UNIT 3 EQUIPMENT MANAGEMENT PLANNING AND PROCUREMENT

Structure
3.0

Objectives

3.1

Introduction

3.2

Present Scenario

3.3

Steps for Equipment Selection

3.4

Hospital Equipment Utilisation

3.4.1 Utilisation Index
3 4.2 Important Factors Affecting Utilisat~onof Equipment

3.5

Procurement of Imported Equipment

3.6

Let Us Sum Up

3.7

Answers to Check Your Progress

3.0 OBJECTIVES
After going through this unit, you should be able to:
describe briefly the present state of medical equipment in Indian Health Care Institutions;
describe the various steps in procurement of hospital eguipment;

understand the concept of utilisation index; and

describe the various factors affecting equipment utilisation.

3.1 INTRODUCTION
In this u n q you will learn about the essential steps for equipment selection. You will also
learn about the various factors which affect equipment utilization. You are aware that
hospitals have undergone a quantum change in concept and care provisioning from ancient
days to the present era. The information explosion and technological advances have
revolutionised the medical care. The sophistication in the medical field has led to the
development of specialised care centres in an attempt to provide high quality care. Modem
medical technology has contributed immensely in improving the quality of health care and
state of health prof&. of Alrtioaa The advancement has been mainly due to:

improved diagnostic facilities,

sophisticated equipment, and

spectacular progress in development in hugical procedures.

Besides surgical and technological advances development of safer anaesthetic techniques

has lead to the development of disciplines like CardiothoracicSurgery, Neurosurgery, Renal
Transplant, Radioimaging and so on.

3.2 PRESENT SCENARIO

The resultant of the rapid advances in medical sciences and technology have been:

a
a

The physicians are becoming more and more equipment oriented.

The patients are much informed of the modem facilities available in our country and
abroad. They start expecting and demanding the same.

a There is at present a flair for introduction of computer technology in the medical field.
The introduction of state of the art technology has resulted in metamorphic changes in
diagnostic and therapeutic modalities in patient care activities. This has led to enhancement
of quality of life and decreased morbidity and mortality rates. However, modem medical
technology is not a panacea for all ills. The adverse effects include.sbpplier induced
demands, indiscriminate use, duplication and underutilization.
I
,

Essentials of Logistics and

Equipment Management

Studies on equipment management have indicated that any given time in most of the
hospitals noii-functional equipment niay account for 40-50% of all equipment procured by
the hospital.
Most of the states and other organisations in India have laid down rules and regulations for
the procurement of equipnient and other supplies in hospitals. The basic rationale behind all
these rules. regulations and procedures is to maximise the value of the money invested in
the purchase of equipment.
In practice the term purchasing describes the process of buying. It generally involves
exchanging morfey for goods. The procurement should also focus on the cost benefit
analysis, replacement and disposal of old existing equipment. Indigenom equipment, if
available should be preferred to imported ones. Procurement is described as the total
responsibility for buying. It involves choosing the items, specifications, identifying the best
source of supply, establishing a delivery date and the acquisition of items at the most
favourable cost.

3.3 STEPS FOR EOUIPMENT SELECTION

The following are the essential steps for equipment selection:
1,

Need assessment: The basic purpose and reason for going in for a particular equipment
should be enunciated beforehand. In the hospitals where there is requirement of new
equipment, there is a need to do the survey before halid and justifying thi need of a
particular equipment to be provided. In many countries before a new facility is to come
up a team comprising hospital administrators, hospital engineers. epidemologist,
financial experts visit tlie particular hospital and assess the need and thereafter they
issue a Certificate ofNeed (CON) before allowing new facilities to come up.

2)

Use coeffisient: This coefficient is applied to assess the utilisation of an equipment i.e.
whether the equipment is optimally utilised or underutilised. Additional denlands of the
equipment may be assessed by use of the formula:
Use Coefficient

N x 100

where, N =Average number of hours the equipment is used per day

M = Maximum number of hours the equipment can be used per day.
If the use-coefficient is less than 50%, it is considered to be underutilised and hence a
bad investment. However, life saving equipment cannot be subjected to this kind of
assessment.
3)

Cost consciousness: While procuring a new equipment the total cost of the equipment
must be kept foremost in mind during the entire cycle of equipment planning and
procurement. Cost containment procedures may be thought at every stage of the
procurement procedures.

4)

Specifications and not the brand: There should be insistence on exact specifications of
the equipment. Tenders floated with the exact specifications will set about a healthy
competition which works to advantage. Functional requirements should be known and
based on these, technical specifications should be developed. Based on these one
shall be able to negotiate sometimes an unimaginative price. The clinicians requirement
of equipment may thus be obtained at a lesser cost.

