1. Pre-Commercial Procurement
EU Commission, DG INFSO
Strategy for ICT research and innovation unit
PCP website:

2. Why PCP?
RTD expenditure as % of GDP
3,5 3
2,5
… but … 2
1,5 1
0,5 EU US
Many public sector challenges unsolvable
via public procurement of existing solutions
Forward looking R&D procurement strategy required
R&D Procurement
Basic +applied R&D funding
Public expenditure is 47% of EU-25 GDP, but ~20 times less is spent on R&D procurement in EU (~2,5 Bn€) versus US (~50Bn€)
More demand to develop new innovative solutions for public sector challenges for which there are no products on the market yet (R&D procurement) can fill half of the EU-US R&D investment gap 2

3. Where do we come from? December 2007 COM on PCP
Specific approach for public sector to procure R&D services aimed at improving quality and efficiency of public services:
Competitive development in phases
Risk-benefit (IPR) sharing between procurers & suppliers
Separation from deployment phase
Public Procurement of
Innovative Solutions (PPI)
R&D / Pre-commercial Procurement (PCP)
Phase 0
Curiosity
Driven
Research
Phase 1
Solution design
Phase 2
Prototype
development
Phase 3
Original development
of limited volume
of first test products /
services
Phase 4
Deployment of commercial end-products
Diffusion of newly developed
products / services
Group of European procurers
Pool public demand and specify needs
Manage procurement process
Share risks and benefits together and with suppliers
Cost shared, IPR shared, knowledge shared
Compatible with procurement directives and state aid
Exception to procurement directives
Legally defined as procurement of ‘R&D Services’
Possibility to restrict to ‘European wide offers’
Possibility to apply at European and Member States level
Need for incentive to support the framework
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
… in line with WTO proc. rules, EU Treaty, State aid free

4. Based on good practice
Procure R&D in steps (solutions, prototypes, test series) to reduce risk for procurer and give SMEs a chance
Grow size of tasks gradually, make bridge from ideas to first test product, procurer = SME first customer reference
Risk-benefit sharing with suppliers
Less risk procurer, commercialisation opportunity suppliers
Competing development with multiple suppliers
Better value for money. US defence report: in-development competition reduces first unit acquisition cost with average 20%*
Sharing R&D costs with other procurers
Joint PCP procurement to reduce fragmentation of public demand and foster standardisation/interoperability in areas of public interest
* 'Competitive Dual Sourcing', Jacques Gansler, 7/10/2007. Based on analysis from Annex G, 'International Armaments Cooperation in a era of coalition security', report US Defence Science Board, August 1996

5. Win-win for all stakeholders
Politicians
Suppliers
 Quality of public services
(focus on political priorities)
Improve innovation climate
(Attract foreign investment,
 R&D employment in Europe)
Shorter time to market
(earlier customer feedback)
Economies of scale
(IPRs -> wider market)
- New lead markets
Global competitiveness
First buyer in early R&D
Pre-commercial
Procurement
Reduce cost of procurement
Shared risks & benefits
- Reduce risk of innovation
… at the ‘Lowest Price’
Get the ‘Best Product’…
Politicians
-Prevents political fiasco of buying big expensive useless system
(reduce risk of buying expensive system that does not deliver)
Reduce cost of big procurements
(risk management and sharing, pooling demand)
-Create new lead markets
(incentive for R&D where there is no natural market stimulant
unless demand is driven from public sector side)
Increased export opportunities
Improved local innovation climate
Increased attractiveness for foreign investment
Increased employment opportunities
(ability to restrict to EU suppliers)
Shape industry R&D to public needs
Address ‘public market innovation failure’
Reduce risk in commercial tendering
(increase technology knowledge)
Favour supplier competition
First time right’ product
(reduce projects going over budget,
EU interoperable from the start)
Pooling of resources (share R&D cost)
Economies of scale, license free use
Attractive to VCs and other investors
( financial viability to deploy innovations)
Procurers

6. Status of PCP implementation across Europe Update February 2012 status
Awareness Raising
Exploring possibilities
Working on
framework
Framework
identified
Pilots
started
SILVER
Latvia
Slovenia
Denmark
Malta
Spain
Germany
Romania
France
Sweden
Greece
Finland
Cyprus
Ireland
Italy
United Kingdom
Luxembourg
Bulgaria
Portugal
Lithuania
Netherlands
Hungary
(Eszak-Alfold)
Slovakia
Austria
Estonia
Norway
Poland
Czech Republic
BE (Flanders)
Switzerland
SILVER: First EC co-funded PCP pilot started January 2012
(Supporting Independent Living of Elderly through Robotics) 6

7. FP7-WP 2009 EU support for PCP Networking & awareness raising activities
2009 calls for proposals
support the establishment of networks of public authorities on pre-commercial procurement
promote awareness-raising and experience-sharing on PCP, debate mid-to-long term public needs requiring R&D of new technology solutions with potential role for PCP strategies
3 CSAs
in FP7 ICT
2 INTERREG IV RFEC
fast track networks
PCP at
regional level
in Hungary,
Poland, UK
New project,
speed up innovation
time-to-market
from demand side
PCP in
Intelligent
Transport
Systems
PCP in ICT
for health
and energy
domains
PCP in egov
in eastern
European
countries

