mobilizing r&d budget, current expenditure and structural funds thessaloniki, 29 th april 2014...

Mobilizing R&D budget, current expenditure and Structural Funds

Thessaloniki, 29th April 2014

Innovation procurement in Italy

Sara BedinIndependent expert on innovation procurement

for MIUR-MISE and Lombardy Region

EU High level event «Digital Innovation for Regional Growth»

Inserire titolo del documento

2© 2014 Sara BEDIN. ALL RIGHTS RESERVED

Innovation policy mix and «market failure»

I n n o v a t i o n p a r t n e r s h i p

P r e - c o m m e r c i a lPPI - Procurement of innovative solution

equity Crowd-funding

Crowd-sourcing competitive/collaborative

P e e r – t o – p e e r f i n a n c i n g

Fundraising 2.0

P u b l i c P r i v a t e P a r t n e r s h i p

T e c h n i c a l d i a l o g u e

L I V I N G - L A B

P2P Social lending

Competitive Dialogue

St a t e A i d

INNOVATION VOUCHER

D e s i g n c o n t e s t

C o n t e s t of i d e a s

Explorative survey

N e g o t i a t e d p r o c e d u r e

P r o j e c t -f i n a n c i n g

Technological F o r e s i g h t

Public procurement

Innovation REUSE 2.0

T a x c r e d i ttechnology transfer

Policy maker perspective: ideological adoption of instruments to promote

innovationMore than 70% of “successful” R&D funded project don’t have a commercial success

(exploitation)



Working on the Innovation Policy Portfolio

...enabling an earlier reality check of industry R&D against concrete needs and challenges,

...maximizing the effectiveness of the R&D process/effort,

...optimizing the value for money and impact of public R&D spending / investments,

...increasing the percentage of successful commercialization of R&D results,

...avoiding to distort the competition on innovation,

...enabling exploitation of innovation by supplier to scale-up business to other clients and markets,

...allowing SMEs to growth and compete in global market,

...creating optimun conditions for take-up of R&D&I through standardization.



Procurement instrument mix and «market failure»

I n n o v a t i o n p a r t n e r s h i p

Public procurementGreen procurement

T e c h n i c a l d i a l o g u e

Competitive Dialogue

Explorative survey

N e g o t i a t e d p r o c e d u r e

R&D public procurement

D e s i g n c o n t e s t

C o n t e s t of i d e a s

P u b l i c P r i v a t e P a r t n e r s h i p

Public C O N C E S S I O N S Public procurer perspective:

uncritical modus operandi repetitionMore than 50% of public procurements for deployments of commercial solutions do not

achieve the expected results (in terms of quality, time, cost).



.... aligning the objectives of the public and private parties for the widespread exploitation of innovation,

...fostering competition during execution and innovation and extending the realization of efficiency and effectiveness gains also over longer the contract period,

...avoiding to lock-in to one/few suppliers,

...enabling a better understanding of demand and allowing businesses to reduce market entry times,

....sharing risk and benefit, obtaining the best whole life-cycle value for money, without assuming (all) the technological risks,

...increasing spontaneous innovation investment levels within the firm (input additionally),

...pooling the efforts of several procurers.

Working on the Procurement Procedure Portfolio



POL CY M ND

SK LLs

Sh ft

The importance of changing mind-sets

SUPPLY-SIDE POLICY

DEMAND-SIDE POLICY


7© 2013 The European House-Ambrosetti S.p.A.. ALL RIGHTS RESERVED

DEMAND-DRIVEN INNOVATION/INDUSTRIAL POLICY

WHY:Raising industry’s innovative performance and creating opportunities for companies to take international leadership in new markets

WHY:Increasing long-term effectiveness and efficiency of public expenditure, as well as improving the quality and sustainability of public services, filtering out technological risk

INNOVATION ORIENTED PROCUREMENT STRATEGY

CO

ND

ICIO

SIN

E Q

UA

NO

NEFF

EC

T

the cause-effect relation must not be swapped!

PCP has a twin relevance, both as strategy and policy



The public sector should assume a double role in promotion of R&D&I via PCP (and PPI)

(1/2)

Financial support to implement innovative procurement action

and to pool demand

PCP work fully within EU competition lawScope of the EU State Aid rules for R&D

Framework

payment of full cost at market

price

PUBLIC PURCHASER

21e.g. PCP Mutually

binding and risk-benefit

sharing (service) contract

provision of R&D services +

financial compensation

POLICY MAKER

contribution, funding

SUPPLIER



POLICY MAKER

PPI

PPI

PCP

foster and encourage

the participation

of SMEs

createawareness of

the new policy tools

stimulate the “intelligent customer“

modus operandi

cross-organizational coordination to

the public demand and

R&D budgets

activate a positive

climate for innovation

Reduce the LCC of

solution WW

and improve the

sustainability of public

services KK

Reduce risk of mistakes in follow-up

for large scale deployment

JOINT PCP

Improve productivity of public services YY

Improve long-term quality of

public services XX

The public sector should assume a double role in promotion of R&D&I via PCP (and PPI)

