

E jo

int

PC

P te

nder

What does joint PCP procurement coverWhat does joint PCP procurement cover

Com

mer

cial

Ten

derin

g

Input to standardisation & regulationVC & other financers

Typical Product Innovation Life Cycle

Specific requirements forSpecific requirements forjoint PCP procurementjoint PCP procurement

• EU wide publication of PCP tender, at least in English – in compliance with Treaty principles

• All offers evaluated based on same objective criteria – regardless of company size, location of head office

• Use functional/performance based specifications – not prescribing specific solution approach

• Joint PCP has to cover phase 1 to 3 and needs to have multiple companies developing in competition – one framework contract with 3 specific contracts/phase

• Tenders awarded based on best value for money (not just lowest price) and market price (no State aid)

• IPRs shared: ownership rights with companies, free usage rights & right to license with procurers

• Support Europe 2020 objectives of growth and job creation– relevant portion of the activities related to PCP contract in Europe*

* In the EEA or a country having a Stabilisation and Association Agreement with EU

• Awareness Raising: events, PCP newsletter etc• Political agenda’s

– EU level: DAE & Innovation Union targets on PCP & PPI– MS agenda’s: half of EU MS are/start engaging in pilots or

are defining their PCP / PPI policy strategy

• Ongoing pilots EU support to procurement actions– Creating networks of public procurers– Co-financing PCP & PPI procurements

• Mainstreaming EU support in Horizon 2020– Draft Commission Horizon 2020 proposal includes

financial support for cross-border PCP & PPI actions– Possibility for EU to be involved itself also

Outlook for Horizon 2020 Outlook for Horizon 2020 Where are we now – where can we go?Where are we now – where can we go?