# EUR-Lex - 52013DC0455 - EN

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# 52013DC0455

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Against lock-in: building open ICT systems by making better use of standards in public procurement /* COM/2013/0455 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

Against lock-in: building open ICT systems
by making better use of standards in public procurement

(Text with EEA relevance)

1.           Introduction

Many organisations are ‘locked’ into their
ICT systems because detailed knowledge about how the system works is available only
to the provider, so that when they need to buy new components or licences only that
provider can deliver. This lack of competition leads to higher prices and some
€ 1.1 billion per year is lost unnecessarily in the public sector alone[1].

Making better use of standards allowing
competitors to provide alternative solutions will diminish lock-in and increase
competition, thus reducing prices and potentially increasing quality. This is
because standards determine the key element of a technology and create a level
playing field for all ICT suppliers[2].
More suppliers will be able to submit offers to invitations to tender for standards-based
systems, leading to more competition and choice.

The Digital Agenda for Europe[3] identified lock-in as a problem,
and its Action 23 committed to providing guidance on the link between ICT
standardisation and public procurement to help public authorities use standards
to promote efficiency and reduce lock-in. To that end, this Communication is
accompanied by a practical guide on how to make better use of standards in
procurement, in particular in the public sector.

2.           The problem of lock-in with ICT systems

Public authorities enter into contracts
with providers of ICT in order to use an ICT product or service for a certain
period of time. ‘Lock-in’ has happened when the public authority cannot easily
change a provider after the expiration of this period of time, because not all
essential information about the system is available for efficient takeover by
another provider.

A survey[4]
carried out in 2011 (2011 Survey) among public procurement officials in the
European Union Member States showed that of the 244 procuring authorities
surveyed, at least 40 % considered that changing their existing ICT
solution would be too costly because it would involve changing many other
systems that use the data of the system that they would like to change. Of
those surveyed, 25 % felt they would not be able to change their ICT
solutions for fear that their information would not be transferable.

A ‘lock-in’ situation will usually imply
that procurement documents for the next contract related to the ICT system
causing the ‘lock-in’ will contain references to the brand name of that system.
Purchasers must resort to reference to brand names, because the lack of
information about the ICT system makes it impossible to describe the system
sufficiently precise in any other way.

A number of studies[5] have indeed indicated an extensive
use of brand names in procurement documents. The percentage of invitations to
tender referring to brand names ranges from 16 % to 36 %, depending
on the samples used in the studies. In addition, the majority of the 244
respondents to the 2011 Survey use brand names in invitations to tender, with
23 % either always or often referring to brand names, and just under 40 %
only sometimes doing so.

However, under procurement rules of the Union[6], technical specifications shall
afford equal access of economic operators to the procurement procedure and not
have the effect of creating unjustified obstacles to the opening up of public
procurement to competition. References to brand names are allowed only on an
exceptional basis, where a sufficiently precise and intelligible description of
the subject-matter of the contract using is not possible by other means laid
down by Union legislation; such reference shall be accompanied by the words
"or equivalent".

The use of brand names in procurement
documents will restrict competition to suppliers of that brand and leads to an effective
monopoly and its price implications. Furthermore, dependence on a single vendor
for an ICT system and its future evolution can lead to problems of business
continuity as there is a risk that a vendor can decide to stop supporting the
system or certain features of the system. It can also lead to missed
opportunities for more innovation and efficiency, particularly when the vendor
is not capable of keeping the system future-proof.

Results from a Commission study[7] found that open tendering
procedures are very effective in attracting increased numbers of bidders, and
that doubling the number of bidders lowered the contract value by around 9 %.

Based on this ratio of increased bidders to
reduced costs, and EU ICT public procurement estimated at € 78 billion[8], with 16 % of such procurements
referring to brand names, public authorities are estimated to be spending unnecessarily
some € 1,1 billion per year[9]
as a result of the restricted number of bidders caused by the reference to
brand names.

3.           ICT systems based on standards vs
proprietary ICT Systems

Using ICT systems based on standards
instead of proprietary technology will help to open up restrictive public
procurement practices, because standards make essential knowledge about a
system available to anyone, implying that other potential suppliers could
maintain or evolve the system under more competitive terms and conditions.

