There is a lot to learn from each other, because this new style of public procurement is far from simple. It asks for new competences from city people and companies. There are all sorts of legal issues that must be addressed. For example, the new solution must be truly innovative, but how can you know that it is not somewhere on the market already? Moreover, for cities it is not straightforward to define precisely what the “urban challenges” are; civil officers are not used to think in such terms. Companies/suppliers on their turn must get used to working with the city in a different way, learning how to navigate the bureaucracy, and how to “co-develop” with the city and other partners, not knowing exactly beforehand what the (commercial) results will be. So, reasons enough to share what goes well and what might need improvement….
Växjö meets Amsterdam to discuss innovative procurement: some takeaways
Amsterdam meets Växjö <own photo>
The Swedish city of Växjö is experimenting to co-develop innovative urban solutions with the private sector. Examples of challenges are better waste collection (see case), data-driven snow clearing services, or a better and more efficient food delivery for the elderly. Funded by UIA in the Diaccess project, the city is adopting the Innovation Partnership model. This model makes it possible for a city to work closely with companies to develop a new product or service, rather than buying it “off the shelf”.
Växjö is not the only city to work on this, many others do the same, and Amsterdam is one of the cities that has gained much experience in recent years with this method. The Växjö project team set up a call with their Amsterdam counterparts, and they decided to meet each other for an in-depth exchange. In April, a delegation from Växjö visited Amsterdam. Like Växjö, the city of Amsterdam sees the need to work closely with companies to co-develop urban solutions, from the belief that this will bring better results for the city and its citizens but might also help companies to thrive. Amsterdam adopted the Innovation Partnership model in two larger projects so far: One to improve crowd management systems in urban “hotspots” during very busy events such as Kings Day; the other to develop sustainable, future-proof sports pitches.
One of Växjö’s projects is to co-develop (with a supplier) a more efficient waste collection process. The data comes from sensors in bins that measure how full the bin is. In April 2022, it was first tested with 1400 sensors on waste bins, in northern Växjö. It is the largest test in Sweden and perhaps even in the world for needs-adapted emptying. There have been similar projects before, but what is new here is how it is connected with system intelligence, which results in operational driving schedules for the drivers. The first step is that sensors in the vessels send information about the degree of filling. If the containers are not full enough, but are judged to be ready for the next run, the space is removed from the driving list and the driver is instructed to go to the next where the degree of filling is high enough. “Right now it is a test, but if you make this work, it can be really good”, says Jonas Gustafsson who is one of two drivers who drive in the area where the test is carried out. Jonas sees potential for reduced and unnecessary transports, because today they drive to environmental houses where the containers are far from full. The test is being carried out by SSAM (the public waste collection company) in collaboration with PreZero, system supplier Bintel AB and local ICT company Wexnet, which is responsible for the sensors.
Amsterdam took the initiative to develop Innovatie Partners (Innovation Partners), a platform for entrepreneurs who want to collaborate on innovation with the public sector in The Netherlands. With clear information and useful checklists, applying for complicated tenders and grant procedures becomes a lot easier. The platform contains a database of current challenge-based tenders from Dutch public agencies, but also contains a lot of relevant (legal) information for public buyers who want to engage in innovative types of procurement. See https://innovatiepartners.nl/en/
Here are some key challenges and takeaways that might also be relevant for other cities looking to deploy innovative procurement:
Develop training for companies and civil officers and companies. Here, Amsterdam has the longer experience; in their Startup in Residence programme, they integrated a 4-month training period to prepare start-up firms to work with the city and co-develop a solution; It also includes an active role of the “challenge owners” from the city side. This helps to build trust and understanding, and raises the chances of success.
Don’t go for perfection and don’t be too afraid to make mistakes…. It is tempting to see innovative public procurement as a legal minefield (which admittedly it is, to some extent), and become paralysed by critical questions such as: do you charge the right price? Are you 100% sure that your market consultation is watertight? How do you know that you did not exclude suppliers on the wrong grounds? Experimenting is better than doing nothing. Amsterdam and Växjö show that it’s worth the effort.
Who pays for the development costs of the innovation? In Växjö, it’s on the companies. They carry the costs, but if they succeed, the IP is theirs, they own the data, and they can make money with it. In Amsterdam, a €100k budget was available to fund the development phase to create the crowd control software on urban hotspots. But Amsterdam is also in the process of implementing a stricter data policy which basically states that the data must be public, leaving less commercial room for the companies to exploit it.
How to integrate the new solution into the systems of the municipality? Here, tensions can arise. In Amsterdam, the city department wanted a crowd management system that could potentially be easily integrated in the systems of the municipality. The private partners however preferred to develop it as “software as a service” in order to improve scalability to other clients. Växjö had similar problems to integrate the waste collection optimization software into the cities IT systems that are managed by other vendors, only solved after long conversations and negotiations….
For which problems is innovative procurement a solution? Växjö found out -the hard way- that it might have been better to start with relatively simple challenges, to learn how it works, before going to more complex ones.
Manage expectations. It is key to explain difference between traditional procurement and innovation partnership – for both suppliers and internal organization. That will help to ensure genuine interest and commitment from both the City and the supplier and avoid disappointment at a later stage.
Help city departments/public agencies to define the urban challenge. The challenge definition stage sets the tone for the types of companies that might be interested and also helps to manage expectations on both sides. Both Amsterdam and Växjö found out that civil officers need substantial support for this.