Pre-commercial Procurement of Innovation Building together innovative solutions Ulf Dahlsten, Director European Commission, DG INFSO

Page 2 Issues at stake for Europe Huge societal challenges for Europe Huge societal challenges for Europe Health, inclusion, security, government, transport Transformation through innovation is a must Europe behind US & Asia in innovation Europe behind US & Asia in innovation Also in ICT! ICT, a constitutive technology shaping innovation

Page 3 The ultimate goal A competitive Europe in a global world!

Page 4 Growth through innovation Innovation EducationResearchEntrepreneurshipIPR & StandardsRisk capitalFirst buyers

Page 5 Call for action Renewed action plan for Lisbon Renewed action plan for Lisbon Action plan on Research and Innovation Action plan on Research and Innovation Aho report Aho report Address public market fragmentation

Page 6 A missing link in innovation Innovation no mans land Research push Market pull Phase 1 Solution proposal Phase 2 Prototype Phase 3 Pre-commercial product/service Phase 4 Commercial product/service Phase 0 Research

Page 7 Reduced time to market Research push Market pull Research pushMarket pull Time to market Commercialisation

Page 8 Pre-commercial procurement Pre-commercial Procurement of Innovation Innovative Procurement Procurement rules Procurement of R&D Services - Exception to procurement rules Phase 1 Solution proposal Phase 2 Prototype Phase 3 Pre-commercial product/service Phase 4 Commercial product/service Phase 0 Research

Page 9 Pre-commercial procurement can fill half of EU-US R&D gap

Page 10 The US procurement practices Similar procurement budget as EU but,… Similar procurement budget as EU but,… …20 times more on high-tech, high risk …20 times more on high-tech, high risk Preferential policies by exception to WTO GPA Preferential policies by exception to WTO GPA Wide experience in Technology risk management Wide experience in Technology risk management

Page 11 State of play in Europe Highly fragmented procurement Highly fragmented procurement So far, marginal role in innovation… So far, marginal role in innovation… …but growing interest …but growing interest UK and NL launched specific measures

Page 12 State of play of legal framework New procurement directives New procurement directives Strengthen Innovative procurement possibilities New State Aid Framework in preparation New State Aid Framework in preparation New measures for risk taking and experimentation

Page 13 Supplier A Supplier C Supplier D Supplier E Supplier A,B,C,D,E or X Phase 1 Solution proposal Phase 2 Prototype Phase 3 Pre-commercial product/service Tendering (GPA not applicable) Tendering (GPA applicable) Supplier B Supplier C Supplier D Supplier E Supplier C Proposed framework Phase 0 Research Pre-commercial Procurement of Innovation Phase 4 Commercial product/service Innovative Procurement

Page 14 Pre-commercial procurement of R&D services Public service contract for procurement of R&D services

Page 15 Pre-commercial procurement of R&D services Excluded from WTO GPA Excluded from WTO GPA Excluded from Public procurement directives Excluded from Public procurement directives Compliant with European Union Treaty principles Compliant with European Union Treaty principles Non-discrimination, transparency, objectivity Compliant with New State Aids rules Compliant with New State Aids rules Limit to aid intensities

Page 16 Pre-commercial procurement of R&D services R estriction to EU companies allowed R estriction to EU companies allowed Risk-benefit sharing between procurers and suppliers allowed Risk-benefit sharing between procurers and suppliers allowed I ncentives below permissible aid intensities allowed I ncentives below permissible aid intensities allowed

Page 17 Win-win for procurers & suppliers First time right solution First time right solution Shared costs, risks and benefits Shared costs, risks and benefits Increases public sector effectiveness Increases public sector effectiveness Economies of scale reduces cost Economies of scale reduces cost Shortens time to market Shortens time to market Addresses market fragmentation Addresses market fragmentation Improves European industry competitiveness Improves European industry competitiveness

Page 18 National support Financial & Political National networks Procurers Steering pre-commercial procurement EU support Financial & Political EU networks Procurers Core group of procurers

Page 19 Next steps Clarification of legal boundaries Clarification of legal boundaries Incentive scheme Incentive scheme Competitiveness and Innovation Programme Workshops with procurers Workshops with procurers Organised with the Committee of the Regions Study on practices in EU, US & Asia Study on practices in EU, US & Asia

Page 20 More information Contacts at European Commission – Ulf Dahlsten, Director DG INFSO, – Aymard de Touzalin, DG INFSO, – Lieve Bos, DG INFSO, 'Pre-commercial Procurement of Innovation – A technical report by an ad-hoc National IST Directors Forum Working Group, March