Pre-Commercial Procurement lieve.bos@ec.europa.eu EU Commission, DG INFSO Strategy for ICT research and innovation unit PCP website: http://cordis.europa.eu/fp7/ict/pcp/home_en.html

Why PCP? RTD expenditure as % of GDP 3,5 3 2,5 … but … 2 1,5 1 0,5 EU US Many public sector challenges unsolvable via public procurement of existing solutions Forward looking R&D procurement strategy required R&D Procurement Basic +applied R&D funding 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 2

Where do we come from? December 2007 COM on PCP 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 Public Procurement of Innovative Solutions (PPI) R&D / Pre-commercial Procurement (PCP) Phase 0 Curiosity Driven Research Phase 1 Solution design Phase 2 Prototype development Phase 3 Original development of limited volume of first test products / services Phase 4 Deployment of commercial end-products Diffusion of newly developed products / services Group of European procurers Pool public demand and specify needs Manage procurement process Share risks and benefits together and with suppliers Cost shared, IPR shared, knowledge shared Compatible with procurement directives and state aid Exception to procurement directives Legally defined as procurement of ‘R&D Services’ Possibility to restrict to ‘European wide offers’ Possibility to apply at European and Member States level Need for incentive to support the framework Supplier A Supplier B Supplier B Supplier B Supplier(s) A,B,C,D and/or X Supplier C Supplier C Supplier D Supplier D Supplier D … in line with WTO proc. rules, EU Treaty, State aid free

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 stakeholders Politicians Suppliers  Quality of public services (focus on political priorities) Improve innovation climate (Attract foreign investment,  R&D employment in Europe) Shorter time to market (earlier customer feedback) Economies of scale (IPRs -> wider market) - New lead markets Global competitiveness First buyer in early R&D Pre-commercial Procurement Reduce cost of procurement Shared risks & benefits - Reduce risk of innovation … at the ‘Lowest Price’ Get the ‘Best Product’… Politicians -Prevents political fiasco of buying big expensive useless system (reduce risk of buying expensive system that does not deliver) Reduce cost of big procurements (risk management and sharing, pooling demand) -Create new lead markets (incentive for R&D where there is no natural market stimulant unless demand is driven from public sector side) Increased export opportunities Improved local innovation climate Increased attractiveness for foreign investment Increased employment opportunities (ability to restrict to EU suppliers) 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) Procurers

Status of PCP implementation across Europe Update February 2012 status Awareness Raising Exploring possibilities Working on framework Framework identified Pilots started SILVER Latvia Slovenia Denmark Malta Spain Germany Romania France Sweden Greece Finland Cyprus Ireland Italy United Kingdom Luxembourg Bulgaria Portugal Lithuania Netherlands Hungary (Eszak-Alfold) Slovakia Austria Estonia Norway Poland Czech Republic BE (Flanders) Switzerland SILVER: First EC co-funded PCP pilot started January 2012 (Supporting Independent Living of Elderly through Robotics) 6

FP7-WP 2009 EU support for PCP Networking & 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 3 CSAs in FP7 ICT 2 INTERREG IV RFEC fast track networks PCP at regional level in Hungary, Poland, UK New project, speed up innovation time-to-market from demand side PCP in Intelligent Transport Systems PCP in ICT for health and energy domains PCP in egov in eastern European countries

PCP support piloted in FP7 WP 2011-12 Cross-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 In 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-2011-7 Deadline: 18/01/2011 FP7-ICT-2011-8 Deadline: 17/01/2012 INFRA-2012-2.3.1 Deadline: 23/11/2011 Objective 5.3(d) Call for joint PCP in specific domain: ‘services for mobile access to patient health info’ Objective 5.4(d) Call for joint PCP in specific domain: ‘robotics solutions for ageing well’ Objective 3.5(d) Call for joint PCP in specific domain: ‘photonics based solutions to improve quality/efficiency of public services’ Objective 11.1 Open call for (a) Networking & (b) joint PCPs in any domain of public interest: ‘e.g. egov, transport, energy, environment, security, health etc’ Call for joint PCP in specific domain: ‘high performance computing resources for PRACE’ 10 Mio € 3 Mio € 3 Mio € 3 Mio € 5 Mio € CP-CSA CP-CSA CP-CSA CP-CSA CSA & CP-CSA

PCP activities in FP7-ICT-WP2013 Proposal 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

What does joint PCP procurement cover Large scale public procurement of end- solutions Preparation phase before launching PCP Pre-commercial Procurement Management/Coordination joint PCP P1 R&D work PCP tender ONE joint P5 P2 Commercial Tendering Formation of joint procurement constellation Intermediate Evaluation Selection Intermediate Evaluation Selectiona Preparing joint PCP Supplier B Supplier C Supplier D Supplier E Supplier A Lessons learnt Dissemination Supplier A,B,C,D,E or X P4 P3 Supplier C Supplier D Supplier E Supplier C Consortia of public bodies e.g. P1->P5 Supplier E Phase 4 Commercialisation of products/services (commercial development) Phase 1 Solution Exploration Phase 2 Prototyping Phase 3 Original development of a limited volume of first products/services in the form of a test series Typical Product Innovation Life Cycle Product Idea Product Idea Solution Design Solution Design Prototype Prototype First Test- Products Commercial End-Products VC & other financers Input to standardisation & regulation 11

Specific requirements for joint 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

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