Identifying the problems in

contracting for R&D

Bacellar, André Melo;
Superintendence for Research and Development and Energy Efficiency
Brazilian Electricity Regulatory Agency – ANEEL

Medeiros, Janann Joslin

University of Brasilia

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Outline

1. Problem

2. Context

3. Method applied

4. Results

5. Conclusion

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1. Problem

-The issue (contracting for R&D) is relevant (Sutton,

2015), and especially so if the company doesn’t itself
have research capabilities.

- There are few studies that address R&D contracting

(Sutton, 2015; Kloyer; Scholderer, 2012; Panico, 2011;
Okamuro, 2007; Sampson, 2004).

- Concepts are not sufficiently developed for testing

possible explanations for success or failure in the
contracting process.

3
1. Objective

The main objective of the study, then, was to help to fill

this knowledge gap by identifying the constraints that
interfere with effectively contracting R&D projects and
how they influence this process.

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2. Context

Brazilian Electricity Regulatory Agency – ANEEL

carries out the Brazilian R&D Programme for the
electrical energy sector.

Mission: Regulation, mediation and fiscalization

in the electrical sector

Generation Transmission Distribution Comercialization

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2. Context

-Companies operating in Brazil are legally required to

invest a percentage of the charges billed to customers
in research projects, which is usually done by
contracting research institutions, as the companies
themselves do not have research capabilities.

- But projects of relevance to the sector have been

slow to get off the ground or contracts for them were
not even closed.

-Meanwhile, about US$500 million remain uninvested

(ANEEL, 2011) despite Agency efforts to simplify
procedures.
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3. Compram Method applied

-The Complex Problem Handling Method (Compram) is

a participative problem structuring method. It involves
two groups: (1) neutral experts (persons not personally
involved in the problem of interest), and (2) involved,
named stakeholders.

- The method involves several phases, beginning with

Understanding the problem, followed by Selection of
the forms of intervention and change to be undertaken,
and ending with the Evaluation of results.

- Results reported in the paper focus on the phase of

problem understanding.
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3. Compram Method applied

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3. Compram Method applied

A list of questions and knowledge domains related to

those questions were drawn up for use in guiding the
meetings.

Principal question: How to get better results from the

ANEEL R&D Program?
Code Question
P1 How to deal with the risk of disallowance of investments made by utility companies?
P2 How to put research on the strategic agenda of utility companies and how to foster the R&D
culture in utilities?
P3 How to increase the application of research results?
P4 How and when to evaluate R&D? How to evaluate results?
P5 How to reduce red tape and give consistency to regulations in order to obtain better results?

P6 How to implement public-private partnerships for project execution?

P7 How to establish a permanent channel of interaction for the actors of the RD&I community
(especially universities and companies)
P8 How to deal with the research risk of failure?

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4. Results

A numbers of concepts directly associated with contracting research

projects identified during the Understanding the Problem phase :
• Four concepts, which result from Question 3 – "The application of
research results", are related to property rights.

• Three concepts derived from Question 6 - “Public – Private

Partnership” - refer to equipment purchased or generated by
the research project.

• Concept 5.1, arising from Question 5 - “Regulatory Coherence” -

is also related to project equipment.

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4. Results

• Other concepts considered relevant to contracting are

the following: Concepts 1.1 Risk, 1.2 Research, 1.5
Accounting planning and 1.7 Evaluation criteria and
Concept 4.1 Risk perception.

• The eight concepts previously mentioned, together with

these five concepts make up 34,2% of all concepts
identified in the discussions, underlining the importance
of the contracting issue in the context of the Brazilian
R&D program studied.

