pre-commercial procurement (pcp) public procurement of innovative solutions (ppi) possible synergies...

PRE-COMMERCIAL PROCUREMENT

(PCP)

PUBLIC PROCUREMENT OF INNOVATIVE SOLUTIONS (PPI)

POSSIBLE SYNERGIES BETWEEN EUROPEAN STRUCTURAL AND INVESTMENT FUNDS(ESIF) AND HORIZON 2020(H2020)IN THE PROGRAMMING PERIOD 2014-220

This is a very first piece of information regarding the synergies between ESIF and H2020 on PCP/PPI. A SWD on that issue will provide more detailed information.

What is:

Pre-commercial Procurement (PCP)?

Public Procurement of Innovative Solutions (PPI)?

• PCP to steer the development of solutions towards concrete public sector needs, whilst comparing/validating alternative solution approaches from various vendors

• PPI to act as launching customer / early adopter / first buyer of innovative commercial end-solutions newly arriving on the market

Supplier B

Supplier C

Supplier D

Phase 1 Solution design

Phase 2 Prototype

development

Phase 3 Original development

of limited volumeof first test products /

servicesSupplier A

Supplier B

Supplier C

Supplier D

Supplier B

Phase 0 Curiosity

DrivenResearch

Applied R&D / Pre-commercial Procurement (PCP)

Phase 4 Deployment of commercial volumes of end-productsWide diffusion of newly

developed solutions

Supplier D

Public Procurement of Innovative Solutions (PPI)

Supplier(s) A,B,C,Dand/or X

Also normally multiple sourcing here to keep competition going

PCP-PPI PCP-PPI

Objectives:– Price/quality products that better fit public sector needs– Earlier customer feedback for companies developing solutions– Better take-up/Wider commercialisation of R&D results

COMPLEMENTARITY/SPLIT BETWEEN PCP and PPI

enables to…

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

Use PPI also if no(more) R&D is necessary for procurement need

Use a small budget PCP to de-risk a large budget PPI

PPI spec can be 'completely rephrased' benefiting from PCP lessons learnt

Use conditions that encourage job creation 'in Europe'

Have more R&D in Europe because PCP falls outside WTO rules

Prevent foreclosing of competition & crowding out of private investment in R&D

Companies that are not financing their R&D via procurement/PCP (e.g. via grants, own company resources) can still bid for deployment contracts/PPIs

Facilitates access to procurement market for SMEs

• Gradually increasing contract sizes, tasks, required manpower

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

PCP Win-win for all stakeholders

- New lead markets- Increase export

- Quality of public services- Focus on political priorities- Improve innovation climate- Attract foreign investment- Increase employment

- Reduce cost of procurement

Procurers

Pre-commercialProcurement

-Shared risks & benefits-First buyer in early R&D

- Global competitiveness

PoliticiansSuppliers

Get the ‘Best Product’… … at the ‘Lowest Price’

- Address ‘public market innovation failure’- Shape product development to public needs- Increase technology knowledge- Reduce risk in commercial tendering- Favour supplier competition

- Pooling of resources- Economies of scale- No licensing costs - ‘First time right’ product - ‘EU interoperable’- Attractive to venture capitalists - Reduce unforeseen expenditure

- Better products- Economies of scale- Wider market size- Shorter Time to market

- Reduce risk of innovation

PCP – PPI •IN A COHESION POLICY CONTEXT

Why should MA and Regions be interested in Innovation Procurement? ……it is a win-win situation for

Public authorities

•by engaging actively as first potential customers in getting new solutions developed and tested, involved in PCPs, can act as a "seal of approval" confirming the market potential of new emerging technological developments, thereby attracting new investors.

•by triggering the development of breakthrough solutions ahead of the rest of the market, can through their role of demanding first buyer create opportunities for companies in Europe to take international leadership in new markets.

• by increasing "local" public sector demand to develop innovative solutions for the societal challenges of the future, can help combat delocalisation and encourage companies to invest in highly qualified R&D in Europe.