Besides the economic aspects there are
other significant advantages for public authorities in switching to
standards-based ICT systems, as also recognised in the eGovernment action plan[10].

3.1.        Interaction with citizens —
efficiency gains and free choice

Since standards consist of specifications
that can be known by all interested parties, products and services from
different producers can be interoperable, thus making it easier and more
efficient to integrate one public system with another for the exchange of data[11]. For example, this will make
it possible for citizens to supply data only once to any public administration.
When these same data are needed in other situations, they can be automatically
retrieved and re-used, making interactions between citizens and public
authorities more efficient at local, regional, national and European level. If
this same level of interoperability is to be achieved between non-standards-based
systems, the cost and complexity will be significantly higher.

Further, if proprietary products rather
than standards-based products are used, this may limit access by citizens, who
can only interact with public authorities if they have access to and use the
same product[12].
If public authorities use standards-based products, citizens can also use another
product that implements those standards.

3.2.        Interaction with other
public authorities

The European Interoperability Framework and
the European Interoperability Strategy, explained in the Commission
Communication ‘Towards interoperability for European public services’[13], depend heavily on the use of
standards-based ICT systems. Interoperability is necessary to deliver cross-border
eGovernment services that citizens and businesses need when travelling/working/studying/doing
business within the EU, and which
underpin one of the objectives of the European digital single market. When
public authorities introduce standards-based alternatives it will be easier to
develop the necessary cross-border services.

3.3.        More innovation

The Directive on the re-use of public
sector information[14]
obliges Member States, in cases where it is allowed to re-use documents of
public sector bodies, to make these documents available through electronic means[15]
where possible and appropriate.

These data can include digital maps,
meteorological, legal, traffic, financial, economic and other data, and also
the Application Programming Interfaces (APIs) of ICT systems. Companies and
citizens are then able to use the data and the systems of public authorities to
develop new applications that are of use to society at large, help to drive greater
growth and jobs, and also contribute to public sector innovation.

If these data is made available in formats
that correspond to common standards, it will greatly help application
developers to ensure that their applications work with data from many different
public authorities and that citizens can use these applications wherever they
may be in Europe.

In addition, an ICT system based on
standards is easier to evolve and better able to deliver the future services
that public authorities are expected to provide to citizens in an efficient and
innovative manner. The standards deliver the necessary hooks that anyone with
ICT knowledge can use to build add-ons to the system or to migrate data from one
system to another, thus increasing the potential for use.

3.4.        Lower
costs for ICT suppliers

ICT suppliers are also affected by lock-in.
The 2011 Survey showed that the majority of ICT suppliers would also be in
favour of more open procurement based on standards, as this would open markets
to all of them, thus increasing the competitiveness of the EU ICT market. However,
it is clear that the sales prospects of certain
dominant leading suppliers may be adversely affected if new entrants are able
to compete more effectively.

Despite the advantages for the majority of
ICT suppliers of using standards-based procurement, they will incur costs to
implement and use standards in their products and services. This should be
compared to their usual costs for the maintenance and evolution of their
products and services. A survey carried out in 2012 among public authorities
and ICT suppliers[16]
(2012 Survey) suggested that 30 % of stakeholders expect any cost
increases to be more significant in the short run (provided public authorities
maintain long-term consistency in the standards they apply). However, 41 %
of respondents expect that the long-term costs of solutions will decrease,
suggesting that ICT suppliers will also benefit in terms of decreased costs and
better access to markets.

ICT systems based on standards will enable
more interoperability, innovation and competition, lower costs and improve
interaction with citizens. They will be the basis for a new generation of open,
flexible and collaborative eGovernment services to empower European citizens
and businesses, as envisaged in the eGovernment Action Plan 2011-2015.

4.           Guide for the procurement of
standards-based ICT

In theory, it seems simple to obtain ICT
systems based on standards in the future. All that needs to be done is to ask
for standards when procuring new licences and components. In practice, however,
a significant number of procuring authorities responding to the 2011 Survey
stated that they had difficulties in using standards when procuring ICT, with
just under 50 % citing a lack of expertise to decide which standards are
relevant and appropriate for the particular ICT needs. Therefore it is
important to help procurers overcome these practical difficulties, so that they
can use standards properly.

