Self-driving cars – opportunities for public procurement

Introduction

From connected vehicles to self-driving cars, driverless vehicles are set to become the future of transportation. As self-driving vehicles are still in full development, these systems are only allowed on public roads in experiments under specific conditions, regulated by law. Without government permits, testing self-driving cars on public roads is almost universally illegal. Under the Vienna Convention on Road Traffic 1968, a human driver must always remain fully in control of and responsible for their vehicle in traffic.[1] However, preparations for the transition to an environment where self-driving vehicles can perform optimally – with smart infrastructure and ultimately in smart cities – more and more legislation is being formulated allowing exceptions to the Vienna Convention. Because for the technology to improve, it must be exposed to real, on-road conditions. In this article we examine the status of the self-driving car in the Netherlands and Europe, and identify some of the opportunities for the European procurement practice.

Legal status of the self-driving car in the Netherlands – High level overview

Amendments to the existing Road Traffic Act

The testing of self-driving cars on public roads in the Netherlands became possible on 26 April 2018, when the Experiments Act on Self-driving Cars was adopted by the House of Representatives. By changing the existing Road Traffic Act 1994, the Experiments Act on Self-driving cars makes it possible to carry out experiments with self-driving cars after obtaining a permit.

Self-driving vehicle licensing in the Netherlands

The procedure is as follows: the Minister of Infrastructure and Water Management grants a permit for an experiment for a maximum of three years. The permit gives a description of the experiment and specifies the period during which the experiment can be carried out, including the weather conditions, the roads or road sections on which the experiment can be carried out, and how many motor vehicles the driver may control at the same time. The permit also determines the safety measures and exemption rules, how the Minister will monitor and evaluate the experiment, and the regulations that apply to enforcement and investigation. Manufacturers can thus ascertain how their systems work, both on the road and in relation to other road users. The results of these experiments will then inform adjustments to the regulations and decisions on whether to permanently allow self-driving and connected vehicles on public roads. This approach meets the European Commission’s wish to make future-proof regulations.[2] 

Legal status of the self-driving car in Europe – High level overview

The declaration of Amsterdam

European regulators are due to establish rules on self-driving cars by 2019. The deadline was set under the Declaration of Amsterdam on Cooperation in the Field of Connected and Automated Driving (navigating to connected and automated vehicles on European roads), resulting from an informal meeting of environmental and transport ministers in April 2016.[3] The Declaration of Amsterdam entails a soft agreement that by 2019 the European regulations concerning self-driving vehicles will be in order and “should be available, if possible'” by then. It calls on stakeholders (EU member states, the European Commission and industry), to work on coherent regulations at the European and national level and the removal of all barriers to the compatibility and interoperability of systems and communication technologies concerning the self-driving car.

Self-driving vehicle licensing in Europe

Two recent studies offer a high-level view of progress so far. KPMG’s 2018 Autonomous Vehicles Readiness Index (AVRI) assesses whether countries are ready for an autonomous vehicle (AV)-driven future. The AVRI indicates where countries are today in terms of progress and capacity for adapting AV technology, taking into account: government willingness to regulate and support AV development; road and mobile network infrastructure; private sector investment and innovation; large-scale testing powered by a strong automotive industry presence; and a proactive government that attracts partnerships with manufacturers. The ARVI ranks the following European countries as the most ready: The Netherlands (# 1), Sweden (#4), the UK (#5), Germany (#6), Austria (#12), France (#13), Spain (#15), and Russia (#18). In another study, Synced (AI Technology & Industry Review) conducted a global survey of autonomous vehicle regulations.[4] The survey determines that European and North American countries such as the US, Germany, the UK and the Netherlands are pioneers of self-driving vehicle licensing and have issued autonomous testing permits.[5]

European procurement and the self-driving car – impact and opportunities

Revolutionizing road infrastructure

It is only a matter of time before self-driving vehicles revolutionise our transportation, and our procurement practices. Due to the nature and functionalities of connected and self-driving cars, much depends on their connection to the environment outside the vehicles themselves.[6] For example, for autonomous vehicular travel to occur properly, the on-board system needs to communicate with sensors embedded in the pavement (“smart infrastructure”).[7]

Super information high ways

According to the Harvard Business Review, we are likely to see a more standardised and active environment as more smart infrastructure is constructed. Think of radio transmitters replacing traffic lights, higher-capacity mobile and wireless data networks handling both vehicle-to-vehicle and vehicle-to-infrastructure communication, and roadside units providing real-time data on weather, traffic, and other conditions.[8] The engineers at Integrated Roadways, specialists in engineering in construction trades, are talking about “turning roads into smarter roads/highways consisting of digital networks connecting drivers to the internet and thereby supporting driverless vehicle technology and providing connectivity between smart cars and tomorrow’s smart cities” (“super information highways”).[9]

Multidisciplinary approach of upgrading road infrastructure

With the arrival of the self-driving car we are therefore faced with the challenging task of upgrading public infrastructure into smart highways, smart infrastructure or even super information highways. The need for roads containing sensors and software and the fact that road infrastructure will eventually have to constitute an IT element call for a standardised new approach to the procurement of road infrastructure. In pursuit of smart infrastructure, a multidisciplinary approach to tenders will become the new norm. Intensive communication between contracting authorities, engineers, the automotive sector, IT/telecoms sectors and procurement lawyers is vital.

