1. Innovation Procurement in Europe Pēteris Zilgalvis Head of the Start-ups and Innovation Unit (F3) DG CNECT European Commission
Why Innovation procurement?

2. Why Innovation Procurement?
WIN-WIN FOR THE PUBLIC SECTOR IN EUROPE
2406 €Bn is the annual purchasing power of the public sector in Europe
Modernization of public services – improving the quality and efficiency of public services and tackling societal challenges with innovative / breakthrough solutions for the benefit of the citizens
Smart use of the procurement budget to remove supplier lock-in and obtain more open, standardized and better value for money solutions in a cost effective manner
In times of economic distress innovation procurement can boost innovation in a country/region without extra funds – only by shifting existing procurement budget towards R&D and Innovation
Benefits to the local economy- support to the economic activity in sectors related to the innovative solutions purchased or developed
It can create growth and jobs in Europe (in PCPs, suppliers can be required to do the majority of R&D in Europe)
Why Innovation Procurement?

3. WHY INNOVATION PROCUREMENT
WIN-WIN FOR THE PRIVATE SECTOR IN EUROPE
The power of the public pursue can open up market/sales opportunities for innovative companies in Europe
Public sector can act as launch customer to help start-ups in Europe scale up and finally go to market
Demand driven Innovation (through Procurement) helps shortening time-to-market for innovative products/services
SCALE – UP EUROPE MANIFESTO
Calls on the Member States :
to open public procurement by supporting more Innovation
to allocate of their annual procurement budget 3% to Pre-Commercial Procurements and 20% to Public Procurements of Innovative Solutions

4. Growing impact at European level
Network national competence
centers on innov proc
More info on these EU policy initiatives on innovation procurement
ERAC council recommendations
eafip launched
1st joint cross-border PPI launched
2014 public proc dirs, EU state aid rules
ESIF and H2020 reinforce PCP/PPI support
European award for innovation proc
European Council asking for more balanced use of supply and demand side instruments (in particular more PCP)
First joint cross-border PCPs launched (FP7)
Increasing amount of EU funding for PCP & PPI
4,5€M in , 43 €M in , 94 €M in 2013,
130 €M in , 130 €M in
Study measuring amount of R&D procured in all MS
First national PCPs started by procurers in MS without EU funding
Since the PCP communication December 2007:
Regular EP & Council requests to EC to reinforce support for PCP/PPI
Innovation procurement included in national R&D&I strategies
National/regional competence centres created in some MS
National and inter-European innovation procurements ongoing*
Targets for percentage of public procurement expenditure going to innovation procurement are set by some MS
Increased emphasis in H2020 and smart specialisation strategies / Structural Funds
* EU funding for PCP-PPI is key to trigger national PCPs/PPIs.
Europe 2020: IU and DAE targets for PCP and PPI
EC Survey on state of implementation of PCP across MS (national legal FW)
FP7 & CIP: awareness raising/networking procurers
Council & EP conclusions
on PCP Communication
2008
2009
2010
2011
2012
2013

5. Growing impact at Member State level
2013
2014
2011
UK NHS and MOD PCPs and PPIs, NL launching customer (PPI)
2012
2009
2008
AT, NO, DK, IS, IT include innov. proc. in R&D&I strategy
ES (3%), NL and UK (2,5%) set expenditure target for innov. proc.
NO, FI, SE, DK, IS min. agreement on cross border innov. proc. collaboration (including 2,5% target)
2010
FI, SE, ES, Flander (BE) include innov. Proc. in R&D&I strategy
FI, SE, ES, Flanders (BE) launch support program & competence center for procurers
PCP and PPI in ESIF: PL, HU, IE, FR,…
EE, LT develop innov. proc. Strategy
Gr announces creation of competence center
DE, PL put innov. proc. in R&D&I strategy
IT (€ 150M), ES (€ 250M) to PCP/PPI struct funds
Baltics (LT, LV, EE) join Norden agreement
FR sets 2% target for innov proc.
Innovation procurement has a growing impact also at MS level.
Back in 2007 there were only few countries from North West Europe with an active PCP and/or PPI strategy.
Gradually UK, NL, FI, SE, ES, Flanders (BE), AT, NO, DK, EE, LT, IT, DE, HU, PL developed an innovation procurement strategy.
One can see a sequence in the steps that countries are typically going through:
(1) Including innovation procurement as a priority in the national/regional R&D&I strategy and in sector specific strategies where the public sector is an important buyer (e.g. energy, health, transport etc)
(2) Setting a national action plan that:
(a) sets political targets to direct a specific percentage of the overall public procurement spending in the region/country to go to innovation procurement
(b) includes innovation procurement as priority in the mandate/budget lines of strategic procurers at national level
(c) establishes a national support structure (an innovation procurement competence center) that manages a financial support program for procurers and interfaces with all procurers to identify innovation needs, shares good practices, trains and assists procurers, measures progress
(3) Bundling demand with other procurers to tackle fragmentation of demand, collect enough budget for an innovation procurement and address situations that require agreement among procurers on solution requirements (e.g. interoperability)
(a) As we will see in the eafip videos later today, in several countries larger strategic procurers (e.g. Swedish Energy Agency) or Central Purchasing Bodies (in healthcare sector) are taking the lead to do innovation procurements for groups of smaller buyers.
(b) Some countries (Nordic & Baltic countries) have even already made ministerial agreements for cross-border collaboration to do innovation procurements jointly
(c) From almost all European countries there are public procurers now that are participating in Horizon 2020 funded projects to implement PCP and PPI procurements together in group with colleague procurers from other countries.
(4) Using the national financial support program for procurers in synergy with EU financial support for PCP/PPI (e.g. Horizon 2020 and ESIF grants and EIB loans for procurers). Some countries like EE, LT, HU specifically base their national support program, that financially support procurers to undertake Innovation Procurements, on the European structural funds.
2015
2016