5) CTF destination: Normally insurance and freight are covered up to nearest port with
customer clearance facility. In case of procuremeilt of very sophisticated, expensive
and imported items moving the equipment to the institution with custom clearance may
cost an additional 1-2% of the value of equipment. This slioul'ci be confirmed at the time
of negotiation. Most of the suppliers would be willing to absorb the additional cost and
the burden of customs clearance.
6)

Installation on turn key basis: It has been observed that costly equipment installed on
tuin key basis havc better utilisation as total equipment planning considerations like
civil, electrical, air-conditioning installation etc. are ensured by the firm. Thus the
equipment when handed over to the hospital is nom~allyfully functional. Prior to the
commissioning of the facility, adequate number of personnel must be trained by the
h l

7) Warranty with spares: It is the age of electronics due to fierce competition in market,

the manufacturers are yielding to higher and higher warranty period that too with
spares. The cost of spares range from 3-5% of the kalue of equipment. What used to be
a conventional warranty period of one year can now be bargained for 2-3 years without
much additional cost.
8)

Continuous supply of consumables: Some equipment may need expensive consumables

to be imported. Every effort must be able to secure as many consumables as possible to
last for a minimum period of one year. Sufficient guarantee has to be ensured for
continuous supply of consumables thereafter for at least 10 years.

9) service contracts/After sale services: It is important to ensure continuous and an

uninterrupted functioning of the equipment. Services contract must be conceived and
planned at the time of purchase. The supplier may dlctate the terms and price if plan for
service contract 1s done at the end of the warranty period. Accepted norms for the
service charged is 1-2% of the cost of equipment for the fust year after warranty with a
10-15% increase each year.
10) Training of staff: Training of staff to handle the equipment efficiently may range from
training at site to tralning abroad depending upon the sophistication needs of the staff
and institution. This should be ensured with the supplier to provide necessary training
to the staff free of charge before placing the order. Timely and appropriately training the
staff for handling and operating the equipment is a prerequisite for effective and
optimum utilisation of an eqmpment.
11) PreparationlSelectionof site: It is necessary to consult experts while planning for the
site of the equipment. It calls for a team-work to plan for a proper site which does not
require any modification later. The team consists of an architect, civil electrical and A.C.
engineer, including the installation engineer. Their recommendationscan be critically
evaluated suitably by the administrator since the expert and engineers are known to be
over ambitious in demanding space.

12) Foreign exchange: Life saving equipment are exempted from customs duty. Foreign
cuirency value keeps on frequently fluctuating. If it is envisaged that the lead time of
the equipment to be procured is more than 3 months, it may be wiser to indulge in
forward booking where bank undertakes to take care of fluctuations for a specific
period by charging a premium and understanding from the supplier to cover the
expenses on extension of letter of credit and exchange fluctuations.
13) Facility for back up power supply: As most of the vital and essential equipment are
functional on electricity or chargeable battery supply, facility for back up power supply
should be ensured. Some arrangement has to be made in the form of stand by
generators or if possible Unintempted Power Supply (UPS).
14) Good economics: There are several other f a a r s to be bken into consideration like cost
and availability of consumables, consumption of water, electricity, need for air
conditioning, service contract facility and availability of spares at least for ten years.
An equipment may be offered at a very low price but the consumables required may
have to be imported later at a phenomenal cost. It may be wiser to purchase a more
expensive equipment which can be operated wlth much cheaper consumables available
locally.

15) Supplier selection and purchase procedure: It is essential that the specifications, other
terms and conditions, supplier selection should be done after a careful analysis. A
\.
detailed and specific purchase order should be given. The equipment should be
received by a responsible person. Board of officers constituted should certify that the
equipment is as per specificatlons and hnctioning satisfactorily. Techmcal and users
manual should accompany the equipment. The equipment should be adequately
utilised and the performance monitored and evaluated.
Check Your Progress 1
1) Mark true or false:
i)

Generally in most ofthe hospitals in India the medical equipment is in a satisfactory

state. (TrueiFalse)

ii) Imported medical equipment is more reliable and easy to maintain than an indigenous
one. (TmdFalsej

m) Purchasing encompasses the process of procurement. (TmeRalse)

Equipmlent Management
Planning and Procuremer

ientials o f Logistics and

uiprnent Management

2)

Enumerate the various essential steps for equipment selection in health care
institutions.