Currently, some Member States (such as France, Italy, the Netherlands, the UK, Germany, Sweden, Spain and Denmark[17]) are promoting the use of
standards in ICT public procurement. They are helping public authorities
through practical guidance consisting of lists of recommended standards for
specific situations, procurement guides and ready texts to be used in public
procurement documents. Despite these best practices, only 25 % of
respondents to the 2012 Survey had access to this type of advice, which suggests
a need to develop guidance to reach out to more public procurers.

The European Commission has identified the main
difficulties public authorities face when procuring ICT systems, and has collected
the best practices of some of the Member States that are actively working to
overcome these difficulties. These best practices are the basis for the ‘Guide
for the procurement of standards-based ICT, Elements of Good Practice’ (the
Guide), which accompanies this Communication.

The Guide consists of:

·
Advice to develop an ICT strategy, consisting of
main principles to be followed within a country, region or application sector
to make ICT systems work together and to provide an efficient service to
citizens and other actors who work with public authorities.

·
Advice to assess standards in a methodological,
fair and transparent manner in order to choose which standards should be used
to support the ICT strategy and to avoid lock-in. This is a continuous activity
in order to assure that when new and better standards become available they
will be used instead of the previously chosen standards.

·
Guidance on the best way to identify the ICT
needs of a public authority and evaluate potential ICT systems that can meet these
needs, including consideration of user requirements.

·
Advice on long-term budgetary planning in order
to overcome higher up-front costs when trying to eliminate lock-in situations.

·
Advice on how to engage with the market in order
for public authorities to understand the current market offer and, conversely,
for the market to understand the future needs of the public authorities.

·
Advice on how to develop practical, ‘ready to
use’ guidance (list of recommended standards for specific ICT applications,
ready texts to use in procurement documents, training) that will help public
authorities to write procurement documents that refer to the right standards in
the right situation in the right way.

The Guide also provides examples of best
practice, and resources for procuring authorities to use in order to implement
the advice. The Guide addresses all those who might be involved in the public
procurement of ICT, including procurement officials, public-sector chief information
officers, and ICT experts providing assistance to public authorities.

The Guide makes it very clear that the
issues of resolving lock-in, using standards more and better, and having
interoperable systems cannot be solved by individual procurers alone but need
to be part of an overall long-term plan at the appropriate sectoral and organisational
levels in order to ensure that ICT systems work together in an efficient manner.

5.           Related initiatives

There are several
other initiatives at EU level to promote the use of standards:

·
The proposal adopted by the European Commission
for a Directive on the accessibility of the websites of public sector bodies[18], where it is foreseen that a harmonised standard will be built upon the work done by the
European Standardisation Organisations on the basis of mandate M/376[19].

·
The portfolio of eGovernment Large-Scale Pilots carried
out under the EU Competitiveness and Innovation Programme in the ICT Policy
Support Programme (CIP ICT PSP), in which application-specific standards are
recommended, for instance for electronic procurement platforms[20] and eIdentification[21].

·
The work of the eInvoicing[22] multi-stakeholder platform in
the context of the Single European Payment Area.

·
The Common Assessment Method Standards and
Specifications (CAMSS)[23],
developed under the ISA programme (Interoperability Solutions Programme for European
Public Administrations[24]),
providing a framework for assessing interoperability standards and
specifications, and sharing the results. The Guide promotes the use of CAMMS
for the assessment of standards.

·
Another ISA action, the National
Interoperability Framework Observatory (NIFO)[25],
provides observations on interoperability activities within Europe. It focuses
on analysis of the National Interoperability Frameworks, which can be seen as
an important basis for any public organisation’s ICT strategy, as advocated by
the Guide.

·
Furthermore, a recent reform of the European standardisation
system[26]
now allows contracting authorities to formulate the technical specifications in
procurement documents by reference to ICT specifications produced by fora and
consortia, which will be identified by the Commission after consultation –
notably – of the European Multi-Stakeholder Platform on ICT standardisation, whereas
before it was only possible to refer to standards or specifications promulgated
by national, European and international standards organisations.

