State of Play PCP & PPI piloting in FP7 and CIP
Horizon 2020 perspectives
Lieve Bos European Commission
DG CONNECT (Communication Networks)
F2 unit (“Innovation”)
Health care
Climate Change
Energy Efficiency
Transport
Security
Public sector efficiency…
Why? To get best value for money solutions developed for public sector challenges
• Public sector is faced with important challenges.
• Addressing these, often requires public sector transformations for which no commercially stable solutions exist yet. • In many cases, solutions are near the market and would be provided if clear
requirements/sufficient demand expressed by the market (PPI)
• In other cases, still R&D required to de-risk technology, still different competing solution approaches to compare before committing to deploy (PCP)
• Public procurement is 'the tool' that enables the buyers to steer industrial R&I to its needs. However, public procurement driving R&I from demand side is underutilised in EU.
Why? To shorten time to market & provide first customer reference for innovations Market Share %
Innovators
2,5% Early
Adopters
13,5%
Early
Majority
34%
25%
50%
75%
100%
Late
Majority
34%
Laggards
16%
PCP
H2020, SF
PPI
H2020, SF
PPI
CEF, SF
Normally functioning procurement market (e.g. in US, Asia):
2,5% of ‘innovator’ type customers (PCP)
Who invest in R&D with suppliers ($50Bn/Y in US <-> €2,5Bn/Y in EU)
16% of ‘early adopters’ (PPI)
ICT public procurement market in Europe:
0,5% of ‘innovator’ customers (PCP)
5% of ‘early adopters’ of
new tech in e-gov (PPI) CEF = Connecting Europe Facility
SF = Structural/Cohesion Funds
H2020 = Horizon 2020
Supplier B
Supplier C
Supplier D
Phase 1 Solution design
Phase 2
Prototype
development
Phase 3 Original development
of limited volume of first test products /
services Supplier A
Supplier B
Supplier C
Supplier D
Supplier B
Phase 0 Curiosity
Driven Research
Applied R&D / Pre-commercial Procurement (PCP)
Phase 4 Deployment of commercial
end-products Diffusion of newly developed
products / services
Supplier D
Public Procurement of
Innovative Solutions (PPI)
• PCP to steer the development of solutions towards concrete public
sector needs, whilst comparing/validating alternative solution approaches from various vendors
• PPI to act as launching customer / early adopter / first buyer of innovative commercial end-solutions newly arriving on the market
Supplier(s)
A,B,C,D
and/or X
Also normally multiple sourcing here to keep competition going
Why? To create growth and jobs 'in Europe' How? PCP-PPI combo
Because of split between PCP and PPI: • PCP falls outside WTO rules & proc directives (can encourage job creation 'in Europe'), even if the large scale PPI that may come afterwards would not be exempted
PCP based on good practice
• Procure R&D in steps (solutions, prototypes, test series) to reduce risk and give large and small companies a chance
Grow size of tasks gradually, make bridge from ideas to first test product, procurer = first customer reference
• IPR sharing as form of risk/benefit sharing with suppliers
Less risk for procurer, faster time to market + increased commercialisation opportunity for suppliers
• Separate PCP – PPI, competition also in R&D phase
Better value for money: Competition after PCP for PPI + competition during R&D -> higher quality products + reduces first unit acquisition cost with 20-30%*
• Sharing R&D costs with other procurers
Cooperation across borders can help develop a European market, common standards etc
* '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
EC support to PCP & PPI
• Why EC support needed? – PCP /PPI in some EU countries but not spread across rest of Europe – Defragmenting demand side for challenges of common European
interest (common requirements setting, de facto standard creation)
• 2008-2009: EU calls for proposals for European networks of public
procurers on PPI (e.g LMI in CIP) and on PCP (ICT theme in FP7)
• 2011-2013: EC support for PCP via FP7 and for PPI via CIP – DG CNECT and ENTR are piloting support to PCPs by procurers
(FP7 grant: co-financing up to 75% of the price of procured R&D) – DG ENTR, ENV and CNECT are piloting support to PPIs by public
procurers (via CIP grant: co-financing up to 20% of the price of the innovative solutions procured/deployed)
– DG RTD, ENER, MOVE supporting networking of procurers
• 2014-2020: Horizon 2020 (similar possibilities as before) – EC can co-finance PCPs/PPIs carried out by grant beneficiaries – EC or EU funding bodies (e.g. agencies) can carry out PCPs/PPIs on
their own behalf or jointly with Member States
Why separate PCP-PPI in FP7/CIP & H2020 iso long term partnership contract incl. R&D+deployment
Sequence of separate PCP + PPI procurement
• PPI also usable for 'non-R&D' innovations • More open to radical/breakthrough R&D, (no commitment to deploy before R&D over, specs for PPI can be fully changed based on PCP learning)
• Facilitates access to market of new players incl SMEs, avoids supplier lock-in (short term/ small value contracts phase per phase, typically no selection criteria on financial guarantees/customer references in PCP, only at PPI stage)
