Creating a virtual medical market

Working out of a small office at the National Institutes of Health, a group of entrepreneurs came up with a plan they hoped would help American Indian businesses and other small firms tap into the federal market for $3 billion in medical equipment.

The concept was simple: Develop a roster of vendors offering medical hardware, find federal agencies that purchase these products and marry them on the Internet.

The idea will come to fruition April 1 when NIH launches a Web site designed to help minority, women-owned, American Indian and Historically Under-utilized Business Zone vendors—as well as larger companies—capture federal business for everything from hospital crash carts to microscopes.

"It is inefficient for government to buy medical equipment the old-fashioned way," said John Enelio, chief executive officer of the Native American Marketing and Development Corp. (NAMCOR), which put the deal together and plans to market it to government agencies.

The public/private project is modeled on CIO-SP, the innovative NIH Chief Information Officer Solutions and Partners contract that gives vendors the chance to showcase their wares online.

Through NIH's Information Technology Acquisition and Assessment Center (NITAAC), the agency jumped into the government procurement business five years ago and began to offer a wide range of contracts to government agencies in need of everything from thumbtacks to computer monitors. The move was intended to increase competition and help the government get the biggest bang for its buck.

But this is the first time a site has been designed to bring government agencies together with private companies selling medical equipment and the software to run modern medical systems.

The target audience includes federal hospitals and clinics, medical research facilities, federally funded programs at medical schools, the Indian Health Service with its network of hospitals and health centers, and military facilities worldwide.

"It is a perfect role for NIH," said Philip Kiviat, president of the Kiviat Group of Potomac, Md., which helps companies get federal government contracts. "It's medically oriented. They have a very recognized buying function. If anybody was going to do that kind of thing, NIH is the appropriate place for it."

In February, NIH awarded a contract worth a potential $350 million a year to the MedTech Group, an Alaska Native corporation that will host the site. The MedTech Group site will be linked to NITAAC's Web page, which promotes other online marketplaces.

The new site is intended to ease the process for both sellers and buyers of medical equipment. A potential supplier submits data via the Web site showing that it qualifies as an 8(a) small business, a designation named for a section of the Small Business Act. Once NIH verifies the qualification, the vendor submits information to product engineers, and the products are listed in an electronic catalog.

That makes life easier for an agency's procurement officers because they do not have to individually certify that companies meet the requirements for small or minority-owned businesses. They simply submit information about the product they need, and they can expect to receive several bids within 72 hours. If the product an agency wants isn't listed, NIH will do the research to determine whether a qualified vendor exists and will add the product to the catalog.

The system pays off for everyone, said James Cooke, NAMCOR's business development director. "We give the government the best value. We turn it around in 72 hours, and we give agencies the chance to meet their 8 (a) goals," he said.

"We're trying to do something for the tribal economy as well as the American economy," said Leamon Lee, director of NITAAC, which develops ways to use information technology for procurement.

Small American Indian companies certified as 8(a) are exempt from the $5 million cap on a single contract that is in place for other small businesses; they are also exempt from competitive bidding rules. That should hasten the procurement process and allow federal agencies to award bigger contracts for the equipment they need.

"It is a legitimate use of the Native American exemption to competition," said Chip Mather of Acquisition Solutions Inc., a federal contracting consulting firm in Chantilly, Va.

To make the deal even more attractive, NAMCOR offers federal agencies a rebate for their old equipment. The company will take medical devices such as microscopes, refurbish them and sell them to teaching institutions, other countries or rural facilities that may not need the latest device on the market.

Michael Yeh, chief executive officer of Deus Technologies LLC, a small business in Rockville, Md., welcomes the chance to be listed on the site. He said it would give his young company a chance to highlight its latest product: a medical imaging device about to be approved by the Food and Drug Administration that can detect lung cancer before it is visible on an X-ray.

"In the federal sector, veterans fall into the high-risk population for lung cancer," Yeh said. "A [Department of Veterans Affairs] hospital should have a great desire to have this as a diagnostic tool."

With a $1 trillion health care market flourishing in the United States and the need for medical equipment growing, NAMCOR's Enelio hopes that connecting government, industry and e-commerce will generate even more business for companies that have not gained a foothold in the lucrative government marketplace.