Interim Case Study Report - CEPPI€¦ · FCP provides a practical step by step recognised as good PPI practice. The process of FCP from identification through to procurement usually

Interim Case Study Report

January 2017

Report Interim CEPPI Case Study Report | 2

Contents

1. Introduction

2. Capacity building, awareness raising and action learning in innovation

procurement

3. Identification of energy Hot Spots and intervention targets

4. Interim Case Study Reports: Castelló (Spain), Valencia (Spain), Wrocław

(Poland) Budapest (Hungary), Birmingham (UK)

5. Conclusions


Coordinated energy-related PPIs actions for cities Birmingham (UK), Budapest (Hungary), Castelló & Valencia (Spain) and Wrocław (Poland) are joining efforts to look for more sustainable energy solutions through a pro-innovation procurement approach.

The City Authorities are supported by enabling partners with expertise in innovation procurement (JERA Consulting), sustainable energy and energy efficiency (Optimat and STZ) and a European local authority network with access to a wide range of skill sets and connections (ICLEI).

The five cities aim to demonstrate that by selectively intervening in scheduled public tenders, energy consumption can be reduced, the production of renewable energy increased and, consequently, GHG emissions decreased. The challenge is for the partners to deliver energy savings of 33GW/h as a result of the projects interventions. At the same time the cities aim to increase awareness and capacity in the adoption of innovation procurement approaches.

CEPPI is an EU-funded three-year project which started in April 2015 and is funded by the European Commission’s Horizon 2020 Programme. This interim report covers the period April 2015-November 2016.

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1. Introduction The potential for Cities in Europe to both reduce energy consumption, take a more strategic and sustainable approach to energy management and accelerate the rate of carbon reduction is considerable. Cities account for three quarters of the energy the world uses (ARUP 2015). They are in the frontline of a revolution in the ways we generate, distribute and use energy. Not only are Cities intense users of energy, they are facing major challenges such as high levels of air pollution that impact the health of their citizens and their local economies. In addition, many public organisations, including municipal authorities and hospitals, are facing intense financial pressures.

New solutions, technologies and services will be needed to address these challenges, yet all too often these new solutions fail, or are slow, to reach the market. There are two common and inter-related market failures that hinder the uptake of innovative solutions by municipal authorities:

• Information failure: the lack of knowledge about new and emerging solutions and innovative technologies that affect the ways that energy can be generated, distributed and used to meet the unmet and future needs of city authorities

• Demand side procurement failure: the lack of a credible demand from municipal authorities for innovative solutions that meet the unmet and future needs of city authorities as opposed to yesterday’s answers to yesterday’s problems

The CEPPI aims to explore how European cities can address demand side procurement failure and make progress towards achieving progressive energy-related objectives though the strategic use of public procurement. The project will explore what can enable or hinder the adoption of proven innovation procurement methods and green or sustainable procurement.

This interim case study report aims to present a concise overview of the CEPPI project approach and progress made by the project partners in Cities so far, including a selection of the learning and insights gained.

Four types of project activities have been carried out during the first phase of the project:

• Capacity building, awareness raising and action learning in innovation procurement • The identification of energy hot spots • The identification of target energy-related procurements • Intervention in target procurements to achieve better outcomes

This interim report provides details of the work carried out under each of these actions and a summary of the key learnings from the project since its launch until November 2016.


2. Capacity building, awareness raising and action learning in innovation procurement Introduction

Capacity building in innovation and sustainable procurement and the use of procurement as a strategic tool to implement energy policy and support market development for innovative solutions is an important part of this project.

The capacity building programme includes the following features:

• Action learning through implementation of a PPI project • Adoption and adaptation of proven PPI methods • Targeted to address identified gaps between standard and PPI procurement practices • Expert project specific coaching • Peer learning exchanges • Training of local facilitators and ‘train the trainer’ actions

The five Cities involved represent a range of cultures and regulatory frameworks, and have different levels of experience in the adoption of sustainable / green and innovation procurement.

PPI Survey

At the start of the project a survey was carried out to gain a better understanding of the procurement processes, organisational structure and experience of innovation procurement in each of the City Authorities. The survey encouraged CEPPI cities to consider their strengths and weaknesses relating to PPI, as well as set a baseline against which to review progress throughout the project.

The survey provided an ideal opportunity to get an understanding of how procurement was managed and organised and the level of awareness and capability in use of innovation procurement methods. In addition, the survey looked at the underlying environmental, energy and innovation policy framework and the level of influence that the City partners had on their supply chain and the wider network of energy users in the City. The findings provided some valuable insights including:

• Achieving cost savings through energy efficiency was a key motivating factor • Procurement cultures were considered to be careful, traditional, professional and

conservative


• Awareness of innovation procurement was generally low • All partners had some experience of adopting approaches that are commonly used in

support of innovation procurement, such as market engagement, albeit not explicitly for the purpose of stimulating innovative solutions

Cities were asked to reflect on the main barriers, drivers and enablers to the adoption of innovation procurement within their organisation.

The barriers identified ranged from those that the project could address, such as lack of knowledge, experience and skills, to those over which the project had no or little control, such as strict regulations and procedures and lack of staff time. The majority related to cultural and information barriers, such as fears about added costs and lack of flexibility in adoption of new methods and approaches.

The main barriers identified are shown below.

The most significant drivers for the adoption of innovation procurement were identified as cost saving, increasing quality of services and increasing the organisations ability to take on / demonstrate a leadership role in innovation procurement and / or carbon reduction.

The most significant enablers of innovation procurement were seen as increased knowledge, know-how, training and access to case studies demonstrating methods and benefits of innovation procurement.

Potential barriers to PPI identified in the survey

• Fear of novelty

• Resistance to change

• Lack of experience

• Lack of training, knowledge and understanding

• Lack of pro-innovation methodologies

• Lack of knowledge or access to case studies

• Time and resource problems

• Lack of or uncertain budgets

• Innovation perceived as more expensive

• Established administrative procedures

• Strict Public Procurement regulation

Report

Innovation procurement in CEPPI

The innovation procurement interventions being takenthe use of the Forward Commitment Procurement (FCP) model of innovation procurement which has been tried and tested in several European countries and regions. The FCP model identifies three distinct stages of the innmanage the perceived risk of innovation procurement on the part of customers and suppliers.

Stage 1: Customers establish an accurate understanding of their unmet and future needs

Stage 2: Customers communicate tsuppliers

Stage 3: Customers provide an opportunity for suppliers to offer new soluplaying field with established products or services

FCP provides a practical step by step recognised as good PPI practice.

The process of FCP from identification through to procurement usually begins several years before the solution is needed, allowing time for stakeholderensuring that suppliers have sufficient time to innovate

Identificationengagement

Interim CEPPI Case Study Report |

Innovation procurement in CEPPI

The innovation procurement interventions being taken in CEPPI are based on learning from the use of the Forward Commitment Procurement (FCP) model of innovation procurement which has been tried and tested in several European countries and regions. The FCP model

inct stages of the innovation procurement process and was designed to manage the perceived risk of innovation procurement on the part of customers and suppliers.

Customers establish an accurate understanding of their unmet and future needs

icate their needs early and in an accurate and

Customers provide an opportunity for suppliers to offer new solutions on an equal with established products or services

FCP provides a practical step by step process incorporating the key features and recognised as good PPI practice.

The process of FCP from identification through to procurement usually begins several years before the solution is needed, allowing time for stakeholders and market eensuring that suppliers have sufficient time to innovate – innovation, after all

Market

engagement

Pro-innovation

procurement

Interim CEPPI Case Study Report | 7

in CEPPI are based on learning from the use of the Forward Commitment Procurement (FCP) model of innovation procurement which has been tried and tested in several European countries and regions. The FCP model

ovation procurement process and was designed to manage the perceived risk of innovation procurement on the part of customers and suppliers.

