Statskontoret has been tasked by the government to analyse the expenditure for managing the operations of Sweden's Innovation Agency (Vinnova). The commission has included identifying expenditure, determining whether it is reasonable and submitting proposals for the allocation of resources.
Vinnova is a research sponsor with several other tasks
Vinnova is one of several research financing agencies. In addition to financing needs-driven research, Vinnova is tasked with developing effective innovation systems and utilising research. The agency is also a national agency responsible for several of the EU programmes for research and technical development and implementing a number of special government commissions each year.
Resource usage varies between different types of programmes
Statskontoret's survey shows that Vinnova's administrative expenditure in 2012 was approximately SEK 290 million. As with most other agencies, Vinnova's administrative expenditure consists primarily of expenditure for salaries, premises and IT. Vinnova is currently financing a relatively large proportion of its administrative expenditure, about 40 per cent, with the special appropriation the agency has for research and development.
Vinnova allocates its administrative expenditure in three operational areas: financing of research, development and innovation (known as R & D investment), strategy and analysis, and EU cooperation. According to Vinnova's annual report for 2012, R & D investment accounted for 57 per cent of expenditure, while Strategy and Analysis and EU cooperation accounted for 20 per cent and 23 per cent respectively. The distinction between operational areas is not always clear and the agency is also characterised by its staff working across different unit and departmental boundaries. It is also not possible to do this based on time accounting because it is under development and subject to uncertainties.
Statskontoret has surveyed how Vinnova allocated its human resources in 2013 between various programmes and activities within the operational area of R & D investment. The survey shows that the human resources that Vinnova allocates for managing the programmes and operations varies greatly in relation to the amount of contributions paid out within the programme and initiative (known as relative resource input). An analysis shows that:
- programmes where the contributions budget is large tend to require less relative resource input than programmes where the budget is small,
- national programmes tend to require less relative resource input than programmes with international or a EU link,
- programmes targeted at universities and colleges require less relative resource input than those directed at other target groups such as the public sector and small and medium-sized enterprises, and
- old programmes tend to require less relative resource input than new programmes.
Reasonable for Vinnova to have higher administrative expenditure than research councils
To assess whether Vinnova's administrative expenditure is reasonable, Statskontoret has set spending in relation to the agency's commission and the intentions that were behind the formation of the agency. However, as Statskontoret has not made any assessment of Vinnova's activity, we cannot express an opinion on whether the administrative expenditure is reasonable in relation to the agency's performance and effectiveness.
As a starting point for the assessment, Statskontoret has compared Vinnova's administrative expenditure with the corresponding expenditure in other research-financing agencies. A comparison with the three research councils, the Swedish Research Council Formas and Forte shows that Vinnova has higher administrative expenditure than these and that administrative expenditure has increased more for Vinnova than for research councils since the agencies were created in 2001. As the commissions for the agencies differ, it is not possible to draw any exact conclusions based on the comparison as to what is a reasonable level for Vinnova's administrative expenditure.
However, Statskontoret believes that it is reasonable that Vinnova has higher administrative expenditure compared to the three research councils in the light of its commissions to develop effective innovation systems and to utilise research and that Vinnova has other target groups and more extensive duties with regard to EU work. Statskontoret also believes that some of the spending increase since 2001 is reasonable given that Vinnova has been tasked with an expanded mandate in terms of EU work, and a somewhat different target group in connection with Vinnova having a more open commission.
Opportunities exist for utilising greater economies of scale
Statskontoret believes that there should be opportunities to exploit economies of scale in Vinnova's operations. The assessment is made against the background that the agency works with many more programmes and calls for proposals compared to the research councils and that Vinnova's administrative expenditure in relation to contributions granted has fallen relatively little since 2001, even though the special appropriation has more than doubled. Vinnova is currently working to bring down the number of programmes in order to reduce dependence on individual administrators and to provide greater flexibility and efficiency.
Activities should be analysed from the perspective of efficiency
In order to assess how great the opportunities are for utilising economies of scale, Statskontoret proposes that the government tasks Vinnova with analysing its operations from the perspective of efficiency. An analysis of this type should see Vinnova analyse whether there are other opportunities to improve efficiency in its operations. Vinnova should analyse whether the agency, for example, may be more reluctant to perform tasks that they do not have a formal commission to perform, and if it is more effective to achieve operational goals by adhering to the programme for a longer period rather than frequently switching programmes.
Vinnova's OH expenditure is roughly in line with other agencies
Vinnova's expenditure for various support functions is approximately on a par with other comparable agencies. One exception is Vinnova's expenditure for the human resource function which is relatively high compared to other agencies. However, Vinnova has a centralised recruitment policy for new employees at the agency, which could be one explanation for the higher costs.
Vinnova's local costs are higher compared to the average for government agencies located in the same area in central Stockholm. However, the number of square metres per annual employee is relatively low compared with Formas and the Swedish Research Council, which are located in the same area.
Vinnova should manage its operations until 2016 by reallocating resources within the agency
Statskontoret believes that there are factors that suggest that Vinnova needs both more and less resources by 2016. By making greater use of economies of scale in operations and implementing other efficiency measures, Statskontoret believes that the resource initiatives should be able to be reduced by 9-13 full time equivalents compared to the 2013 level. This assessment is made on the understanding that, from an efficiency perspective, it is possible to replace small programmes with a small number of larger ones. Investments in the research and innovation bill means instead that Vinnova, up until 2016, needs to allocate an additional 10-13 full time equivalents for these investments compared to the 2013 level. Overall this means that the need for additional resources and opportunities to reduce resource efforts largely offset each other. This means that the level of spending should remain at the same level by 2016 as it was in 2013, i.e. approximately SEK 293 million, including external funds. This assessment does not take possible price and salary increases into account.
Statskontoret also believes that the current administrative expenditure is considered as a ceiling and that in addition to the potential for economies of scale there may be further opportunities to reduce administrative expenditure. These options should be tested in the efficiency analysis mentioned above.
Transparency and control over how Vinnova uses its resources needs to improve
Statskontoret believes that there is a need to improve transparency and control over how Vinnova uses its resources, partly because it is currently unclear which expenditure is to be financed by which appropriation. Another reason is that the majority of Vinnova's activities are of a permanent nature and that it therefore appears reasonable that Vinnova does not finance a large part of the administrative expenditure with funds from the special appropriation, especially not salary costs.
In order to improve transparency and control, Statskontoret proposes that the purpose of the special appropriation is clarified both by specifying that the appropriation may only be used for contributions for needs-driven research and development, and by defining more clearly the costs which are considered to be software related and that Vinnova therefore should get financing using the special appropriation.
In order to improve transparency of the Swedish Parliament, Statskontoret also proposes that the government recognises the development of Vinnova administrative expenditure by appropriation in the Budget bill.
Funds from the special appropriation should be converted into an administrative appropriation
A clarification of the purpose of the special appropriation and a clarification of the expenditure that is considered to be software related means that Vinnova will not be able to finance a similar proportion of its administrative expenditure with the special appropriation than it does today. We therefore propose that funds should be reclassified from the special appropriation to administrative appropriation. We believe that such a reclassification would cover about SEK 52 million. The programs related costs would constitute about 20 per cent of total administrative expenditure.