1. Innovative Procurement in City of Tampere
A conference on innovation procurement in Estonia
Tallinn
Kari Hakari
Director of Development, PhD
City of Tampere

2. Facts about Tampere Population: 225 000 Budget 2016: 1,536 mrd Euros
Largest inland city in the Nordic countries
One of three most rapidly growing regions in Finland
Centre of know-how intensive entrepreneurial activities
Educational and cultural city
Leading city in industry and a centre of information society

3. Arguments for developing procurement in Tampere
City of Tampere spends c. 800 m€ on investments and service + materials purchase, which has a significant impact on local markets and welfare
Development of (innovative) procurement process and methods will help the city to adapt to the changes in operating environment
It targets to
decrease expenses in the long term
respond to growing and changing service needs
spur businesses in Tampere-area: companies will have new business opportunities and are encouraged to innovate

4. Commissioning services in City of Tampere
Need of innovations
Figure is based on
Murray, J.G. (2009). Towards a common understanding of the differences between purchasing, procurement and commissioning in the UK public sector.

5. Concept of Innovative Procurement in Tampere
Innovativeness in procurement setting can refer to innovation in:
Procurement process (how we procure): new methods in procurement planning, procedure, or deployment phase
Subject to tender (what we procure): procuring R&D, new or significantly improved products or services
Model for delivering services (how service is organized): new forms of public-private collaboration and partnerships

6. Elements of Innovative Procurement in Tampere
User orientation
stakeholder involvement in procurement: needs are defined with service users
Active dialogue with providers at all stages of procurement
Tests and pre-commercial development
Outcome based approach
contractual incentives and development during the contract
cost-effectiveness in procurement

7. Procurement development in Tampere: HANKI - Project
Our mission: Innovative procurements will become an integral part of City’s procurement culture
Seven pilot procurements in social & health services and infrastructure
to develop efficiency and effectiveness of procurement function
to test new procurement models and methods (outcome based procurement, pre-commercial procurement, co-development)
aim at having positive effects on businesses in Tampere area
Project will result in a Roadmap for Innovative Procurement 2015 – 2025 and the toolbox to support its implementation
Project is funded by Finnish Funding Agency for Innovation (TEKES)
Market
supply
Procurement
culture
2015
2016
Innovative Public Procurements
Needs & visions
Public
sector
Service
users
Companies
NGO’s
Pilots

8. The Roadmap for Innovative Procurement
City strategy
Services in the future –model and visions
Investment plans
Organizational reform
CITY
Strategic choices and targets for development
Principles of Innovative Procurement
Cost-effectiveness consists of: effectiveness on stakeholders, service and product innovations, locality, market development, price.
Plan about Procurements
when to run innovative procurements
objectives for innovative procurements and their expansion
role of innovation platforms
Business’ growth potential in Tampere region
ICT & IoT
Life Science/Health-sector
Cleantech & environmental solutions
etc.
MARKET
Market’s growth potential & the city’s interest to create markets
Plan about competency development
ensures successful implementation of the Roadmap
promotes and firms the new procurement culture
Information to City
Commissioning becomes more planned. Setting objectives for procurement becomes systematic.
Information to companies
Forwards City’s needs to which the market can develop solutions and
target resources.
Innovative procurement:
Procurement process (how we procure)
Subject to tender (what we procure)
Model for delivering services (how service is organized)
PROCUREMENT
How can procurement promote better products and services?
Procurement management
Toolbox
Modelled practices and guidelines to support procurement
11/7/2018

9. Cases of Innovative Procurement

10. Kotitori – Key to services Service integrator model
New solution models for the home care of elderly people
The integrator ties together needs, services and service providers
Senior citizens and their family
User and purchaser / orderer of the services
Part of the funding come from the municipality, part is paid by the elderly people themselves
services
Contract & SLA
Service and care plan
The city as a purchaser
Defines objectives such as quality, coverage and functioning
Defines the role of the municipal service production
Answers for services designated municipal responsibility (such as official decisions or funding)
Kotitori – service integrator
Maintains and manages a service network
Client guidance
Assessment of service needs
Develops services and processes
Producer network
Produce services in compliance with jointly agreed rules (quality) and practices
Municipal service production is part of the service network.
Municipal home care
Other producers
SLA = Service Level Agreement; service description, quality requirement

11. Areas of innovation in Kotitori-case
Procurement process
(December 2014-June 2015)
Subject to tender
The model for delivering services
Tendering with negotiation
City’s objectives for the service
providers’ presentations on their concepts, visions and innovations
contract model
Outcome based definitions and evaluation criteria
Providers’ service level promises founded the basis for bonus-sanction model in the contract
Service integrator
Development partnership with the City and networks, which is measured and rewarded by the level of stakeholder satisfaction