Customers establish an accurate understanding of their unmet and future needs

and convincing way to

tions on an equal

ey features and processes

The process of FCP from identification through to procurement usually begins several years and market engagement, and

after all, takes time.


However, this is not always practical or possible. In the case of many city authorities annual budget planning means that only procurements for the year ahead are approved. Often, procurements are only considered weeks and months rather than years ahead. Additionally, central procurement departments are often ‘presented’ with procurements at an advanced stage of development, limiting the potential of these professionals to introduce new PPI methods. Introducing the lead or budget-holding departments that commission the services or are responsible for buying the goods to the potential innovation procurement has been identified as a key success factor.

In addition, innovation procurement methods were new and largely unfamiliar to those procurement and budget owners that needed to be engaged. Indeed, many buyers introduced to PPI perceived it as a seemingly complex and time consuming process. The term ‘innovation’ contributed to this perception of additional risk.

This meant that CEPPI needed to take a practical approach, adapting the innovation procurement tools and processes to fit the situation on the ground. CEPPI has therefore set out to show that, regardless of the timescales involved, you can always do something to support innovation in the supply chain and encourage suppliers to bring forward more energy efficient solutions. The tool being developed and tested to enable this is the CEPPI Action Plan Template.


CEPPI Action Plan Template

The tool aims to provide a checklist of possible actions based on FCP and PPI good practice to fit the circumstances on the ground for each tender intervention. For example, a short time frame, a nervous buyer unfamiliar with PPI, purchases for goods and services that is retendered on a regular cycle, such as maintenance, catering and waste contracts. It can also provide a mechanism for partners to plan and record their awareness raising activities and tender interventions.

The template is still in development and will continue to evolve to incorporate the experience of the partners and as the state of the PPI art progresses. The draft template can be found in Annex 1.

The framework for the Action Plan Template includes: • Preparation and support actions • PPI Actions • Supporting innovative suppliers

Capacity building and Peer Learning

Engaging stakeholders in the CEPPI process required the local CEPPI facilitators to introduce new procurement approaches to colleagues and stakeholders, which was supported and enabled by a capacity building programme including training and peer learning workshops, action learning and mentoring.

At the start of the project, the CEPPI Partners defined the two key terms of innovation and innovation procurement.

Defining key terms

INNOVATION

The process of translating an

idea or invention into goods

and services for which

customers will pay.

INNOVATION

PROCUREMENT

Undertaking procurement in a way

that stimulates the supply chain to

invest in developing better, more

energy efficient and innovative

goods and services to meet the

unmet needs of the City Authorities

Report

Case examples from other projects tangible evidence that it is possible to:

• Change procurement practices to deliver better outcomes• Stimulate the supply chain to bring forward, and invest in, innovative products and

services • Deliver efficiency, cost savings,

approaches • Overcome regulatory, cultural and process barriers • Obtain better and more sustainable outcomes

product/service use – innovation procurement delivers.

The PPI Peer Learning Materials created for these workshops are available on the project website: http://ceppi.eu/guidance

Below are some key points and learning highlights discussed in the workshops.

The Buyer Supplier Paradox: limit themselves to buying what is avresult? ‘more of the same’ and little room for innovation. CEPPI aims to change this:

Changing the way we engageTypical approaches to public procurementThis stifles innovation. CEPPI actions aim to break down this barrier in a way that is consistent with procurement regulations. The new engagement.


from other projects were presented and discussed. These examples provided tangible evidence that it is possible to:

Change procurement practices to deliver better outcomes ulate the supply chain to bring forward, and invest in, innovative products and

cost savings, quality and sustainability using innovation procurement

Overcome regulatory, cultural and process barriers and more sustainable outcomes with additional costs over the lifetime of

innovation procurement delivers.

The PPI Peer Learning Materials created for these workshops are available on the project http://ceppi.eu/guidance-learning.


Suppliers respond to customer demand and Customers tend to limit themselves to buying what is available – rather than asking for what they need. The result? ‘more of the same’ and little room for innovation. CEPPI aims to change this:

engage with suppliers is a cornerstone of innovation procurement leave little room for customer –

This stifles innovation. CEPPI actions aim to break down this barrier in a way that is consistent with procurement regulations. The new procurement regulations positively encourage market


were presented and discussed. These examples provided

ulate the supply chain to bring forward, and invest in, innovative products and

quality and sustainability using innovation procurement

s over the lifetime of

The PPI Peer Learning Materials created for these workshops are available on the project


Suppliers respond to customer demand and Customers tend to rather than asking for what they need. The

result? ‘more of the same’ and little room for innovation. CEPPI aims to change this:

stone of innovation procurement: supplier exchange.

This stifles innovation. CEPPI actions aim to break down this barrier in a way that is consistent y encourage market


The importance of the identification stage: The FCP innovation procurement method starts with an identification phase in which the customer identifies unmet needs or opportunities within the organisation that would benefit from innovation. The customer then engages and consults the relevant stakeholders, and embeds the project within the organisation.

Don’t ask, don’t get: The importance of asking for what you want and need rather than what you think is possible or you can afford. However, to get an accurate picture of unmet needs requires stakeholder and end-user engagement.

Stakeholder engagement: The importance of understanding the needs of all the customers and end users. The purpose of stakeholder engagement is to gather practical insights into the current situation surrounding the procurement in question, how requirements may need to change to adjust to future conditions and how it could be improved.

Consultation and engagement also serves to engage staff in the acceptance of new solutions. Identifying and enrolling the necessary stakeholders was an essential starting point for the pilot projects.

The enrolment of key stakeholders helps to:

• Establish willing participation in the adoption of new procurement approaches • Enable the accurate definition of the unmet needs and supply requirement • Ensure all opinions are heard • Provide a forum for assumptions to be challenged and the status quo questioned • Support acceptance of new solutions and technology

Stakeholder engagement works to underpin the project’s success and to create a firm foundation for the project implementation within the organisation, ensuring that the unmet need and requirement are defined accurately and fostering a willingness to accept new approaches and solutions.

Energy efficiency is not the whole story: Customers need solutions that work well and are delivered on time. Innovation can deliver much more than energy efficiency. For example, in the case of street lighting, energy efficiency is important but suppliers can also deliver additional benefits and prevent implementation problems by understanding what the different stakeholders need including safely and security, preventing light pollution, enhancing the cultural environment and local architecture, providing smart city connectivity etc. The case for energy efficiency can be improved considerably and its appeal broadened if these additional benefits can be taken into account

Report

Operational energy efficiency manufacture, disposal, maintenance etc. is also part of the equation. Introducing this concept into a market engagement exercise and / or outcome specification and ultimately evaluation of offers invites the possibility for suppliers to demonstrate how they are working to reduce embedded energy and carbon

The value of outcome based specifications:greatest when buyers specify what they want in terms of outputs or outcomes. An outcome based specification focuses on the desired outcomes that are required from goods or services rather than a detailed technical specification. This allows providers scope to propose innovative solutions that might not have occurred to the delivery team.

What is the difference between innovationprocurement and sustainable or green procurement?

To illustrate this, an example from a hospital lighting PPI project was presented. If you ask a for an energy efficiency bedhead lamp that is all you get; if you ask for want, including energy efficiency, this gives suppliers scope to supply scope. It is also easier to engage the budget holder who will see energy effibut not his or her main focus and may value other benefits more highly.the difference in what is possible when using an oand accurate understanding of unmet needs and requireenergy efficient lamp on the market. users, not simply those concerned with energy efficiency or sustainability.

