Demand driven innovation through public procurement PCP and PPI in Horizon 2020 Lieve Bos European Commission DG CONNECT (Communication Networks) F2 unit (“Innovation”)

 Health care  Climate Change  Energy Efficiency  Transport  Security  Public sector efficiency… Rationale 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.

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 How does it work PCP: specific approach to procure R&D services, enabling –Price/quality products that better fit public sector needs –Earlier customer feedback for companies developing solutions –Better take-up/Wider commercialisation of R&D results

PCP Win-win for all stakeholders - New lead markets - Increase export - Quality of public services - Focus on political priorities - Improve innovation climate - Attract foreign investment - Increase employment - Reduce cost of procurement Procurers Pre-commercial Procurement -Shared risks & benefits -First buyer in early R&D - Global competitiveness Politicians Suppliers Get the ‘Best Product’… … at the ‘Lowest Price’ - Address ‘public market innovation failure’ - Shape product development to public needs - Increase technology knowledge - Reduce risk in commercial tendering - Favour supplier competition - Pooling of resources - Economies of scale - No licensing costs - ‘First time right’ product - ‘EU interoperable’ - Attractive to venture capitalists - Reduce unforeseen expenditure - Better products - Economies of scale - Wider market size - Shorter Time to market - Reduce risk of innovation

Status of PCP implementation across Europe 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 Examples of PCPs done by procurers in Member States without EU support: in Norway, Austria, Italy, Spain, UK, etc ->More Info about national PCP initiatives in Member States: Examples of on-going EC funded PCP projects doing joint cross-border PCP procurements: SILVER (Robotics solutions for elderly care), CHARM (Traffic management), V-CON (Virtual Construction / Modelling of Roads), (Integrated ICTs for Smart Personal Protective Equipment for Fire Fighters and First Responders), DECIPHER (applicationsbased on Distributed EC Individual Personal Health Records), PRACE 3IP (high energy efficient high performance computing), C4E (Cloudcomputing) ->More info about EU funded cross border PCP projects: SILVER UK Iceland CHARM V-CON DECIPHER PRACE 3IP

 Regulatory requirement to seriously reduce CO2 emissions by 2016 without negative effects on health/environment, beyond what market is able to offer  PCP started mid 2011, finished end 2012 (time to market shortened)  compared solution approaches of 5 vendors  Follow-up procurement for deployment in preparation for 2014 (open to whole market) More info on this case on: Examples from PCPs in member States done without EU support Carbon capture – Norway Large project Statoil/Gassanova attracting large firms

7 Potential £160m p.a. saving Potential £30m p.a. saving £4,000 per HCAI avoided Potential £19m p.a. saving Examples in Healthcare Larger project, but demanding Small projects attracting mainly SMEs innovation requirements, attracts both SMEs+large vendors attracts both SMEs+large vendors Potential Value PCP-like projects to NHS in UK:  Improve the quality of the patient experience and generate significant cost savings (£236m). Value to the economy:  A number of innovators/SMEs have attracted significant extra investment (£290m). 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

Examples first EU funded cross-border PCPs Ageing well 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 jointly 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. Latest News: 7 bidders/consortia successfully passed the SILVER tender evaluation ! More info here: The PCP will start now and will be executed in 3 PCP phases Up to 7 tenderers competing in PCP phase 1, 4 in PCP phase 2, and 3 in PCP phase 3

Examples EU funded cross-border PCPs Traffic Management CHARM is a cooperation between 3 road authority procurers: Rijkswaterstaat (NL), Highways Agency (UK), Department Mobility and Public Works - MOW (BE) CHARM contracting authorities jointly procure R&D services via the PCP to move towards an open modular traffic management architecture by getting modules developed that will optimise network performance, increase road safety and reduce CO2 emissions by improving network management, incident prediction and prevention and cooperative ITS. Latest News: CHARM call for tender is currently open until 23 October 2013 ! The PCP will be executed in 3 PCP phases, expecting up to 12 tenderers competing in PCP phase 1, 9 in PCP phase 2, and 6 in PCP phase 3 CHARM /business_opportunities/ charm_pcp/index.aspx

EC support to PCP & PPI in Horizon : 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 done by public procurers (via CIP grant: co-financing up to 20% of the price of the innovative solutions procured/deployed) : Horizon 2020 (+ possibilities in ESIF & CEF) –EC or EU funding bodies (e.g. agencies) can carry out PCPs/PPIs on their own behalf or jointly with Member States –EC can co-finance PCPs/PPIs carried out by grant beneficiaries (procurers from Member States and/or Associated countries) –1 joint procurement per project carried out by min 3 procurers from 3 different countries –Expected funding rates: 70% for PCPs, 20% for PPIs –Per action only 1 funding rate for all costs in that action. E.g. for PCPs: 70% funding rate both for coordination costs to prepare/manage the PCP and for co-financing the actual PCP procurement cost

