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Procurement Innovation - Digitalflow framework
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FAPPE - Faster Adoption of Public Procurement in Europe
A Decision Support System for R&D
Public Procurement
2nd FAPPE meeting – London 8th November 2013
Page 1Digitalflow © All Rights Reserved
Page 2
Digitalflow Value Proposition
Digitalflow is helping organizations implement Procurement and Innovation effective
management systems. Our reward rests on a hands-on approach that accelerates and
makes it easier for organizations to put cutting edge tools and methodologies into practice.
Public e-Procurement (PeP)
Procurement Innovation
Systems (PIS)
Innovation
Management Systems
(IMS)
Procurement
Innovation
Strategy Execution & Performance Management
Technology & Process Automation
www.digitalflow.pt | www.linkedin.com/company/digitalflow
Digitalflow © All Rights Reserved
Agenda
1. Present Challenges2. Differences between PPI & PCP
3. Critical activities for the success of R&D Public
Procurement
4. Further developments
Page 3Digitalflow © All Rights Reserved
A Decision Support System for R&D Public Procurement
Public procurement of sustainable and
innovative goods and services is one of
the essential tools for stimulating new
technological or service solutions
while helping to create jobs and
boosting the competitiveness of the
European industry and SMEs. It also
encourages more efficient public
services. Source: Antonio Tajani, Vice-President of the EC and European
Commissioner for Industry and Entrepreneurship.
1. Present Challenges
Page 4Digitalflow © All Rights Reserved
Public sector is faced with important challenges like in Health care,
Climate Change, Energy Efficiency, Transport, Security, Public sector
efficiency…. Addressing these, often requires public sector
transformations for which no commercially stable solutions exist yet.
Page 5Digitalflow © All Rights Reserved
1. Present Challenges
A broader role of supply partners in the innovation
processes
Over the last decade we have seen a rise in outsourcing non-
core activities: the average percentage of revenues procured
externally has risen to over 60%. In addition, companies are
increasingly outsourcing critical business functions, including
the outsourcing of R&D to the supply base.
As a result, the relationship with suppliers becomes
more complex. At the same time, companies are finding it
more and more difficult to keep up with the pace of innovation
through internal R&D alone. Tapping into the capabilities of
the market and supply base, is one way of speeding up the
innovation process and a reduction in total cost.
Source: Capgemini - Kirsten Schipper
Page 6Digitalflow © All Rights Reserved
1. Present Challenges
The leaders engage
suppliers in the “initial
concept” phase nearly
five times more
frequently than
followersSource: A.T. Kearney’s Assessment of
Excellence in Procurement
Page 7Digitalflow © All Rights Reserved
1. Present Challenges
Agenda
1. Present Challenges
2. Differences between PPI & PCP3. Critical activities for the success of R&D Public
Procurement
4. Further developments
Page 8Digitalflow © All Rights Reserved
A Decision Support System for R&D Public Procurement
Page 9Digitalflow © All Rights Reserved
How Innovation is Changing in
Europe: an interview with OECD's
Andrew Wyckoff
Innovation goes far beyond R&D
It goes far beyond the confines of
research labs to users, suppliers and
consumers everywhere – in
government, business and non-profit
organisations, across borders, across
sectors, and across institutions.
The Oslo Manual for measuring
innovation defines four types of
innovation: product innovation,
process innovation, marketing
innovation and organisational
innovation.
2. Differences between PPI & PCP
Page 10Source: http://cordis.europa.eu/fp7/ict/pcp/links_en.html
2. Differences between PPI & PCP
Public Procurement of Innovative
solutions (PPI) has been recently
defined as “the purchase of new or
significantly improved goods and /
or services, processes, etc. that are
new to the public procurer and new
in the Internal Market”.
In a PPI procurement the
contracting authority acts as
“launching customer”, that is the
first customer to acquire newly
developed commercially viable end-
products for deployment – it is the
stage where it is ready for
commercial take-up.
PPI is related to short- to mid-term
needs, related to more
incremental type innovations.
Source: DG ENTR 2011 CIP/EIP call for
proposals on PPI
Source: Public procurement vs
private purchasing: Is there any
foundation for comparing and
learning across the sectors? Jan
Stentoft Arlbjørn and Per Vagn
Freytag
Page 11
Conventional off-the-shelf procurement deals with obtaining a supply of a commodity or
service from a supplier’s catalogue which is already available on the market. It is mainly
concerned with short-term tactical purchasing considerations such as low cost, short-term
quality and value aspects. In contrast, PCP is a method to make available a service and/or
commodity that does not exist in the market. To be used strategically as a mechanism to
develop new, step-change innovations that meet important mid-to-long term service
delivery (service quality and/or efficiency) requirements.
