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February 17, 2022, 07:02

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The winners of the tenders not only supply the equipment, but also ensure its operation throughout the entire contract period.

In 2021, Moscow signed 52 life cycle contracts (LCCs). Four of them are for the supply of public transport rolling stock, the rest are for the purchase of modern medical equipment.

“Today, life cycle contracts account for more than half of all public-private partnership projects in the capital. Last year, Moscow signed 52 such contracts, their total value is 64.2 billion rubles. All of them provide for not only the supply of equipment, but also repairs by the contractor throughout the entire life cycle,” said the Deputy Mayor of Moscow for Economic Policy and Property and Land Relations

Vladimir Efimov.

So, in 2021, the capital held two tenders for the supply of 400 electric buses, an environmentally friendly type of public transport. The purchase was made with funds received through the issuance of green bonds. We signed life cycle contracts with the winners (Russian Buses – GAZ Group and KamAZ PJSC) for the supply and service of vehicles for a period of 15 years. The total value of these contracts is 24.1 billion rubles. In just 3.5 years, Moscow signed seven contracts worth 60.6 billion rubles, providing for the supply and maintenance of a thousand vehicles.

“The task set by the Mayor of Moscow is to make Muscovites travel in comfortable and modern public transport. Life cycle contracts help to organize its smooth and reliable operation – manufacturers are responsible for ensuring that every day the transport goes on the line for 15 or 30 years. The Moscow Metro was the first in Russia to start purchasing and servicing trains under such contracts, which allowed us to improve the quality of service and regularly save up to 15 percent of costs,” said the Deputy Moscow Mayor for Transport Maxim Liksutov.

Life cycle contracts are also in demand by suppliers, as they have their advantages over standard public procurement. Business gets the opportunity to load its capacity for a long period. In addition, the signing of the LCC is a guarantee of income for the entire period of its validity (in the case of conscientious performance of duties).

Since 2019, Moscow has been acquiring innovative medical equipment for city hospitals and polyclinics with the help of life cycle contracts. Within the framework of contracts signed last year, about 760 units of modern medical equipment were purchased for the amount of 26.7 billion rubles. Among the winners of the competitions were the world’s largest manufacturers. In just two years, the city signed 122 contracts worth 90 billion rubles for the supply of medical equipment.

The conclusion of the LCC is also beneficial for Moscow. A long-term deal helps to get the best value for money equipment and its service, which allows you to evenly and predictably distribute costs. Competition during tenders allows you to save budget funds, since purchase prices, as a rule, are reduced. In addition, if during the term of the contract the equipment fails, the city does not spend money on its repair and subsequent commissioning.

“In two years of purchasing medical equipment under life cycle contracts, we were able not only to achieve significant cost reductions, but also to ensure the reliability of the purchased equipment due to the interest in maintaining its performance of equipment manufacturers. And, of course, the most important thing: thanks to technical re-equipment, we are raising the level of diagnostics and treatment in medical organizations in Moscow to a qualitatively new level, which is positively evaluated by our doctors and patients. More than five thousand units of equipment have already been purchased, of which over 70 percent have been delivered to the capital’s medical institutions and are being actively put into operation,” said Irina Rybalchenko, General Director of GAU Gormedtechnika

Department of Health of the city of Moscow.

Moscow has been concluding life cycle contracts since 2014. Today, they account for more than 535 billion rubles, which is almost half of the total volume of public-private partnership agreements in the capital. With the help of life cycle contracts, the city not only acquires medical equipment and electric buses, but also renews the rolling stock of the subway and the tram fleet. Thus, the capital purchased 1,432 metro cars for 274.8 billion rubles and 504 trams for 89.4 billion rubles.

More information about the economic policy and property and land relations of Moscow can be found at site.

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and or sentence structure not be perfect.

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