3.4 HOSPITAL EQUIPMENT UTILISATION

It should be the earnest endeavour of the management and users to optirnise the equipment
utilisation to obtain maximum return for the capital invested. In an era of cost-intensive
medicare, every equipment being installed in health care institutions need to be fully and
properly utilised.
An optimum utilisation of equipment will result in:
Optimal patient handling and rapid turnover.
Minimum possible cost.
Quality patient care and satisfication.
Utilisation essentially means the use of the equipment to its full potent~al.

3.4.1 Utilisation Index

Utilisation index is one of the important parameters to monitoi the functional status of the
equipment or it is the parameter to assess the productivity of service or an equipment.

3.4.2 Important
- Factors Affecting Utilisation of Equipment
The important factors are:
1) Training of staff: Timely and appropnate training of the staff handling and operating
the equipment is a prerequisite for effective and optimum utilisahon of an equipment.
2)

Equipment installed on turn-key basis: It has been observed that costly equipment
installed on turn key basis have better utilisation as total equipmentplanning
considerations like civil, electrical, air-conditioning installation etc. are ensured by the
firm. Thus the equipment when handed over to the hospital is normally fully functional.
Prior to the commissioning of the facilit$, adequate number of personnel are to be
tralned in their premises.

3)

Preventive maintenance and after sales services: Insisting on regularafter sales

services of the equipment and a proper system of preventive maintenance, downtime of
costly and essential equipment can be considerably reduced thereby increasing
utilisation. Normally the annual maintenance cost of an equipment varies from 1-4% of
the capital cost of the equipment. By ensuring availability of repair, maintenance and
necessary spares, equipment utilisation can be significantly increased.

4)

Facility for back up power supply: As most of the vital and essential equipment are
functional on electricity or chargeable battery supply, facility for back up power supply
should be ensured. Some arrangement has to be made in the form of standby generator
or if possible Unintermpted Power Supply (UPS).

5)

Time scheduling of the hospital: Hospital timing can be scheduled in such a way that
there is optimum utilisation of the costly equipment. Usually in government hospitals
the facilities work only 8 hours or one shift which amounts to 33% or practically 25% of
utilisation. If these facilities can be made available for two shifts, hlgb cost equipment
can be utilised for 50-60%.

6) Use coefficient: This is applied to assess the utilisation of an equipment i.e. whether
the equipment is optimally utilised or underutilised. Additiona1,demands of the
equipment may be assessed by the following formula:
U-seCoefficient = N

x 100

where, N = Average number of hours the equipment is used per day.

M = Maximum number of hours the equipment can be used per day.

If the use-coefficient is less than 50%, it is considered to be underutilised and hence a

bad investment. However, life saving equipment cannot be subjected to this kind of
assessment.
7) Awareness of the Facility: There is a changing trend in health-care delivery system.

Hence, it !s propised that to ensure optimum utilisation a marketing strategy be evolved

where services can be made popular in the community to gain maximum benefit of the
capital of the capital investment.
8) Utilisation of the Special Facility or Skill: Any facility, the X-ray, ultrasonography, CT
scanning if underutilised due to paucity of workload, should be shared with other
hospitals. Networking of resources would ensure optimum utilisation of the costly
equipment.
Check Your Progress 2
1)

Define the tern utilisation index

2) Enumerate the various factors affecting the utilisation of equipment in health care

institutions.

Ilrthis section you will learn about the procedures involved in the procurement of imported
equipment. Given below is a sample of tender form for supply of imported equipment. This
w~llhelp you in understanding the process of supply of equipment of foreign origin.
Sample of Tender Form '
From: ................ ....................
;

Letter No: ......................................

To : .......................................
Date: .......................................

Dear Sir/Madam,
1) This hospital is interested in the supply, installation and commissioning of import of the
following:

2)

You are invited to send us a proforrna invoice from your principals. The proforma
invoice should be in a quadruplicate and in the name of the ....................................... The
documents may please be posted at the address given above. The latest hours and date
of receipt of the offer is up to ...................................... hours on ........................................