8. PCP support piloted in FP7 WP 2011-12 Cross-border PCPs on topics of common EU interest
Support for public authorities planning joint implementation of pre-commercial procurements on topics of common European interest
EU contribution (CP-CSA): combination of
CSA: Reimbursement of eligible costs for preparation, management and coordination of the joint PCP call for tender (100% funded)
CP: Reimbursement of max 50% of the eligible costs for the development of the new ICT solutions procured through the joint PCP (for financing of the R&D to be performed by the bidders/subcontractors selected via the joint PCP)
* CP-CSA = combination of CP and CSA funding within the same EC grant agreement

9. FP7 WP 2011-12 support for PCP In ICT areas of FP7 programme
Calls for developing new ICT solutions that can improve quality and/or efficiency of public services through joint PCPs:
FP7-ICT
Deadline: 18/01/2011
FP7-ICT
Deadline: 17/01/2012
INFRA
Deadline: 23/11/2011
Objective 5.3(d)
Call for joint PCP
in specific domain:
‘services for mobile
access to patient
health info’
Objective 5.4(d)
Call for joint PCP
in specific domain:
‘robotics solutions
for ageing well’
Objective 3.5(d)
Call for joint PCP
in specific domain:
‘photonics based
solutions to improve
quality/efficiency
of public services’
Objective 11.1
Open call for
(a) Networking &
(b) joint PCPs
in any domain of
public interest:
‘e.g. egov, transport,
energy, environment,
security, health etc’
Call for joint PCP
in specific domain:
‘high performance
computing
resources for
PRACE’
10 Mio €
3 Mio €
3 Mio €
3 Mio €
5 Mio €
CP-CSA
CP-CSA
CP-CSA
CP-CSA
CSA & CP-CSA

10. PCP activities in FP7-ICT-WP2013 Proposal under discussion
EC co-financing for cross-border PCP pilots
CP-CSA instrument: Commission not involved in PCP
Digital preservation (5 €m)
E-learning (5 €m)
ICT for Health / Ageing well (8 €m)
Call open to joint PCPs in any area of public interest (4 €m)
Joint Commission - MS PCP procurement
eGov / Cloud Computing (10 €m)
EC support for networking procurers in preparation of PCPs
ICT for health / ageing well
Robotics
Future Internet

11. What does joint PCP procurement cover
Large scale
public procurement
of end- solutions
Preparation phase
before launching PCP
Pre-commercial Procurement
Management/Coordination joint PCP P1
R&D work
PCP tender
ONE joint P5 P2
Commercial
Tendering
Formation of
joint procurement
constellation
Intermediate
Evaluation
Selection
Intermediate
Evaluation
Selectiona
Preparing joint PCP
Supplier B
Supplier C
Supplier D
Supplier E
Supplier A
Lessons learnt Dissemination
Supplier
A,B,C,D,E
or X P4 P3
Supplier C
Supplier D
Supplier E
Supplier C
Consortia of public bodies
e.g. P1->P5
Supplier E
Phase 4
Commercialisation of products/services (commercial development)
Phase 1
Solution
Exploration
Phase 2
Prototyping
Phase 3
Original development of a
limited volume of first
products/services
in the form of a test series
Typical Product Innovation
Life Cycle
Product
Idea
Product Idea
Solution
Design
Solution
Design
Prototype
Prototype
First Test-
Products
Commercial
End-Products
VC & other financers
Input to standardisation & regulation 11

12. Specific requirements for joint PCP procurement
EU wide publication of PCP tender, at least in English
in compliance with Treaty principles
All offers evaluated based on same objective criteria
regardless of company size, location of head office
Use functional/performance based specifications
not prescribing specific solution approach
Joint PCP has to cover phase 1 to 3 and needs to have multiple companies developing in competition
one framework contract with 3 specific contracts/phase
Tenders awarded based on best value for money (not just lowest price) and market price (no State aid)
IPRs shared: ownership rights with companies, free usage rights & right to license with procurers
Support Europe 2020 objectives of growth and job creation
relevant portion of the activities related to PCP contract in Europe*
* In the EEA or a country having a Stabilisation and Association Agreement with EU

13. Outlook for Horizon 2020 Where are we now – where can we go?
Awareness Raising: events, PCP newsletter etc
Political agenda’s
EU level: DAE & Innovation Union targets on PCP & PPI
MS agenda’s: half of EU MS are/start engaging in pilots or are defining their PCP / PPI policy strategy
Ongoing pilots EU support to procurement actions
Creating networks of public procurers
Co-financing PCP & PPI procurements
Mainstreaming EU support in Horizon 2020
Draft Commission Horizon 2020 proposal includes financial support for cross-border PCP & PPI actions
Possibility for EU to be involved itself also