2. Differences between PPI & PCP
Page 12Digitalflow © All Rights Reserved
• If solutions are near the market and would be provided if clear requirements /
sufficient demand expressed by the market (PPI) - Normal procurement
procedure/directives.
• If it is still R&D required, still different competing solution approaches to compare
before committing to deploy - invest in R&D with suppliers (PCP) - Working under
R&D exemption of the procurement procedure/directives. PCP projects are
typically projects that relate to mid/long-term needs that would not be addressed
by the private sector by itself without financial support from the public
sector.
2. Differences between PPI & PCP
Page 13Digitalflow © All Rights Reserved
Benefits for both the Procurer and the Supplier
2. Differences between PPI & PCP
Procurer Supplier
It offers a deeper understanding of the technological
capabilities and limitations of approaches from different
suppliers and therefore reduces the risk of miss-specified
tender for the commercial roll-out as well as big commercial
roll-outs that do not deliver on expectations.
Access to understanding of public sector needs and real life testing environments.
Share the risks and benefits of designing, prototyping and
testing a limited volume of new products and services with supplier without involving State aid.
Rapid R&D cycle and shorter time-to-
market that can better anticipate demand
for new solutions and better align their
product developments to fulfill concrete customer needs.
Obtain a lower cost (and less risk) deal compared to
exclusive development contracts, due to lower development
prices and licensing rights for the use of the developed
solution in compensation of giving the IPR ownership rights of the R&D to the suppliers.
Having the possibility and ability to work
with potential clients on their needs in a
structural way, making it more likely that R&D will lead to commercial demand.
And create optimal conditions for wide commercialization and
take-up of R&D results.
Wider innovation diffusion.
Agenda
1. Present Challenges
2. Differences between PPI & PCP
3. Critical activities for the success of R&D
Public Procurement4. Further developments
Page 14Digitalflow © All Rights Reserved
A Decision Support System for R&D Public Procurement
Page 15
2. Technical Feasibility Analysis
3. Market Availability
1. Key needs identification
Critical activities for the success of the PCP initiative
Source: A practical guide to PCP – Project Progr-EAST
3. Critical activities for success of R&D Public Procurement
4 Suppliers 3 Suppliers 2 Suppliers
Typical approach for the Needs Assessment Phase:
• Literature review of scientific, technical and policy publications
• Expert Opinion
• Focus Group Research
• Wouldn’t it be Great If...(WIBGI)’ workshops to identify and rank needs
• Key Informants interviews, including service end-users
The Needs Assessment Phase should result in a final decision regarding
the need, how to address it (through a PCP approach or via traditional
procurement) and how to formulate the need for such a procurement
Page 16Digitalflow © All Rights Reserved
3. Critical activities for success of R&D Public Procurement
Source: A practical guide to PCP – Project Progr-EAST
1. Key needs identification (identify the key
needs of the stakeholders). Does it respond to
a societal challenge?
2. Technical Feasibility Analysis (assess whether
it is technically possible to create a solution to
meet that need) or
3. Check whether the need can be met with
products/services already available in the
market or so close to the market that no R&D
but only incremental/ integration type
development is required.
Page 17Digitalflow © All Rights Reserved
2. Technical Feasibility Analysis
3. Market Availability
1. Key needs
identification
Critical activities for the success of the PCP initiative.
3. Critical activities for success of R&D Public Procurement
1. Key needs identification (identify the key needs of the stakeholders)
Is this a critical need for our stakeholders?
1.1 Who are the key stakeholders?
• Internal and External Stakeholders
• Organizational Objectives
• Engagement and Buy-in from Stakeholders
• Exercise #1 – Identify the key procurement stakeholders
1.2 What is the critical need of the stakeholder?
• Creating a value proposition for procurement innovation
• Translation of stakeholders requirements into needs
• Exercise #2 – Define the critical need
Page 18Digitalflow © All Rights Reserved
3. Critical activities for success of R&D Public Procurement
Decision Support System for
R&D Public Procurement
Hands on workshop
2. Technical Feasibility Analysis (assess whether it is technically possible
to create a solution to meet that need)
Is it technically possible to create a solution to meet the need?