3) Delivery of Tender
Tenderers should submit their tenders in three parts (i) Price bid, (ii) Technical bid and
(iii) Bid guarantee, each part in separate sealed covers as under:
Price bid (in triplicate) should be placed in a,'separate sealed cover duly superscribed
price bid for .........................................
similarly technical bid (in triplicate) should be
placed in a separate scaled cover duljl superscribed technical bid for .................................
...................... The bid guarantee (Earnest money) should also be placed in a separate
. scaled cover duly superscribed Bid ~ k a n t e for
e ...............................................
All these three envelopes should be placed in a big envelope which will form the main
cover. This main cover must be superscribed Tender for .............................................. due
on .............................................. at ...............................................
A11 the other three envelopes should also bear the address of this office as given
above. The price bid should be kept valid for acceptance for a periodof 180 days after

opening of the tender. The purchaser will not be responsible for any postaldehy or
any other cause that may lead to delay in the receipt of the documents in this office
beyond the stip~lateddate and time stated in the tender documents. The detailed
instructions with respect to bids are given below.
The technical bid shall be opened at hours on ..........................:................ It should be
submitted in quadruplicate indicating precise details, any limitations or extension of the
requirement should be clearly spelt out. Quotations which do not give precise technical
information are likely to be ignored. The operating and service manual of the equipment
should accompany the technical bid.
Only manufacturers or their sole authorized distributorslsole agents are entitled to
submit the proforma invoice. The proforma invoice must be from the manufacturers
abroad. All offers other than those fiom the manufacturers should be supported by an
authority letter in original from the manufacturers authorizing the firm to tender on their
behalf. Certificate to the effect that you are the manufacturers of the equipment1
authorised sole distributors or sole agents for manufacturer on whose behalf you are
quoting, must be included in the documents. The said certificate should be duly
attested and stamped by the authorized signatory of the firm. The fm should enclose a
certificate that they are enrolled with the Directorate General of Supplies and Disposals,
Parliament Street, New Delhi to act as Indian Agent.
In addition to quoting for the equipment as per para 1 above, tenderer must quote the
charges and terms and conditions of service contract for a period of 5 years for
maintaining the equipment at this hospital after the expiry of the period or warranty.
During the service contract period the fm shall provide preventive maintenance and in
addition attend to all emergent and breakdown calls. The service contract charges
should be quoted for labour cost only and should not include the cost of any
replacement partslcomponents that may be needing replacement. Thus the charges
quoted will be of service only which would include the cost of the engineers time and
travel etc. During the contract period replacement of parts/components that may be
needing replacement shall be made available by the fm at the hospital's own expense
and all import formalities, payment of customs duty etc. shall also be compiled withi
borne by the hospital. The charges shall be paid to after the satisfactory service.
The up-time guarantee of 328 days in a block of 365 days of the service contract period
should be ensured. The principals or their agents are required to submit a certificate
that they have satisfactory service arrangements and fully tralned service staff
available to support the up-time guarantees. Tenders not containmg service contract
charges shall not be considered and shall be rejected.
Tenderers must attach, along with the Technical Bid a photocopy of the constitution 2f
the fm indicatin&artnership deed, if any the time of the proprietorlpartners.
Foreign f m quoting direct against their tender enquiry should attach, along with the
technical bid, a certificate giving the name and address of their Indian Agents or their
representative they have in position for servicing the equipment in India.
In case the offer is from other than manufacturers, then a certificate that quantum of
Indian Agency Commission mentioned by the fiml in the proforma invoice in the same
as is being charged from other departments/Institutionsfor similar items, must
accompany the Technical Bid.
A list detailing all places in India where the same equipment or similar equipment has
been installed by the Company should be attached. Documentary evidence wherever
possible in support of this list and also certificates of its satisfactory working from
those mentioned in the list, should also be enclosed.
In case the offer is from other than manufacturers, then an Authority letter from the
manufacturers authorizing the firm to tender on their behalf must accompany the
technical bid.
I

Tenderers must furnlsh along with the technical bid the latest current vaid Income Tax
Clearance Certificate and Sales Tax Certificate or attested photocopies there of.
Tenderers must furnish along with their technical Bid a certificate that the Indian
Agency commission, if any payable has been included in FOB value and that no Indian
Agency commiss~onother than that stipulated in the proforma invoice is payable by
the foreign manufacturers to the Indian Agent.
Bid Guarantee and Security

a) The tender must be accompanied with Earnest money for Rs ....................................