6. Innovation Procurement potential still underutilised
Data from DG CONNECT study to be published end Sept 2014
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: $Bn ,5 €Bn of R&D public procurement/year
PPI: % % of e-gov solutions procured are 'innovative'
Also large differences within Europe
Frontrunner Member States invest 5 times higher % of total public procurement budget than followers on ICT and R&D proc:
ICT procurement
13,5% in UK <-> 2,5% in GR
R&D procurement
0,5% in UK <-> 0,1% in GR
€Mio
(2011)
Public Procurement of ICT
Public Procurement of R&D
How is the situation today? The EC published a study that measured the amounts of ICT and R&D procured in 2011.
Compared to other parts of the world, public procurement as a driver for research and innovation is still underutilised in Europe. Innovation procurement is gaining wider acknowledgment in Europe as 'the tool' that can enable public buyers to really steer industry R&D actively to its needs. But in terms of volumes of innovation procurement that are really happening, we are still in a start-up phase.
For PCP, the US spends every year 50 $Bn on R&D procurement, compared to 2,5 €Bn in Europe (2011 figures).
For PPI, only 5 % of e-government solutions in Europe that are procured are 'innovative solutions', compared to 15% in markets where PPI is well established
There are also still large differences within Europe. Frontrunner Member States invest a 5 times higher percentage of their total annual public procurement budget compared to followers on ICT and on R&D procurement. For example:
The UK spends 13,5% versus Greece 2,5% of its public procurement budget on ICT procurement.
The UK spends 0,5% versus Greece 0,1% of its public procurement budget on R&D procurement

7. Political encouragement Encourage demand side to meet supply side
What can countries/regions do?
Political encouragement
Modernising public sector 'a priority'
Quality-efficiency improvement targets
e.g. Lombardia/IT, UK
Target % proc budgets to R&D&I
Monitoring framework
e.g. UK, NL, ES, Nordics, FR
Implementation
- Innov Proc Competence center
Training / assisting procurers
(e.g. SE, FI, ES, EE, DE)
- Innov Proc financial support program
(e.g. SE, FI, ES, EE, HU, DE)
Leverage EU funding
Horizon Increased
ESIF support for
EIB loans innov proc
Encourage demand side to meet supply side
Early notification innov proc needs
Open market consultations
Meet the buyers events
What can countries and regions do to mainstream innovation procurement?
Countries and regions that already doing so, use a mix of 4 ingredients:
Political Encouragement to encourage public procurers to buy 'innovative'
Make public sector modernisation a political 'priority':
Agree with all procurers in the region quality/efficiency improvement targets (KPIs) that they are to reach in public service delivery by addressing high priority innovation needs. Define which innovation needs to address via a PPI or PCP.
Set a target for the percentage of public procurement budgets that are to be directed to R&D and innovation every year by procurers in the region/country. UK, NL, ES, FR and the Norden countries have already set such targets. Measure progress on this as well.
Implementation framework
- Establish a regional/national financial support program for procurers that offers them financial incentives that reduce their risk to undertake PCPs and PPIs
- Establish an innovation procurement competence center in your region/country that can share good practices, provide practical (+ the above financial) assistance to procurers on how to do a PCP or PPI, provide info about EU funding for PCP/PPI
Leverage EU funding
Use the financial support for innovation procurement offered by Horizon 2020 and ESIF grants and EIB loans for PCP& PPI
Encourage demand to meet supply
Encourage public procurers in your region to notify businesses early about upcoming innovation procurements (via public info notices) and to invite businesses to discuss those innovation needs in open market consultations or meet the 'buyers events'.

8. European Assistance for Innovation Procurement
eafip
What is eafip?
A service set up by the DG CNECT (implemented by contractors)
- Horizon 2020 supports groups of procurers to do joint PCPs/PPIs together
- eafip supports single procurers to start PCP/PPIs on their own nationally
What does eafip offer?
Training & events across Europe
3 major events and 9 smaller workshops with procurers in different sectors between to provide information and training on PCP and PPI
Toolkit and helpdesk 
Training is based on toolkit on why and how to implement PCP/PPI
Helpdesk that posts replies to questions - FAQs online
Free local assistance (6 PCP + 6 PPI cases)
For public procurers starting concrete PCPs and PPIs for ICT based solutions
Includes legal assistance in the start-up and implementation of a PCP/PPI

9. THIRD ANNUAL INNOVATION PROCUREMENT EVENT ESTONIAN PRESIDENCY TALLIN OCTOBER 2017

10. Thank you very much for your attention Peteris Zilgalvis Start-ups and Innovation Unit (F3) DG CNECT European Commission