In the context of the French Presidency of the European Union, the Science and Technology Service of the Permanent Representation of France to the European Union and the CLORA, as programme designer, organised a seminar on public-private partnerships in the research field on 15 October 2008.

 

Mr VANDENBERGHE, (chef de cabinet to Commissioner POTOCNIK), felt that PPP in the field of research were not a natural development, given the very different approaches followed by private and public players.  Mutual understanding and trust were unfortunately lacking at present.  The major challenges facing Europe were on such a scale that no single state could cope on its own.  Likewise, the interplay of market forces alone was not suited to the challenge.

It was on the basis of this analysis that the Commission had developed its framework programme, involving, amongst other things, the creation of technology platforms and JTIs. The basic idea was gradually to transform the FPRD from a project finance instrument into a finance instrument for programmes under PPPs or "PPPPs" (public-public-private partnerships such as ARTEMIS and ENIAC).  However, recent experience showed how complex this new endeavour could be : it took three years to create a JTI.  There were other forms of PPP which could be considered : recourse to innovation-oriented public  procurement, or infrastructure finance. In conclusion, Mr VANDENBERGHE felt that the fundamental issue was still to improve the framework conditions for promoting investment in R&D.

1. 1. Theoretical work on PPPs

Public-private research partnerships in Europe: an overall view of trends and modalities

After setting out the need for European PPPs in driving innovation, Ms Reinhilde VEUGELERS (Catholic University of Leuven – Member of the BEPA), went on to consider how the question had been tackled in European policies, concluding with a presentation on current models.  Private investment in R&D was still very low in Europe; what was more, it had not grown over the last 10 years. The failings of the European innovation system were chiefly down to the weakness of links between public and private players, and between individual players.

In December 2006, in order to reverse this trend, the European Union had established a plan for European innovation; its 10 priorities included bringing industry and science closer together. In the legal sense, a public-private partnership was a partnership contract between the public sector and the private sector, in which the latter took over certain activities from the public authorities.  In a broader sense, it was a very diverse phenomenon involving a long-term relationship between private and public players.  The European Union supported all types of PPP for innovation (infrastructures, growth markets, etc.).

However, R. Veugelers felt that public-private partnerships in science, which were an emerging phenomenon, would continue to be constrained by the advantages to be gained by each of the partners.  The benefits of PPPs included sharing risk, know-how, costs, including access to subsidies for the private partner, researcher mobility and access to networks.  Their limitations were constituted by the  rigidity of research bodies, the low level of industrial demand, IP issues, divergent interests and intermediaries.  She pointed out that industry cooperated with academe when there was no competitive effect (at a stage well upstream of the market) or when the outcome was uncertain (risk-sharing).

R. Veugelers concluded that a European policy to promote partnership between science and industry had to be systemic (linked to innovation policy, with the effect of increasing R&D investment, from scientific supply to industrial demand); it had also to be conducted on a mainly national basis.  The additional contribution from the European Union should consist of making it possible to exchange good practice, and coordinating, evaluating and establishing measurement tools.  The EU could stimulate the cross-border aspect of PPPs on the basis of existing instruments (FP7, CIP, EIT, etc.) and the management of state aid; it could support local initiatives through the Structural Funds.

Science et Industry: issues and forms of partnership between private and public players

M. Jean-Luc GAFFARD (Director of the department of research on innovation and competition – OFCE [French economic policy institute]– Professor at the University of Nice – Sophia Antipolis) highlighted the issues and forms of partnerships between private and public operators.  Public-private partnership in science should be seen as a way of developing private investment in R&D rather than a substitute for public investment.

Before looking into the pre-requisites for an effective PPP, there was a need to understand the process of technology transfer and market forces.  Innovation was a "process of creative destruction" of technologies; it was a slow process, involving a large number of stakeholders; it was a disparate phenomenon, requiring coordination before any incentive policy was introduced.  The imperfections of the market necessitated public intervention directed not at the players themselves, but the flow, the relationship between stakeholders.

Jean-Luc GAFFARD showed that an effective PPP in science was (1) a partnership on heterogeneous and complementary innovations ; (2) a stable partnership ; (3) a partnership bringing together complementary undertakings, but in competition for irrecoverable costs ; (4) a partnership focussing on the flow of information, not the performance of any particular operator.  Public policies had to seek to support the stability of technological consortia so that joint innovations benefited all those involved.

