Procurement Innovation - Digitalflow framework

FAPPE - Faster Adoption of Public Procurement in Europe

A Decision Support System for R&D

Public Procurement

[email protected]

2nd FAPPE meeting – London 8th November 2013

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Digitalflow Value Proposition

Digitalflow is helping organizations implement Procurement and Innovation effective

management systems. Our reward rests on a hands-on approach that accelerates and

makes it easier for organizations to put cutting edge tools and methodologies into practice.

Public e-Procurement (PeP)

Procurement Innovation

Systems (PIS)

Innovation

Management Systems

(IMS)

Procurement

Innovation

Strategy Execution & Performance Management

Technology & Process Automation

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Agenda

1. Present Challenges2. Differences between PPI & PCP

3. Critical activities for the success of R&D Public

Procurement

4. Further developments


A Decision Support System for R&D Public Procurement

Public procurement of sustainable and

innovative goods and services is one of

the essential tools for stimulating new

technological or service solutions

while helping to create jobs and

boosting the competitiveness of the

European industry and SMEs. It also

encourages more efficient public

services. Source: Antonio Tajani, Vice-President of the EC and European

Commissioner for Industry and Entrepreneurship.

1. Present Challenges


Public sector is faced with important challenges like in Health care,

Climate Change, Energy Efficiency, Transport, Security, Public sector

efficiency…. Addressing these, often requires public sector

transformations for which no commercially stable solutions exist yet.



A broader role of supply partners in the innovation

processes

Over the last decade we have seen a rise in outsourcing non-

core activities: the average percentage of revenues procured

externally has risen to over 60%. In addition, companies are

increasingly outsourcing critical business functions, including

the outsourcing of R&D to the supply base.

As a result, the relationship with suppliers becomes

more complex. At the same time, companies are finding it

more and more difficult to keep up with the pace of innovation

through internal R&D alone. Tapping into the capabilities of

the market and supply base, is one way of speeding up the

innovation process and a reduction in total cost.

Source: Capgemini - Kirsten Schipper



The leaders engage

suppliers in the “initial

concept” phase nearly

five times more

frequently than

followersSource: A.T. Kearney’s Assessment of

Excellence in Procurement



Agenda


2. Differences between PPI & PCP3. Critical activities for the success of R&D Public

Procurement





How Innovation is Changing in

Europe: an interview with OECD's

Andrew Wyckoff

Innovation goes far beyond R&D

It goes far beyond the confines of

research labs to users, suppliers and

consumers everywhere – in

government, business and non-profit

organisations, across borders, across

sectors, and across institutions.

The Oslo Manual for measuring

innovation defines four types of

innovation: product innovation,

process innovation, marketing

innovation and organisational

innovation.

2. Differences between PPI & PCP

http://www.youtube.com/watch?v=m4kM7ocL6fA&feature=youtu.be

Page 10Source: http://cordis.europa.eu/fp7/ict/pcp/links_en.html


Public Procurement of Innovative

solutions (PPI) has been recently

defined as “the purchase of new or

significantly improved goods and /

or services, processes, etc. that are

new to the public procurer and new

in the Internal Market”.

In a PPI procurement the

contracting authority acts as

“launching customer”, that is the

first customer to acquire newly

developed commercially viable end-

products for deployment – it is the

stage where it is ready for

commercial take-up.

PPI is related to short- to mid-term

needs, related to more

incremental type innovations.

Source: DG ENTR 2011 CIP/EIP call for

proposals on PPI

Source: Public procurement vs

private purchasing: Is there any

foundation for comparing and

learning across the sectors? Jan

Stentoft Arlbjørn and Per Vagn

Freytag

Page 11

Conventional off-the-shelf procurement deals with obtaining a supply of a commodity or

service from a supplier’s catalogue which is already available on the market. It is mainly

concerned with short-term tactical purchasing considerations such as low cost, short-term

quality and value aspects. In contrast, PCP is a method to make available a service and/or

commodity that does not exist in the market. To be used strategically as a mechanism to

develop new, step-change innovations that meet important mid-to-long term service

delivery (service quality and/or efficiency) requirements.



• If solutions are near the market and would be provided if clear requirements /

sufficient demand expressed by the market (PPI) - Normal procurement

procedure/directives.

• If it is still R&D required, still different competing solution approaches to compare

before committing to deploy - invest in R&D with suppliers (PCP) - Working under

R&D exemption of the procurement procedure/directives. PCP projects are

typically projects that relate to mid/long-term needs that would not be addressed

by the private sector by itself without financial support from the public

sector.



Benefits for both the Procurer and the Supplier


Procurer Supplier

It offers a deeper understanding of the technological

capabilities and limitations of approaches from different

suppliers and therefore reduces the risk of miss-specified

tender for the commercial roll-out as well as big commercial

roll-outs that do not deliver on expectations.

Access to understanding of public sector needs and real life testing environments.

Share the risks and benefits of designing, prototyping and

testing a limited volume of new products and services with supplier without involving State aid.

Rapid R&D cycle and shorter time-to-

market that can better anticipate demand

for new solutions and better align their

product developments to fulfill concrete customer needs.

Obtain a lower cost (and less risk) deal compared to

exclusive development contracts, due to lower development

prices and licensing rights for the use of the developed

solution in compensation of giving the IPR ownership rights of the R&D to the suppliers.

Having the possibility and ability to work

with potential clients on their needs in a

structural way, making it more likely that R&D will lead to commercial demand.

And create optimal conditions for wide commercialization and

take-up of R&D results.

Wider innovation diffusion.

