08546511 _MSPV_GenZ_Transition2_SSJ_20220926_v1_ForSignature(LES) cdp (004) ab 10112022_Redacted.pdf

Control Number: 36C10X-22-AP-1244

AS3-22-221

CLASS JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

PURSUANT TO FAR 6.302-2

1. Contracting Activity: Department of Veterans Affairs (VA) Office of Procurement, Acquisition and Logistics Strategic Acquisition Center (SAC) 5202 Presidents Court, Suite 103 Frederick, MD 21703

2. Nature and/or description of the action being approved.:

The purpose of this document is to obtain Senior Procurement Executive (SPE) approval for the use of Federal Acquisition Regulation (FAR) 6.302-2 Unusual and Compelling Urgency, for twelve months, for the Veterans Health Administration (VHA), Office of Procurement & Logistics’ Medical Surgical Prime Vendor (MSPV) – GenZ Transition contractors. Use of this authority will allow the SAC to meet the medical and surgical supply needs of the Department from December 1, 2022 until November 30, 2023, and provide the time necessary to solicit and award competitive long term contracts in support of the MSPV program. This MSPV-GenZ Transition 2 period of performance (PoP) includes a six (6) month base period of December 1, 2022 through May 31, 2023, and two three-month option periods.

Currently, the VHA manages multiple decentralized firm-fixed-priced (FFP) indefinite-delivery, indefinite-quantity (IDIQ) distribution contracts with Medline Industries, Inc., Concordance Healthcare Solutions, LLC, and Cardinal Health 200, LLC. These MSPV-GenZ Transition contractors provide mission critical medical/surgical supply distribution services in support of VA’s MSPV program for designated Veterans Integrated Service Networks (VISN) and VA facilities throughout the United States and Puerto Rico. Additionally, the VA Consolidated Mail Outpatient Pharmacy (CMOP) and Other Government Agencies (OGAs) utilize the VA MSPV program.

Current OGAs leveraging this program through established Inter-Agency Agreements (IAAs) are:

Indian Health Services, Federal Bureau of Prisons, Department of Health and Human Services, and Department of State.

The estimated value of the proposed transition contract (MSPV-GenZ Transition 2) will be consistent with the prime vendor’s general regional area of responsibility and current VISN support.

The estimated not to exceed maximum total value for the current planned prime vendor transition contract is listed below.

over 800 active ordering officers for MSPV would need to independently procure requirements for their facilities. Additionally, with the loss of allocations and the MSPV Product List, the ordering officers for each VAMC would be in direct competition with one another on the open market to procure requirements, including PPE. Moreover, the management of the Product List, and associated Blanket Purchase Agreements (BPAs), Basic Ordering Agreements, and Distribution And Pricing Agreements, through the MSPV program addresses critical supply issues, including medical item recalls, f iltering out non-Food and Drug Administration (FDA) non-compliant or grey-market items and non-Buy American Act/non-Trade Agreements Act compliant items.

Consequently, at this time, there are no other viable, competitively awarded contract(s) established for VA to utilize subsequent to the November 30, 2022 expiration date to ensure the continuity of the MSPV program. As such, implementation of the transition effort is considered urgent due to the magnitude of impact, and being pursued under FAR 6.302-2, Unusual and Compelling Urgency.

This class justification and approval (CJ&A) will authorize the awards for this transition effort, enabling the current contractors to continue to meet the needs of the agency from December 1, 2022 until November 30, 2023. This performance period includes a six (6) month base period of December 1, 2022 through May 31, 2023, and two three-month option periods during which the SAC will go through the process of soliciting and awarding new, competitive contracts in support of VA’s MSPV program. Based upon the most recent integrated master schedule/plan of action and milestones for the competitive action (dtd September 13, 2022), award is expected May 17, 2023, with the first availability to order post the 120-day implementation period of September 27, 2023. The inclusion of option periods allows for f lexibility in the event the competitive procurement timeline is able to be streamlined and awarded sooner.

MSPV Gen-Z Transition 2 contracts will maintain SAC capability to satisfy the mission-critical medical and surgical supply needs of the entire VA Healthcare System. The contracts will continue to meet the four following needs: (1) to increase the number of healthcare supplies available to VHA facilities nationwide; (2) to stem the use of non-preferred sources and contracting methods (example: Government Purchase Card (GPC) over micro-purchase threshold, local/regional contracts, etc.); (3) to increase cost savings and best pricing obtained by leveraging volume; and

(4) to generate increased Veteran-owned business opportunities.

