Supplier B

1. Innovation ProcurementAn opportunity for European regions and citiesPre-Commercial Procurement (PCP) &Public Procurement of Innovative Solutions(PPI)Viorel PecaDG CONNECTEuropean Commission

2. Innovation Procurement = PCP + PPI Complementarity • 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 Public Procurement of Innovative Solutions (PPI) Applied R&D / Pre-commercial Procurement (PCP) Phase 0 Curiosity Driven Research Phase 1 Solution design Phase 4 Deployment of commercial volumes of end-products Wide diffusion of newly developed solutions Phase 2 Prototype development Phase 3 Original development of limited volume of first test products / services Supplier A Supplier B Supplier B Supplier B Supplier(s) A,B,C,D and/or X Supplier C Supplier C Supplier D Supplier D Supplier D • Objectives for innovation procurement: • Price/qualityproductsthatbetter fit public sectorneeds • Earliercustomer feedback for companiesdeveloping solutions • Bettertake-up/Wider commercialisation of R&D results Also normally multiple sourcing here to keep competition going

3. Innovation Procurement A huge potential or … … simply a must !? • Health care • Climate Change • Energy Efficiency • Transport • (Cyber) Security • Public sector efficiency • Waste management (reuse)…. • Public sector faces important societal challenges! • Addressing these, often requires solutions for which no commercially stable version exist yet. • In many cases, solutions are almost there (PPI) • In other cases, still R&D is to be performed (PCP) • Innovation Procurement (PCP & PPI) can improve public sector efficiency & quality + create business opportunities for industry

4. Why innovation procurement?Win-win for all stakeholders Suppliers Politicians • Improve quality and efficiency of public services • Focus innovation on political priorities • Increase employment • Stimulate local innovation ecosystem • Better products • Economies of scale • Wider market size • Shorter Time to market - New lead markets • Increase export • Global competitiveness Innovation Procurement PCP + PPI • Reduce procurement cost • Shared risks & benefits … at the ‘Lowest Price/Risk’ Get the ‘Best Products’… • 20% lower cost first products • ‘First time right’ product (interoperability • from start, reduced customisation cost) • - Attract VCs to help make innovative • SMEs more reliable to buy from • Good practice example PCP/PPI • contract documents available • Shape industry R&D to public needs • Gain technology knowledge • De-risk large deployment tender • Encourage supplier competition avoiding supplier lock-in Procurers

5. Evidence on impact from successful examples • Shortening of time-to-market: UK National Health service PCP examples achieve reduction from several years to 18 months • Attracting venture capital:Companies in UK NHS PCPs attract significant VC investment, enabling them to grow faster • Creating lead markets: Companies in UK ministry of defence PCPs are selling now also to US department of defence • Retaining lead market position: possible through sustained PCP procurements (e.g. 60 ys of supercomputing PCPs -> IBM, Cray, HP) • 20% cheaper productsandhigher product quality: evidence from US defense multi competitor, multi phase PCP-PPI procurements • Removal of supplier lock-in -> 20% cost reduction: outcome of benchmarking of NL RijkswaterstaatPCP on new traffic management centres thanks to move towards open architecture via PCP • Benefits on local economy: Estonia buying Mitsubishi electric vehicles increased local Estonian economic activity in related sectors

6. Time to do put ambitions into action • Targets for Innovation Procurement in Europe 2020 strategy • Innovation Union: 10€Bn/Y on PCP & PPI from 2011 on, gradually growing • DAE: double 5,5€Bn/Y public ICT R&D spending via PCP by 2020 • Regional Flagship: promotes use of PCP/PPI to reach ESIF innovation target. • Time for Action is 'Now' We cannot afford 'not to' • Because underinvesting in innovation procurement in ICT domain is underinvesting in economic growth of your country/region • ICT is responsible for 40% of productivity growth in Europe • ECB identified slow ICT adoption as key reason for efficiency lag public sector • Public procurement accounts for 2000 €Bn/year (19% of GDP) in Europe • Half of structural funds is spent through public procurement • Majority of procurement budget in EU is spent at regional and local level • ! Regional and local procurers can make the difference !

