OECD workshop on measuring the link between public procurement, R&D and innovation. "Impact Assessment of Pre-commercial Procurement"

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Impact Assessment of Pre-commercial Procurement

John Rigby

Manchester University

United Kingdom

OECD WORKSHOP ON MEASURING THE LINK BETWEEN

PUBLIC PROCUREMENT, R&D AND INNOVATION

Session 4: Assessing the innovation impact of public procurement policies

Paris, 5-6 December 2013

Room CC5 - OECD Conference Centre

2, Rue André Pascal, 75016 Paris

Manchester Institute of Innovation Research, Manchester Business School

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+ Impact Assessment of PCP

Definitions and Contexts

Aims and Objectives of PCP

Evaluation of PCP


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+ Definitions - SEC(2011) 1427 final

Procurement: contracts in order to obtain, against payment of a price the supply of movable or immovable assets, the execution of works or the provision of services. This may include:

(1) Public pre-commercial procurement, which is an approach to procuring R&D services which involves risk-benefit sharing under market conditions, and competitive development in phases, where there is a separation of the R&D phase from deployment of commercial volumes of end-products;

(2) Public procurement of innovative solutions, which refers to the case where contracting authorities act as a launch customer for innovative goods or services which are not yet available on a large-scale commercial basis, and may include conformance testing.

Large-scale public intervention in research and innovation is needed, through both supply and demand measures, such as pre-commercial public procurement of innovation

Communication in all EU languages (COM(2007)799 final)

Staff Working Document in all EU languages (SEC(2007)1668)


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+ PCP and PPI


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+ Opinion of the Committee of the Regions on

‘Public procurement package’ (2012/C 39 1/09)

finds it regrettable that some new proposals are also difficult to understand and extraordinarily detailed, as well as adding a number of new provisions. Certain provisions to facilitate procurement have also been added, but other new additions add to the administrative burden on contracting authorities despite the fact that legal stability is required in order for public procurement to be carried out smoothly;

believes that it is certainly possible to develop simpler – but no less effective – rules for procurement, as demonstrated, not least, by the fact that the WTO's Government Procurement Agreement (GPA) is much simpler than the equivalent EU rules. The Commission is asked to significantly increase the thresholds for procurement. Given that a minuscule percentage of public procurement is cross-border, and in view of the administrative burden the regulatory framework creates for authorities and suppliers, the thresholds do not need to be as low as they are;

A simple regulatory framework would be useful in this context, too, as such enterprises do not have access to experts in procurement law and other fields. Businesses are experts in their own goods or services, not in procurement rules.


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+ Pre-commercial Procurement (PCP):

Contexts for Application

Complexity

An approach to innovation using demand rather than supply

Public sector organisations can choose between Procurement of Innovation and Pre-commercial Procurement

Legally complex

Innovation Partnerships in the new version of the Procurement Directives brings new approach

Increasing interest

Recent adoption in the EU and MS, styled on US SBIR

As legal framework based, variety in applications:

Range of schemes (EU, MS outside the EU)

Scale of application: local/ regional, national, cross border

Agency based (NL Agency (NL), TSB (UK), versus procurer/user


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+ Aims and Objectives

Explicitly (not necessarily new or different)

Prototype / idea IPR? capable of commercialization or decision not to go ahead

Direct Public Sector

Catalytic Private Users

Shared Needs – Cooperative Public Private

Gateway to a product or service but not a guarantee *risk*

IPR use rights in public hands

Objectives achieved by competition and new method > greater speed of innovation + closer match to user needs + leverage

Cross border

Implicitly Capabilities in firms (winners and losers)


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+ Aspects of the Evaluation of PCP

Process and Procedure

Impact


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+ Evaluation of PCP: Process / Procedural

Start with the specification – who is involved?

Meet the needs of the potential users?

Correct application of the procedure to the problem?

Cross border?

Market potential?

External justifications (supervision) of procedures?

Operational costs of implementing a procurement?


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+ Evaluation of PCP: Impact

In the Firm

New firms??

Firm growth (turnover, employment profitability)

IPRs (ready made valuations in the Procedure (ref Cordis FAQs))

CA must pay market price > (costs – market present valuation of commercialisation opportunities)

Publications

Skills

Post PCP performance

Takeovers – 3rd party investment

At the Procurement

Valuable IPRs licensing, for public benefit

Connection to real procurement – to Phase 4

PCP Modes: Direct or Catalytic or Cooperative


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If market value >

costs?

+ Impact of PCP as Policy

Comparison with alternatives, procurement of innovation,

“ordinary procurement”, procurement under the directives

Fit other measures

Raises R&D spend of firms involved and in the shadows

Externalities

Access to PCP?

Engagement of SMEs?

Sectoral coverage


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+ Afterword

Opportunities for learning?

Many schemes, different forms, different contexts


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Government & Nonprofit

OECD workshop on measuring the link between public procurement, R&D and innovation. "Impact Assessment of Pre-commercial Procurement"