•can get more efficient infrastructures and service solutions

Innovators•can get first client for new product (lead customer) and faster ROI

SETTING THE SCENE

The implementation of a PCP and/or PPI should take place in the framework of a holistic approach that involves R&I to achieve the goals set for the development of each region mainly reflected through the Smart Specialisation Strategy and provides clear impact on competitiveness, job creation and growth.

The Smart Specialization strategies will set out the national or regional frameworks for investments in research and innovation not only from ESIF but from all funding sources. In that way synergies with H2020 will be better ensured and actions will be in line with the Europe 2020 objectives.

What is important at strategic level The relevant OPs and European Territorial Cooperation Programs should be

designed in a way to support public demand driven innovation in terms of PCP/PPI implementation as well as coordination, consortium building, networking and preparation activities

SMART SPECIALIZATION DEFINITION

Smart Specialisation is a strategic approach to economic development through targeted support to Research and Innovation (R&I). It will be the basis for Structural Fund investments in R&I as part of the future Cohesion Policy’s contribution to the Europe 2020 jobs and growth agenda.

Smart specialisation involves a process of developing a vision, identifying competitive advantage, setting strategic priorities and making use of smart policies to maximise the knowledge-based development potential of any region.

This type of specialisation allows regions to take advantage of scale, scope and spill overs in knowledge production and use, which are important drivers of productivity

POLICY 2014-2020 H2020

SMART SPECIALIZATION Ensures synergies with

H2020

COHESION POLICY 2014-2020

EUROPE 2020

Cohesion Policy may support measures in the framework of the Operational Programs to:

Foster more innovative public procurement procedures and administrative capacities

TO 11 (IP11) Enhancing institutional capacity and an efficient public administration TO 2 (IP2C) strengthening ICT applications for e-government, e- learning, e-inclusion, e-culture and e-

health Target group: procurement officers

Foster innovation through public procurement - both PCP and PPI • TO 1 (IP1B) Strengthening research, technological development and innovation • Target group: enterprises

Foster better meeting of public needs through buying innovative solutions TO 1 (IP1A) enhancing research and innovation (R&I) infrastructure TO 2 (IP2C) strengthening ICT applications for e-government, e- learning, e-inclusion, e-culture and e-health TO 4 (all IPs) supporting the shift toward a low –carbon economy in all sectors TO 5 (all IPs) promoting climate change adaption, risk prevention and management TO 6 (all IPs) preserving and protecting the environment and promoting resource efficiency TO 7 (all IPs) promoting sustainable transport and removing bottlenecks in key network infrastructures Target group: town planners, transport, environment, health etc. ministries – ERDF,

Cohesion Fund and ESF)

Cohesion Policy may also support:

Private demand for innovative solutions (e.g. adoption of energy efficiency and renewables solutions in SMEs and in the housing sector)

TO 4 (all IPs) supporting the shift toward a low –carbon economy in all sectors

Major projects / Joint Action Plans in cooperation with other

Regions and key players in the Cohesion Policy

Coordination, Networking and Preparation actions for the implementation of a PCP and/or PPI through European Territorial Cooperation Programs

PCP/PPI IN THE FRAMEWORK OF THE OPs

PCP – PPI • IN THE FRAMEWORK OF

• HORIZON 2020

H2020 RULES ON PCP/PPI – FORESEEN TYPES OF SUPPORT

Coordination and Support Actions (CSA) supporting networks of procurers to prepare joint PCPs / PPIs

PCP cofund actions and PPI cofund actions co-fund the price of an actual PCP or PPI call for tender + related coordination and networking activities to prepare, manage and follow-up the PCP or PPI

H2020 RULES ON PCP/PPI – FORESEEN CO- FUNDING RATES AND CONSORTIA

The special role of the Lead Procurer The Lead Procurer is one of the beneficiaries Should be a Contracting Authority/Entity (definition of the EU

Procurement Directives)

Could be (or not) part of the buyers group

It co-ordinates the procedure, launches the calls and signs the Framework Contracts/Agreements*

An EGTC could play the role of either the Lead Procurer or the Buyers Group (for the latter on the condition that at least 2 procurers from 2 different MS participate in the EGTC as partners)

