Vasileios Tsanidis

European Commission

DG CNECT

Digital Single Market

Start-Ups and Innovation Unit (F3)

Advantages of investing in Innovation Procurement (PCP/PPI)

H2020 support

Pre-Commercial Procurement(PCP) to steer the development of solutions towards concrete public sector needs, whilst comparing/validating alternative solution approaches from various vendors Public Procurement of Innovative Solutions(PPI) to act as launching customer / early adopter / first buyer of innovative commercial end-solutions newly arriving on the market

Innovation Procurement = PCP + PPI / Complementarity

Why Innovation Procurement?

WIN-WIN FOR 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)

••• 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

• Get 20% better value for money products(US defense data)

• Use PPI also if no(more) R&D needed for procurement need

• Use a small budget PCP to de-risk a large budget PPI • PPI spec can be 'completely rephrased' benefiting from PCP lessons learnt

• Use conditions that encourage job creation 'in Europe' • Because PCP falls outside WTO rules

• Prevent foreclosing of competition & crowding out of private investment in R&D • Companies that are not financing their R&D via procurement/PCP (e.g. via

grants, own company resources) can still bid for deployment contracts/PPIs

• Facilitates access to procurement market for SMEs • Gradually increasing contract sizes, tasks, required manpower

• Stringent financial guarantee/qualification requirements:'no' in PCP,'ltd' in PPI

Complementarity / split between PCP and PPI and phased approach enables to…

COMMUNICATION COM(2016) 733

Europe's next leaders: the Start-up and Scale-up Initiative

••• 6

Acknowledges that : • public procurement contracts can support scaling up activities, but SMEs

are still under-represented in particular for so-called ‘above-threshold’ procurement.

• Public procurement, a €2 trillion market, represents a great potential for

start-ups/scale-ups to grow. Today, this potential is not yet sufficiently used. Compared to their weight in the economy, start-ups/scale-ups do not get a proportionate share of public contracts

• Better support to contracting authorities on using the market

opportunities and the modernised procurement tools is necessary to improve the uptake of innovative start-ups/scale-ups.

Encourages (inter-alia) the MS to: • to set ambitious innovation buying targets

Growing impact at European level

2013 2014-15 2011

FP7 & CIP: awareness raising/networking procurers

2012 2009 2008

Council & EP conclusions

on PCP Communication

Study measuring amount of R&D procured in all MS

First national PCPs started by procurers in MS without EU funding

First joint cross-border PCPs launched (FP7)

Increasing amount of EU funding for PCP & PPI

4,5€M in 2009-10, 43 €M in 2011-12, 94 €M in 2013,

130 €M in 2014-15, 130 €M in 2016-17

2010

Europe 2020: IU and DAE targets for PCP and PPI

EC Survey on state of implementation of PCP across MS (national legal

FW)

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

2016-17

Network national competence

centers on innov proc More info on these EU policy initiatives on innovation procurement

http://ec.europa.eu/information_society/newsroom/cf/dae/itemdetail.cfm?item_id=16605

Growing impact at Member State level

PCP and PPI in ESIF: PL, HU, IE, FR,…

EE, LT develop innov. proc. Strategy

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.

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

2016 2015

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 2020 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/regions do?

- Speed up public sector modernisation – improve quality and efficiency of public services with breakthrough solutions

- Get better value for money through cooperation - enable public sector around Europe to share cost + experience to buy new solutions that can respond to concrete public needs

- Address issues of common interest together – e.g. where interoperability and coherence of solutions across borders, pooling of resources or market defragmentation is required

- Create growth and jobs in Europe – help innovators bring European R&D to the market (the majority of R&D in H2020 funded PCPs should take place in Europe, ltd set of first test products can be bought in the PPI from companies in the PCP)

Why European cooperation on PCP-PPI?