7. Innovation Procurement potential still underutilised • Innovation procurement is 'the tool' that enables potential buyers to steer industry R&I to its needs. However, it is under-used in EU. • US EU • PCP: 50 $Bn 2,5 €Bnof R&D public procurement/year • PPI: 15% 5% of e-gov solutions procured are 'innovative' • Also large differences within Europe Frontrunner Member States invest 5 times higher % of total public procurement budget than followers on ICT and R&D proc: ICT procurement 13,5% in UK <-> 2,5% in GR R&D procurement 0,5% in UK <-> 0,1% in GR €Mio (2011) Public Procurement of ICT Public Procurement of R&D

8. What can countries/regions do? • Political encouragement • Modernising public sector 'a priority' • Quality-efficiency improvement targets • e.g. Lombardia/IT, UK, Flanders/BE • Target % proc budgets to innovation • Monitoring framework • e.g. UK, NL, ES, Nordics, FR Implementation - InnovProc Competence center Training / assisting procurers (e.g. SE, FI, ES, Flanders/BE, DE) - InnovProc financial support program (e.g. SE, FI, ES, Flanders/BE, DE) • Encourage demand side to meet supply side • Early notification innovproc needs • Open market consultations • Meet the buyers events • Leverage EU funding • Horizon 2020 Increased • (syn) ESIF support for • EIB loans innovproc

9. AND YET IT MOVES (Eppur si muove)

10. Growing impact at Member State level PCP and PPI in ESIF: PL, FR,… EE, LV develop innov. proc. strategy DE, PL put innov. proc. in R&D&I strategy IT (€ 150M), ES (€ 250M) to PCP/PPI struct funds Baltics (LT, LV, EE) join Norden agreement FR sets 2% target for innov proc. NO, FI, SE, DK, IS min. agreement on cross border innov. proc. collaboration (including 2,5% target) AT, NO, DK, IS, IT include innov. proc. in R&D&I strategy ES (3%), NL and UK (2,5%) set target for innov. proc. FI, SE, ES, BE launch support program & competence center for procurers FI, SE, ES, BE include innov. Proc. in R&D&I strategy UK NHS and MOD PCPs and PPIs, NL launching customer (PPI) 2010 2011 2008 2009 2012 2013 2014-15

11. Progress PCP implementation Learn from first movers Framework identified and/or pilots in preparation Working on framework Awareness Raising Exploring possibilities Pilots started 2007 Denmark Malta Ireland Sweden Latvia Lithuania Estonia Spain Poland Norway Romania Slovenia Bulgaria Cyprus Greece Netherlands France Slovakia Finland Germany Iceland Luxembourg Italy Austria Belgium Czech Republic Portugal UK Switzerland Hungary Framework identified and/or pilots in preparation Awareness Raising Exploring possibilities Working on framework PCPs projects ongoing 2014 Malta Estonia Sweden Finland Romania Latvia Lithuania Ireland Poland Spain Netherlands Bulgaria Cyprus Greece Denmark UK Norway Slovenia Belgium Italy Czech Republic France Luxembourg Iceland Slovakia Portugal Germany Austria Switzerland Hungary First pioneer projects are there now. Still major effort needed to mainstream this

12. Ongoing EU funded PCP/PPI projects in ICT domain Learn from them See Brochure THALEA (PCP) CHARM (PCP) Tele-detection/care of high-risk ICU patients Traffic Management V-CON (PCP) UNWIRED-HEALTH (PCP) Virtual road infrastructure modelling Mobile care for vaccination & heart failure SMART@FIRE (PCP) NYMPHA-MD (PCP) Smart Textiles ICT firefighters Mental care for bipolar disorders PRACE 3IP (PCP) Cloud for Europe (PCP) Cloud computing Energy efficient High Performance Computing PREFORMA (PCP) SILVER (PCP) Long term digital preservation Robotics ageing well IMAILE (PCP) DECIPHER (PCP) Personalised learning needs Services mobile health data ENIGMA (PCP) STOP AND GO (PPI) Photonics City Lighting Telecare for frail elderly with multiple conditions

13. Horizon 2020 support

14. Support to PCP & PPI across the 3 Horizon 2020 priorities Research Infrastructures Pioneering Research Training • Excellent science • Industrial leadership • Societal challenges • LEIT: Leadership in Enabling • Industrial Technologies • (ICT, nanotechnology, • materials, biotechnology, • manufacturing, space) • Access to risk finance • Innovation in SMEs Health/ Demographic change Sustainability/Bio-economy Energy Transport Climate/Environment Security Inclusive society No specific funding program for PCP & PPI. Check out the work programmes of all the above priorities to find calls for PCPs/PPIs.

15. Types of support foreseen in Horizon 2020 • Coordination and Support actions supporting networks of procurers to prepare joint PCPs / PPIs • PCP cofund actions and PPI cofund actions cofund 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 • Funding rate: 70% vs 20% for PCP vs PPI cofund actions • One joint PCP or PPI procurement per action • Consortium of min participants from 3 different MS or AC, of which min 2 public procurers from 2 different MS or AC investing in the joint procurement (+ possibly other procurers that are providing services of public interest and other entities that are assisting the procurers) MS = EU Member States, AC = countries associated to Horizon 2020