* in the name and on behalf of the procurers of the buyers group

COORDINATION AND SUPPORT ACTIONS (CSA)

Prepare for a PCP/PPI execution by:

Identifying the common challenge to be tackled through the execution of PCP/PPI

Networking and Consortium Building

Defining the Lead Procurer and the applicable national law

Preparing the tendering documents

............other relevant preparation, coordination etc activities

CSAs vs. Preparation, Coordination etc. activities in the

framework of the H2020 PCP/PPI Cofund actions

Part of a specific calls for proposals

Co-funding rate 100%

There will not be calls on CSAs for all the PCPs/PPIs that will be executed in the framework of H2020

CSAs

Part of a PCP or PPI cofund action

Co-funding rate the same as the PCP or PPI cofund actions

i.e for PCP 70% and for PPI 20%

On the condition that preparatory, coordination etc. activities have not been already implemented (and co-funded by H2020(CSAs), ESIF or by National Funds)can always be co-funded in the framework of a PCP/PPI cofund action

Preparation, Coordination, etc. activities

In their proposal, consortium shall have already identified one concrete procurement need as proposed focus for the PCP that is identified as a common challenge in the innovation plans of the buyers group and requires R&D!

One joint call for tender published EU wide One joint evaluation of offers One lead procurer awarding all contracts in the name and on behalf of all procurers in buyers group

Each winning tenderer gets: 1 framework agreement to participate in the PCP + one specific contract per PCP phase (solution design, prototyping, testing)

One joint total budget (grouping financial commitments of all procurers in buyers group) from which all R&D providers are paid

But, actual payments can be carried out centralised or distributed Either all R&D providers paid by the lead procurer

Or each R&D provider paid pro rata by each procurer in the buyers group according to the share of each procurer's contribution to the common pot

Also supervising suppliers and testing of solutions can be centralised or distributed

(Choice between testing all solutions of all R&D providers in 1 procurers site or on several sites procurers sites etc)

ONE JOINT PCP ONE JOINT PCP

In their proposal, consortium shall have already identified one concrete procurement need as proposed focus for the PCP that is identified as a common challenge in the innovation plans of the buyers group and requires R&D!

One joint call for tender published EU wide (unless PPI procures limited set of prototypes / test products developed during PCP, then negotiated procedure without publication foreseen in public procurement directives possible)

One joint evaluation of offers

But contract award can be centralised or distributed Either one lead procurer awarding all contracts to all suppliers on behalf of all procurers in the buyers groupOr one lead procurer only awarding a framework contract with lots (lots per procurer) to each supplier, and each individual procurer awarding (a) specific contract(s) for his lot(s) to the

supplier(s) delivering the solution(s) he buys This means same core functionality and performance characteristics for solutions procured by all procurers, but possible additional local functionality for each procurer

Also supervising suppliers and payments can be centralised or distributed

ONE JOINT PPI ONE JOINT PPI

• POSSIBLE SYNERGIES BETWEEN • ESIF AND H2020

• ON PCP/ PPI

SYNERGIES BETWEEN H2020 AND ESIF ON PCP/PPI WHY?

• BECAUSE:

The value of support for research, development and innovation could be further enhanced by combining funding resources (increase of effects at regional level)

Procurers could choose for higher ESIF co-funding rates instead of H2020 co-

funding rates' whilst participating to H2020 funded PCP/PPIs.

Better communication between "regional development community" and "Horizon-Science community"

A regional development scheme through the participation in a H2020 project acquires a European perspective

Include innovation procurement in the RIS3 SWOT and policy mix.

Build PCP/PPI references into OPs in every relevant thematic objective.

Ensure support of public demand driven innovation in the framework of the European Territorial Cooperation.

Involve MA from the beginning to ensure availability of ESIF & synchronisation.

CONDITIONS FOR SUCCESS

GENERAL RULE

IT IS NOT ALLOWED !!!!!!