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4. Results
• The next step was to investigate the relationship
between the concepts
CONCEITO X CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP CP >
influênci
1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 3 3.1 3.2 3.3 3.4
a
CP1 2 2 1 1 2 1 1 1 1 1 1 1 1 16
CP1.1 2- 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 21
CP1.2 1 1- 1 1 1 2 2 1 2 1 1 2 1 1 1 1 1 1 2 1 2 1 28
CP1.3 1 1- 1 1 1 1 1 1 1 1 1 11
CP1.4 2 2 1 - 1 1 1 1 1 1 1 2 1 2 1 2 1 2 2 1 26
CP1.5 1 1 - 1 1 1 1 6
CP1.6 1 1 1 - 1 1 1 1 1 1 1 1 11
CP1.7 2 2 2 1 1 1- 1 1 1 1 1 1 15
CP1.8 1 1 1 1- 1 1 1 1 1 1 10
CP1.9 2 - 1 1 1 1 1 1 8
CP2 1- 1 1 1 1 5
CP2.1 1 1 1- 1 1 1 1 1 8
CP2.2 1 1 1 2- 1 1 1 1 1 1 1 12
CP2.3 1 - 1 1 1 1 1 6
CP2.4 1 1 1 1 - 1 1 1 1 1 9
CP2.5 - 0
CP2.6 1 2 1 1 1 1 - 2 1 2 1 1 1 15
CP2.7 1 1 1 1 1 1 1 1 1- 1 1 1 1 1 14
CP2.8 1 2 1 1 1 - 2 2 10
CP2.9 1 1 1 1 1 1 1 1- 1 1 1 1 12
CP2.10 1 1 1 1 - 4
CP3 1 1 1 2 1 1 1 2 1 1 1 1 - 1 1 1 17
CP3.1 1 1 1 1 1 1 1 1 1 1- 1 11
CP3.2 1 1 1 1 1 1 1 1 1 1 1 1 2 1- 15
CP3.3 1 1 1 1 1 1 1 1 1 1- 1 11
CP3.4 1 1 1 1 1 1 1 1- 8
CP3.5 1 1 1 1 4
CP3.6 1 1 1 1 1 1 1 1 8
CP3.7 1 1 1 1 1 1 1 1 2 1 11
CP4 2 2 1 2 2 1 2 1 1 14
CP4.1 1 2 1 1 1 1 1 1 1 1 1 12
CP4.2 1 2 1 1 1 1 1 1 1 1 1 12
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4. Results

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4. Results

• Industrial property should not be a stumbling block for contracting research

projects.

– This concern on the part of the institutions involved in the contracting

process of the Brazilian R&D Program seems to indicate a lack of
knowledge with respect to the real value of intellectual property to the
firm.
• In Fischer and Henkel (2013) study, intellectual property was found to be the
least effective tool for value appropriation among the seven surveyed, a
finding consistent with Okamuro's (2007) observation that more companies
achieve commercial success from R&D projects than technological success
measured by the number of patent applications.
– Because these companies lack research capabilities. Previous studies
have pointed out that internal R&D capacity is necessary to absorb
(Cassiman; Veugelers, 2006) and appropriate value (Fey; Birkinshaw,
2005) from external knowledge and that being developed.

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4. Results

• Our research, in a contribution to the literature on contracting for

R&D, uncovers additional issues that can cause delay or even
render the contract impracticable.

• Issues related to industrial property and equipment are seen, from

study data, to be related to conflicting legislation and to the lack of
an adequate management structure for R&D.

• The analysis carried out revealed that Concept 1.4 (Utility Company
R&D Management Structure) is the factor having the greatest
impact on contracting and able, by itself, to cause delay in the
contracting process.

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5. Conclusions

• This paper provides a cause and effect framework for

understanding the constraints experienced in the
contracting process of R&D projects.

• The second most cited group of constraints to the R&D

Programme studied were those related to procurement,
specifically those concerning industrial property,
purchase and ownership of equipment. In fact, 34% of
the identified concepts are related to procurement.

• The importance of an adequate management structure

has not been reported previously in the literature and is
also a contribution.

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5. Conclusions

• It would be relevant to address, in future research, the

proposal of solutions to the constraints identified and
testing the viability of these solutions.

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 Thanks

Contact information:

• Tel.: 55 61 2192-8568

• ambacellar@yahoo.com.br

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