in a lump sum amount in the form of deposit at Call ReceiptITerrns deposit valid for
one year from any scheduled bank in the name of the .......................................
Earnest money in any other form will not be accepted.
b) Bids not accompanied by Earnest money as stated above or less than the amount
stipulated above shall be summarily rejected.
c) Earnest moneylsecurity deposittany other sums of the tenderers with the hospital
in connection with any other tenderlcase will not be considered against this tender.
d) The successful tenderer shall be required to h i s h a contract performance
guarantee bond in the shape of Bank Guarantee for an amount equivalent to 5% of
the FOB value of the equipment towards the execution of the agreement and the
warranty. The Bank guarantee should be valid till the expiry of the warranty period
of 24 months. The Bank guarantee for 5% of the FOB value will be submitted within
a period of 15 days after the placement of the supply order failing which the order
will be liable to be cancelled and the Earnest money forfeited.
e) The hospital would return the Earnest money mentioned in para (a) above to the
successful tendering firm on the submission of the Bank guarantee above.
f ) The successful tenderer will submit bank guarantee equivalent to 2% of the FOB

value to recover the service contract period after the expiry of warranty period of 24
months. Bank Guarantee mentioned in para 8 (d) above will be returned on the
receipt of bank guarantee indicated in this clause.
g) The hospital does not pledge itself to accept the lower to any other tender, and
reserves to itself the rlght of acceptance of the whole or the part of the tender or
portion of the quantity offered and the tenderers shall be required to supply the
same at the rate quoted. The hospital reserves to itself the right to accept or reject
any or all the tenders without assigning any reasons thereof.
9) CustomsClearance

i
I

1<
,

The equipment requiring import from abroad will be import$ under the OGL
scheme, for which tenderer will ensure before shipment takes place, that the
equipment, in question can be imported under the said scheme.

ii) It will be the responsibility of the purchaser to get the customs clearance of the
equipment done (however the tenderers will assist in the clearance of consignment
as and when required). The tenderer will pursue any claims with the custom
authoritieslinsurance companylcargo operators and transporters as may arise at
any stage.
iii) The N.M.I.C. (Not manufactured in India) and the duty exemption certificate and
any other documents required for custom clearance will be provided by the
hospital.

10) Insurance

The manufacturers will ensure that the equipment is properly insured for the full CIF
value to cover the transit up to site of installation. If the installation is delayed beyond
the agreed date of satisfactory installation commissioning and handing over of the
equipment, then in that event any transit and storage damages which come to light after
such delays, shall be at the risk and cost of the tenderers. The Tendererhdian Agent
shall provide to the hosp~talafter the inspection, a detailed list of any loss or damage to
the stores that may have occurred so as to enable the purchaser to file appropriate
claims with the Insurance Company. However, it shall be the responsibility of the
hospital to prepare, lodge and pursue any claims that may arise with the Insurance
Company. The manufacturers shall provide all assistance in pursuing any such
insurance claims expeditiously. The manufacturer shall make free replacement, if
required, m lieu of damagedllost items etc. regardless of the fact whether the claim is
settled by the underwriters or not. The manufacturer's liability shall be restricted to
making free replacementJrectificationand any local expenses such as custom duty1
clearance, ete. connected with such replacement shall be borne by the hospital.

'

11) It should be noted that, if, in consideration or offer of earlier delivery, the contract is
placed with higher tenderer on preference to the lowest acceptable offer, the tenderer
will be liable to pay to the hospital the difference between the contract rate and that of
the lowest acceptable tenders on the basis of the final price for destination, including
all elements of freight, sales tax, local taxes, duties and other incidentals, in case of
failure to complete supplies in terms of such contract w i t h the date of delivery

Equipment ManagementPlanning and Procurement

Essentials of tog)stics amd

Equipment Management

specified and incorporated in the contract. This is in addition to cover all other losses
and damages resulting from delayed supplies and cancellation and risk purchase in
case of failure to supply the stores and without prejudice to other rights of the hospital
to recover all other losses and damages resulting from delayed supplies and of
cancellation and risk purchase in case of failure to supply the stores guarantee1
warranty. The tenderers will be required to furnish guaranteelwarranty from the
manufacturers as under:

The guaranteelwarranty against defects of manufacturerlworkmanship and poor quality