••• 10

2016-17 H2020 budget in support of PCP & PPI: €130M

(or 0,8% of the Horizon 2020 budget for 2016-2017)

Calls in 8 areas to co-finance joint PCPs

1 in e-Health, 2 in ICT, 1 in space, 3 in security, 1 in climate

Calls in 4 areas to co-finance joint PPIs

1 in e-Health, 1 in ICT for ageing well, 1 in Energy, 1 in e-infrastructure

Calls in 4 areas to support networks of public procurers prepare future PCPs/PPIs

1 in ICT, 1 in Transport, 1 in Climate, 1 in security

Overview all calls: http://ec.europa.eu/information_society/newsroom/image/document/2016-40/overview_pcp-ppi_calls_2016-2017_sept_2016_17683.pdf

For comparison (Horizon 2020, FP7 & CIP calls included)

2016-2017: € 130 million 2014-2015: € 130 million 2013: € 94 million 2011-2012: € 42,9 million 2009-2010: € 4,5 million

Horizon 2020 support to innovation procurement

Overview EU funded projects doing PCPs (FP7/H2020) More info on: http://ec.europa.eu/digital-agenda/en/eu-funded-projects

SILVER (PCP)

Robotics ageing well

DECIPHER (PCP)

Services mobile health data

THALEA (PCP) NYMPHA-MD (PCP)

Mental care for bipolar disorders Tele-detection/care of ICU patients

HEALTH

AGEING

PCP in Human Brain Project

PCP on supercomputing / brain modelling

MAGIC (PCP)

Post stroke recovery

EMPATTICS (PCP)

Chronic disease self-management

RELIEF (PCP)

Pain self-management

ANTISUPERBUGS (PCP)

Detection of superbugs

LIVE INCITE (PCP)

Life style interventions

in perioperative care

PROEMPOWER (PCP)

Diabetes disease self-management

NIGHTINGALE (PCP)

Wearable sensors

STARS (PCP)

Stress reduction

Overview EU funded projects doing PCPs (FP7/H2020) More info on: http://ec.europa.eu/digital-agenda/en/eu-funded-projects

CHARM (PCP)

Traffic Management

V-CON (PCP)

Virtual road infrastructure modelling

PRACE 3IP (PCP)

Smart Textiles ICT for fire fighters

SMART@FIRE (PCP)

High Performance Computing

Cloud for Europe (PCP)

Cloud computing e-gov

PREFORMA (PCP)

Long term digital preservation

IMAILE (PCP)

Personalised learning needs TRANSPORT

SUSTAINABILITY

EDUCATION

SAFETY

E-GOV SELECTforCities (PCP)

Open City IT platform for cities

HNSciClouds (PCP)

Research Science Cloud

More powerful quadrupole magnets

QUACO (PCP) RESEARCH

MARINE-EO (PCP)

Earth Observation, marine-security

SMART-MET (PCP)

Smart Metering water sector

Overview EU funded projects doing PPIs (CIP/H2020)

More info on: http://ec.europa.eu/digital-agenda/en/eu-funded-projects

ECOQUIP & LCB-HEALTHCARE (PPI)

Low carbon healthcare

SPEA (PPI)

HAPPI (PPI)

PRO-LITE (PPI) Cities/Metro Lighting

Healthy Ageing

STOP AND GO (PPI) Telecare for elderly with multiple conditions

HEALTH

AGEING

SUSTAINABILITY

INNOBUILD (PPI) INNOBOOSTER (PPI)

Office Furniture & Lighting

Sustainable buildings

INNOCAT (PPI)

Sustainable catering

Sustainable buildings

TRANSPORT SYNCRO (PPI)

Smart roads communication Vehicles Fire Fighters

FIRED-UP (PPI)

PAPIRUS (PPI)

Sustainable construction

PROBIS (PPI)

Sustainable construction

THALEA II (PPI) Telemedicine for ICU patients

RITMOCORE (PPI) Remote care for Arrhythmia / Pacemaker patients

PPI4HPC (PPI)

High Performance Computing

EU funded CSAs/Networks of procurers (FP7/CIP/H2020) More info on: http://ec.europa.eu/digital-agenda/en/eu-funded-projects

HEALTH

AGEING

TRANSPORT

ICT

INSPIRE (Training PCP, link with VC)

E-health procurers

C4BI (networking)