What makes a project well suitedagreed as the combination most likely to result in a successful pilot project:

• Genuine, accurate, credible requirement• Related to a real procurement• Energy saving potential• Scope for innovation, plus • Scope for cost saving, plus• Ability to influence the procurement.


Operational energy efficiency is not the whole story: energy and carbon involved in manufacture, disposal, maintenance etc. is also part of the equation. Introducing this concept into a market engagement exercise and / or outcome specification and ultimately evaluation of

es the possibility for suppliers to demonstrate how they are working to reduce embedded energy and carbon over the product or service lifecycle.

utcome based specifications: The potential for finding an innovative solution is yers specify what they want in terms of outputs or outcomes. An outcome

based specification focuses on the desired outcomes that are required from goods or services rather than a detailed technical specification. This allows providers scope to propose

vative solutions that might not have occurred to the delivery team.

he difference between innovation sustainable or green

To illustrate this, an example from a hospital lighting PPI project was presented. If you

a for an energy efficiency bedhead lamp that is all you get; if you ask for what you want, including energy efficiency, this gives suppliers scope to supply against this broader scope. It is also easier to engage the budget holder who will see energy effibut not his or her main focus and may value other benefits more highly. The example sho

in what is possible when using an outcome based specification based on a full and accurate understanding of unmet needs and requirements versus asking for the most

efficient lamp on the market. Innovation procurement addresses all the needs of users, not simply those concerned with energy efficiency or sustainability.

s a project well suited for CEPPI intervention? The following characteristics were agreed as the combination most likely to result in a successful pilot project:

Genuine, accurate, credible requirement, plus eal procurement, plus

Energy saving potential, plus plus

Scope for cost saving, plus influence the procurement.


energy and carbon involved in manufacture, disposal, maintenance etc. is also part of the equation. Introducing this concept into a market engagement exercise and / or outcome specification and ultimately evaluation of

es the possibility for suppliers to demonstrate how they are working to reduce

The potential for finding an innovative solution is yers specify what they want in terms of outputs or outcomes. An outcome

based specification focuses on the desired outcomes that are required from goods or services rather than a detailed technical specification. This allows providers scope to propose

against this broader scope. It is also easier to engage the budget holder who will see energy efficiency as valuable

The example shows utcome based specification based on a full

asking for the most Innovation procurement addresses all the needs of

users, not simply those concerned with energy efficiency or sustainability.

he following characteristics were agreed as the combination most likely to result in a successful pilot project:

Report

Market engagement: Market engagement is a cornerstone of innovation procurement.

The market engagement phase is a ‘preprocurement’ activity i.e. it takes place before a formal procurement procedure begins. Its purpose is to assess the appetite, capacity and capability of the market to respond to the customer’s requirements.

Stopping the procurement conveyor beltchallenge the automatic renewal of tenders with ‘more of the same’, or ‘more of the same but a bit more energy efficient’.

The example of Multi-Functional(MFDs) for printing, scanning and copyinga new premise would be that the most energy-efficient MFD is one that doesexist. The innovation discussion therefore shifts to consider how MFDs are used, why, hot spots of use and inviting stakeholder and supplier engagement on future alternatives, e.g. digital solutions, paperless office etc.


Market engagement is a innovation procurement.

The market engagement phase is a ‘pre-procurement’ activity i.e. it takes place before a

nt procedure begins. Its purpose is to assess the appetite, capacity and capability of the market to respond to the customer’s requirements.

conveyor belt: Meaning, the need to move the conversation and newal of tenders with ‘more of the same’, or ‘more of the same but a

Functional Devices for printing, scanning and copying:

would be that the most efficient MFD is one that doesn’t

The innovation discussion therefore shifts to consider how MFDs are used, why, hot spots of use and inviting stakeholder and supplier engagement on future alternatives, e.g. digital solutions,


eed to move the conversation and newal of tenders with ‘more of the same’, or ‘more of the same but a


3. Identification of energy ‘Hot Spots’ and intervention targets One of the first actions of the project was to identify procurements that were suitable targets for CEPPI intervention. This involved firstly understanding the energy-use profile of the Cities by carrying out a baseline study of energy consumption and identifying any energy ‘hot spots’. In parallel this activity involved exploring the different procurements and tenders that were in the pipeline to identify opportunities for energy saving in planned procurements and the key stakeholders involved.

At the outset, an opportunity for a CEPPI procurement intervention was defined as one having significant energy saving potential, scope for influence with the people involved and taking place within the life of the project.

Energy baseline

Each City produced its own report, looking at: the supporting low carbon/energy efficiency policies in place; sources of energy inputs; the breakdown of energy used by different services (and therefore where the energy ‘hotspots’ are); energy efficiency success stories and; opportunities for Public Procurement of Innovation interventions (both short and longer term).

In addition to the baselining of the energy used (and directly paid for) by the City Authorities, the report also sought to identify indirect energy hot spots occurring due to suppliers providing goods and services. The reports also identified significant energy using organisations in the City area where potential collaboration on energy efficiency could help meet City-wide low carbon/ energy reduction targets.

Identification of CEPPI intervention

opportunity

Base line energy

studies

Energy hot

spots

identified

Scope for

influence

assessed

Procurement

opportunities

Potential

procurements

identified

Stakeholders

identified


The reports highlighted a well-developed range of supporting policies and strategies already in place at the City level. These focused on low carbon, energy efficiency and renewable energy, very much aligned with the EU 2020 climate and energy agenda.

The direct energy baselining of each City Authority highlighted a range of energy hot spots. As expected these represented a range of areas depending on the extent of direct service provision. For example, some City Authorities are directly involved in provision of district heating systems and public transport systems (both significant energy using services) whilst for others these services are outsourced and delivered by the private sector.

Street lighting was a key energy hot spot (and procurement opportunity) identified by most of the City Authorities – in one case street lighting represents two-thirds of total direct primary energy use. Examples from other European Cities suggest that potential energy savings from more energy efficient street lighting can be 50% to 80%. This can be achieved through replacement with more efficient bulbs, improved control of timing of operation and reduced maintenance and disposal costs cost (due to longer lifespan of bulbs). Consideration of the procurement opportunity represented by more efficient street lighting requires the use of a whole life costing approach to account for the saving in energy costs and acknowledgement that the comparative ‘business as usual’ case is likely to involve increasing unit energy costs.

Initial investigations in this area by one of the CEPPI partner Cities has identified a wider range of factors to be considered including security and safety, quality of light, light pollution and potential to add value to investments by considering coordinating street lighting investments with improving e-mobility infrastructure by, for example, combining vehicle recharging points with street lights.

The Energy Opportunity Reports also identified other short term procurement opportunities around common energy hotspots including multi-functional devices, with two of the City partners (BCC and Castello) looking at this area as an opportunity for PPI intervention. In addition to this City partners have identified a range of opportunities including: heat recovery from energy from waste; energy efficient building refurbishment; co-operation of district heat networks to increase renewable energy sources, amongst others.

Several situations arose during the development of the reports where energy hot spots were identified but no short-term procurement opportunity existed. In these cases, ‘hot spot action plans’ are proposed to help engage with decision makers, show what is possible, establish the steps necessary to reduce energy use and identify the potential role of PPI in enabling this reduction.


The reports highlighted some existing engagement with the supply chain in promoting a range of sustainability objectives (including carbon reduction) but little data were available to help identify specific hot spots related to the procurement of goods and outsourced services.

Other significant energy users were identified by some of the City partners and these included hospitals, prisons, universities and public sector rented housing sector. In some cases, data was available on potential heat demand from specific facilities as part of investigations about collaborating to expand district heating networks. The reports highlighted good practice examples of groups of stakeholders in the City boundaries who meet to discuss how they will achieve low carbon targets and this offers a good mechanism by which CEPPI partners can engage with and influence other significant energy users in their local area.