(2/2)

reduce barriers to a wider private adoption of

new solutions



The national “top down” approach for PCP /PPI

The National PCP/PPI funding program

through the Cohesion Action

Plan

Amount of resources allocated: 150Million EUR

Source of funding: re-invested resources resulting from the reduction in the national co-financing quota (National revolving Fund), originally allocated for NOP R&C

Intensity of funding: (100% PCP) – (~ 20% PPI)

Procurer/Recipients of innovation: Body governed by public law engaged in public services and localized in (one or more of) the 4 (IT) Convergence Regions

Policy maker: MIUR (Ministry for education, research and innovation) and MISE (Ministry for Economic Development)

Adjudicating authority: (for PCP) MIUR (Ministry for education, research and innovation) and MISE (Ministry for Economic Development); (for subsequent PPI) local PAs.

Implementing act: Public notice for the recognition of innovation needs in Convergence Region - DD 437 of 13 /03/2013).



The Cohesion Action Plan reprogramming measure in Italy

% %€ 4254 € 2555,7 € 877

Axis II- Support for innovation € 1721 € 1664,1 € 586Axis III - Technical assistance € 230 € 204,5 € 18Horizontal priorities € 0 € 0 € 300

TOT € 6205 100% € 4424,3 100% € 1781

€ 3103 50% € 3102,7 70,10%€ 3103 50% € 1321,7 29,90% € 1781

€ 3233 52% € 2365,7 53% € 867€ 2973 48% € 2058,7 47% € 914

€ 100€ 50

Innovation public procurement (quota referred to MIUR)Innovation public procurement (quota referred to MISE)

Axis I - Support for structural changes to innovation

referred to EC ERDFreferred to National Revolving Fund (FdR)

referred to MIURreferred to MISE

NOP R&C initial funding NOP R&C reprogrammed (National Operational Program Research and

CAP (Cohesion

Action Plan)EURO (Million) EURO (Million)EURO (Million)



(submitted innovation needs)

Admission criteria

1.Commitment to identify and organize a real-life customer environment in order to assess the performance of working prototypes (or limited volume of first products or services in the form of a test series), to demonstrate that they are suitable for production or supply in quantity to acceptable quality standards.

2.Commitment to undertake the procurement of innovative solutions (PPI) resulting from R&D.

(submitted innovation needs)

Award criteria1. Social and economic relevance a)Adherence to the thematic priorities of Horizon 2020.

b)Connection with a priority or urgent challenges emerging in urban areas, metropolitan and regional level.

2. Technical relevance a)Novelty and originality of knowledge needed, with reference to the state of the art – this eventually detected with a technical dialogue before expression of interest.

b)Specification level of the need functional and performance requirements

c)Adequacy of the real-life operating environment identified for the test and experimentation.

3. Industrial relevance and potential target market a)Relevance and coherence of the innovation need with respect to local industrial development objectives

b)Level of demand aggregation/pooling, documented with the number of public bodies involved in the partnership (and not necessarly established in one of the Convergence Region)

c)Target market potential dimension.

The national “top down” funding program for PCP /PPI



Expression of interest evaluation

Co-funded PPI action (procuring

commercial volumes of end-

products)

Sperimentation of different solutions in real-life operational

conditions

Financial allocation to projects

(100% PCP and ~20% PPI)

PCPs procedures design

Candidate PCPs selection

(Open technical dialogues)

Notice of Call for idea

13 March 2013

September 2013

PCP call for tender and procedures management

LOC

AL

LEV

EL

(R

eci

pie

nts

of

innovati

on)

NA

TIO

NA

L LE

VEL

(Polic

y m

aker

+ A

dju

dic

ati

ng

auth

ori

ty)

Expression of interest

submission

Needs assessment

SoA analysis (technical dialogue)

Candidate PCP ranking

The national “top down” funding program for PCP /PPI

June 2014



Recognition of innovation needs in Convergence Region: preliminary figures on geographic distribution

(1/2)

199 projects submitted190 projects eligible



Recognition of innovation needs in Convergence Region: preliminary figures on thematic distribution

(2/2)HEALTH and SOCIAL SERVICES

TOURISM

TRANSPORT, INFOMOBILITY, SUSTAINABLE MOBILITY

PUBLIC SERVICES MANAGEMENT and ORGANIZATION

HISTORICAL AND CULTURAL HERITAGE



The local “bottom-up” approach for PCP /PPI

The Lombardy Region

innovation procurement

pilot

Amount of resources allocated: 750K EUR

Source of funding: Lombardy Region own R&D budget

Intensity of funding: (100% PCP) – (100% PPI)

Procurer/Recipients of innovation: Lombardy Region (General Direction for Healthcare) + Niguarda Hospital (and others local hospitals)

Policy maker: Lombardy Region (Direction for research)

Adjudicating authority: ARCA (Regional Purchasing Agency)

Implementing act: •Agreement ex art.15 L.241 •Public notice for open technical dialogue and public hearing•Public notice for explorative survey•Call for tender publicated in the Official Gazette of the EU + Official Gazette of the Republic of Italy + website + newspapers on 08/03/2013.