Agenda



3. Critical activities for the success of R&D

Public Procurement4. Further developments



Page 15

2. Technical Feasibility Analysis

3. Market Availability

1. Key needs identification

Critical activities for the success of the PCP initiative

Source: A practical guide to PCP – Project Progr-EAST

3. Critical activities for success of R&D Public Procurement

4 Suppliers 3 Suppliers 2 Suppliers

Typical approach for the Needs Assessment Phase:

• Literature review of scientific, technical and policy publications

• Expert Opinion

• Focus Group Research

• Wouldn’t it be Great If...(WIBGI)’ workshops to identify and rank needs

• Key Informants interviews, including service end-users

The Needs Assessment Phase should result in a final decision regarding

the need, how to address it (through a PCP approach or via traditional

procurement) and how to formulate the need for such a procurement



Source: A practical guide to PCP – Project Progr-EAST

1. Key needs identification (identify the key

needs of the stakeholders). Does it respond to

a societal challenge?

2. Technical Feasibility Analysis (assess whether

it is technically possible to create a solution to

meet that need) or

3. Check whether the need can be met with

products/services already available in the

market or so close to the market that no R&D

but only incremental/ integration type

development is required.


2. Technical Feasibility Analysis

3. Market Availability

1. Key needs

identification

Critical activities for the success of the PCP initiative.


1. Key needs identification (identify the key needs of the stakeholders)

Is this a critical need for our stakeholders?

1.1 Who are the key stakeholders?

• Internal and External Stakeholders

• Organizational Objectives

• Engagement and Buy-in from Stakeholders

• Exercise #1 – Identify the key procurement stakeholders

1.2 What is the critical need of the stakeholder?

• Creating a value proposition for procurement innovation

• Translation of stakeholders requirements into needs

• Exercise #2 – Define the critical need



Decision Support System for

R&D Public Procurement

Hands on workshop

2. Technical Feasibility Analysis (assess whether it is technically possible

to create a solution to meet that need)

Is it technically possible to create a solution to meet the need?

2.1 What are the solutions that meet the need?

• Methods for solutions generation: challenges and taskforces

2.2 Are there any technical solutions that meet the need?

• Methods for solutions evaluation

• Exercise #3 – Generate and evaluate technical solutions



3. Market Availability (check whether the need can be met with solutions -

products/services - already available in the market)

Is there a technical solution available in the market or so close to the market that

no R&D but only incremental/integration type development is required?

3.1 What are the key procurement innovation knowledge ecosystems?

• Procurement Innovation knowledge ecosystems mapping

• Exercise #4 – Identify the most critical knowledge ecosystems

3.2 Are there any technical solution available in the market?

• Environmental scan (internal and external) process and tools

• Delegate Exercise #5 – Identify alternative solutions in the marketplace.



Agenda



3. Critical activities for the success of R&D Public

Procurement




Current procurement of R&D services that meet conditions of the exemption

under article 16f of Directive 2004/18/EC, article 24e of 2004/17/EC or article 13j

of Directive 2009/81/EC.

What recent developments of the EU Procurement Directives bring?

•The exemptions for procurement of R&D services currently included in the new

Directives (which are the basis for PCP) will be maintained. Public procurers can

therefore continue to undertake pre-commercial procurement.

•The creation of innovation partnerships (article 29), a new type of procedure for

innovative procurement, which enable a public authority to enter into a structured

partnership with a supplier with the objective of developing an innovative product,

service or works, with the subsequent purchase of the outcome;


4. Further Developments

Innovation Partnerships (article 29)

• establishing a structured partnership for the development of an innovative product, service or works

• it shall provide for intermediate targets to be attained by the partner and provide for payment of the

remuneration in appropriate installments. Based on those targets, the contracting authority may

decide after each stage to terminate the partnership and launch a new procurement procedure for the

remaining phases, provided that it has acquired the relevant intellectual property rights.

• the contract shall be awarded in accordance with the rules for a competitive procedure with

negotiation and shall be awarded on the sole basis of the award criterion of the most economically

advantageous tender

• in selecting candidates, contracting authorities shall pay particular attention to criteria concerning the

tenderers’ capacity and experience in the field of research and development and of developing

innovative solutions.

• the value and duration of a contract for the purchase of the resulting supply, service or works shall

remain within appropriate limits, taking into account the need to recover the costs, including those

incurred in developing an innovative solution, and to achieve an adequate profit.



IPR issues: ownership rights of IPRs generated by a company during the PCP

contract should be assigned to that company. The public purchasers should be

assigned a free licence to use the R&D results for internal use as well as the

right to require participating companies to license IPRs to third parties

under fair and reasonable market conditions



INNOBOOSTER EVENTS TO EXPLORE THE OFFICE OF THE FUTURE

The Innobooster inLIFE project will hold three supplier engagement events in Graz

(Austria), Munich (Germany) and Helsinki (Finland), focusing on the “office of the future in

the public sector”. Participants of the Supplier Innovation Days will be companies

specialised in disciplines such as acoustics, ergonomics and furniture. The first event will

take place in spring 2014. The Federal Procurement Agency Austria is currently looking for

interested, innovative suppliers in office furnishings to attend. Selected participants will

meet other relevant actors in the field and have the chance to elaborate on and develop

future office solutions.

A workshop to define the office needs of the public sector will also be held, with procurers

from relevant ministries invited to participate. To further define needs, the results of an

innovative test buy that took place in an Austrian Ministry will be evaluated. The results of

the workshop, the test outcomes and the Supplier Innovation Days will be brought together

to serve as the basis for the innovative office tender.



Procurement Innovation is 'the tool' that enables the buyers

to push industrial R&D to its needs and accelerate innovation

in public services.

Our goal is to develop an end to end framework to

enable and manage outsourced supplier innovation.



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Procurement Innovation - Digitalflow framework

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