Finally, the reports identified the scale of the energy saving contributions of each City Authority to the combined 33GWh/a energy reduction target, relative to their overall energy use. This ranged from 0.3% to 3% of total direct primary energy use for the City Authorities.

To achieve these savings the City partners will continue to work on a range of shorter term and longer term PPI interventions associated with energy hot spots, building internal capacity in this area.


Definitions

Energy efficiency

Energy efficiency is typically considered at the level of individual devices (eg a streetlight) and means the device uses less energy to operate than a less efficient device. Energy efficient devices are therefore usually less costly to operate. However, they may be more expensive to buy and may contain hidden energy costs in manufacture, maintenance and at end of life. The importance of these later aspects are recognised in the EU Ecodesign working plan (2016- 2019) and the proposed update to the Energy Efficiency Directive. They are not well recognised in procurement practice.

Energy efficiency can also be a property of the whole energy system including generation (e.g. decentralised combined heat and power), distribution (e.g. transmission losses) and use (e.g. smart homes). With regards to use, the energy efficiency of non-domestic and residential buildings is a major opportunity in new-build and, more substantially, through retrofitting existing buildings by modifying the thermal performance of the building envelope, for example

Sustainable energy

Sustainable energy is energy that society can use indefinitely without ill effects. Sustainable energy must be available, non polluting, and affordable if it is to meet society’s requirements. Renewable energy is often described as sustainable but its cost and intermittency can be a problem and its deployment implies changes to the whole energy system. Energy efficiency is a key component of achieving a sustainable energy system at reasonable cost.

Renewable energy

Renewable energy is energy derived from sources that have an essentially unlimited life. Included in the definition are wind, solar, tidal and biomass. Not all renewable energy is clean with pollution from biofuels being a particular problem and the sustainability of biomass can also be questionable when it competes with food or biodiversity considerations.

Carbon reduction

Carbon reduction means the reduction in the emission of carbon dioxide and other greenhouse gases (GHG). It is a critical problem for the world as it is causing global warming. Energy generation form fossil fuels is key contributor to manmade emissions of GHG’s and the reduction of these GHG emissions (“carbon reduction”) is a key target of EU policy. Use of fossil fuels is regarded as unsustainable for this reason and a transition to renewable energy is a essential for a “low carbon” economy. However, energy efficiency has a vital role to play in the carbon reduction transition.

The carbon emissions embodied in production, maintenance and disposal of goods and services are frequently not properly considered in procurement decisions.


4. Interim Case Study Reports

This section provides a summary report of the five Cities in applying their new PPI knowledge in practice. The summary reports summaries the activities undertaken, the key learning points and next steps.

Castelló, situated on the Costa del Azahar (Spain), is a city of medieval origin. It preserves its provincial charm and its endearing traditions, while keeps on developing and boosting innovation.

The municipality is mainly responsible for procurement but there are some structural investments that are responsibility of the regional government. Procurement is governed by national and regional legislation.

Castelló has a commitment to carbon reduction, focused on reducing the energy consumption in buildings, adapting the energy network to integrate renewable energy production, developing energy storage systems and promoting more sustainable low-carbon transport systems.

In 2009, the municipality became a signatory of the Covenant of Mayors, the “world’s biggest urban climate and energy initiative”. In 2015, the city finished the update of its commitment document setting out actions to achieve the 2020 targets.

During the baseline energy research, street lighting was identified as accounting for over half of the total final energy demand of the City Authority. Other significant areas of direct energy consumption include public transport and building lighting and heating.

Castelló has also developed an Urban Mobility Action Plan, and the city has a public rental bike service and an electrical tram that crosses the city from west to east. The municipality is installing charging points for electric vehicles and has four electric vehicles for municipal workers.

The municipality has an incubator of new business ideas related with energy efficiency and sustainability. The building is also a living lab to test new innovations related to energy efficiency in buildings.


Activities

To understand the different possibilities for tender interventions for energy savings, the local facilitator first undertook a review of forthcoming tenders. This revealed that the information was available only for tenders on an annual basis. It was also surprising that the number of tenders was relatively small and most tenders did not directly involve energy consumption in operational use. However, several opportunities were identified and meetings with the tender owners and procurement team to introduce CEPPI and explain PPI approaches were held.

The energy baseline study showed that street lighting was a clear ‘hot spot’ where there was scope for energy and cost savings. However, there were no planned procurements in this area. Discussions with the responsible Department highlighted that there was no budget available or planned investment to update street lighting and there was resistance to the idea of alternative financing through, for example, energy performance contracts. This concern will be taken up in the next phase of the project.

One of the first tender subjects to be identified concerned printing and photocopying. As the tender was due to be issued within a short timeframe the project partner had to work rapidly. The intervention involved identifying that the tender was in the pipeline and engaging the owner of the procurement and the procurement department through several meetings to explain the CEPPI project and its aims and convince them of the advantages of adopting principles of innovation procurement.

Previously the services for printing and photocopying services had been let in two separate tenders (this was a historical practice that had not recently been reviewed). This was one of the first examples of CEPPI interrupting the ‘conveyor belt’ of procurement. All too often tenders are simply renewed. Pausing the automatic renewal of the same tender specification and raising questions as to the basis for the procurement was an important step in allowing consideration of technical developments and the municipalities policy objectives.

An estimate of the energy consumption of the existing printers and copiers was made based on energy calculator developed as part of the project (utilizing EnergyStar data). Advice has also been supplied on the use of in-line energy monitors to establish baseline energy use based on actual operational performance. The new contract can also be monitored using the in-line energy measuring equipment and, using an equivalent sampling methodology can be used to compare the energy use of the new equipment.

In April 2016, a tender was issued to procure energy efficient printing, scanning and photocopying leasing, supplies and maintenance, which included specific criteria based on


recommendations from CEPPI expert partners. Suppliers bidding for this tender were asked to include a description of the recycling system of the toner, specify the typical electricity consumption of the different models, and explicitly show whether they were providing low-melt toners (which are more energy efficient than traditional alternatives) and if these were 100% recyclable. Ecological solutions were awarded 0.5 points; low-melt toners were awarded 2 points, and equipment offering the possibility of 100% recycling was awarded 2 points.

The short time frame limited the number of PPI features but several were included such as ‘direction of travel’ messages. These are a simple but useful tool to send clear messages to suppliers about the customer’s priorities and their increasing standards in relation to energy efficiency and reductions in operational and embedded carbon. There is also scope to ask suppliers to feedback their thoughts and views on future innovations.

The tender also took into consideration technological innovations, such as solutions that increase the printing speed or allow printing from a mobile phone. Extra points were also awarded for those improvements related to energy efficiency, such as preventive maintenance – based on life cycle considerations – and carbon reduction in the operations, by reducing miles or using eco-friendly vehicles for deliveries.

The CEPPI intervention proved to be a useful pilot and raised a lot of interest within the Municipal services about how procurement could be used to deliver better goods and services.

Key learning

You can always to do something to support innovation within the procurement process, even with limited timeframes.

Once the concept is proven internally, it is easier to replicate and identify new opportunities.

When introducing new ways of doing thing it is important to check the details, for example of the evaluation criteria.

Next steps

The Local Facilitator will consider other short term tenders and assess their suitability as CEPPI intervention targets. For example, a forthcoming tender concerning the maintenance of schools and public buildings. The first step will be to understand the scope and potential for energy saving, carbon reduction and innovation. The local facilitator will also explore the potential of any longer term planned investments in terms of energy efficiency, carbon reduction and innovation and means to address the energy Hot Spots identified.


Energy Efficient Printing and Photocopying Services (lease, supplies, maintenance) for Castelló Municipality, April 2016.