2.1 What are the solutions that meet the need?
• Methods for solutions generation: challenges and taskforces
2.2 Are there any technical solutions that meet the need?
• Methods for solutions evaluation
• Exercise #3 – Generate and evaluate technical solutions
Page 19Digitalflow © All Rights Reserved
3. Critical activities for success of R&D Public Procurement
3. Market Availability (check whether the need can be met with solutions -
products/services - already available in the market)
Is there a technical solution available in the market or so close to the market that
no R&D but only incremental/integration type development is required?
3.1 What are the key procurement innovation knowledge ecosystems?
• Procurement Innovation knowledge ecosystems mapping
• Exercise #4 – Identify the most critical knowledge ecosystems
3.2 Are there any technical solution available in the market?
• Environmental scan (internal and external) process and tools
• Delegate Exercise #5 – Identify alternative solutions in the marketplace.
Page 20Digitalflow © All Rights Reserved
3. Critical activities for success of R&D Public Procurement
Agenda
1. Present Challenges
2. Differences between PPI & PCP
3. Critical activities for the success of R&D Public
Procurement
4. Further developments
Page 21Digitalflow © All Rights Reserved
A Decision Support System for R&D Public Procurement
Current procurement of R&D services that meet conditions of the exemption
under article 16f of Directive 2004/18/EC, article 24e of 2004/17/EC or article 13j
of Directive 2009/81/EC.
What recent developments of the EU Procurement Directives bring?
•The exemptions for procurement of R&D services currently included in the new
Directives (which are the basis for PCP) will be maintained. Public procurers can
therefore continue to undertake pre-commercial procurement.
•The creation of innovation partnerships (article 29), a new type of procedure for
innovative procurement, which enable a public authority to enter into a structured
partnership with a supplier with the objective of developing an innovative product,
service or works, with the subsequent purchase of the outcome;
Page 22Digitalflow © All Rights Reserved
4. Further Developments
Innovation Partnerships (article 29)
• establishing a structured partnership for the development of an innovative product, service or works
• it shall provide for intermediate targets to be attained by the partner and provide for payment of the
remuneration in appropriate installments. Based on those targets, the contracting authority may
decide after each stage to terminate the partnership and launch a new procurement procedure for the
remaining phases, provided that it has acquired the relevant intellectual property rights.
• the contract shall be awarded in accordance with the rules for a competitive procedure with
negotiation and shall be awarded on the sole basis of the award criterion of the most economically
advantageous tender
• in selecting candidates, contracting authorities shall pay particular attention to criteria concerning the
tenderers’ capacity and experience in the field of research and development and of developing
innovative solutions.
• the value and duration of a contract for the purchase of the resulting supply, service or works shall
remain within appropriate limits, taking into account the need to recover the costs, including those
incurred in developing an innovative solution, and to achieve an adequate profit.
Page 23Digitalflow © All Rights Reserved
4. Further Developments
IPR issues: ownership rights of IPRs generated by a company during the PCP
contract should be assigned to that company. The public purchasers should be
assigned a free licence to use the R&D results for internal use as well as the
right to require participating companies to license IPRs to third parties
under fair and reasonable market conditions
Page 24Digitalflow © All Rights Reserved
4. Further Developments
INNOBOOSTER EVENTS TO EXPLORE THE OFFICE OF THE FUTURE
The Innobooster inLIFE project will hold three supplier engagement events in Graz
(Austria), Munich (Germany) and Helsinki (Finland), focusing on the “office of the future in
the public sector”. Participants of the Supplier Innovation Days will be companies
specialised in disciplines such as acoustics, ergonomics and furniture. The first event will
take place in spring 2014. The Federal Procurement Agency Austria is currently looking for
interested, innovative suppliers in office furnishings to attend. Selected participants will
meet other relevant actors in the field and have the chance to elaborate on and develop
future office solutions.
A workshop to define the office needs of the public sector will also be held, with procurers
from relevant ministries invited to participate. To further define needs, the results of an
innovative test buy that took place in an Austrian Ministry will be evaluated. The results of
the workshop, the test outcomes and the Supplier Innovation Days will be brought together
to serve as the basis for the innovative office tender.
Page 25Digitalflow © All Rights Reserved
4. Further Developments
Procurement Innovation is 'the tool' that enables the buyers
to push industrial R&D to its needs and accelerate innovation
in public services.
Our goal is to develop an end to end framework to
enable and manage outsourced supplier innovation.
Page 26Digitalflow © All Rights Reserved
4. Further Developments