6.           What if no standards are available?

For some new types of applications that public
organisations need to develop to cope with important societal challenges, such
as ensuring high-quality affordable healthcare for an ageing population, combating
climate change etc., the necessary standards may not yet be available. In such cases,
public authorities could potentially engage with other public procurers in
pre-commercial procurement. This means procuring R&D services[27] that enable the public sector
to share the risks and benefits of undertaking ground-breaking R&D with
industry. It enables procurers to steer industry to respond to their needs, while
comparing the pros and cons of competing solutions from different suppliers
(through design, prototyping and testing), without committing large deployment
contracts to any single supplier. Suppliers can also be requested to take part
in the relevant standardisation bodies to establish standards relating to the
results of the R&D for the pre-commercial project. The European Cloud
Partnership[28]
is one example of pre-commercial procurement where standards are being
developed.

7.           Procuring ICT based on standards: The
way forward

The European Commission calls upon all
public authorities in the Member States to use the Guide to help alleviate
lock-in of their ICT systems, thus encouraging competition in Europe and
underpinning the development of the European digital single market, including
by ensuring greater access to and use of public data and information. The
European Commission will also apply the Guide to make better use of standards
in its own ICT systems and calls upon the other European institutions to follow
suit.

It is expected that over time Member States,
along with the European Commission and other European institutions, will
develop more specialised versions of the Guide tailored to their own ICT
strategies and their use of specific standards. Such an iterative approach is
likely to bring increasing benefits in terms of cost savings and further opportunities
for innovation and competition.

A consultation on an earlier version of the
Guide[29]
showed that the sharing of best practice is considered valuable by the majority
of respondents, both those who currently have access to sources of best
practice and those who do not. Over 90 % of both categories of respondents
(or 71 % of the total sample) indicated that the sharing of best practice
is or would be useful or very useful.

In order to facilitate the sharing of best
practice, the European Commission will support this initiative by organising
meetings with relevant stakeholders (public authorities, ICT supply industry,
standards organisations and civil society), supported by a public best practice
website. By sharing their experience on a regular basis, public organisations will
learn from each other, adapt to best practices that emerge, look into common
problems and suggest common solutions. This sharing of best practice will
ensure that the choices made in different Member States will converge, reducing
fragmentation and helping to ensure a real digital single market.

Further, the Commission will
report on the outcome of this process, in particular:

·
providing relevant information on the ICT procurement
processes of public authorities, the assessment of their use of standards in
ICT procurement, the development of practical advice, long-term business
appraisals, and budgetary planning,

·
reviewing the procurement process and reporting
on what worked and what could have been done better in order to encourage
future best practices.

This information and associated data could
be complemented with an overview of statistical data on references to brand
names in tenders, the number of suppliers participating in public procurement
bids, and assessments of value for money of ICT procurement.

The actions described above will result in
more open ICT systems based on standards that should help to develop more
efficient public ICT services that can evolve and adapt to future needs. The
ICT supply industry will be able to compete to offer value for money to public
authorities, and to offer innovative new services.

[1]               See section 2 for a justification of this figure.

[2]               Ghosh, R.A (2005) ‘An economic basis for open
standards’ FLOSSPOLS project,
http://flosspols.org/deliverables/FLOSSPOLS-D04-openstandards-v6.pdf.

[3]               Action 23 of the Digital Agenda commits to providing ‘guidance
on the link between ICT standardisation and public procurement to help public
authorities to use standards to promote efficiency and reduce lock-in’,
COM/2010/0245, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52010DC0245R(01):EN:NOT.
For more on Action 23, see
http://ec.europa.eu/digital-agenda/en/pillar-ii-interoperability-standards/action-23-provide-guidance-ict-standardisation-and-public.

[4]               http://cordis.europa.eu/fp7/ict/ssai/docs/study-action23/study44-survey1results.pdf.

[5]               For example, R.A. Ghosh (2005), ‘An Economic Basis
for Open Standards’ Maastricht, FLOSSPOLS project,
http://flosspols.org/deliverables/FLOSSPOLS-D04-openstandards-v6.pdf; Paapst,
M. ‘Affirmative action in procurement for open standards and FLOSS.’ International
Free and Open Software Law Review Vol.2 No 2 pp. 184-185, see http://www.ifosslr.org/ifosslr/article/view/41,
Open Forum Europe, (2011); ‘OFE Procurement Monitoring Report: EU Member States
practice of referring to specific trademarks when procuring for Computer
Software Packages and Information Systems between the months of February and
April 2010’ (May), p 6, see
http://www.openforumeurope.org/openprocurement/open-procurement-library/Report_2010.pdf;
.