• Better value for money (higher quality & 20-30% cheaper products)
• Exempt from WTO: can encourage job creation 'in Europe'
• Choice of most suitable procedure for PPI (comp dialogue, open/neg procedure etc)
• Complements other R&D policy support: Allows also companies that funded R&D through other means to compete for PPI
• No State aid (open competition for R&D and commercial phase)
Long term partnership contract incl. R&D + purchase end-products
• Usable only for innovations resulting from R&D
• Tendency to attract close-to-market '0' risk commercial development, less real R&D (commitment on what/how much to deploy needed before R&D starts, tender specs cannot be significantly changed based on learning from R&D)
• Tends to favour large established suppliers over SMEs, higher risk of long term supplier lock-in (long term / large value contract, selection criteria for financial guarantees/customer references used from start of contract, incl. for R&D phase)
• Normally not exempted from WTO (because can include purchase of large commercial volumes)
• Restricts choice of procedure (neg. procedure)
• Blocks road to market for main R&D policy support: Does not allow companies that financed their R&D through other means (e.g. R&D grants) to compete for the deployment phase any more
• How to 'guarantee' up front there will be no State aid/no foreclosing of competition? (when restricting choice of suppliers for commercial purchase before proof exists that R&D will deliver better value for money than other competitors on the market)
Status of PCP implementation across Europe Update March 2013 status
More info about EU funded cross border PCP projects: http://cordis.europa.eu/fp7/ict/pcp/projects_en.html
More Info about national PCP initiatives in Member States: http://cordis.europa.eu/fp7/ict/pcp/msinitiatives_en.html
Pilots started
Framework identified and/or Pilots in preparation
Hungary
Belgium
Netherlands
Awareness Raising Exploring possibilities
Denmark
Austria
Finland
Sweden
Poland
Working on framework
Germany
France
Luxembourg
Ireland
Cyprus
Romania
Slovenia
Slovakia
Bulgaria
Czech Republic
Estonia
Greece
Latvia
Lithuania
Malta
Portugal
Spain
Norway
Switzerland
Italy
Projects in dotted-line are cross-border EC funded PCP projects that have started:
SILVER: started January 2012 (Supporting Independent Living of Elderly through Robotics)
CHARM: started September 2012 (Common Highways Agency / Rijkswaterstaat Model for traffic management of the future)
V-CON: started October 2012 (Virtual Construction / Modelling of Roads)
SMART@FIRE: started Nov 2012 (Integrated ICTs for Smart Personal Protective Equipment for Fire Fighters and First Responders)
DECIPHER: started February 2013 (new applications based on Distributed EC Individual Personal Health Records)
PRACE 3IP: started July 2012 (PRACE 3rd phase on high energy efficient high performance computing)
SILVER
UK
Iceland
CHARM
V-CON
SMART@FIRE
DECIPHER
PRACE 3IP
PCP
2009 2011-12 2013
DG INFSO (CSAs)
FP7-ICT-2009
€1,5M 3 €500K networking
actions for procurers
(ICT for health,
transport,
egov for NMS)
DG INFSO (CP-CSAs)
FP7-ICT-2011/12 €24M
FP7-INFRA-2012 €4,5M Co-financing 6 cross border
PCPs:
(in robotics for ageing well,
mobile health services,
traffic management,
embedded ICT for fire
fighter garments, energy
efficient supercomputing)
DG CNECT(CP-CSAs)
FP7-ICT-2013 €32,5M
FP7-INFRA-2013 max €19,5M Co-financing 7-8 cross border PCPs:
(€8M health/active ageing,
€5,5M elearning, €4M open call
€5M digital preservation,
€10M cloud computing,
Up to €x19,5M DANTE, GEANT)
DG ENTR (CP-CSAs)
FP7-SEC-2012 €10M Co-financing 1 joint PCP:
(maritime border
surveillance)
DG ENTR (CP-CSAs)
FP7-SEC-2013 €18M Co-financing 2 bottom-up
cross border joint PCPs on land
and maritime border
surveillance)
PCP related calls so far
PCP-PPI related calls so far
PPI
DG ENTR
CIP-EIP-2009
Lead Markets
Networks €3M) 3 €1M networks of
Procurers (healthcare,
embedded textiles
firefighters, sustainable
construction)
DG RTD
FP7-ENV-WATER-INNO-DEMO CSA for PCP in EIP on water mgt
FP7 2013 FOOD/AGRI WP CP (€6M) on opening market for
bio-based products via procurement
DG ENTR & ENV
(PPI Pilot)
CIP-EIP-2011/12 €17M Co-financing cross border PPIs:
8 on areas of EIPs (climate
change, active ageing, energy
efficiency, mobility, health
working conditions) &
1 on eco-innovation
DG ENTR (PPI Pilot)
CIP-EIP-2013 €6,3M (sustainable construction,
recycling, clean vehicles)
DG CNECT (PPI pilot & TN)
CIP-PSP-2013 €12M PPIs in health/active ageing
Thematic networks preparing PPIs
in ICT for sustainable mobility,
energy efficient servers for cities
DG RTD (CSAs)
FP7-COH-2012 €2M Transport & health
procurer network
2009 2011-12 2013
FP7 2013 TRANSPORT WP CP to demonstrate electric buses
should facilitate PCP
DG ENER
CIP-IEE (2008…) Series of networks of procurers
on sustainable energy
procurement
11
Potential £160m p.a. saving
Potential £30m p.a. saving
£4,000 per HCAI avoided
Potential £19m p.a. saving
Example projects in Healthcare
Potential Value PCP-like projects to NHS:
Improve the quality of the patient experience
and generate significant cost savings (£236m).