In his view, the challenge for PPPs in science was to enable the private sector to get to know the market better and be consistent in its investments over large geographical and technological areas.  This was a model yet to be constructed.  He was not really convinced by the EIT model, as it was not presented either as a technological consortium or as a technological research institution. Joint technology initiatives were an interesting idea, subject to the following conditions: the selection criteria had to have due regard for competition, stability had to be guaranteed and experts in managerial and economic sciences had to be consulted.

National research PPPs : overview and briefing

Mr Michael KEENAN,  ("Country Review" administrator at the OECD), gave an overview and a briefing on a study of the role of PPPs in support of innovation in 5 OECD countries (France, Austria, Australia, Netherlands and Spain).  These case studies had identified the conditions which PPPs needed in order to succeed.  Mr Keenan drew attention to the origin of the recent boom in PPPs resulting from the important role of scientific technology in innovation (nanotechnologies, electronics and biotechnologies, etc.) and the success of the open innovation model in commercial strategies.  There were several paradigms for cooperation and partnership between science and industry (spin-offs, patents and licences, collaborative projects, etc.) and the PPP lay at the crossroads.  However, the success of these partnerships required intervention from public authorities and legislators as partnership facilitators.

At the OECD, a PPP was defined according to a number of criteria : (1) it was an institutionalised partnership, (2) in which public authorities were partners (regions, etc.).  The partnership had to be based on (3) common objectives with a clearly identified public interest.  Lastly, (4) it involved active engagement by both public/private components and joint investment of resources.  In order to ensure a balance between public and private interests, the OECD identified the need for long-term commitment by public authorities and industry, the formation of a critical mass, a basis in existing networks and, lastly, the use of efficient selection and follow-up mechanisms.  On the basis of case studies, the OECD had established a set of optimum criteria for : selecting projects and participants for a PPP, finance, the organisation and administration of the PPP, and evaluation.

The speaker concluded by presenting recent developments identified by the OECD:  PPPs had risen to the top of the political agenda, the framework conditions for PPPs had improved, while the forms of the PPPs, their management and financial engineering were becoming increasingly complex.

Mr Nicolas DAUBRESSE, (National contact point for competitive clusters – DIACT [French inter-ministerial group for town planning and competitiveness]), put the emphasis on French competitive clusters and their development.  Competitive clusters were instruments to enable regions to mobilise competitive advantages by concentrating R&D activities in spatial terms; they were designed to step up cooperation between undertakings, laboratories and universities, to establish a strategy geared towards international markets and ensure regionally based development.  Of the 71 clusters bearing this label, 7 were global and 10 had prospects of becoming so.  These clusters were present in 23 regions, and had received a total budget of EUR 1,5 billion for 2006-2008.

An evaluation carried out between November 2007 and autumn 2008 by two consultancies, BCG and CMI, on specifications from the CIADT [French inter-ministerial committee for town planning and development], was designed to make support measures more efficient and define the relevant limits of the clusters to be supported.  39 clusters were classed in group 1 and had achieved the cluster policy objectives according to the evaluation criteria, 19 had partially achieved the objectives and 13 needed to be re-configured. The clusters in the first two groups had already had their "competitive cluster" label confirmed for 2009-2011 and would receive financial support until 2011.  Financial support for the clusters in group 2 would be reviewed in 2010, depending on the changes made. Financial support and 3-year objectives for both these groups would be set out in performance contracts between the state and the local authorities involved.

Financial support for the clusters in group 3 was guaranteed until the end of 2009, when the label would be confirmed or withdrawn depending on the action plan drawn up by the cluster.  There were no plans to award new labels over the next three years, except for structures working on eco-technologies.  Over the next three years the overall state budget would stay at EUR 1,5 billion, divided among development appropriations, intervention appropriations and agency interventions.

Mr Nick PEACOCK, (Programme Executive - Rolls Royce), described in highly personal terms, laced with irony and a dose of very British humour, a major industrialist's view of the Clean Sky Joint Technology Initiative, a special, very important type of PPP.
His account stressed the difficulties of reconciling private and public viewpoints in a PPP of this type. Clean Sky was a very upstream development project (in comparison with other JTIs) with a quasi-obligation to produce results and major deliverables : in the short term, large-scale demonstrators for a "green aircraft" able to maintain the competitiveness of European industry.  In such circumstances, the industrialist's concern for fast and efficient management and decision-making did not fit well with the Commission's concern for transparency and openness, and its determination that all JTIs should be governed in the same way. The presentation stressed the difficulties and misunderstandings in the dialogue between industry and the Commission, and the different perceptions of priorities and attitudes on either side. Clean Sky, brought forth in sorrow, was taking its first, tentative steps.
The presentation made a plea for greater involvement by the Member States, a recognition by all those involved that there was a need for flexibility and some "made-to-measure" management if the Clean Sky objectives set jointly by the Commission and the industry were to be met, and for all the partners, especially the Commission, to aim to resolve and finalise the questions still outstanding before the European aviation summit in Bordeaux on 18 November.