• Combine the (previously two) contracts and open-up the tender to allow alternatives such as energy efficient multifunctional devices - i.e. Machines that can copy, fax, print, scan and print

• Put energy efficiency up front in the specification and include in the title of the tender. Simple but effective!

• Evaluation includes criteria based on energy efficiency and suppliers rewarded for exceeding any minimum requirement

• The GPP 2020 Office ICT calculator (http://www.gpp2020.eu/low-carbon-tenders/measuring-savings/) provides an indication of how the annual energy use increases (in some cases quite significantly) with the Pages Per Minute printing speed of MFD’s, printers, etc.

• Suppliers required to monitor the energy consumption of the machines to allow comparison between stated energy use and actual energy use.

• Low melt toners should be used where practicable.

• Toner cartridges should be recycled and recyclable by the supplier. (e.g. remanufactured ink and toner cartridges are less expensive than new cartridges)

• Suppliers should be required to provide information on end of life management of the machines they provide and the extent to which the machines are manufactured from recycled materials

• Provision of training for staff in energy efficient operation of machines

• Suppliers should provide information on any environmental accreditation (e.g. ISO 14001 standard or internal environmental management system.)

• Suppliers rewarded for demonstrating energy efficiency and carbon reduction in the operation of this contract and in their operations. (E.g. transport, reducing miles, training drivers, electric vehicles etc.)

• Include direction of travel messages to suppliers regarding future tenders e.g. regarding progressive improvements in energy and carbon performance

• Request ideas for innovation and energy efficiency in the provision of such services in future contracts

• In future tenders the Council will look for ongoing and progressive improvements in energy efficiency

• In future tenders the Council will reward supplier who can demonstrate carbon reduction in their operations, carbon reduction in their supply chain and reduction of embedded carbon in the products and services supplied


Valencia is the third largest city in Spain. It is in the centre of the Mediterranean Corridor and has one of the most important ports in the Mediterranean region. The city mixes history and modernity, integrating old buildings with futuristic ones, such the City of Arts and Sciences, designed by Santiago Calatrava.

Procurement is governed by the National Law of Public Procurement. The annual procurement budget of the city in 2015 was over 738 million euros.

The city has already implemented some sustainable procurement initiatives, such as the replacement of some streetlights with LEDs. The public bus fleet has 413 biodiesel vehicles, 75 using compressed natural gas, and 7 hybrid vehicles.

The forecast for 2017 is to buy 2 electric buses and 35 hybrids. And for next years, to incorporate to the fleet 2 electric buses every year.

Valencia has also focused on energy efficient buildings. For instance, the Sport Complex of Malilla is using new technologies and energy efficient systems that produce 85% of the total amount of energy the facility requires. Other buildings, such as MercaValencia or the conference centre, have photovoltaic roofs.

When joining the Covenant of Mayors, Valencia City Council drafted the Plan of Action for Sustainable Energy (PASE), which in its first two years helped to reduce CO2 emissions by 8%.

Valencia has achieved a 24% energy consumption reduction, compared to 2008, thanks to several energy efficiency policies to reduce CO2 emissions the city has in place. The greatest reduction was in the transport sector, with CO2 emissions lowered by 18%.

Valencia City Council's local environmental policies include:

• Valencia 2020 Strategy addressing Climate Change • Action Plans for sustainable energy, air quality and noise pollution • Valencian Observatory on Climate Change • Sustainable Urban Mobility Plan

Street lighting accounts for just under half of the total final energy demand of the City Authority, so offers an energy saving opportunity beyond the initial LED replacement activities. Other significant areas of energy consumption by the City Authority include sanitation stations, sports centres and schools. Significant energy use by wider stakeholders include areas such as public transport.


Overview

The CEPPI partner in Valencia is not the municipal authority but an agency: The Valencia Foundation for Strategic Development and Urban Innovation (InnDEA). The InnDEA Foundation supports and encourages development in the city by innovation in its various forms. Acts on the city: encourage development and social innovation to the benefit of citizens. Acts on local administration to modernise municipal services and give citizens a faster and more efficient response. Acts on the business system, in favour of its innovation.

InnDEA represents the city in the Climate KIC. Its function is to promote the development of the city through innovation and works in a triangular partnership with the City Council and their associated ICT services, including the platform for smart city management. InnDEA has been working since 2014 to combine R&D projects with more effective public procurement and contract awarding, including on the PPI strategy of the Valencia city council. The task of identifying suitable projects for CEPPI intervention within the Municipal Authority was challenging. As no department deals with public tenders the project team needed to visit each department to present the Project and get their feedback. It was clear that middle management did not feel empowered to act or be proactive without approvals and motivation from senior management. This was also during a period of political and organisational change following elections.

Activities

The CEPPI journey so far has been one of finding a suitable CEPPI project. Finding a project that met all or most of the criteria identified has been surprisingly difficult. However, progress has been made and important learning gained along the way. InnDEA has tried several approaches towards different organisations. A Department of Innovations is being created in the City Authority which is anticipated to be a good contact point going forward. The head of the Department of Innovation of the City Authority is anticipated to be a good contact point going forward and is being actively involved in the project.

Although there have been several barriers and delays several options have been explored. These are summarised below and next steps outlined for each.

Municipal Lighting

This project concerned new urban lighting solutions for the city. This project is owned by the Central Procurement Department of the City Council. After several meetings, the decision on this project is still to be finalised by the Council, budget is not approved and there is some


uncertainty about the full scope of the project. Innovation procurement is new to the Council and although there is interest there is also some nervousness about its adoption as there are few local examples of PPI in action and concerns about the legal aspects. A draft CEPPI action plan has been prepared outlining proposed actions which included preparatory actions and proposed PPI actions. At the time of writing, the current status of this CEPPI intervention is ‘paused’, waiting budget and scoping of the project and a senior level meeting between InnDEA and the Council to be held in 2017. In the meantime, the local team have worked to identify opportunities within the wider City network.

Palais de Congres fountains

This project initially concerned energy-efficient fountains for the pools that surround this Norman Foster designed iconic building. The project had several positive features, such as an interested and willing partner, some scope for energy saving and was identified as a learning opportunity for the local team. As a first step, the team undertook a site meeting and discussed the issues with stakeholder groups and gathered data on energy use and cost. Following this review however it became clear that the underlying problem was much bigger that cost of maintaining and powering the fountains, relating to problems with the build and infrastructure that were causing underlying problems with the building, such as damp ingress.

It was therefore agreed that it was this bigger issue that needed to be addressed, which was outside the scope of CEPPI and being highly specific to the location requiring a bespoke solution, hence not a suitable candidate for innovation procurement.

In reaching out to wider city partners, the team contacted staff at a local sports Foundation. In discussing ‘unmet needs’ two issues arose that related to energy efficiency, carbon reduction and sustainability.

Sports centres – playing fields

The first unmet need concerns a problem that is common to many sports centres in regions of high summer temperatures; artificial turf provides a good alternative to grass in areas where high levels of irrigation are needed, with an average grass playing field can use 50,000 gallons of water per week during the growing season. Water and energy are closely linked. A clean reliable water source consumes energy. Water conservation leads to energy conservation.

The sports centre was however finding that with sun and hot weather, the turf becomes too hot to play on. This led to a need for the artificial turf to be irrigated to cool the surface. Wider research indicated that there were reports of other less visible problems with artificial turf, including harmful chemicals, increased number of ‘turf-burns’ with athletes who use synthetic


turf reported as being seven times more likely to receive turf burns than those who play on natural grass and some reports making links to increasing occurrences of MRSA.

It was clear to the local team that this was a genuine problem that needed a solution and that it had several characteristics that made it suitable as a CEPPI intervention project: a genuine problem with a wider demand; cost implications; willing partner and scope for influence; energy saving potential; carbon saving potential; potential for wider sustainability gains.