components for the entire equipment shall be for a period of 24 months starting from
the date of satisfactory installation. Commissioning and handing over the equipment in
working order............:............................ During the guaranteelwarranty period, the
replacement of any part(s) of the ..............................................equipment of rectification
of defects of works will be free of cost. In case of any replacement during guarantee
period, all formalities such as connected with such import of replacement shall be
completed with by the purchaser. Further the defective partslequipment shall be
returned by the purchaser to the supplier, prior to making replacement. During the
guaranteelwarranty period the up time as defined earlier will be maintained. If the down
time exceeds seven consecutive days at the time, the guaranteelwarranty period will be
extended beyond 24 months to a duration equal to the total of such periods of down
time during the period of warranty.
The tenderer should submit a written guarantee from the manufacturers stating that the
equipment being offered is the latest model as per specifications and that spares for the
equipment will be available for a period of atleast 10 years after the warranty period.
The manufacturer should also guarantee that it will keep the hospital informed of any
update of the equipment over a period of next 5 years and undertake to provide the
same to the hospital at no extra cost.
Guarantee that they will supply regularly any items of spare parts requisitioned by the
purchaser for satisfactory operation of the equipment till the life span of the equipgent
if and when required, on agreed basis for an agreed price. The agreed basis could%e an
agreed discount on the published catalogue price or an agreed percentage of profit on
the landed cost.
Warranty to the effect that before going out of production of spare parts, the
manufacturers and/or tenderers will give adequate advance notice to the purchaser of
the equipment so that the latter may undertake to procure the balance of the life time
requirements of spare parts.
The warranty to the effect that the manufacturers will make available to the hospital the
blue-prints and drawings of the spare parts if and when required in connection with the
equipment.
The tenderer hereby furnish the following warranty in case the contract is placed on him.
The tenderer hereby declares that the goods/stores/articles supplied to the buyer
under this contract shall of the best quality and workmanship and shall be strictly in
accordance with the specifications and particulars containedlmentioned in the clause
here of and the tenderer hereby guarantee that the said goods/stores/articles conform
to the description and quality aforesaid. The purchaser will be entitled to reject the said
goods/stores/articles or such portion there of as may be discovered not to conform to
the said description and quality. On such rejection the goods/stores/articles will be at
the seller's risks and all the provisions have here in contained relating to rejection of
goods etc. shall apply. The contractorlseller shall, if called upon to do so, replace with
in period of fourteen days or such hrther period as may be extended from time to time
by the purchaser at his discretion on an application made thereof by the tenderer, the
goods/stores/articles or such portion thereof as rejected by the purchaser and in such
an event the above mentioned warranty period shall apply to the goods/stores/articles
replaced from the date of the replacement thereof, otherwise the tenderer shall pay to
the purchaser such damage as may arise by reason of breach of the conditions hereln
contained. Nothing herein contained shall prejudice any other right of the purchaser in
that behalf.
Note: If there are any parts of consumable nature which are not covered under the
ab& said guaranteelwarranty clause, then details of same with nomenclature etc.
must be furnished.

12) Mode of Despatch, Delivery and Commissioningof Equipment

Eq
Plan

The equipment with all its accessories should be dispatched by duly insured, freight
and insurance charges pre-paid. The tenderer is required to undertake to deliver and
install the commission the equipment within a period of days from the date of opening
of letter of credit.
13) Damage of Delay in Supplies/Installation (Liquidated Damage)
In the event of delays in supply installation and commissioning of the equipment to the
satisfaction of the purchaser beyond the stipulated date, the purchaser shall have the
right to recover damages at the rate of 2% of the FOB value of the equipment (including
components, spares, accessories and optional items) per month or part thereof, by
which the supplies or their satisfactory installation and commissioning is delayed
subject to a maximum of 10% damages on this account. .
The acceptance of the equipment will be based on demonstration of the satisfactory
working of all models of the equipment as tested by the Head of Department. The
materials, etc. required for demonstration of satisfactory functioning of the equipment
shall be arranged by the suppliers.
14) Contract
The successful bidder will be required to enter into an Agreement with the hospital on a nonjudcial stamped paper for the supply and satisfactoryinstallation of the equipment as per
specficationsand terms and condtions listed in this tender document and agreed upon.
,15) After satisfactory installation the fm will provide requisite training to the staff of the
hospital at site at no extra cost.
16) Uptime Guarantee
~t the end of the guarantee period of the 24 months the hospital shall enter into a
service contract with the firm. The firm will be required to guarantee that during
warranty period as well as during the service contract period, the equipment will be
maintained in good working condition for a period of 328 days out of a period of 365
days (i.e. 90% uptime), 8 hours non hctioning of the equipment may be considered as
one day down time. Essential period to shut down the installation entirely or partially
shall also be included in the down time while calculating the 90% guaranteed uptime.
No deduction or advantage of any kind on account of Sundays, half days on
Saturdays, public1Govt. holidays observed by the hospital shall be allowed from the
total down time permissible as defined above except that such of Sundays, half days on
Saturdays, publiclGovt. holidays on which the hospital is not able to provide facilities
for servicelrepairs of the equipment shall not be counted in the downtime. The
equipment will thus required to be maintained in satisfactory working conditions for a
minimum of 328 days in each period of 365 days which defines the 9G0/:,uptime required
to be maintained in each such period of 365 days. This guaranteed uptime shall be
calculated for each block of 365 days. The firm will be required to pay a penalty of Rs.
...................................... per day in case the number of days of down time in each period
of 365 days in more than the down time, permissible which is to be calculated as defined
above and the delay for not bringing the equipment in functioning order is in any way
directly, even partially attributable to the f m .
The penalty will apply only for the number of days the permissible down time as defined
above is exceeded. For purpose of calculation of down time, any down time period less
than 8 hours shall be excluded. During the service contract period the time taken by the
hospital in providing to the firm the spare parts shall not count towards the down time.
During the guarantee period the time taken by the hospital to provide the customs duty
exemption certificate, Not Manufactured in India certificate, import licence etc. for
enabling the tenderers to import any spare part, shall not count towards the downtime.
17) Opening of Tender
The bids shall be opened on .......................................
Technical bid ......................................
hours non price bid ...................................... hours on .......................................You are at
liberty to be present, in person or through your authorized representative at the
openingof the tender at the time and date specified in the tendernotice. In the event of
the day of receipt and opening of the tender being a holiday for the hospital then due date
of receiptlopening of the tender will be the following working day at the same hour.
-.