-To use ESIF and H2020 funding accumulatively to finance the same cost/expenditure item

-To finance the own contribution of the participant from H2020 or ESIF

A. JOINT OR SIMULTANEUS USE OF FUNDS

Possible Scenario* # 1 on PCP

Preparatory, coordination etc. activities are co-funded by the ESIF (in particular in the framework of European Territorial Cooperation Programs)

Execution of a PCP is co-funded by H2020

* The list of the presented scenarios is not exhaustive. In practice more than those scenarios presented in that set of slides could be possibly implemented.

Coordination , preparatory etc. activities are co-

financed by the ESIF

OPs or European Territorial

Cooperation Programs – Cross Border or Transnational or

Interregional

THE CO-FUNDING RATE IS DEPENDED ON THE

PROGRAM AND/OR THE PARTICIPANT

Α mature project proposal in the framework of the PCP Cofund actions calls (H2020) can be

submitted. In case of approval it will receive co-funding for the execution of a

joint PCP

FLAT CO-FUNDING RATE 70%

Possible Scenario #2 on PCP

Coordination and preparatory activities are co-funded by H2020 in the framework of CSAs

i.e Assignment of Lead Procurer, Formation of Buyers Group, Preparation of Tender Documents etc.

Execution of a PCP is co-funded by the ESIF.

The distinction between different cost items could be easier in cases like the following: One joint PCP, one lead procurer, one jointly committed budget but each R&D provider is

paid pro rata by each procurer in the buyers group according to the share of each procurer's contribution.

Coordination, preparatory, etc. activities are co-

funded by H2020(CSAs)

100% CO-FUNDING RATE

EXECUTION OF A JOINT PCP

PROCURER A (Less developed Region) CO-FUNDS HIS CONTRIBUTION TO THE JOINTLY COMMITED BUDGET THROUGH THE ESIF CO-FUNDING RATE up to 85% (for his contribution)

PROCURER C (Transitional Region) CO-FUNDS HIS CONTRIBUTION TO THE COMMON POT THROUGH THE ESIF

CO-FUNDING RATE up to 60% (for his contribution

PROCURER B (Less developed Region) CO-FUNDS HIS CONTRIBUTION TO THE JOINTLY COMMITTED BUDGET THROUGH THE ESIF CO-FUNDING RATE up to 85% (for his contribution)

Expenses are paid pro rata by each procurer of the buyers

group according to his

contribution to the jointly committed

budget

Possible scenario on the execution of a PCP In the framework of PCP Cofund action calls, some participants of the

consortium of the buyers group may receive co-funding from the ESIF and others from H2020.

This case is applicable only if there is a clear distinction between budgets offered per OP and between expenditures co-funded by the ESIF (per OP) vs expenditures co-funded by H2020.

Example - each R&D provider is paid pro rata by each procurer in the buyers group

according to the share of each procurer's contribution to the jointly committed budget.

To achieve innovation goals in their territory by using ESI Funds procurers from less developed Regions could receive higher co-funding rates to participate in a PCP/PPI implemented in the framework of H2020 by/with procurers from more advanced Regions.

Condition for success : synchronization between the ESIF calls and the H2020 cofund action calls

•

Coordination, Preparatory etc. activities are co-funded

by H2020 (CSAs)


EXECUTION OF A JOINT PCP

Coordination, Preparatory

etc. activities are co-funded by the ESIF

DIFFERENT CO-FUNDING RATE PER PROGRAM AND/OR

PARTICIPANT

OR

PROCURER A (Less developed Region) CO-FUNDS HIS CONTRIBUTION TO THE JOINTLY COMMITTED BUDGET THROUGH THE ESIF

CO-FUNDING RATE up to 85% (for his contribution)

PROCURER B (Transitional Region)

CO-FUNDS HIS CONTRIBUTION TO THE JOINTLY COMMITTED BUDGET THROUGH THE ESIF CO-FUNDING RATE up to 60%(for his contribution)

PROCURER C

CO-FUNDS HIS CONTRIBUTION TO THE JOINTLY COMMITTED BUDGET THROUGH H2020

CO-FUNDING RATE 70%(for his contribution)

PROCURER D

CO-FUNDS HIS CONTRIBUTION TO THE JOINTLY COMMITTED BUDGET THROUGH H2020

CO-FUNDING RATE 70%(for his contribution)

Possible Scenario #1 on PPIH2020 co-finances networking, coordination preparation etc. activities Consortium building Preparation of the calls Drafting of the tender documents …

ESIF co-finances the execution of a PPI ESIF co-finances the purchase of the innovative solutions.