To facilitate an affiliated form of cooperation, the European Commission describes cooperative procurement in its Guidance on Innovation Procurement (adopted in the context of the “renewed European Agenda for Research and Innovation – Europe’s chance to shape its technological leadership”).[10] Cooperative procurement encompasses various methods of cooperation between public buyers. For instance, establishing or mandating dedicated entities, such as the European Research Infrastructure Consortia (ERICs)[11] to perform cooperative procurement on a regular basis.[12] According to the European Commission this form of procurement facilitates innovation procurement by making it easier to engage professional staff with the expertise to articulate specialised and complex needs, to engage with the market in a structured way and design procedures that will lead to innovation.[13] Cooperative procurement can also be used in less structured forms to organise exchanges of good practices and mutual learning, ideally suited for innovations associated with the self-driving car.

Fortunately, the Public Procurement Directives (Directive 2014/23/EU, Directive 2014/24/EU, Directive 2014/25/EU) allow innovation procurement[14] (including cooperative procurement) in the pursuit of smart highways, smart infrastructure and ultimately smart cities. Under the Public Procurement Directives it is also possible to organise the procurement procedure in an innovation-friendly way. This can be realised by the default use of a preliminary market consultation in less conventional ways, such as presentations and testing of samples allowing end-users to verify the suitability of the proposed solutions in real-life conditions. Competitions, hackathons, idea markets or category innovation roadmaps can also be considered. The Directives also permit the use of descriptive technical specifications, whereby the public buyer describes the detailed solution, focusing more on the intended goal rather than the means to achieve it. Furthermore, tendering contracts must be future proof (i.e., self-driving car-proof) by being able to respond to the rapidly evolving nature of IT developments. This can be achieved when the contract terms reflect innovation-friendly aspects: exit clauses that apply when the market brings an even more suitable solution than the one currently under development (with fair exit conditions for the supplier); contract modification clauses, due to high potential of further innovation ascertained during the contract performance; and value-engineering clauses covering the possibility to improve the quality and cost of solutions delivered during the implementation phase. These clauses may provide for the payment of bonuses to suppliers for improving the quality of the solutions.

Specific innovation-friendly procurement procedures include the use of the negotiated procedure and the competitive dialogue to adjust ready-to-use innovation. They also cover procuring research and development, enabling the public buyer to develop a tailor-made innovative solution. Design contests, pre-commercial procurement, and innovation partnerships are also allowed for, along with the use of innovation brokers to close the knowledge gap between (smaller) high-tech and innovative SMEs and the public buyer.

As you can see, in line with the Declaration of Amsterdam, the Public Procurement Directives are ready for an AV-driven future. Are you?

[1] This convention has 36 signatories and 77 parties[1], an international treaty that has regulated international road traffic since 1968. The Convention on Road Traffic (Vienna, 1968) replaced the Geneva Convention on Road Traffic (1949). However, it appears that fewer countries have ratified the 1968 convention than originally ratified the 1949 convention.

[2] European Commission, 'On the road to automated mobility: An EU strategy for mobility of the future', Brussels 2018.

[3]Informal ministerial meeting for transport and environment ministers, Declaration of Amsterdam "Cooperation in the field of connected and automated driving", Amsterdam 2016.

[4] Medium, ''Global Survey of Autonomous Vehicle Regulations'', 10 October 2018.

[5] Ibid.

[6] European Commission, ''Digital Transformation Monitor Autonomous cars: a big opportunity for European industry'', 10 October 2018.To meet the wider communication demand, Intelligent Transport Systems (ITS) is being developed. The goal is to create standards and specifications for the use of information and communications technologies (IT) in future transport systems.

[7] ITS International, ''Infrastructure and the autonomous vehicle'', 11 October 2018. For example: a combination of adaptive cruise control ((ACC) – a driver assistance technology that sets a maximum speed for vehicles and automatically slows the speed of the car when traffic is sensed in front of the vehicle) and lane alignment, which is maintained by sensors embedded in the pavement edges that communicate with the vehicle.

[8] Harvard Business Review, ''To Make Self-Driving Cars Safe, We Also Need Better Roads and Infrastructure'', 12 October 2018.   

[9] Integrated Roadways, ''Say Hello To The real Super Information Highway'', 14 October 2018.

[10] European Commission, ''Guidance on Innovation Procurement'', 15 October 2018.

[11] ERICs are legal entities set up under the community legal framework to establish and operate new or existing research and innovation infrastructures with European interest. ERICs are exempt from VAT and may adopt their own procurement procedures while respecting the Treaty principles. There are, for example, ERICs that operate infrastructure across EU member states in the field of health, ageing, carbon capture, big data, sea and climate change, etc. For more info: https://ec.europa.eu/research/infrastructures/index.cfm?pg=eric

[12] European Commission, Commission notice, guidance on innovation procurement¸ 2018. p.18.

[13] European Commission, Commission notice, guidance on innovation procurement¸ 2018. p.19.

[14] Buying innovation. That is, either buying the process of innovation – research and development services – with (sectional) outcome or buying the outcomes of innovation created by others.[14] Or the use of specific innovation-friendly procurement procedures.

Authors

Picture of Petra Heemskerk
Petra Heemskerk
Partner
Amsterdam
Sharon Chömpff - Amo-Adjei
Professional support lawyer
Amsterdam