‘DF Procurement of innovative technology.’
Procuring complex technology is always challenging. How is the buyer to know he gets what he needs when he doesn't understand the technology? How to differentiate between competing technologies? Well, don't. Define your goals instead of a long list of requirements, and identify the vendor with the relevant expertise.
Decision free solutions
November 6, 2016
Amsterdam, the Netherlands
Click for the basic info of this case
- Three hospitals in Amsterdam have founded a consortium to realize proton therapy in Amsterdam
- DF Procurement was implemented within the framework of the European Public Procurement Law (EPPL)
- 400+ requirements were reduced to an aim with 5 elements and three critical functional requirements
- Out of 9 international vendors (US, Europe, Asia) 5 qualified for the tender based on functional requirements, 3 participated
- 4 months after start of the tender the 3 tenderers handed in 4 tender documents of no more than 3 A4-pages each
- 3 one-hour interviews were held with the tenderer’s key personnel 2 months later
- It took 2 meetings for an assessment team of 9 persons (with and without experience in proton therapy) to come to a substantiated consensus
- From start of the international tender to pre-award took 6 months
- The pre-awarded tenderer (US) clarified its scope and provided all required documentation within a 6 month period
- Following a 1-day presentation by the pre-awarded vendor the assessment team unanimously voted for awarding the tender
Decision Free Procurement
of complex medical technology
For the Amsterdam Proton Therapy Center (APTC)1, a consortium of two university hospitals (who have since fused as UMC Amsterdam) and a comprehensive cancer institute (Antoni van Leeuwenhoek), proton therapy equipment including ‘total cost of ownership’ for ten years was to be purchased for an estimated 90 MEUR (price-ceiling). Given the technological complexity of the proton therapy equipment (cyclotron/synchrotron, beam transport, control system, etc.) and the range of solutions the market provided (nine vendors world-wide), the traditional procurement method of compiling a long list of specifications was not an option. Not only is it almost preposterous to define — as a user and non-expert — requirements for complex technology, the vendors’ solutions are medically certified products and will not (can not) be modified.
Traditional methods would have the organisation try to speak the technical language of the vendors, and force it to write technical and or functional specifications in absence of sufficient knowledge on possible interdependencies and or whether they could be met. It would force the organisation into making assumptions and thus introduce risk. It would also draw the organisation into discussing technology rather than focussing on their overarching aims and how vendors would be able to help the organisation to achieve them. Understanding little and seeing risk everywhere the focus would automatically shift to price as the prime method to ‘minimise’ the risk.
But the success of a proton therapy center hinges not on the equipment, but on the financially sound operation in the organisation’s particular circumstances (too many centers have struggled to the point of bankruptcy2, but never because of technical reasons). For APTC the emphasis was on (the architecture for) continuous innovation in line with APTC’s own research strengths. APTC also had to take their permit conditions into consideration (included phased expansion of patient numbers and collaboration with other permit holders in the Netherlands).
APTC was thus looking for the expert-vendor who would play an important role during the operational lifetime of the center, not the vendor with the cheapest solution or the most strategical bid. Such an approach clearly posed a much greater risk.
So the method of Decision Free Procurement3 (DFP), a tried and documented method that is focussed on providing the conditions to first identify the vendor who has the expertise that best aligns with the aim, and then to have this ‘pre-awarded’ vendor to make a transparent plan how the aim will be achieved (to be ‘awarded’ only when it was clear to the organisation’s team that the vendor had the plan, the scope, and the risk mitigation measures in place to achieve the organisation’s aim).
Running the DFP tender a lot of attention was given to describe the situation in which the center was to be realised. This included information on the involved hospitals (strategy, developments, financial situation), the radiotherapy departments and their past performances, and their research interests. But also the political situation in the Netherlands with respect to the introduction of proton therapy (a permit system with requirements attached), the reimbursement situation (in flux) and the legal obligation of the academic centers to do research the list of stakeholders, and a list of stakeholders. This information was to help the prospective tenderers in getting a clearer view on the “initial conditions” of the project, and thus allow them to use their expertise to identify project-specific risks, as well as see opportunities (e.g. in providing additional services of use to APTC, but also in making use of the available clinical expertise for joint research projects).
The various elements of the aim were prioritised and the aim was accompanied by a list of ‘sought performances’4 and ‘what-we-think-we-want’5. This greater emphasis on the aim and the system within which it is to be achieved is typical for the approach of Decision Free Solutions, and hence DFP.
In the preparation for the tender (a period which took 4 months) an earlier obtained and adapted list containing 400+ specifications was replaced with a transparent and objectifiable aim consisting out of 5 prioritised elements aligned with the academic goals of the three hospitals.
Of the nine vendors five qualified for tendering (based on a short list of basic functional requirements as defined by the radio-oncologists) and three vendors decided to participate. Following the start of the tender each of the tenderers was invited to Amsterdam for a two-day meeting in which the tenderers had the opportunity to ask APTC questions on the aims and the sought performances. Tender documents (no more than 12 pages in total) were handed in 4 months after the start of the tender, followed 6 weeks later by three one-hour interviews of key-personnel of each tenderer.
The tenderer who demonstrated to be the expert in realising APTC’s aims, (based on the assessment of the tender documents and the interviews) was pre-awarded the tender 3 weeks after the last interviews. It took the assessment team (several of whom had no experience with proton therapy) a total of two meetings to come to consensus on the scores for all 12 documents and 9 interviews.
In the months that followed the pre-awarded vendor developed a comprehensive risk management document and presented and explained a milestone plan with which APTC’s aims were to be realised. The scope included a wide range of new features to be included once they would become available, against no additional cost.
APTC’s assessment team unanimously awarded the tender following a one-day final presentation of how the provided solution would realise APTC’s aims.
The tenderer who ranked 3rd legally challenged that (the implementation of) DF Procurement was lawful within the European Public Procurement Law (EPPL). APTC won the ruling on all accounts: EPPL provides room for the implementation of DF Procurement, and DF Procurement was judged to be implemented correctly in all aspects. For more information on the legal challenge and its outcome read the article ‘Is it legal to minimise risk in procurement?’, you will find it here.
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