The lead procurer launches one procurement procedure and awards the Framework Contract or Agreement. Procurers participating in the buyers group implement separate specific contracts. or The lead procurer launches one procurement procedure, signs all the contracts but every individual procurer pays the invoices

Coordination, preparatory etc. activities are co-

funded by H2020(CSAs)

100% CO-FUNDING

RATE

EXECUTION OF A JOINT PPI

PROCURER A (Less developed Region)

purchases the innovative solution with the support of the ESIF in line with the objectives of the relevant OP CO-FUNDING RATE up to 85% (for his contribution)

PROCURER C(Transitional Region)

purchases the innovative solution with the support of the ESIF in line with the objectives of the relevant OP CO-FUNDING RATE up to 60%(for his contribution)

PROCURER B(Less developed Region)


PROCURER D(Transitional Region)


Possible Scenario #2 on PPI

ESIF co-funds coordination, preparation etc. activities consortium building preparation of the call/s evaluation of bids legal issues trans-national check for possible price reductions due to large volumes ………. (i.e. in the framework of European Territorial Cooperation Programs)

H2020 co-funds the purchase of the innovative solutions (flat co-funding rate 20%)

Coordination, Preparatory etc. are

activities co-funded by the ESIF

(i.e. ETC Programs)


PARTICIPANT

One joint PPI that has been prepared with the support of the

ESIF is executed. The execution of the PPI is co-

funded by H2020 (PPI Cofund action calls)

FLAT CO-FUNDING RATE 20% FOR ALL PROCURERS

Possible Scenario #3 on PPI

Joint implemented PPI: A procurer located in a less developed Region purchases the innovative solution co-funded by the ESIF (up to 85% rate) and another procurer in another MS is co-funded by H2020 (20% rate) to

purchase the innovative solution.

The networking and the preparation phase for the execution of the PPI may be co-funded either by the ESIF or by the H2020 (CSAs). In case that they haven't received co-financing for the preparatory activities these can be co-funded by the PPI Cofund actions according to the rules applicable to these actions.

Applicable Scenario in cases:

under a joint Framework Contract/Agreement which provides the joint technical specifications separate contracts are implemented by the procurers according to their national law for the purchase of the innovative solutions Orthe lead procurer launches one procurement procedure awards all the contracts but the invoices are paid by every individual procurer

Coordination, Preparation etc. activities are co-funded

by H2020 (CSA)


EXECUTION OF ONE JOINT PPI

PROCURER A

purchases the innovative solution with the support of H2020 FLAT CO-FUNDING RATE 20% (for his contribution)

PROCURER C

purchases the innovative solution with the support of H2020 FLAT CO-FUNDING RATE 20% (for his contribution)

PROCURER B(Less developed Region)

purchases the innovative solution with the support of the ESIF in line with the objectives of the relevant O.P CO-FUNDING RATE up to 85%(for his contribution)


by the ESIF


PARTICIPANT

OR

PROCURER DLess developed Region

purchases the innovative solution with the support of the ESIF in line with the objectives of the relevant O.P CO-FUNDING RATE up to 85%(for his contribution)

Possible Scenario #4 on PPI Joint implemented PPI: Procurer A located in a less developed Region

purchases (co-funded by the ESIF – up to 85% rate) an X lot of the innovative solution and another procurer (procurer B) in another MS purchases the lot Y of the same innovative solution (co-funded by H2020- rate 20%).

The coordination, preparation etc. activities for the execution of the PPI could have possibly been co-funded either by the ESIF or by the H2020(CSA). In case that they haven't received co-funding for the preparatory activities these can be co-funded by the PPI Cofund actions according to the rules applicable to these actions.

Applicable in cases like the following :

Under a joint Framework Contract/ Agreement that sets out the common functional specifications separate contracts for different lots are implemented by the procurers according to their national

law for the purchase of the innovative solutions.