CONNECT PCP opportunities in WP of potential interest to ENLETS PCP opportunities in draft WP : Commission proposal under discussion with Member State committee PCP call open to proposals in any area of public interest requiring new ICT solutions –4 Mio EURO (1 st Call) PCP call in robotics for environmental monitoring & public safety –5 Mio EURO (2 nd Call) Expected timing of calls: 1 st Call: Call opens December 2013, Call deadline: April nd Call: Call opens December 2014, Call deadline: April 2015

PCP website: Info on calls, EU funded projects, background docs, FAQs, PCP initiatives in Member States and Associated Countries etc Background info

Background More background info on -what is covered/targeted by PCP -examples other on-going EU funded PCP projects and their latest news

PCP - Pre-Commercial Procurement When –Challenge requires R&D to get new solutions developed. Problem clear, but pros / cons of several potential competing solutions not compared / validated yet. No commitment to deploy (PPI) yet. What –Public sector buys R&D to steer development of solutions to its needs, gather info about pros / cons of alternative solutions to be better informed to make specs for a follow-up PPI possibly later, to avoid supplier lock-in (create competitive supply base) How –Public sector buys R&D from several suppliers in parallel (comparing alternative solution approaches), in form of competition evaluating progress after critical milestones (design, prototyping, test phase), risks & benefits of R&D (e.g. IPRs) shared with suppliers to maximise incentives for wide commercialisation

Examples EU funded cross-border PCPs Smart personal protective systems is a cooperation between procurers of equipment for fire fighters and first reponders: Federal Home Affairs Ministry (BE), SDIS Fire Department Bouches-du-Rhone (FR), Fire Department city Dortmund (DE), Greater Manchester Fire and Rescue Authority (UK), National Disaster Response Agency (NL) contracting authorities' depth needs assessment showed that the R&D focus for the PCP should be on localization systems, data transfer, visualization and sensors. is currently conducting a market consultation to consult industry on these aspects. Latest News: market consultation is on-going in September and October 2013 ! Publication of call for tender expected beginning

Examples EU funded cross-border PCPs Energy efficient supercomputing PRACE 3IP is a cooperation between 4 European procurers of supercomputing equipment: CINECA (IT), Juelich Supercomputing Center (DE), Genci (FR), EPCC (UK) The PRACE 3IP contracting authorities pilot joint procurement and joint ownership of innovative HPC prototypes, focusing on high energy efficiency. PRACE 3IP's market consultation with industry in preparation of the PCP is finished, and the PCP call for tender is under preparation. Latest News: PRACE 3IP call for tender under preparation Publication of call for tender expected end PRACE 3IP Implementation-Phase

Examples EU funded cross-border PCPs Personalised healthcare DECIPHER procurers are public health providers: TICSALUT (ES), ESTAVC (IT), Central Manchester University Hospital NHS Foundation Trust (UK) DECIPHER aims to generate interoperable applications, developed on a pan-European platform to improve existing healthcare services, building on secure mobile devices for access to prescription data, emergency data, examination results and other health information. Latest News: DECIPHER market consultation is on-going in June and October 2013 ! Publication of DECIPHER call for tender expected beginning

Examples EU funded cross-border PCPs Virtual Road Construction V-CON is a cooperation between procurers of equipment for fire fighters and first reponders: Federal Home Affairs Ministry (BE), SDIS Fire Department Bouches-du-Rhone (FR), Fire Department city Dortmund (DE), Greater Manchester Fire and Rescue Authority (UK), National Disaster Response Agency (NL) CHARM contracting authorities jointly procure R&D services via the PCP. In depth needs assessment showed that the focus should be on localization systems, data transfer and visualization and sensors. is currently conducting a market consultation to consult industry on these aspects. Latest News: market consultation is on-going in September and October 2013 ! Publication of call for tender expected beginning V-CON /business_opportunities/ charm_pcp/index.aspx

Examples EU funded cross-border PCPs Cloud computing C4E (Cloudforeurope) is a cooperation between 22 public authorities across 10 European countries The main c4E objectives are to identify obstacles for cloud use in the public sector, defining services that overcome these obstacles, procuring R&D from industry to find innovative solutions for cloud services Latest News: Cloudforeurope project started June 2013 First C4E project conference taking place November