(R&D services procurement) Admission criteria

objective and relevant in view of the commercialization

1.No reasons for exclusion as set out in article 38 (National Procurement Law)

2.(Declaration of) the ability to perform all R&D services and contractual activities described in lex specialis (Experimental Development and Intellectual Property rights management contracts)

3.(Declaration) to have accounting and organizational structures to ensure the management, exploitation and /or transfer of IPRs arising from R&D activities.

(R&D services procurement) Award criteria

objective and relevant in view of the commercialization

1.Based on the most economically advantageous offer (not on lowest price)Ability to address the problem and satisfy the requirements

Novelty/innovativeness (progress beyond the state-of-the-art)

Technical feasibility/reproducibility with an industrial process

Quality and effectiveness of the organization and resources

2. Incorporating life-cycle cost and performance in the evaluation of proposals

Measures taken to ensure the environmental sustainability of the solution throughout the life cycle

Measures taken to ensure the cost reduction of the solution throughout the life cycle

3. Including the soundness of the commercialization plan of the bidders.




PPI action (procuring

commercial volumes of end-

products)

Experimentation of different solutions in real-life operational

conditions

Financial allocation

PCP procedure design

Candidate PCP selection

Open technical dialogue

Build

ing a

ware

ness

an

d o

bje

ctiv

e

alig

nm

ent

January 2012

PCP call for tender and procedure management

Pro

cure

r and R

eci

pie

nts

of

innovati

on)

(P

olic

y m

aker

+ A

dju

dic

ati

ng

auth

ori

ty)

Needs identification and baseline assessment

Comprehensive SoA analysis and patent

search

Candidate PCP (preliminary)

rankingApril 2012


Call for idea in health sector

Identifying (potential) PCP projects from

innovation needsBusiness case preparationcost-benefit analysis and investment definition

«WIBGI» moderated focus

group

Perform IPR contract

April 2013



pre-commercial public

procurement

To design a demand driven approach to innovation policy

To ensure sustainable high quality public services

To develop new markets and help commercialization for innovative solutions

To buy Research & Development services

To filter technological risk before a large scale commercial

procurement

To benefit from a more flexible regulation of the implementation

procedure

To address public needs and social challenges through concrete innovation

To support innovation through financial allocations already assigned to public services management (zero budget policy)

To re-establish private spontaneous incentives to innovate

To activate virtuous mechanisms of competitive procurement

To stimulate innovation through public expenditure without beeing locked-

in to any vendor To implement innovations rapidly, cooperating with the market To anchor innovation into reality

To broaden SMEs participation in R&D projects and create opportunities for companies to

take international leadership in new markets

To increase long-term effectiveness and efficiency of public expenditure

WHAT KIND OF SUPPORT DO WE NEED?FINANCIAL INCENTIVATION

and/or CAPACITY BUILDING ?


20© 2014 Sara BEDIN. ALL RIGHTS RESERVED Source: European Commission

R&D procurement expenditure gap: it’s time to act

PUBLIC PROCUREMENT OF PRODUCTS AND SERVICES REPRESENTS AROUND 17% OF GDP IN EUROPE

(ENORMOUS ECONOMIC LEVERAGE)

...If 2% (more) of public procurement spending was addressed to R&D, EU could achieve innovative procurement markets equivalent to those in the US...

...and could benefit from a greater economic leverage than Horizon 2020

€ 2,5 Bn/y versus $ 50 Bn/y in R&D procurement in R&D procurement

(20 times more) Expenditure in R&D (%GDP)

2,1% of GDP in R&D0,1% of GDP in R&D procurement

3 % of GDP in R&D0,5% of GDP in R&D procurement



EU FUNDING PROGRAMS ARE AIMED TO BOOST THE ADOPTION OF PCP/PPI

R&D procurement expenditure gap: it’s time to act



1. SIZING THE MARKET OPPORTUNITIES AT EU LEVEL

> co-funding the procurement value; requiring cooperation between procurers across Europe

through cross-border coordinated (or joint) procurement, whilst developing a strong European home market for innovative products and services;

mobilizing public and private purchasers and networks leveraging the complementarity between partners to bring together the demand in order to create a critical mass to acquire innovative (cost-effective and fit-to-purpose) solutions, whilst creating new jobs and opportunities for business growth in Europe, with particular reference to EU SMEs.

2. ENHANCING INSTITUTIONAL CAPACITY AND STIMULATING THE PUBLIC ADMINISTRATION TO BE MORE INTELLIGENT

> co-funding the CSA part;• supporting the coordination, consortium building,

networking and procurement preparation activities;

Conclusions: the value of Horizon 2020 to speeding PCP/PPI



Sara Bedin

[email protected]: +39.(0)2.467535270 / +39.3470115010

Let’s compete on innovation

For furher info:

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mobilizing r&d budget, current expenditure and structural funds thessaloniki, 29 th april 2014...

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