•


by H2020 (CSA)

100% CO-FUNDING RATE EXECUTION OF ONE JOINT PPI

PROCURER A

purchases the LOT A of the innovative solution with the support of H2020 FLAT CO-FUNDING RATE 20%(for his contribution)

PROCURER C

purchases the LOT B of the innovative solution with the support of H2020 FLAT CO-FUNDING RATE 20%(for his contribution)

PROCURER B(Less developed Region) purchases the LOT C of the innovative solution with the support of the ESIF in line with the objectives of the relevant O.P C0-FUNDING RATE up to 85%(for his contribution)

One Framework Agreement /

Contract. Several

contracts are signed

by the procurers PER LOT

Coordination, Preparation etc.

activities are co-funded by the ESIF


PARTICIPANT

OR

Possible scenario on the coordination, preparation etc. activities for PCP and PPI

To implement the coordination, preparation etc. activities necessary for the execution of a PCP or a PPI procurers A and B that come from less developed regions are co-funded by the ESIF (up to 85% co-funding rate) and procurers B and C are co-funded for their contribution by H2020 (CSAs – if there is a specific call -100% co-funding rate or PCP/PPI Cofund actions co-funding rate 70%/20%

accordingly)

The execution of the joint PCP/PPI can follow one of the scenarios presented in the previous slides.

Minimum conditions for success:

-- Separate and distinguished cost/expenditure items even at project proposal level

-- Synchronization and coordination between ESIF MAs and H2020 Managing Bodies -

EXECUTION

OF A JOINT

PCP


Coordination and preparation etc. activities for a PCP are co-funded by the ESIF



Coordination and preparation etc. activities for a PCP are co-funded by the ESIF


PROCURER C

Coordination and preparation etc. activities for a PCP are co-funded by H2020 (PCP Cofund actions)

FLAT CO-FUNDING RATE 70% (for his contribution)

PROCURER D

Coordination and preparation etc. activities for a PCP are co-funded by H2020 (PCP Cofund actions)


EXECUTION

OF A JOINT

PPI


Coordination and preparation etc. activities for a PPI are co-funded by the ESIF



Coordination and preparation etc. activities for a PPI are co-funded by the ESIF


PROCURER C

Coordination and preparation etc. activities for a PCP are co-funded by H2020 (PPI Cofund actions)


PROCURER D

Coordination and preparation etc. activities for a PCP are co-funded by H2020 (PPI Cofund actions)


B. SEQUENTIAL FUNDING

Possible Scenario

First PCP (ESIF) to develop and test the innovative solution and then PPI (H2020)for the deployment of the innovative solutions developed and tested through PCP

and vice versa (H2020 for PCP and ESIF for PPI)

Example:

A group of Public Procurers from different cities are looking for a new sustainable public water supply system. It requires R&D. At

first they implement a PCP (Phases 1,2,3) with the support of H2020 and different solutions are developed and tested.

Thereafter they implement a PPI with the support of ESIF/ERDF to co-fund the preparation of the call for tender and the purchase of these

new solutions (each MA for the territory covered by its OP).

Directly without CSAs or preparatory activities

(Option)

OR

Execution of a PCP using either only

H2020 or ESIF Funds or

combination of both Funds

Execution of a PPI using either only H2020 or ESIF Funds or

combination of both Funds per contract or per

lot and contract

Coordination, preparatory etc. activities are co-funded

by the ESIF

DIFFERENT CO-FUNDING RATE PER PROGRAM

AND /OR PARTICIPANT

Coordination, preparatory etc. activities are co-funded by H2020(CSA)


PCP PPI


funded by H2020(CSA)


OR


funded by the ESIF


PARTICIPANT

C. ADDITIONAL/PARALLEL USE OF FUNDS

D. ALTERNATIVE FUNDING

• ESI Funds could be used for project proposals that have received positive evaluation under H2020 and could not be co-funded due to lack of H2020 funds under the call.

• These proposals could be reoriented towards ESIF requirements and submitted at national/regional level, if this type and topic of project fits into the operational programmes of the concerned territories.