12. Benefits of Kotitori Easier access to services
One contact point for all elderly services
Right services for right customers at the right time
Enhanced service portfolio from privately paid services
Lower cost & higher productivity
Synergies in service provider network
Sharing best practisies between city and service providers
Price negotiations between Kotitori integrator and service providers
Less work for the city
Only one public procurement
One provider to deal with
Lower transaction costs in purchasing services and adapting to changes
More privately funded services used
Improved quality of services
Increased competition between service providers
Learning between service providers
Continuous development
Enhanced auditing of service quality

13. Results of Kotitori 1. Kotitori Service Center
Access to service is considered fast and service friendly
Replacing contacting and visiting other units and services
Very high customer satisfaction (2015: 4,4)
2. Costs, quality and effectiveness
Fixed and predictable costs of home care
Slowing down increase of demand for services paid by the city
Lower costs for specialized healthcare
Amount of aged people living at home with high need for services increased
3. Good collaboration with home care integrator

14. Economic impacts of Kotitori
Service
Kotitori’s costs compared to whole city’s costs of people + 75 years old (M€)
Kotitori’s own area (ca. 300 clients)
Client guidance
+ 0,1
26 %
Regular home care
- 1,9
58 %
Transitions to 24 h housing services
+ 0,3
3 %
Use of special health care
- 0,5
48 %
Use of short-term hospital care
0,0
4 %
Total M€
-2,0
City
Developing (together with city’s own home care, e.g. increasing the immeadiate working time)( )
-3,3
12 %
Support services of home care ( )
-0,1
25 %
-3,4
Audited by KPMG

15. Procurement of R&D in Intelligent Transport-case
City’s need to do development work with companies
Aim was to encourage companies to introduce cost-effective data-sources that would benefit the city with better information about transport in Tampere.
Aimed at mapping the yet un-commercialized ideas of companies and unite them with City’s needs.
Purchasing of R&D-services targeted to conceptualizing, prototyping and user-testing of Realtime information about transport and street conditions.
R&D-process to which the Act on Public contracts isn’t applied In Pre-commercial procurement the City doesn’t commit to procuring the commercialized version.
Gave chances to companies to test their ideas.

16. Procurement of R&D in Intelligent Transport-case
A modified model of pre-commercial procurement
Variation for lighter (2-phase) and quicker pre-commercial procurement process. Budget euros
Needs
Market dialogue
Purchasing of R&D,
euros
Purchasing of R&D, euros
Idea contest -phase
Implementation phase
Call for tenders
Tenders (10 pcs)
Concepts
Concept A
Concept B
Concept-idea A
Concept-idea B
Concept-idea C
Concept-idea D
Concept-idea E
Concept A
Concept B
Concept C
Preparation
(fall 2014-
spring 2015)
1st phase of R&D pro-curement
Selection of proceeding ideas
(December2015)
Assessment of functionality
& Decision on phase 2.
Piloting
(2/2016-2/2017)
Assessment of 2nd phase results
Supply,
know-how,
technologies
City of Tampere
Companies:
software, transportation,
consultancy
firms
Pilot A
Pilot D
Company A
Company B
Company C
Company D
Company E
6 pilots to be implemented
Introduction of needs and aims of the City
Market dialogue on ITS-development forum
Possiblity to face-to face negotiations
=procurement order cycle. Possibility to procure the solution by means of public procurement.
11/7/2018

17. Life cycle neighborhood @Tesoma
Pilot integrates construction, living, services and community to serve inhabitants in all ages.
Pilot will include
an idea contest on planning the neighborhood
studying the needs and wishes of citizens and other stakeholders in the neighbourhood area
Aims at creating a testing environment for companies in welfare, construction and technology businesses. It also could serve as a platform for diverse research institutions to develop and test their services and equipment.
Welfare
Tesoma welfare center -pilot creates an operating model for an integrated welfare center. The center will combine the social and health services with other services that enhance welfare.
Multiple market dialogue -events aimed at:
mapping out the interest of the market
defining the size and objectives of procurement
clarifying the possibility to found an alliance as an operating and contractual model
An idea contest on digital solutions applied to health and welfare, that could be included in the procurement
11/7/2018

18. Summary: Some lessons of innovative procurement in Tampere
IP must be seen around the hole cycle of commissioning
IP has implemented the strategic objectives of the Tampere like customer orientation and partnerships in service provision as well as new enterprises in Tampere region
IP has achieved verified value for money, outcomes and economical impacts
As a result of co-creation IP has produced new services and innovations, which the purchaser has been acquisition of knowledge before the IP process
The outcome based procurement and bonus/sanction models have shared the risk between the city and the service provider and encouraged continuous improvement
There is a continuous need of new IP projects after the first good results
A successful IP process takes a time: there is often need for extra resources, too

19. Kari Hakari