Cities on healthcare

P4ITS (Preparing PPI)

Intelligent Transport Systems

TRANSFORM (Networking)

City/Regional transport

GREENS (prep PPI)

Energy agencies – CO2

SAEPP (preparing PCP)

Ambulance ICT

PRO4VIP (preparing PCP)

ICT for Visually impaired

EPP-eHealth (preparing PCP/PPI)

Cities on e-health

Cloud computing research cloud

PICSE (Preparing PCP/PPI)

Photonics broadband

COMPLETE (Preparing PPI)

SUSTAINABILITY

WATER PIPP

Water procurers

EURECA (prep PPI)

Green data centers

CEPPI 2 (prep PPI)

Cities – energy consumption

SPP regions (capacity building)

PPI – sustainability

InnProBio Forum (capacity building)

PPI – bio based products

BRODISE

Cities brown field

decontamination

PPI4WASTE

Authorities

Waste management

Ongoing and completed PCP procurements

• 16 PCPs are busy - or have completed - procuring by now

- SILVER (Robotics for elderly care)

- THALEA (Telemedicine for intensive care unit patients at increased risk)

- SMART@FIRE (Smart protective equipment for fire fighters)

- Human Brain Project (High Performance Computing for brain simulation)

- Cloud for Europe (Cloud computing for governments)

- DECIPHER (Mobile health services)

- V-CON (Virtual construction of road infrastructure)

- CHARM (Traffic management)

- PRACE 3IP (Energy efficient supercomputing)

- PREFORMA (Long term digital preservation)

- IMAILE (Personalised e-learning solutions)

- NYMPHA-MD (Mental care for bipolar disorders)

- HNSciCloud (Science cloud platform for research community)

- QUACO (Quadrupole magnets for large hadron collider)

- MAGIC (Post stroke recovery)

- SELECT4Cities (Internet of Everything platform for Cities)

HBP PCP doesn't result from a PCP call. HBP decided itself to implement a PCP in the HBP research project.

PC

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ted

PC

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Further PCP procurements that are in preparation

• 9 buyers groups are in open market consultation (preparing a PCP)

- RELIEF (Pain self-management)

- EMPATTICS (Chronic disease self-management)

- MARINE-EO (Marine earth observation)

- ANTISUPERBUGS (Robotics for elderly care)

- STARS (Health stress reduction)

- LIVE INCITE (Lifestyle interventions in perioperative medicine)

- NIGHTINGALE (Wearable sensors for safer patient monitoring/care)

- PROEMPOWER (Diabetes patient empowerment)

- SMART.MET (Smart water metering)

PC

P in

Pre

para

tion

Achieved market engagement

• Open Market Consultations - Involving between 70 to 300 companies and researchers per PCP

- Broaching the views of companies and researchers from all over Europe and beyond in preparation of the upcoming PCP procurement

• Call for Tenders - Tender docs downloaded typically between 50 to 300 times

- Nr of offers received typically between 10-48 (4-7 for specialised/low budget PCPs)

- Offers received from all over Europe and beyond

• Contract award - 73 procurers cooperating in the 16 buyers groups

- 104 contracts awarded in total

- Winning bidders involving 147 companies and 20 universities/research centra

- Total value of the PCP procurements: between € 450.000 and € 9.000.000

- Contract values for phase 1: between € 15.000 and € 180.000 (per contractor)

- Contract values for phase 2: between € 20.000 and € 900.000 (per contractor)

- Contract values for phase 3: between € 65.000 and € 2.700.000 (per contractor)

Info about impacts of the procurements itself

• Opening a route-to-market for new players/SMEs - 71% of contracts won by SMEs (SME lead bidder, bidding alone or with partners)

- Compared to 29% average in public procurements across Europe

Mostly small young SMEs: 23% below 10 people, 58% below 50 people, 51% less than 10 years old

• Helping also larger market players bring products to the market - 18% of contracts won by large companies as single bidder

- 11% of contracts won by consortia of larger companies and SMEs bringing innovative products together to the market

• Relevance to universities & bringing scientific results to market - 28% of winning contracts have also a university/R&D center partner in consortium

