Innovation through Research and Precompetitive Procurement

Trond Knudsen21st Nov. 2008

Motivations for Engaging in

Pre-competitive Procurement

1. Strategic planning for larger and long lasting

procurement (get it cheaper)

2. Procurement of advanced products and services (get

better products/services)

3. Build procurement knowledge

4. Initiate new products and services

5. Let byer be in full charge of own processes at every stage

Supplier A

Supplier C

Supplier D

Supplier ESupplier E

Supplier A,B,C,D,E

Or X

PHASE 1Solution design

PHASE 2Prototypedevelopment

PHASE 3Precommercial

products / services

Pre-commercialTender

Tender forCommercialDeployment

Supplier B

Supplier C

Supplier D

Supplier E

Supplier C

Pre-commercial Procurement (EU-model)

PHASE 0Exploratory Research

Pre-commercial Procurement

PHASE 4Commersialisation

Diffusion of Product/services

Innovative Procurement

Pre-commercialTender

Pre-commercialTender

No tenderRules apply

Estab-LismentOf new

Knowledge

New Ideas

Inventions

‘OFU’ ‘BIP’

EU: The Legal Framework No Hurdle

• Public Procurement directives 2004/18&17/EC:– Procurement of R&D services

– If benefits only for the procurers, then the directives apply

– If benefits shared by procurers with e.g. suppliers,

then directives do not apply, internal market rules only

(articles 16f & 24e)

• Treaty Principles / State aid rules– If competitive, transparent, non-discriminatory

procurement, done at market price, then procurement of

R&D services is not considered State aid

• WTO Government Procurement Agreement– Procurement of R&D services outside WTO GPA

Norway: The Legal Framework No Hurdle

FOR 2006-04-07 nr 402: Forskrift om offentligeanskaffelser

§ 1-3. Hvilke kontrakter som er omfattet av forskriften

(2) Forskriften får ikke anvendelse på:

…..

g. forsknings- og utviklingstjenester, nåroppdragsgiver ikke fullt ut betaler for tjenesteneller den ikke fullt ut tilfaller oppdragsgiver tilbruk i hans virksomhet,

Supplier A,B,C,D,E

or X

Company / Public Institution C

The Research Council’s Innovation Projects (BIPs)as Pre-commercial Procurement

Pre-commercial ProcurementInnovative Procurement

Research Partner

Company /Pubilc Institution B

Company / Public Institution A (Proposer)

Partners of other types (Orgs

PHASE 0Exploratory Research

PHASE 1Solution design

PHASE 2Prototypedevelopment

PHASE 3Precommercial

products / services

PHASE 4Commersialisation

Diffusion of Product/services

Pre-commercialTender

Tender forCommercialDeployment

Pre-commercialTender

Pre-commercialTender

No tenderRules apply

Evaluation of user managed RCN R&D projectsshows profitability

0

1

2

3

4

5

6

0,7 billlion invested in programme 1996-2001 creates net value of 5,0 billion i participating businesses

BillionNOK

0,74

1,62 2,36

Invest.By RCN

Invest.b/comp

Totalinvest.

Total Value

(1) Netto nåverdi er beregnet verdi av prosjektet i dag etter at alle investeringer er trukket fra. Kilde: Møreforskning

5,0

Supplier A,B,C,D,E

or X

Public Research and Developemnt Contracts (OFU) ofInnovation Norway as Pre-commercial Procurement

Pre-commercial Procurement Innovative procurement

R&D Partner

Supplier

Public Institution (Byer)

PHASE 0Exploratory Research

PHASE 1Solution design

PHASE 2Prototypedevelopment

PHASE 3Precommercial

products / services

PHASE 4Commersialisation

Diffusion of Product/services

Pre-commercialTender

Tender forCommercialDeployment

Pre-commercialTender

Pre-commercialTender

No tenderRules apply

Recommended Strategy for Exploiting R&I-projects as Pre-commercial Procurement

1. Establish a longterm strategy for innovation and procurement within a specified area

2. Analyze status of knowledge and experience at hand for relevant future innovation and procurement

3. If necessary, suggest a project to aquire necessary procurement competence and for developing an initial procurement basis

4. Asses the use of R&D contributions into the project

5. Invite R&D partner(s), sected knowledgeable suppliers and user partners (NGOs etc) to a Pre-commercial Procurement Project

6. Make the result of this project public and start a regular procurement process

Inte

rope

rabi

lity

Collaboration between public sector orgs

Collaboration inside public sector orgs

Fragmented public sector: isolated information models

Public sector organisations

An example: Semicolon www.semicolon.no

Semantic and Organisational Interoperability in Communicating and Collaborating Organisations. Financing (m €)

RCN contribution 2.0Partner cash 1.8Partner work 2.2

6.0