Sports centres – solar water heating

The second unmet need uncovered again relates to the climate. Solar panels have been introduced by the sports centre to heat water. However, in summer the temperatures in Valencia are high and customers of the sports centre want cold, not hot, showers. This has led to the solar panels being disconnected and a lost opportunity for energy generation. In common with the previous example, this project has many of the characteristics of a suitable subject for CEPPI intervention.

The sports centre projects have stalled for the moment. The main concern causing hesitancy on the part of the customer is the lack of a budget to address the problems and ideas for developing these projects. This barrier will be discussed at the Peer Learning workshop in November 2016 and possible solutions considered.

Fire station – building refurbishment

This project is the refurbishment of a 1970s built Fire Station for energy efficiency and well-being and comfort of fire officers. The current building has different problems f.ex. with the control of indoor temperature in summer and winter, ventilation and artificial lighting. Consequently, it is too hot or too cold, too bright or too dark in different zones of the buildings which affect the well-being and the security in the daily routine of a fire operative’s work. The operation of the building is far from energy efficient which leads to high energy cost.

This project is considered highly promising for a PPI demonstrator, with all the features of a project suitable CEPPI intervention: genuine need, willing partner and scope for influencing the procurement process, budget over several years, scope for energy efficiency and innovation, scope for carbon reduction, cost saving and range of other benefits for the fire service.


Key learning

The local facilitator found that engaging smaller, more autonomous bodies in innovation procurement was easier than engaging municipal authorities. In the latter, concerns over new approaches, time investment, legal aspects are taking time to break down.

The action learning approach to PPI is providing an excellent learning opportunity on how to introduce innovation at all levels. The changing the ‘conversation’ in the tenders and re-orientation of the problems that need to be solved, taking time to really understand the underlying needs and expressing them as outcomes rather than pre-determining the solutions.

Working with stakeholders on the definition of unmet needs has been a most positive and enlightening process.

Innovation procurement is a new concept for all the organisations we have engaged and who implement what we might call ‘traditional’ public procurement. The major challenge for the next stage of the project will be finding ways to communicate effectively about innovation procurement and overcoming the resistance to new approaches within the administrative functions of the contracting bodies, including the city authority.

The peer learning workshops and direct mentoring have provided valuable learning. The experience in the other cities and sharing the PPI journey are a great source of knowledge, inspiration and encouragement.

Next Steps

The project team will develop a CEPPI action plan for the Fire Station Refurbishment. The first step will be to get the signed commitment from the fire service and establish a project team. The aim will be to complete an energy audit before the end of the year and then start the PPI process early in 2017 with a stakeholder survey and determination of the outcome based requirement ahead of market engagement.

In parallel, a senior level engagement between InnDEA and the Municipal authority will be initiated to January 2017 and discussions with other organisations such as the Sports Centres will be continued.

The project team are already engaging a wider group of actors in the City and this will be developed further in the next phase of the project.

The local facilitator will continue and expand their capacity building programme and organise an information event on innovation procurement.


Wrocław is the fourth largest city in Poland and the capital of Lower Silesia region. It is commonly known as the Venice of the North, because of its large system of canals and over 100 bridges. Wrocław has been designated as the European Capital of Culture 2016.

The Low Carbon Economy Strategy (LCES) for the city of Wrocław contains general and specific objectives, identifies the challenging sectors in the city, quantifies air pollution and greenhouse gas emissions, and sets action tasks and measures both in the short and in the long term.

The targets for year 2020, against 1990 baselines are:

To reduce greenhouse gas emissions by 20%

To reduce energy consumption by 20%

To obtain 15% of the total energy production from renewable resources

The LCES for the city of Wrocław clearly indicates that public procurement practices should use criteria for energy efficiency and GHG emissions reduction. According to this strategic document, the implementation of green public procurement from 2015 to 2020 can achieve up to 1% of energy usage reduction, which is around 541 GWh/year energy saving.

Wrocław for Environment initiative is a working group created by Wrocław Municipality. One of the group’s main tasks is to look for solutions that could speed up the transition from lowest price criteria based contracts into green public procurement practices. This is a positive step towards the use of PPI methods.

Wrocław is already working on several projects related to sustainable development including an intelligent transport system, refurbishment of municipal buildings helping to reduce energy consumption and CO2 emissions.

The initial energy baselining activity identified building heating as being one of the most significant areas of final energy demand, with a lot of the energy used being due to the district heating company. Public transport (including trams) also accounts for a significant amount of energy use. In terms of direct energy use by the City Authority then street lighting represents an attractive energy saving opportunity.

Overview

Wroclaw Research Centre EIT+ Ltd. established in 2007, is a unique undertaking in Poland, dedicated to fostering innovation based on the co-operation of academia, local government


and innovative business. The company’s shareholders are the largest universities in Wroclaw as well as the authorities of the city of Wroclaw.

EIT+ is located in its new Pracze Campus – the most significant Polish R&D investment in recent years. A network of laboratories and offices, meets world class standards with regard to equipment, infrastructure management and R&D support services.

Apart from physical facilities, the Pracze Campus aims to become a vibrant innovation village, truly supportive of the creative environment indispensable for the development of the Knowledge Based Economy.

EIT+ is also a Climate-KIC partner trying to build low carbon community within the Municipality of Wrocław. Together with the Municipality we agree, that as Innovation Centre, EIT+ will be a better partner for CEPPI, identifying PPI opportunities within the city and the whole region.

Activities

Street lighting was identified early on by the local facilitator as both a hot spot and an area where investment was planned. The current energy consumption of the mercury vapour street lamps was estimated as 32.1 GWh/a end energy use, and taking into account losses during generation/ distribution of electricity this requires 80.25 GWh/a of primary energy.

The potential savings from updating street lighting to more energy efficient solutions was estimated at 5.3 GWh/a end energy, equivalent to 13.25 GWh/a primary energy saving. This was therefore seen as a high priority project based on the assessment that there was a genuine need (already identified), the potential energy saving and scope for innovation for a better street lighting outcome, and scope for cost saving. It was less clear how strong the policy drivers for energy efficiency and carbon reduction were, the proposed timelines and budgets for the procurement and, critically, the scope for influence.

This area was therefore actively pursued together with an action learning programme in the adoption of innovation procurement approaches to street lighting. An action plan was drafted based on the CEPPI Action Plan and the nature of an outcome based requirement discussed as part of the learning process, generating the following ideas:

• Smart, ultra-efficient lighting solutions to enhance the urban environment • While supporting safety for citizens • Demonstrate a step-change in energy efficiency • Progressive improvements over the life of the contract • Future ready for next generation of smart ultra-efficient lighting solutions


• Willing to offer sites to trail innovative solutions that are new to market

Research into case studies of lighting projects in other cities highlighted a range of other issues that could be considered to maximise the value gained from the lighting upgrade, such as reducing light pollution, integration with smart city initiatives.

The next step was to get agreement and sign-off from senior city leaders for the overall approach and establishing a project team. After several months, it became clear that this was unlikely to happen in the near term. A combination of factors, including the lack of awareness among the and previous experience in the use of innovation procurement approaches on the part of key stakeholders i.e. no ‘local ‘proof of concept’, combined with a large, high visibility and high value project and complications with the ownership of street lighting, meant new procurement approaches were considered too risky. This CEPPI intervention was therefore put on hold and consideration given to actions that would support future engagement. These included building an evidence base in both innovation procurement and innovative street lighting.

The project team therefore began to look more widely for an alternative project that could demonstrate innovation procurement in the municipal environment in Poland. Subsequently, a renovation of a heritage building was identified as a good innovation procurement pilot and proof of concept and method. The scope for influence is high due to the senior project leader being enthusiastic about the use of new procurement approaches and has influence within the Municipality. This pilot project and project lead has the potential to create a valuable case example and learning opportunity in a relatively low risk environment.

