Contract with guarantees

Over the last year, Moscow entered into 72 life cycle contracts (LCC) with businesses to supply complex medical equipment to healthcare facilities for RUB 57+ bn. World's leading manufacturers of high-tech medical equipment are among the BIDwinners. They will not only supply but also provide service for 7-12 years.
Previously, Moscow used to sign the LCCs mainly in transport, but now it is actively using this mechanism of public-private partnership in healthcare. For example, Moscow clinics will receive within LCCs the latest models of medical equipment: angiographs, MRI and CT scanning equipment, ultrasound machines as well as X-ray, endoscopic equipment and digital mammography systems. The supplier list has the following names: Philips, Siemens, Canon, GE.

Life cycle contracts serve as a kind of alternative to public procurement. They provide for the purchase of goods with further maintenance and repair by the supplier throughout the life of devices. The city gets through the long-term LCC nature the best value for money for the equipment and related maintenance, and can evenly and predictably allocate its costs. And the investor ensures in its turn loading of its capacities for a long period and receives guaranteed income during the validity period of the LCC.

Moscow also holds bids for procurement of medical equipment jointly with other Russian regions. Such cooperation at the interregional level allows not only to purchase equipment up to 50% cheaper in comparison with the initial price, but also to have an opportunity to sign contracts directly with the manufacturers of medical equipment, who are responsible not only for its delivery, but also for its maintenance. Last year, Moscow conducted joint tenders with the Perm Region, the Khanty-Mansi Autonomous District and the Yamalo-Nenets Autonomous Disrict.
— Apropos! —
To determine the bid winners for the procurement of medical equipment, not only the price is taken into account, but also non-price criteria, among which are own equipment production, experience of performing LCCs as well as reduction factors to the service cost indexation and installment rate.

The LCC implementation time is 7-12 years depending on the delivery period and type of equipment. During the first three years, the customer pays for the equipment in installments at the key rate of the Russian Central Bank with the applied reduction factor and the supplier shall ensure the function of its equipment with minimum downtime during the entire LCC period The supplier is also responsible for training the customer's physicians and engineers and for updating the equipment software.
Alexander Prokhorov
Deputy Head of the Moscow Department of Investment and Industrial Policy
"Today, life cycle contracts account for more than half of the volume of all public-private partnership projects in the capital: over six years, it amounted to RUB 542.4 bn. The LCCs help the city to acquires metro rolling stock, to renew the tram fleet, to purchase equipment for use in healthcare as well as housing and utility services. In the coming year, the capital will continue to use this mechanism, which is widely demanded by business. Thus, it is planned to conclude new LCCs for the supply of modern equipment for the needs of Moscow medical institutions."
Audience: 16+