Tekes Smart procurement program and the innovative procurement funding scheme in Finland
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1 Tekes Smart procurement program and the innovative procurement funding scheme in Finland Tekes Program manager Sampsa Nissinen
2 DM Tekes key figures 2012 Target year turnover expected from company projects 6.2 billion euros The projects created 1,260 new or replacing products, services or processes Projects that were completed in 2012 resulted in 980 patents or patent applications 47 out of 50 fastest-growing technology companies in Finland are Tekes customers 2,900 funding applications 1,700 development ideas tested 1,240 rejected applications Applications processed in 71 days 570 M Funding for companies and research organisations, 570 million euros 350 million euros for company projects, of which 135 million for young growth companies 68 % of company funding to SMEs
3 Hurdles in procuring innovative solutions Current situation, why public sector is not innovative in Finland Lack of expertise and knowledge of procurers Limited interaction between buyers and suppliers Absence of strategy to link policy objectives, procurements and market/ technology developments Perceived conflict between value for money and innovation Tendency to favour lowest cost bids Fragmented markets Limited networking and collaboration between procurers
4 Funding scheme for public procurement of innovation Funding available for the procurement unit for preparing procurement To define what is procured, market dialogue, defining criteria Buy competence when needed End user About 70 project funded so far ( ) Main focus areas so far: Construction and real estate Social and health care Innovations Energy and environment, water supply Aim Buyer Goal is to create added value, for example by having lower life cycle costs, by offering better quality, by employing innovative processes and by environmental friendliness Develop new markets, new services Stimulate innovations on markets with tradition on pure price competition Demonstrate new technology and innovations, references for SMEs The funding typically amounts to 50% of a project's total costs. Seller
5 Some funded innovative public procurement projects City of Tampere Contract models and tools for optimizing energy efficiency in design, construction and operation phases in the built environment in the Tampere area, piloting the models City of Vantaa Totally new type of design competition for new concepts, services and partnerships for the new Kivistö city district. City of Lahti Renewed and unified the organization model and processes for procuring all logistics services for the city, market dialogue with the industry Toholammen energia Oy Need for small scale CHP power plant, that can create a wider specter of heat products (district heating, hot oil, milled peat and pellets). Competitive dialogue based on actual need, implementing new challenging technologies DM
6 Key lessons learned so far - How to promote innovations through public procurement Need identification, outcome-based specification (long term perspective, functional specifications), procuring results Focus on procurement methods, contract models, incentives, competitive dialogue Market dialogue prior bidding process, openness for unexpected and innovative solutions, engage suppliers broadly at the early stage Engage end-user and other stakeholders in the process
7 Key lessons learned so far - How to promote innovations through public procurement (2/2) The buyers are unaware of the possibilities of procurement of innovation if you ask for innovation you get innovation! Need to allocate resources to the pre-procurement / development phase Markets are not changed by one single project, the market need a signal of continuity in order to keep developing
8 Smart procurement program M The aim of the Smart Procurement program is to create smart demand, which will provide the prerequisites for new market creation and growth. Smart demand will allow companies to develop their competitiveness through first commercial references, providing the best possible solutions to many of society's major challenges. The vision is for Finland to be known as a model country of smart demand one in which smart customers create new markets for internationally competitive innovations.
9 Smart procurement Energy and environment ICT Health care Built Environment Security and safety Private strategic procureme nt Main focus areas for the program are those areas where the public (or private) procurement has major impact on the market. The main impact comes from bringing innovative supply and demand together.
10 Aim of the program First commercial references for innovative SMEs. New research knowledge about the impact of smart procurement Creation of thematic or geographical centers where innovative supply and demand meet Examples of improved public services through innovative procurement. Smart (private) procurement shortens the time for innovations to enter the market Influence the general attitude for innovative procurement as an enabler for renewal To build a Tekes toolbox for demand ILU side innovation
11 Huhtasuo School and day care center in city of Jyväskylä Need To build a learning environment with a clear focus on life cycle Efficient and multi use of spaces; setting, controlling and reporting usability and indoor air quality requirements (functional requirements) To utilize new technological solutions Ambitious goals for sustainability and energy efficiency Approach Clear innovation goals Life cycle contract model (20 years, 55M ) Competitive dialogue Benefits The approach enabled to reach goals during the whole life cycle, new solutions can be developed Innovative incentives; 50/50 split for overruns/ savings on energy, heat and water consumption Usability and indoor air requirements fulfilled, multi use partly fulfilled Users Huhtasuo school: children, teachers, other personnel, parents, evening users
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