The project team also began to consider the wider sphere of influence. Discussions with a private hospital that is interested in energy efficiency and in the potential of a PPI project in the region have been initiated. The project is on hold while new laws affecting the healthcare sector and budgets are finalised.

Key learning

Lack of awareness and experience of PPI has proven to be a bigger hurdle than anticipated.

The scope for influence in a procurement project is a critical feature of any intervention. It is important to focus energy and effort where there is willing participation.

Lack of awareness and understanding is a key barrier in a highly regulated and conservative procurement culture. There are not enough examples in Poland of using PPI or they are not properly communicated.


A smaller scale proof of concept project can hopefully be used to shift perceptions and increase interest and confidence in innovation procurement approaches. Progress can be made once a willing partner is engaged.

The word ‘innovation’ with procurement and using’innovation methods’ in procurement makes people nervous. Instead we learnt to stress that we are helping them to deliver ‘what you need, when you need it, at a price that reflects the value placed on the outcomes’.

Next steps

An action plan for the refurbishment project will be developed and a project team established. This will include an assessment of the energy baseline and energy saving potential of the project. Training needs for the projects stakeholders and team in innovation procurement will be identified.

A targeted training programme will be designed to meet the needs of the local facilitator and local situation.

A project within the healthcare sector will be pursued with the assistance of local experts in innovation procurement in this sector.

Reflecting on the intention of the city to apply for European Green Capital the local facilitator will explore how innovation procurement could be used and promoted in this context.


Birmingham is the second largest city in the UK and with over 571 parks, Birmingham is one of the greenest cities in the UK and in Europe.

Procurement is a central function within the Council and decisions of procurement are established by the Council Standing Orders. There are around 25 qualified procurement professionals working in the council. The annual procurement budget is £2 billion.

Birmingham’s Green Commission is tasked by Birmingham City Council to deliver evidence-based advice to the city to help it realise its green ambitions. The Green Commission’s Vision, launched in March 2013, established a programme of work that aims to make Birmingham a leading green city, by adapting to climate change, reducing carbon emissions and increasing the number of green jobs.

Birmingham has a Carbon Roadmap to direct the city in its obligations to reduce carbon emissions by 60 per cent of 1990 levels by 2027. The Road Map has four priority areas:

• How Birmingham should be heated and powered in the future; • How people travel and get around the city; • Improving the energy efficiency and affordable warmth of buildings; • Creating decarbonised local energy generation capacity.

Birmingham City Council has a relatively narrower range of directly delivered services (compared to most of the other partner cities) with services such as public transport operated by private suppliers. Street lighting is a significant energy using area but there is limited scope for innovation procurement interventions as it is the subject of a long term (25 year) services contract. There is a significant opportunity for heat recovery and then distribution via district heating connected to the City Authority energy from waste plant (currently this only generates electricity but does not recover any of the heat energy).

Activities

Municipal Waste Contract

The project is a strategic opportunity arising from a contract coming to an end. The CEPPI Team transformed this from a LOW scope for impact to a HIGH scope for impact through pro-active lobbying of stakeholders and engaging senior staff at Birmingham City Council enabling a wider, pro-innovation approach to be taken.


Birmingham City Council’s current municipal waste contract comes to an end in Dec 2018. The local authority, one of the largest in Europe, currently incinerates 350k tonnes of waste at its energy from waste facility in an area of the City called Tyseley; this provides power for 30-40k homes but no heat is currently captured. The remainder of the city’s residual waste is sent to landfill. Green waste (collected separately) and the waste from parks is sent for anaerobic digestion outside the city. Birmingham also has contracts for commercial waste with several businesses across the city but competes with other waste management companies for business.

Because of the existing waste contract coming to an end, Birmingham decided to increase its options, as well as refresh the TOTAL waste strategy for the city (i.e. the strategy goes beyond the contract alone) and to establish new targets around waste, recycling and optimum resource use across the city; a review of the current assets was undertaken and future waste projections made.

The key drivers for a strategic review were three-fold: 1) since the previous contract was awarded there have been several important developments in the world of waste; for example, rather than a problem to be dealt with, waste is potentially an asset that cities can use to generate revenue (through sale of heat and power); 2) waste is part of an integrated city system, with clear interactions between the waste stream and energy, transport, buildings etc.; and 3) awareness of climate change, and the imperative to act upon it, highlight waste reduction, circular economy and resource efficiency are vital components of a progressive waste strategy.

The identification stage of the project began with an intelligence gathering exercise. This included:

• Stakeholder meetings. Two meetings were convened to bring together individuals with an interest and expertise in waste and resource efficiency. These were day-long meetings with people from research, private, public and third sector organisations (including environmental pressure groups) to set priorities for Birmingham and identify opportunities.

• Study tours to other cities (e.g. Bristol) took place as part of the benchmarking and research, particularly around governance and business models for waste management and ownership of facilities.

• A technology foresighting study was also commissioned to understand the range of options that might be suitable for resource minimisation, reuse, recycling and recovery. These were cross-referenced against City Council priorities to understand


which technologies would be taken forward into the assessment process and which would clearly be unsuitable due to factors such as environmental performance, risk, cost or social dis-benefit. The fore sighting study has been carried into the next stage of the process to identify the best options for waste management in Birmingham.

• Other studies: A range of other inter-related studies/ activities were identified that could have an important bearing on the procurement of the waste contract. These include: 1) a heat network study to understand the costs, return on investment and technical feasibility of capturing the heat from the energy from waste plant and bringing it into the city centre; 2) Tyseley Energy Park, which will provide low carbon vehicle refuelling infrastructure (identified in the Birmingham Blueprint for Low Carbon Vehicle Refuelling Infrastructure) and 3) the wider work at Tyseley Environmental Enterprise Zone, which has a Local Development Order to make it easier to get through the planning process if a business wants to deliver a complimentary activity.

The potential of innovation procurement to deliver better outcomes that had been gained from the CEPPI project enabled the project team to ‘halt the procurement conveyor belt’. Without the team’s intervention, the tendering process would have simply have repeated the previous contract and removed scope for innovation. Using their knowledge of innovation procurement, the team were able to challenge the norm and demonstrate wider opportunities and benefits that could be gained from a pro-innovation approach. Key to this was the ability to make links between a progressive waste strategy and wider policy objectives of alleviating fuel poverty, improving air quality and carbon reduction. This helped to secure the backing of the Cabinet Member for Sustainability to widen the work programme to consider alternatives and actively engage stakeholders. These preparatory actions will inform a more innovation friendly tendering approach.

The process has led to a considerable organisational shift in waste policy and the operation of this major contract. The Council will seek innovations in the service relating to increasing recycling, carbon reduction and maximising the potential of residual waste. However, increasing financial constraints within the Council will also need to be considered as part of the equation before a process of market engagement is launched.

Refrigeration units for a commercial market

This project was identified following a review of upcoming tenders undertaken with the procurement team. The refrigeration units in question were in the Birmingham indoor market,


which is the property of BCC who equip the market and pay the energy bills. The units in question are over 20 years old and considered no longer fit for purpose. Technological progress in energy efficient refrigeration should allow scope for more efficient units to be installed and specific needs of stakeholders to be met and as the Council pays for the energy consumed in the building e there should be interest in ensuring that energy efficient equipment is purchased. Discussions with the project manager of the facility and the responsible councillor were held. A desk review of progress and innovation in energy efficiency of refrigeration was undertaken and this helped to engage the stakeholders.