Mr Heinz OLBERS, (Head of the R&D and Innovation Division – European Investment Bank), explained that the Luxembourg-based EPEC (European PPP Expertise Centre) had been launched by the European Investment Bank and the European Commission in Paris on 15 September 2008.  The EPEC was a response to the need to increase public-sector capability to engage in PPPs, given the low level of public sector investment in PPPs; it was a forum for exchanging views and sharing good practice and expertise on PPPs. The infrastructure and research sectors were being particularly targeted in order to try to find more, better constructed PPPs.

Membership of the EPEC was strictly limited to the public sector in EU Member States or accession candidates and states associated in the 7th FPRD.  The EPEC, in its initial form,  had been set up for a preliminary phase until 2010, following which a review of the situation would determine its size, structure and objectives for a second phase.  The EPEC now had 22 members and should reach 30 by the end of 2008.  Its staff came from the EIB or were seconded from member organisations. By 2010, the EPEC should have 10 experienced "brokers".

In the second part of his talk Mr Olbers also gave an account of the ERCF (ESFRI Risk Capital Facility), a new specific finance instrument for ESFRI-labelled research infrastructure within the more general framework of the RSSF (Risk Sharing Finance Facility) mechanism set up under the 7th FPRD.  ESFRI's special targeting was due to the vast amount of finance needed for ESFRI infrastructures, the EIB's recognised expertise in infrastructure financing and the major potential which the RSFF offered for these infrastructures.  The integrated finance mechanism under the ERCF comprised a "public sector" tranche covering public sector needs from standard EIB financing through loans repayable over periods of 5 to 30 years and a "project" tranche to be repaid depending on the income generated by the projects which had been financed.
The criteria for use of the ERCF were that infrastructure projects should be consistent with EU policy objectives, that infrastructure projects should be supported by the host countries, by the Commission and by ESFRI and that the ERCF should contribute clear added value. In a project with 50% EIB financing, 20% of the total cost of the project could come from the ERCF mechanism.  The ERCF "project" tranche remained conditional upon project performance, once all conventional sources of finance had been used up.

A governance model for the knowledge triangle: complex systems

Ms Adrienne PERVES,  (Coordinator of the "ComplexEIT" pilot project - CEA [French Atomic Energy Agency]), reported on the progress and initial results of the ongoing ComplexEIT project, one of the four pilot projects launched by the European Commission to study models of governance with the activities of the governing board of the EIT.  The topic chosen by the ComplexEIT related to ICT (Information and Communications Technologies).  The study was designed to identify best practice and to propose a complex multi-faceted governance model, to evaluate the model, and to disseminate the results.

The study involved a broad range of partners : industrialists, research and/or innovation institutes, universities, associations and municipalities.  It comprised an analysis of more than 14 relevant cases,  identification of what "worked well"  in this broad sample  (in terms of governance structure, human resources and mobility, finance, clusters, IP, technology transfer and education programmes) and innovative proposals for integrating this good practice into the Knowledge Triangle.   In this study the Knowledge "triangle" was in fact based on a "tetrahedron" of stakeholders : industry, research, education and the regions.  Each of the four tops of this cell had its own vision of the role of the other 3 and the study aimed to define the processes at work within this quadripartite cell.

After summarising the relevant cases by viewing them in terms of this tetrahedric cell, the study made proposals (to be tested and evaluated) with preliminary ideas of what an ICC in the ICT sector might look like.  These proposals comprised 5 sections : (1) Cross-hybridisation between the world of academe (with industrial initiatives of the "incubator" type), industry (taking on the role of a university through training initiatives) and public authorities (able to play a risk-capitalist role). (2) Promotion of a new form of education called Edu-Action comprising entrepreneurship, interdisciplinarity and mobility (3) Creation and integration of SMEs. (4) Taking into account the local/regional dimension by forming "Regional Integration Centres", each with two components : Innovation & Education. (5) Integration of all these sections at European level in an ICC.

Contact : Eric-Olivier PALLU - Conseiller (science et technologie - groupe recherche, CREST, COST, EUREKA)

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