Directive 2014/24/EU

Procedures and approaches in PPI
Relevant procurement procedures subject to the
Public Procurement Directive 2014/24/EU
Potential tender approaches in PPI
The Commissions definition of PPI
From the FAQ’s on PCP published on the
FAQ no 19:
PPI is when contracting authorities, possibly in cooperation with
additional private buyers, act as lead customer (also called early adopter
or launching customer) by procuring 'innovative’ solutions (not the R&D
to develop them) that are newly arriving on the market but that are not
yet available on large scale commercial basis due to a lack of market
commitment to deploy.
A demand-side policy instrument to enhance market
penetration speed for ‘innovative solutions’
Everett Roger’s S curve – the tilting 50 % to convince
the market
How the Commission connects PPI to PCP
A definition that
makes PPI a supplement to PCP or other R&D
procurements (art. 14 of Directive 2014/24, art. 16 f of the
“old” Directive 2004/18/EC
does not directly link PPI to procurement of R&D or mixed
procurements of R&D and commercial procurement
makes PPI the ‘Phase 4’ of PCP
makes PPI a policy related instrument with the goal of
enhancing deployment of already developed “innovative
The ‘mission-oriented’ definition of PPI
From the publication “PPI as Mission-oriented Innovation
Policy”, Professor Charles Edquist, Lund University, 2012
PPI occurs when a public organization places an order for the fulfillment
of certain functions within a reasonable period of time (through a new
product). Hence, the objective (purpose, rationale) of PPI is not primarily
to enhance development of new products, but to target functions that
satisfy human needs or solve societal problems.
....innovation is needed in all PPI before delivery can take place. In
contrast to PPI, regular procurement occurs when public agencies buy
ready made products such as pens and paper “off-the-shelf”, where no
innovation is involved.
A definition that
directly link PPI to procurement of R&D/innovation or
mixed procurements of R&D and commercial procurement
presupposes that PPI’s will always relate to “solutions” that
is not already on the market and ready to “plug-and-play”
link PPI to (further) demand-side driven innovation in a
view to fulfil specific needs
‘Innovation ‘
Directive 2014/24/EU (Procurement directive)
Article 2, no. 22
‘innovation’ means the implementation of a new or
significantly improved product, service or process, including
but not limited to production, building or construction
processes, a new marketing method, or a new
organisational method in business practices, workplace
organisation or external relations inter alia with the purpose
of helping to solve societal challenges or to support the
Europe 2020 strategy for smart, sustainable and inclusive
‘Research & Development’
Directive 2009/81/EC (Defence and security directive)
Article 1, no. 27:
‘Research and development’ means all activities comprising
fundamental research, applied research and experimental
development, where the latter may include the realisation of
technological demonstrators, i.e., devices that demonstrate
the performance of a new concept or a new technology in a
relevant or representative environment;
See also recital no. 13.
‘Research and innovation projects’
Directive 2014/24/EU (Procurement directive)
Article 31 (6) – Innovation partnerships
“….research and innovation projects aimed at meeting the
needs identified by the contracting authority that cannot be
met by existing solutions.”
The “common” understanding of PPI
Commercial procurement
Procedures subject to the procurement directives
With the aim of procuring ‘innovative solutions’ or
improving or applying/deploying already invented solutions
Might contain R&D, which (seen isolated) could have been
procured in accordance with the exemption rules in art. 14
(Dir. 2014/24/EU) or art. 16 f (Dir. 2004/18/EC)
Relevant procedures for PPI subject to the
Public Procurement Directive 2014/24/EU
In principle – any procedure
The obvious procedures
Innovation partnership (art. 31)
Competitive dialogue (art. 30)
Competitive procedure with negotiation (art. 29)
Design contest (art. 78)
The “light regime” – social services (art. 74)
Relevant procedures for PPI subject to the
Public Procurement Directive 2014/24/EU
The less obvious procedures – but in practice the
most utilised (and encouraged) procedures:
Open procedure (art. 27)
Restricted procedure (art. 30)
Innovation partnership
“The innovation partnership shall aim at the development
of an innovative product, service or works and the
subsequent purchase of the resulting supplies, services or
works, provided that they correspond to the performance
levels and maximum costs agreed between the contracting
authorities and the participants.”
The “commercial extension” of PCP
Competitive dialogue and competitive procedure with
Article 26 (4)
(a) with regard to works, supplies or services fulfilling one or
more of the following criteria:
(i) the needs of the contracting authority cannot be met
without adaptation of readily available solutions;
(ii) they include design or innovative solutions;
Potential tender
approaches in PPI
Early announcement
Forward Commitment Procurement
Early announcement of intention to procure or the deploy
innovative solutions
“Prior information notice” in the OJEU (Official Journal of
the European Union)
Between announcement and tender: preliminary market
consultation (art. 40) – have the industry solutions reached
the required readiness (technology, tests, price?)
Early announcement (continued)
Combined with long time limits for the receipt of tenders?
Guarantee of minimum procurement volume?
Notice: Restricted opportunity for dialog during the period
from publication of contract notice to time limit for tenders
(if open or restricted procedure)
Functional requirements
Design the technical specifications with the aim of allowing
innovation, efficiency improvement, and new ways of
thinking – “open specifications”
Requires focus on the evaluation criteria vs. focus on the
(details in the) technical specification
Requires focus on minimum requirements
Functional requirements (continued)
Suitable for PPI’s following PCP’s or other Public-PrivateInnovation projects (art. 14/16 f)
Helps to prevent supplier lock-out / disqualifying
competitive advantages
Requires focus on the evaluation criteria vs. focus on the
technical specification
Requires focus on minimum requirements
Allow the procuring authority to evaluate technical
specified solutions and other market “other solutions”
In principal a combined tender with, and without, open
(functional) specifications
Requires focus on minimum requirements
Requires very much focus on the evaluation criteria –
same evaluation criteria as “normal tender”
Total Cost of Ownership (TCO)
Life-cycle costing (art. 68)
E.g. energy efficient or labour cost-saving solutions
An evaluation-technical price comprising different aspects
of the costs over the life cycle of a product, solution etc.
Focus on data (from the suppliers) and transparent,
objectively verifiable and non-discriminatory methods of
calculating life-cycle costs
Mandatory legislative EU acts for calculating life-cycle
costs shall be applied (updated Annex XIII)
Remuneration for participation and
Increases the incentives for participating and
developing/modifying/adapting solutions
Today: Competitive dialog (and design contest)
Directive 2014/24/EU: + innovation partnership
The same mechanisms as in PCP – competitive
development but combined with a public procurement
Other approaches or tools?
IPR sharing (presupposed in innovation partnership)
Free test sites?
A combination with other policy instruments (subsidies, tax
incentives etc.)
Always consider the risk of illegal state aid!

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