Value to the economy:
A number of innovations have been able to
attract significant extra investment (£290m).
NHS UK Lombardia Italy
PCP Niguarda Hospital – Lombardy region Easy-to-use automated universal system for moving hospital beds, with anti-collision and safety systems, not needing guide lines or tracks even on non rectilinear routes PCP call for tender open
Regulatory requirement to seriously reduce CO2 emissions by 2016 without negative effects on health/environment, beyond what market is able to offer
PCP started in 2011, currently comparing solution approaches of 5 vendors, time-to-market shortened
Follow-up procurement for deployment in preparation for 2014 (open to whole market)
More info on this case on: http://cordis.europa.eu/fp7/ict/pcp/docs/statoil-pcp-case-v2.pdf
PCP example on CO2 emissions Large project Carbon capture – Norway attracting large firms Statoil/Gassanova
Example EU funded cross-border PCP (DG CNECT)
7 Local and regional contracting authorities from 5 EU Member States carrying out this PCP jointly:
city of Odense and region of Southern Denmark (Denmark), city of Västerås (Sweden), city of Vantaa and
Oulu (Finland), city of Stockport (UK), city of Eindhoven (Netherlands).
SILVER contracting authorities procure R&D services via the PCP to get robotics solutions developed and
tested in the 5 participating countries that will allow by 2020 to care for 10% more elderly people living
independently at home with the same amount of care staff.
SILVER call for tender is 'OPEN NOW'.
Potentially invited tenderers are invited to info meetings in March-April
and to make offers by 12 June (see SILVER website and tender publication in OJEU) !
www.silverpcp.eu
For more info: http://lowcarbon-healthcare.eu/
UK brand name for PPI = Forward Commitment Procurement (FCP)
Low carbon healthcare PPI started 2006 Introducing more energy efficient LEDs in network of over 20 hospitals in 8 EU countries
(cross border PPI cooperation funded by EC/DG ENTR)
• 30% energy consumption saving • 88% maintenance savings Total cost savings enable take-in of +10% patients
Swedish environmental/energy efficiency PPIs done by NUTEK/STEM agency: • heating-ventilation-cooling of buildings • public transportation (hydrogen busses) • office blocks (sun shading, lighting) • white appliances (washing machines, fridges) • wind energy parks
Result: Reduced the SE dependency on nuclear energy with 15% through PPIs in combination with product certification/labeling, take-up subsidies & tax incentives More on UK & SE PPI cases: http://cordis.europa.eu/fp7/ict/pcp/msinitiatives_en.html
PPI examples In Europe
(PPI is called teknikupphandling in Sweden)
Example EU funded PPI network (DG ENER)
5 local authorities lead this project on early market engagement to encourage sustainable energy public
Procurement (low carbon emission technologies): Barcelona (ES), Kolding (DK), Cascais (PT), London
borough of Bromley and the Eastern Shires Purchasing Organisation (UK).
Result: successful PPI procurement deploying various innovative products such as LEDs (over 20.000 units),
indoor and street lighting, energy efficient vending machines and electric mobility (e.g. electric mini bus),
representing a total budget of around €80 million and involving over 200 municipal staff. The technical
solutions retained will reduce energy consumption and CO2 emissions by 30-90%, accounting for an
estimated reduction of 5.3 GWh/a.
www.smart-spp.eu
New innovation related points in revision of public Procurement directives
• Joint procurement • Clarifies legal base also for joint procurement between contracting authorities from
different Member States
• Intellectual Property Rights • Clarifies that IPR that contracting authority wants to acquire is part of the subject-
matter of the contract and shall be clearly specified in tender specifications
• Pre-commercial Procurement • Current provisions (Exemption for R&D services) maintained and clarified in the
directives
• Innovation Partnership • Identifies into a procedure already-used-today-practice of long term partnership
procurements combining purchase of R&D + subsequent purchase of end-products
(is not the same as PCP-PPI, different applicability)
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