- Winning SMEs are also often university start-ups

• Stimulating cross-border company growth - 34,6% of contracts won by bidders that are not from a country of any of the

procurers in the buyers group (e.g. DE company working for UK+NL procurers)

- Compared to 1,26% average in public procurements across Europe

• Creating growth and jobs in Europe – 98,7% of bidders do 100% of R&D activities for the PCP in Europe

(2 have committed to do minimum 68% resp. 85% of R&D in Europe)

• Budget efficiency / Reducing the R&D risk for procurers Encouraging commercialisation of results by vendors – Leaving IPR ownership rights with contractors reduced the R&D cost for procurers

on average with 50% as vendors see wider commercialisation opportunities -> PCPs can get twice as much R&D done for same budget as R&I action

• Improving the quality and efficiency of public services – All completed PCPs have delivered innovative solutions that achieve the expected

quality and efficiency requirements set out initially by the procurers

– 60% of procurers use PCP to obtain more open, interoperable solutions

– Procurers from 50% of PCPs that completed second half of 2016 have already deployed the small test series developed during the PCP and are preparing wider commercial deployment with an enlarged buyers' group (preparation involving e.g. certifying solutions in preparation of a follow-up PPI)

Info about impacts of the procurements itself

• Separating PCP (R&D) from PPI (commercial deployment) and using a phased PCP approach - Opens the market for small players/SMEs (smaller gradually growing contract sizes)

- Enables procurers to steer industry R&D to meet their needs, achieve desired

quality and efficiency improvements in public services and reduce vendor lock-in

- Stimulates cooperation with universities and larger companies

• Joint cross-border PCP procurement – Stimulates cross-border company growth

– Facilitates the creation of more open standards based interoperable solutions

• Leaving IPR ownership rights with contractors – Reduces the cost / risk of going for an innovative solution for procurers

– Encourages wider commercialisation of solutions by vendors

• Using a place of performance condition in PCPs – Can effectively stimulate growth and job creation in Europe

Lessons learnt

Geographic location winning bidders & procurers

(4)

(22)

(14)

(19)

(9)

(2) (6) (5)

(20)

(2)

(17)

(4)

(2)

(1)

(2)

Companies

in winning bids

(nr/country)

Procurers

(nr/country)

Universities

in winning bids

(nr/country)

(2)

(3)

(2)

(9)

(1)

(1)

(1)

(4)

(3)

(1)

(1)

(1)

(1)

(1)

(1)

(7)

(5)

(10) (1)

(4)

(1)

(6)

(8)

(2)

(9)

(1)

(1)

(5)

(6)

(1)

(1)

(1)

(4)

(1)

(1)

H2020 support to

Innovation Procurement

PCP/PPI Actions + Coordination and Support Actions

(CSAs)

Coordination and Support Actions (100% funding rate): Support only coordination activities e.g. preparation of a PCP or PPI by a

group of procurers (identifying common challenges, open market consultation with industry before initiating a concrete PCP or PPI etc)

CSAs do not provide EU co-financing for an actual PCP or PPI procurement

PCP Actions (90% funding rate): Provide EU co-financing for an actual PCP procurement (one joint PCP

procurement per action) + for related coordination and networking activities (e.g. to prepare, manage and follow-up the PCP call for tender)

PPI Actions (35% funding rate): Provide EU co-financing for an actual PPI procurement (one joint PPI

procurement per action) + for related coordination and networking activities (e.g. to prepare, manage and follow-up the PPI call for tender)

Forms of support

! New ! ••• 24

In addition, other entities can also participate

- In buyers group: also private/NGO procurers providing services of public interest

- In coordination/networking activities: any private/public type of entity (e.g. experts, end-users, certification bodies that assist procurers) that has no conflict of interest (no potential suppliers of solutions for the PCP/PPI)

Public procurers are contracting authorities or contracting entities as defined by the EU public procurement directives

MS = Member States

AC = Countries Associated to Horizon 2020

Minimum 3 independent participants from 3 different MS or AC, of which minimum 2

public procurers (buyers group) from 2 different MS or AC

PCP and PPI actions – participation requirement

••• 25

Buyers group Beneficiaries that provide the financial commitments for the PCP or PPI.