[6]               Directive
2004/18/EC, OJ L 134, 30.4.2004, p. 114–240 .

[7]               ‘Estimating the Benefits from the Procurement
Directives’. http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/estimating-benefits-procurement-directives_en.pdf.

[8]               This is based on a figure for UK government expenditure on IT of € 18 billion in 2010 and research that indicates the UK accounts for 23 % of EU public IT expenditure. This was cross-checked against an
estimate of € 54 billion obtained from the MAPPS database of public sector
ICT contracts based on relevant IT CPV codes (which is likely to be an
underestimate given the fact that only above-threshold contracts are published in
the OJEU, and that not all IT-related procurements are classified under IT CPV
codes).

[9]               If the number of bidders would double in 16% of the
ICT procurements because they no longer refer to brand names (this is the
lowest number mentioned in the studies referred to in Footnote 5) this would
save 9% of 16% of € 78 billion per year, which equals € 1,1 billion per year.

[10]             COM(2010) 743, available at              
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0743:FIN:EN:PDF;
see also http://ec.europa.eu/digital-agenda/node/165.

[11]             Ghosh, R.A (2005) ‘An economic basis for open
standards’ FLOSSPOLS project,
http://flosspols.org/deliverables/FLOSSPOLS-D04-openstandards-v6.pdf. Hesser,
Czaya and Riemer (2007) ‘Development of standards’ in W. Hesser (Ed) Standardisation
in Companies and Markets, pp. 123-169, Hamburg: Helmut Schmidt University.

[12]             http://www.epractice.eu/files/European%20Journal%20epractice%20Volume%2012_6.pdf.

[13]             COM(2010) 744    
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0744:FIN:EN:PDF.

[14]             Directive 2003/98/EC, OJ L 345, 31.12.2003, p. 90–96     
and for proposed updates:
http://ec.europa.eu/information_society/policy/psi/index_en.htm.

[15]             In its proposal for a Directive amending Directive 2003/98/EC,
the Commission has proposed to replace the terms "electronic means"
by "in machine readable format and together with their metadata". COM
(2011) 877 final.

[16]             http://cordis.europa.eu/fp7/ict/ssai/docs/study-action23/study44-survey2results.pdf.

[17]             http://cordis.europa.eu/fp7/ict/ssai/docs/study-action23/d2-finalreport-29feb2012.pdf.

[18]             COM(2012) 721, see            
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2012:0721:FIN:EN:PDF           
and
http://ec.europa.eu/digital-agenda/en/news/proposal-directive-european-parliament-and-council-accessibility-public-sector-bodies-websites.

[19]             http://www.mandate376.eu/

[20]             http://www.peppol.eu/.

[21]             https://www.eid-stork.eu/.

[22]             http://ec.europa.eu/internal_market/payments/einvoicing/index_en.htm.

[23]             https://webgate.ec.europa.eu/fpfis/mwikis/idabc-camss/.

[24]             http://ec.europa.eu/isa/index_en.htm.

[25]             http://ec.europa.eu/isa/actions/04-accompanying-measures/4-2-3action_en.htm.

[26]             Regulation (EU) No 1025/2012, OJ L 316, 14.11.2012, p.
12–33 and
http://ec.europa.eu/enterprise/policies/european-standards/standardisation-policy/index_en.htm.

[27]             Pre-commercial
procurement is defined in COM/2007/799 and the associated staff working
document SEC/2007/1668.

[28]             COM(2012) 0529, p. 13 (key action 3),             
http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!DocNumber&lg    
=EN&type_doc=  COMfinal&an_doc=2012&nu_doc=529         
and        
http://ec.europa.eu/information_society/activities/cloudcomputing/europeancloudpartnership/index_en.htm.

[29]             http://cordis.europa.eu/fp7/ict/ssai/docs/study-action23/study44-survey2results.pdf.