ent Ma1nagementand Pr'ocurement

Essentials of Logistics and

Equipment Management

18) Period for which the Offer will remain Open

The tendering firms should keep their offers valid for acceptance for a period of 180
days from the date of the bids.

19) Payment
The hospital will pay 100% CIF value excluding Indian Agency Commission of the
goods to the tenderer through an irrevocable Letter of Credit (LOC) against negotiable
shipping documents.
Country of origin will be one and not more. Expenditure on release of LOC by the
foreign fm will be borne by them. No amendment in LOC will be allowed which is not
in the QuotationITenders.
The hospital shall make all reasonable and due efforts to pay the Indian Agency
Commission out of the FOB value to the Indian Agents at the earliest possible within
30 days after satisfactory installation/commissioning and handing over of the system in
good working condition and meeting any other requirements for payment of the
Agency Commission. The rate of exchange applicable for converting agency
commission into equivalent Indian rupees shall be the T.T. selling rate prevalent on the
date of releasing the documents by the Bankers. The Indian Agency Commission out
of the FOB value will be paid in Indian Currency (Rupees) to the Indian Agents.
20) Packing and Marking
Best trade packing suitable for safe RaiYRoadJAirtransit shall be used subject to
packing and marking being acceptable to the Inspecting Authority.
a) The supplier shall provide such packing of the goods as is required to prevent their
damage or deterioration during transit to their final destination as indicated in the
contract. The packing shall be sufficient to withstand without limitation, rough
handling during transit and exposure to extreme temperature, salt and precipitation
during transit and open storage. Packirig case size and weights shall take into
consideration, where appropriate, the remoteness of the goods final destination
and absence of heavy handling facilities at all points in transit.
b) The packing,marking
shall show the description of quantity of contents, the name
\
of the consignee and address, the gross weight, a dishnaive number of mark
sufficient for purpose of identification. Each package shall contain:
.

i) A packing note quoting the name of the purchaser

ii) The number and date of order

iii) Nomenclature of the goods

iv) Schedule of parts for each complete equipment giving part number with
reference to assembly.

Not withstandinganything stated in this clause, the supplier shall be entirely

responsible for loss, damage, deterioration, depreciatior. of the goods due to faulty
packing.

21) Preparationand Delivery of Tender

Tender documents must be signed by the tenderers in full along with their stamp.
If any time, any question, dispute or difference whatever shall arise between the two parties
(hospital on the one hand and vendor on the other hand) in relation to the purchase, either
of the parties may give to the other notice in writing of the existence of such a question,
dispute or difference and the same shall be referred to two arbitrators, one to be nominated
by the Institute and the other to be nominated by the finn. Such a notice of the existence of
any of any question, dispute or difference in connection with this purchase shall be served
by either party within 30 days of the beginning of such dispute failing which all rights and
claims shall be deemed to have been forfeited and absolutely barred.
Before proceeding with the reference the arbitrators shall appoint/no inatean Umpire. In
the event of the arbitrators not agreeing in their award the Umpire a&inted by them shall
enter upon the reference and his award shall be binding on the parties. The venue of the
arbitrator shall be at
The provision of the Indian Arbitration and Act Reconciliation Act 1996 and of rules framed
there under and any statutory modification thereof shall be deemed to apply and be
incorporated for the supply, installation and commissioning etc.

