Legal chapter in outline – 1’st draft P4ITS meeting # 8, Genoa, 2-3 December 2015

First of all – and again: The definition of PPI From the FAQ’s on PCP published on the cordis.europa.eu: FAQ no 19: PPI is when contracting authorities, possibly in cooperation with additional private buyers, act as lead customer (also called early adopter or launching customer) by procuring 'innovative’ solutions (not the R&D to develop them) that are newly arriving on the market but that are not yet available on large scale commercial basis due to a lack of market commitment to deploy.

Definition of PPI From the Horizon 2020 – Work Programme 2016 – 2017, Smart, green and integrated transport: PPI – Public procurement of innovative solutions means procurement where contracting authorities act as a launch customer for innovative goods or services which are not yet available on a large-scale commercial basis, and may include conformance testing

How the Commission connects PPI to PCP

What is PPI not? It is not participation in R&D-projects with the main purpose of doing Research and Development activities Therefore, it is not: PCP Single or dual supplier R&D-projects (risk-/resource- sharing) Public-Private Innovation Partnerships (seen in isolation) Any other procurement of R&D within the frames of art. 14

What is PPI not? It is certainly not everything that is not PCP!

What is PPI not? It is not a certain procurement procedure, like e.g. Innovation Partnership What is Innovation Partnership (art. 31) Innovation in phases with shortlisting like in PCP Multiple, two or only one supplier participation Procurement of R&D-result if successful (= innovation) A contract that regulates both the R&D-phases and a following commercial procurement of the R&D-result

What is PPI then? Programmes/strategies/policies supporting procurement of innovation, e.g. strategies on making daily procurement more innovation friendly (e.g. “10 % of our procurements should be carried out with a PPI approach) or multi authority cooperations with a certain economic mass, allowing market penetration of new (yet undiscovered) innovative solutions in grand joint procurement projects or Technical or legal approaches to enhance the possibilities of new innovative solutions winning a tender (in the following named “PPI approaches”). On an operational level the PPI approaches are the very fundamental preconditions for PPI

What is PPI then? PPI can be a part of a mix of policies with the aim of encouraging more R&D and innovation procurement in the performance of public tasks or the solving of societal needs. Thus, a policy mix can comprise e.g. both PCP and PPI strategies With the aim of providing practical guidelines for PPI, the legal chapter is focused on the PPI approaches in the planning and implementation of PPI.

PPI and R&D PPI does not by default include procurement om R&D It must however be accepted that PPI might very well contain elements of R&D for adapting existing solutions to fit the required needs as so far this adaption has not been developed during the initial market dialogue In particular in the field of C-ITS

PPI and choice of tender procedure (EU dir.) As in any procurement projects the complexity of the acquisition determine the choice of procedure An acquisition that expectedly requires more comprehensive modifications or adaption would normally be conducted according to a more complex procedure allowing dialogue or negotiation with the bidders It must be accepted that PPI might very well contain elements of R&D for adapting existing solutions to fit the required needs as so far this adaption has not been developed during the initial market dialogue phase; not least in the field of C-ITS.

PPI and choice of tender procedure (EU dir.) Figure xx below [procedures with TRL] seek to illustrate the theoretical correlation between the TRL metrics, the complexity of the intended C-ITS acquisition and the tender procedures according to the procurement directives:

Relevant procedures for PPI subject to the Public Procurement Directive 2014/24/EU In principle – any procedure The obvious procedures Innovation partnership (art. 31) Competitive dialogue (art. 30) Competitive procedure with negotiation (art. 29) Design contest (art. 78) The “light regime” – social services (art. 74)

Relevant procedures for PPI subject to the Public Procurement Directive 2014/24/EU The less obvious procedures – but in practice the most utilised (and encouraged) procedures: Open procedure (art. 27) Restricted procedure (art. 30)

PPI approaches

ApproachDescription Market consultations Early Announcement Forward Commitment Procedure Early announcement of intentions to procure or to deploy innovative solutions “Prior information notice” in the OJEU Between announcement and tender: preliminary market consultation (art. 40) – have the industry solutions reached the required readiness (technology, tests, price?) Combined with long time limits for the receipt of tenders? Guarantee of minimum procurement volume to increase interest for participating in the PPI process? Official Journal of the European Union Functional requirements Define req.ts with the aim of allowing innovation, efficiency improvement, and new ways of thinking – “open specifications” Suitable for PPI’s following PCP’s or other Public-Private- Innovation projects (art. 14/16 f) Helps to prevent supplier lock-out / disqualifying competitive advantages Variants Allows the procuring authority to evaluate both the technical specified solutions but also other “already on the market solutions” In principal a combined tender with, and without, open (technical) specifications

PPI approaches ApproachDescription Total Cost of Ownership (TCO), Life- cycle costing (art. 68) E.g. energy efficient or labour cost-saving solutions An evaluation-technical price comprising different aspects of the costs over the life cycle of a product, solution etc. Focus on data (from the suppliers) and transparent, objectively verifiable and non-discriminatory methods of calculating life-cycle costs Remuneration for participation and shortlisting Increases the incentives for participating and developing/modifying/adapting solutions Today: Competitive dialog (and design contest) Directive 2014/24/EU: + innovation partnership The same mechanisms as in PCP – competitive development but combined with a public procurement contract Always consider the risk of illegal state aid! Reward innovative solutions through the evaluation criteria Art. 67 (2) (a): “Such criteria may comprise for instance: (a)...innovative characteristics...” Recital 45 (on competitive procedures): “...Negotiations may concern all characteristics of the purchased...., as well as social, environmental and innovative aspects...”

PPI approaches ApproachDescription IPR sharing (is presupposed in innovation partnership, art. 31 (6)) Free test sites? For market consultations Always consider the risk of illegal state aid Risk deducing procurements Get all experts together when writing the specifications Test period before procurement

IPR in PPI If any IPR related work within a PPI project is foresee, the procuring authority should consider aspects such as: the need for further development and/or further distributions within own organisation the need for being able to distribute the solution outside the organisation on a commercial or non-commercial basis the need for later third part integration to the solution the need for independent operation or maintenance, or the need for outsourcing further development, operation or maintenance

The PPI cases ECO-AT (AustriaTech) Nordic Way (VTT Finland) Project (ITS Bertagne) Are the cases PPI? If yes – in which stage of PPI then?