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I n s t r a t e g i c a l l i a n c e w i t h B a r t e l s S u e t e r s R a s s a A a n b e s t e d i n g s a d v o c a t e n

©2019 Corvers

Use of innovative procurement tools

Dr. Ramona Apostol

Corvers Procurement Services

14 November 2019, General Assembly

African Public Procurement Network

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Agenda

Introduction

Innovation in and through procurement

EU pre-commercial procurement

History of EU’s support to innovation procurement

Best practice

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Innovation in and through procurement - EU challenges -

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Importance of innovation

Source: NESTA, UK

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Innovation performance SRIP 2018

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SRIP 2018

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In addition to innovation-friendly regulation, “innovation demand policies, such as public procurement will be critical. These actions will speed up the creation of benefits from innovation.” (SRIP 2018)

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Frontrunner Member

States invest 5 times

higher % of total public

procurement budget

than followers on ICT

and R&D procurement

Public Procurement of ICT

Public Procurement of R&D

• Public procurement is 'the tool' that enables potential buyers to steer industry R&I to its needs. However, it is under-used in EU.

US EU

PCP: 50 $Bn 10 €Bn of R&D public procurement/year

PPI: 15% 5% of e-gov solutions procured are 'innovative'

• Also large differences within Europe

Source: European Commission;: https://ec.europa.eu/digital-agenda/en/news/quantifying-amount-public-procurement-ict-and-rd-across-europe

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Public sector often pay too much to get non optimal quality product

Long term contracting, vendor lock-in, fragmented procurement market -> PCP-PPI reduces costs of 'first' deployment with 20% with more cost savings when deploying more widely (US data). This repays small PCP investment multiple times.

More than 50% of public procurements don't achieve their goals

Procurers not informed enough about pros & cons different solutions – buying wrong thing, vendor lock-in with proprietary solutions & cost overrun everywhere etc -> PCP/PPI de-risks large deployments to prevent failure/ waste of tax payers' money

Not even 25% of public R&I grants result in commercialisation

Because not driven by customer to steer R&D to meet concrete customer needs -> Increase the effectiveness of public investments in R&I: 50 to 75% commercialisation success rate for companies in PCP-PPI procurements

Innovative companies leave Europe – EU competitiveness undermined

Public sector is more willing to be first test and deployment reference (45Bn more PCP, 200Bn more PPI per year in US) -> PCP/PPI can attract innovative suppliers to EU & create growth/jobs 'in Europe' (PCP falls outside WTO rules: can require R&D to be done in Europe, first deployment of tested PCP product can be from PCP suppliers)

Source: Lieve Bos, European Commission

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How is it regulated in the EU ?

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What are the EU rules ?

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Innovation Procurement

Source: European Commission Innovation Partnership bundles the R&D and commercialization phases Deployment must meet conditions of 2014 R&D&I State aid framework

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PCP is a public procurement of Research and Development (R&D)

services characterized by:

(i) competitive development in phases

(ii) risk-benefit sharing under market conditions

(iii) a clear separation between the procurement of the R&D from

the deployment of commercial volumes of end-products

Understanding Pre-Commercial Procurement

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History of European support

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First results FP7 funded PCPs

• 11 out of 13 FP7 funded PCPs have awarded contracts by now - SILVER (Robotics for elderly care)

- CHARM (Traffic management)

- PRACE 3IP (Energy efficient supercomputing)

- SMART@FIRE (Smart protective equipment for fire fighters)

- PREFORMA (Long term digital preservation)

- DECIPHER (Mobile health services)

- Human Brain Project (High Performance Computing for brain simulation)

- V-CON (Virtual construction of road infrastructure)

- Cloud for Europe (Cloud computing for governments)

- Thalea (Telemedicine for intensive care unit patients at increased risk)

- IMAILE (Personalised e-learning solutions) HBP PCP doesn't result from a PCP call. HBP decided itself to use PCP under its subcontracting activities.

• Contracts awarded

- Tender docs downloaded typically between 50 to 300 times

- Nr of offers received typically between 10-34 (4-7 for specialised/low budget PCPs)

- 75 contracts awarded in total (126 companies/universities involved)

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Results of first (11 out of 13) FP7 funded PCPs

• Opening route-to-market for new players/SMEs - 71% of contracts won by SMEs (SME lead bidder, bidding alone or with partners)

- Compared to 29% in public procurements across Europe

Mostly small young SMEs: 27% below 10 people, 60% below 50 people, 49,5% less than 10 years old

• Relevance to universities & bringing scientific results to market - 32% of winning contracts have university/R&D center partner in consortium

- Winning SMEs are also often university start-ups

• Encouraging commercialisation – budget efficiency – Bidders offered ~ 50% price reduction on R&D cost (market beyond procurers)

-> PCPs can get twice as much R&D done for same budget as R&I action

• Creating growth and jobs in Europe – 97,5% of bidders do 100% of R&D in Europe

(2 have committed to do minimum 68% resp. 85% of R&D in Europe)

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Geographic location winning bidders & procurers

(4)

(18)

(9)

(19)

(9)

(2) (3) (3)

(10)

(2) (12)

(4)

(2)

(1)

(1)

Companies in winning bids (nr/country)

Procurers

Overview on-going projects: http://ec.europa.eu/digital-agenda/en/eu-funded-projects

.

Universities in winning bids (nr/country)

(1)

(3)

(2)

(8)

(2)

(1)

(1)

(4)

(2)

(1)

(1)

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European assistance for innovation procurement (eafip) 2015-2018

European Commission DG CONNECT

Knowledge transfer to contracting authorities throughout Europe – Workshops & conferences

– Toolkit

– Local assistance (12 PCPs and PPIs)

Network-approach

Demand driven policy – no support to companies

www.eafip.eu

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Eafip methodology

Preparatory Phase

• Needs identification and assessment

• Prior art analysis; IPR search; regulatory, certification, standardisation environment

• Business-case

• Open market consultation

• IPR and confidentiality strategy

• Drafting the tender documentation

Conducting the procedure

• Publish the call for tender

• Evaluate the proposals

• Award decision & standstill period

• Sign the contracts

Managing and evaluating the

contract performance

• Interim calls and visits to the suppliers’ premises

• Evaluation of (interim and) end-of-phases reports

• Making testing facilities available

• Evaluating the test results

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The eafip methodology

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TRLs & Innovation Procurement

Figure 1 - The situation of different types of external information for the determination of TRL level

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Best Practice – Artificial Intelligence for the sewage water system PCP

Asset management

System

PredictiveMaintenance

Burst Detection

GE FANUC

Weather forecast

Z_INFOHet

Waterschapshuis

WANDA – ModelsDeltares

Optimising Transportsystem and Sewer plantsBurst Detection / Energy savings

Machine learning - Transport System

USER Experience

Dashboards / Reporting

- Central Control Room- Alarms- Sewerage experts- Asset manager- Management- Municipalities

SENSORS

FUTURE

IOTLAYER

BIG DATALAYER

WMLFinancial System

Municipalities

Proces AutomationSiemens PCS7 / XYLEM AQUAVIEW

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Thanks for your attention!

Corvers Procurement Services B.V.

Julianaplein 21

5211 BB ‘s-Hertogenbosch

Tel: 073-612 6566

info@corvers.com

www.corvers.com