The team had expectations that there would be scope to influence this tender as there was some time envisaged before the tender was due to be launched and engagement of the project lead was showing signs of a positive response and scope for influence. However, the tender was then fast-tracked due to political pressures and the team worked quickly to review the tender documentation and make recommendations such as including requests for innovative solutions in the tender document and introducing energy efficiency as an evaluation criteria.

Engagement in this tender highlighted a failure in the procurement process to systematically consider energy efficiency as a key evaluation criteria in electrical goods and services, with a significant implication for energy consumption and cost to the Council. Subsequently this observation led to Team Leaders reassessing all current and future bids with respect to energy consumption.

During engagement with the team involved in this tender, plans for a procurement in 5-years time of a new retail market and refrigeration units emerged. This fact, together with increasing financial pressures within the Council, led to the tender being recalled. This project has been identified as a potential innovation procurement project. The aim will be to agree a forward plan based on the CEPPI action plan.

Multi-functional devises (MFDs)

The project was identified following a review of upcoming tenders undertaken with the procurement team. The City Council spends close to £10 million per annum on printing and associated costs, it already has in place a large number of MFDs through its previous procurement processes which incorporates 25 different suppliers. Unlike the refrigeration tender, the previous MFD tenders required the latest and most energy efficient machines available at the time. Due to the number of suppliers involved, an internal investigatory piece of work was commissioned by the Council to understand the current situation of these


contracts. Initial findings suggested several challenges/ recommendations including a) establishing a single point of ownership as this would lead to more control b) standardisation of KPIs for suppliers and c) encouraging suppliers to work together. Energy efficiency did not significantly feature in the findings due to many of the current machines already being of a high standard and instead more emphasis was placed on aligning contracts and reducing the number of suppliers to establish better control. Due to the timelines involved and relatively low potential for significant energy consumption reductions, this option was not progressed by the project team any further.

Key learning

The strong and sustained engagement between the CEPPI project team and Corporate Procurement Services through the exploration of the above tenders has led to several issues being highlighted:

• Upskilling and training needs – this included further training on topics such as Public Procurement of Innovation and Total Cost of Ownership for managers and officers within the Corporate Procurement and Commissioning Team. Alongside this it was noted that other key decision makers and budget holders should also undergo such training (see below)

• Procurement Process – it was often found that the procurement and commissioning team would be involved at too late a stage in the decision-making process and therefore lacked any significant ability to influence the scope, timelines etc. of the tenders. If training was delivered as mentioned above to other key decision makers and budget holders then this would potentially eradicate this problem leading to a more effective, efficient and harmonised procurement process

• Energy Efficiency included as a criterion in tenders – this was highlighted through the Refrigeration Units tender and has led the department to scrutinise all current and forthcoming tenders. Managers have highlighted this issue in team meetings and fortunately to date no other relevant tenders have had this omitted. This suggests it may have been an oversight in one isolated tender however the review has ensured that the process has been re-evaluated

• Procurement conveyor belt – The MFD tender was a good example of how difficult it can be to shift thinking from the established solution (e.g. paper based printing) to one that is fully outcome based (e.g. communications, information sharing etc.). Similarly, when operational energy alone is considered the arguments for innovation are less convincing that if operational energy, lifecycle carbon and circular economy are


considered. This issue will be raised for discussion in future peer learning workshops. This is also an example where technology fore-sighting could play a role to introduce ideas for MFD alternatives such as digitisation, paper free offices and increased use of ICT.

Next steps

Capacity building and training is a high priority and the team now has buy-in at a senior level for all individuals within the procurement and commissioning teams to attend a PPI training workshop which will be a vehicle to identify ‘action learning’ projects. Key individuals from within the organisation’s hierarchy will also be invited for training sessions.

A meeting with commissioning services will be organised to widen the search for suitable tenders in which CEPPI can intervene.

The team will aim to engage the wider public network across the City and engage with the Local Government Association to share experience on CEPPI and innovation procurement.


Budapest is the capital and the largest city of Hungary. It is the country’s principal political, cultural, commercial, industrial, and transportation centre. The city is situated along the Danube, in the heart of the Carpathian basin.

The Municipality of Budapest does not have any special guidance concerning sustainable and innovation procurement as the currently valid General Rules on Public procurement do not declare compulsory use of green and innovative aspects in public purchasing. Global climate change generates new challenges at local level and requires new ways of thinking and the city is implementing strategies to improve energy efficiency and reduce CO2 emissions. Budapest is participating in several EU initiatives, networks, for example Climate-KIC, Covenant of Mayors and EUROCITIES.

The Municipality of Budapest owns several public utility companies and cultural institutions. The Budapest City Directorate Holding – established in 2014 – oversees their individual policies on energy efficiency and CO2-emission reduction:

The wide range of publicly owned utility companies includes significant energy users such as the public transport and district heating companies. The Budapest Flood and Public Lighting company is also a significant energy user through street lighting operations. In terms of direct use by the City Authority then heating and lighting of public building uses a relatively high amount of energy. In the case of the Budapest City Hall this aligns with a live refurbishment procurement opportunity.

Activities

City Hall refurbishment

The energy efficient refurbishment of the City Hall was identified early on as a focus for the CEPPI intervention. The scope for energy saving was estimated to be 4-5 GWh/a. The project began with the commissioning of a feasibility study. The outcome based requirements were agreed by stakeholders to be:

• Dignified city hall open to the community • Modern workplace • Restored monument • Energy-conscious building • A reconstruction method which can be financed; • A building which can be operated economically;


• Undertaking Public functions and urban development strategies

The project team intervened in the tendering of the study by adding in innovation and sustainability factors, i.e. requiring contractors to present innovative solutions regarding energy saving and water conservation and solutions in support of environmental sustainability.

One of the issues that arose in discussions with the project owners was a resistance to including non-price based evaluation criteria for the feasibility study tenders. Ultimately this resulted in a very low cost bid being awarded the tender which provided an important learning point for the project team. Once the feasibility study and plans are received, the impact of the interventions requiring contractors to identify solutions for energy saving, water saving and innovative solutions will become clear.

While the feasibility study was underway changes in the project ownership were agreed at a senior level, leading to the project budget being transferred to the control of central government rather than the City Hall and hence central Government will be responsible for the procurement process. The impact of this on the ability effect further interventions is not yet clear, but could result in reduced scope for influence. The team will aim to keep in contact with the project and continue to seek opportunities for influence.

Street lighting

Street lighting was identified as hot spot in the energy baseline study and a project to upgrade around 8,000 lamps is expected to begin in 2017, subject to budget approvals through the general assembly which is expected early 2017. The project will involve the public company responsible for street and cultural lighting and be led by the Urban Planning Department. It is to the team’s advantage that the new public procurement regulations require some market sounding to justify the budget and that the team have a good working relationship with the street lighting company and anticipate scope for influencing in favour or innovation procurement methods.

Several other potential projects have been identified as potential for CEPPI intervention, including the establishment of a heat cooperation system in South-Budapest, and e-mobility activities (tbc).

Key learning

Scope for influence is a key factor. It is important to focus energy and effort where there is willing participation.

The new procurement regulations are creating opportunities for conversations around innovation procurement. Following the new regulation, the Department on Public Procurement


has prepared new recommendations for the technical departments of the Chief Clerk’s Office on sustainable procurement.

Lack of awareness and understanding presents a key barrier in a highly regulated and conservative procurement culture on the part of contracting authorities and suppliers. Awareness raising events and training can help to break down these barriers. There is also an obvious need for specific and professional trainings, studies related to innovation and sustainability.

The Municipality of Budapest has already made efforts to build useful and educational relationships with experienced enterprises and institution such as Semmelweis University, the biggest Medical

Documents

Interim Case Study Report - CEPPI€¦ · FCP provides a practical step by step recognised as good PPI practice. The process of FCP from identification through to procurement usually