Upon every or any such reference, the cost of any incidents to the reference and award(s)
respectively shall be at the discretion of the arbitrators or in the event of their not agreeing, of
the Umpire appointed by them who may determine the amount thereof or direct the same to be
fixed as between solicitors and client or as between parties and shall direct by whom and in what
manner the same shall be borne and paid, venue to the Arbitrator will be ............................
:.....

Equipment Management-,
Planning and Procurement
'

Jurisdiction
The courts at ..................................
alone will have the jurisdiction to try any matter, dispute
on reference between the parties arising out of the contract. It is specifically agreed that no
court outside and other than Court shall have jurisdiction in the matter.
Force Majeure
Any failure of omission or commission to carry out the provision of the contract by the
supplier shall not give rise to any claim by any party, one against the other, if such failure of
omission or commission arise from an act of God, which shall include all acts of natural
calamities such as fire, flood, earthquake, humcane or any pestilence or from civil strikes,
compliance with any statue andlor regulation of the Government, lockouts and strikes, riots,
embargos or from any political or other reasons beyond the supplier's control including war
(whether declared or not) civil war or state or insurrection, provided that notice or the
occurrence of any event by either party to the other shall be given within two weeks from the
date of occurrence of such an event which could be attributed to Force Majeure conditions.
The hospital reserves the right to accept or reject in whole or in part any or all the
quotations receivd without assigning any reasons therefor.
Termination for Insolvency
The purchaser may at any time terminate the contract by giving written notice to the
supplier, without compensation to the suppliers, if the supplier becomes bankrupt or
otherwrse rnsolvent (which events shall of themselves be a breach of the contract on the
part of the supplier), provided such termination will not prejudice or affect any right af
action or remedy which has accrued or will accrue thereafter to the purchaser.
Termination for Convenience
The purchaser, may by written notice sent to the supplier terminate the contract, in whole or
in part, at any time for its c o n v e n i e n c e ~ i c of
e termination.shal1 specrfy that
termination is for the Purchaser's convenien;e, the extent to which performance of work
under the contracfis terminated becomes effective.
The good that are complete and ready for shrpment within 30 days after the supplier's
receipts of notice of termination shall be purchased by the purchaser at the contract terms
and prices. For remaining goods the purchaser may elect to
a) have any portion completed and delivered at the contract terms and prices; and/or
b) cancel the remainder.
Government Language
The contract shall be written in the language of the Bid (English Language) as specified by
the purchaser. All correspondence and other documents pertaining to the contract shall be
m English.
Now you procure a tender form for purchase of forelgn equipment from a hospital and
compare it with the sample tender form. Discuss your findings with the academic counsellor
at your programme study centre.

3.6 LETUSSUMUP
In this unit you have learnt that the introduction of state of the art technology has resulted
in metamorphic changes in diagnostic and therapeutic modalities it1 patient care activities.
This has led to enhancement of quality of life and decreased morbidity and mortality rates.
However, modemmedical technology is not a panacea for all ills. The adverse effect include
supplier induced demands, indiscriminate use, duplication and underutilisation.

You have also learnt about the strategies for hospital equipment which include scientific
need assessment, appropriate procurement, maintenance, repairs, optimum utilisation and

'

Essentials of Logistics and

Equipment Managememt

timely replacement. Equipment availability, hnctionality, effectivity, efficiency, utility

assessment are the cornerstones in which the stores administrator plays a pivotal role in
provision of satisfaction to staff, cost effectiveness to the hospital management and health
care to the patients. 'Towards the end of the unit you have learnt about various issues
involved in procurement of imported hospital equipment. Further you have learnt that
Efficient equipment utilisation should be ensured to optimise health care facilities. A
substantial number of equipment in Indian Health Care institutions is of foreign origin. It is
imperative that appropriate steps are taken in the planning, procurement, installation, usage
stages of these equipment to maxirnise utilisation and optimise health care facilities.

3.7 ANSWERS TO CHECK YOUR PROGRESS

Check Your Progress 1
1)
2)

i) F ii) F iii) T
a) Need assessment
b) Use coefficient
c) Cost consciousness
d) Specifications
e) CIF destination
f) Installation on turn key basis

g) Warranty\with spares
h) Continuous supply of consumables
i)

Service contracts

j)

Staff training

k) Preparation of site
1) Foreign exchange

IQ Facility for back up power supply

n) Good economics
o) Supplier selection and purchase procedure

Check Your Progress 2

1) Utilisation index is the parameter to assess the productivity of service or an equipment.
Training of staff
Equipment installed on turn key basis
Preventive maintenance and after sales service
Facility for back up power supply
Time scheduling of the hospital
Use coefficient
Awareness of the facility
Utilisation of the special facility