Min 2 public procurers from 2 different Member States or associated countries

Shall represent the demand side for the innovations, a critical mass of procurers that can trigger wide implementation of the innovations, shall aim for ambitious quality/efficiency improvements in area of public interest.

Lead procurer Public procurer in project appointed by the buyers group to lead and

coordinate the PCP or PPI. Can be part of buyers group or not.

Subcontractors Successful tenderers, selected by the buyers group & lead procurer as result

of the PCP or PPI call for tender, to provide the R&D services (PCP) or innovative solutions (PPI).

They do 'NOT' enter the grant agreement with the EC.

PCP and PPI actions - Role different actors

••• 26

Preparation stage Preparation of one joint PCP or PPI procurement per action

Open market consultation /verification of market readiness to meet procurement need

Outcome

Agreed common tender specifications + Joint procurement agreement

Confirmation of availability of financial commitments to start PCP/PPI

Execution stage Joint procurement of the R&D services (PCP) or innovative solutions (PPI)

Follow-up of suppliers and validation of results

PCP: Validation/comparison of the performance of the competing PCP solutions against jointly defined criteria in real-life operational conditions

PPI: Evaluation of results of deploying and operating the procured solutions in real-life operating conditions

Dissemination/exploitation of results

Other coordination/networking activities relevant to the action (e.g. preparation of follow-up PPI, contribution to standardisation / regulation / certification)

PCP and PPI actions - Eligible activities

••• 27

Reimbursement rate direct costs: Max 90% respectively 35% of eligible costs for PCP respectively PPI actions

Eligible direct costs to carry out eligible activities defined in WP include:

- Price of the R&D services (PCP) or innovative solutions (PPI) procured (if procurement conducted in compliance with requirements in Annex E WP)

- Eligible coordination and networking activities

- May include in-kind contributions (e.g. third parties putting resources at disposal of beneficiaries e.g. for testing of solutions)

- VAT is an eligible cost unless for beneficiaries that can deduct it

Requested reimbursement for coordination and networking activities can comprise max 30% (for PCP) / max 50% (for PPI) of total requested grant

Plus 25% for indirect costs. But, no indirect costs on the price of the

PCP/PPI procurement or on 3rd party resources not used at the beneficiary premises

Pre-financing: Yes, 1st pre-financing at start project for costs for preparation

stage, 2nd pre-financing before execution stage for rest of costs (incl. call for tender)

PCP and PPI actions – EU contribution

••• 28

eafip INITIATIVE

Toolkit and Help-desk

Free local assistance

Identification of key procurers in the ICT

sector

Workshops&

Conferences

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EAFIP TOOLKIT

The eafip Toolkit aims to provide support to policy makers in designing PCP and PPI strategies, and to procurers and their legal departments in implementing such procurements. It will consist of three modules:

Module 1: A strategic module addressed to policy makers, providing economic and case evidence about the impacts and benefits of PCP and PPI, together with concrete guidance on how to embed PCP and PPI into innovation strategies;

Module 2: An operational module addressed to public procurers aimed at clarifying the pre-requisites and key steps to design and implement an innovation procurement process (PCP and PPI); and

Module 3: A legal / operational module addressed to legal services aimed at clarifying legal issues and provide practical ‘how-to’ guidelines, supported by templates.

••• 30

••• 31

For more detailed info on Innovation Procurement please the

following link:

• http://ec.europa.eu/digital-agenda/en/innovation-procurement

• where you can also find the brochure on the PCP/PPI projects that are currently EU Co-funded

• http://ec.europa.eu/digital-agenda/en/news/innovation-procurement-power-public-purse

European Assistance for Innovation Procurement (Eafip):

http://eafip.eu/

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Thank you very much for your attention

Vasileios Tsanidis Dr.Jur Start-ups and Innovation Unit (F3)

DG CNECT European Commission

Vasileios.Tsanidis@ec.europa.eu

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