16. How much for PCP and PPI in 2014-2015 2014-2015: Horizon 2020: €130-140 million* • 9 areas expect to cofundPCPs • 1 in e-Health, 6 in ICT, 1 in security, 1 in research infrastructure • 6 areas expect to cofund PPIs • 1 in e-Health, 3 in ICT, 1 in Transport, 1 in research infrastructure • 11 areas expect to support networks of procurers preparing future PCPs/PPIs • 1 in bioeconomy, 4 in Energy, 2 in Climate, 2 in ICT, 1 in security, 1 in research infrastructure + Galileo/GNSS activities + possible Geant research infrastructure procurements * Depends on actual take-up/proposals received For comparison (funding in previous years) 2013: € 94 million 2011-2012: € 42,9 million 2009-2010: € 4,5 million

17. Background info Official Horizon 2020 docs – funding conditions: http://ec.europa.eu/research/participants/portal/desktop/en/funding/reference_docs.html#h2020-work-programmes-2014-15-annexes (Annex D&E) DG CNECT website on PCP and PPI: FAQs, ongoing projects, initiatives in Member States, upcoming events, etc Keep informed: subscribe yourself to the CNECT PCP-PPI newsletter Pre-2014 info: http://cordis.europa.eu/fp7/ict/pcp/home_en.html Post-2014 info: http://ec.europa.eu/digital-agenda/en/innovation-procurement Slides from 23 Jan 2014 Info Day: Commission ppts + proposal ideas from participants that attended the info day http://ec.europa.eu/digital-agenda/en/news/info-and-networking-day-about-funding-opportunities-pre-commercial-procurement-pcp-and-public Finding partners:Procurement forum, PCP-PPI Linkedin group

18. Examples of PCP and PPI: Backup slides

19. Let's hear now from the experience of two of the first PCP and PPI pilots projects that are funded by EU framework programmes: • Enigma, PCP project • Smart Homes, PPI project THANK YOU!

20. National PCP example - NL – Digital inspection dikes • Dike bursts in Netherlands (2003-2004) • PCP (2006): Developing/comparing possible solutions for real time dike inspection & early warning of dikes and dams • 2 complementary products (satellite, sensor)brought to market by PCP. Optics solution found financing itself as well. Sensor / chip based solution Satellite based solution approach Optics based solution Camera based solution Helicopter based solution

21. National PCP examples – UK and Italy - Healthcare Virtual Veins Potential £19m p.a. saving Non-invasive glucose meter Potential £30m p.a. saving One hand syringe holder Potential £160m p.a. saving Is enabling 6 new small innovative companies to enter a market traditionally dominated by large vendors Potential Value PCP type projects to NHS in UK: • Improve the quality of the patient experience • and generate significant cost savings (£236m). First effects on the companies: • A number of SMEs in the PCPs have attracted • significant financial investment (£290m). PCP Niguarda Hospital – Lombardyregion Easy-to-use automateduniversalsystem for moving hospital beds, with anti-collision and safetysystems, notneeding guide lines or trackseven on non rectilinearroutes Clean Room £4,000 per HCAI avoided 21

22. Example transnational PCP - CONNECT Traffic Management CHARM project is lead by 3 road authority procurers: Rijkswaterstaat (NL), Highways Agency (UK), Department Mobility and Public Works - MOW (BE). Nine additional road authorities are associated to the CHARM PCP to maximise potential market uptake: Connekt (NL), Landesbetrieb Straßenbau NRW (DE), ASFINAG (AT), Trafikverket (SE), National Roads Authority (IE), Société des autoroutes de Paris et Normandie (FR), LGC transport (DK), Transport for London (UK), Mobiris (BE) The CHARM PCP focuses on the move towards an open modular traffic management architecture by getting modules developed that will optimise network performance, increase road safety and reduce CO2 emissions by improving network management, incident prediction and prevention and cooperative ITS. Benchmarking indicates 20% cost reduction on cost of traffic management centers can be achieved by moving towards an open modular architecture agreed across European countries. Latest News: CHARM call for tender closed on 23 October 2013. Offers are under evaluation. Max 12 tenderers expected competing in PCP phase 1, 9 in PCP phase 2, and 6 in PCP phase 3

23. Example transnational PPI - CONNECT Elderly Care • STOP AND GO is led by 6 procurers: Regional Health Agency Campania (IT), Health agency province • Catanzaro (IT), Health agency Rome (IT), Eastern Cheshire Clinical Commissioning Group (UK), Health • procurement agency/Junta de Andalucia (ES), Gemeente Helmond (NL) • The STOP AND GO procurers plan to undertake together a €17,2M public procurement of innovative • solutions to trigger the market to deliver ICT based telecare services that enable to care for frail elderly • that suffer from multiple conditions at the same time such as heart failure, diabetes, etc. • Additional national and European health sector organisations that also participate in the project help to • develop PPI tender specifications suitable for European wide deployment of the solutions. • Latest News: STOP AND GO project expected to start March 2014