3. Description of Supplies or Services:

VA, through the VHA and SAC, administers the MSPV Program, MSPV Supply BPAs and MSPV Gen-Z Transition distribution contracts for the supply and distribution of medical and surgical supplies across VHA facilities for the care of veterans. The MSPV program is based on standard commercial practices and enables facilities to reduce inventory holding cost and streamline delivery and distribution tasks within the facility. The national program is mandatory for all VAMCs in accordance with VHA Directive 1761, dated December 30, 2020 (valid through recertification date of December 31, 2025) and was developed as the key element in VA’s integrated healthcare supply chain improvement initiative, and was designed to enhance efficiency, accuracy, and patient safety, because VA lacked sufficient internal capability to warehouse, coordinate deliveries, and consolidate supply stores. The MSPV Gen-Z Transition contracts afford VA critical benefits not available through other contract methodologies, including traditional single source supply contracts, and establishes a national strategic sourcing solution that combines a Government provided capability for ordering a wide range of medical, surgical, dental, laboratory, and environmental medical supplies via a product list with electronic cataloging and ordering capability. The MSPV Product List consists of approxima ely 70,000 supply items, 65 percent of which are supplied by

Services Disabled Veteran Owned Small Businesses while overall a total of 72 percent are provided by Small Businesses.

4. An identification of the statutory authority permitting other than full and open competition:

The statutory authority permitting other than full and open competition is 41 U.S.C. § 3304(a)(2) as implemented by FAR 6.302-2, Unusual and Compelling Urgency.

5. A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited:

a. Without the award of the MSPV Gen-Z Transition 2 contracts prior to November 30, 2022, VA would lack the ability to obtain critical medical and surgical materials and equipment to support in-patient care and basic operating room procedures for all healthcare facilities.

b. The work performed is integral to VA’s mission of delivering healthcare services to the approximately nine (9) million Veterans currently receiving care through our nation’s VA healthcare system. VHA requires a comprehensive contract vehicle for obtaining critical medical supplies for patient care, managing utilization and maintaining spend under management.

c. VA will suffer direct financial and operational injury and mission-loss across the MSPV program. VA’s eff icient, cost-effective, just-in- time ordering and distribution processes will be severely hindered as facilities will revert to non-preferred contract methods as occurred before the introduction of the national MSPV program in 2005. A program lapse would require approximately 2,000 contracting staff to attempt to process nearly 600,000 formal contracting actions (in addition to their existing workload) annually, via ineff icient, ineffective, and frequently duplicative contracting actions and GPC purchases, which entail more than five times the workload burden of the MSPV ordering method. VA will also lose essential allocations of PPE necessary to support VAMCs due to supply chain disruptions created by the COVID-19 pandemic. If these allocations cannot be transferred to another Prime Vendor capable of warehousing and distributing them effectively, VAMCs will not be able to safely deliver patient care.

d. No other contractors currently have the required infrastructure, ordering capability, or

Electronic Data Interchange (EDI) in place, for the facilities contemplated under this contract, to deliver the necessary medical supplies required to support patient care and safety without interruption of or degradation to quality of care upon MSPV Gen-Z Transition contract expiration. Under the proposed contract action, VA’s healthcare facilities will be able to immediately procure their required supplies using the Government-sourced MSPV Product List.

e. Failure to properly account for or make correct decisions regarding continued distribution of necessary supplies while simultaneously monitoring the full supply chain spectrum for any critical issues (i.e. medical item recalls, f iltering -out non-FDA non-compliant or grey-market items or non-Buy American Act/non-Trade Agreements Act compliant items) would rapidly undermine the safety and efficiency of VHA patient care.

f. VA’s promise to Veterans, implemented through the Maintaining Internal Systems and Strengthening Integrated Outside Networks Act (MISSION Act) of 2018, may be compromised as VA’s ability to provide Veterans with an excellent healthcare experience and delivery of the right care, at the right time, at the right place, may be impacted. Ensuring that covered veterans do not experience a lapse in care resulting from errors or delays by the Department, its contractors, or an unusual or excessive burden in accessing hospital care, medical services, or extended care services, is a priority.

g. Even if VA could perform and sustain the above referenced actions, VA does not have suff icient infrastructure to stock and distribute the required quantity of medical supplies in all locations.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by FAR Subpart 5.2 and, if not, which exception under 5.202 applies:

VA met its original intent to fully compete and award a competitive action prior to the expiration of MSPV-NG Bridge contracts in the award of MSPV 2.0. Due to extenuating circumstances, and the COFC decision/injunction, competitive award of any temporary solution comparable to MSPV 2.0 is not feasible before the expiration of the MSPV Gen-Z Transition contracts on November 30, 2022.

The current long-term competitive MSPV-GenZ procurement action is in the pre-solicitation phase with award not projected until mid- calendar year 2023, as discussed in Section 2 above. The need for mandatory MSPV distribution services is immediate and a lack of comparable services would cause irreparable harm to VA’s mission to provide Veteran care.

VA has also fully considered FAR 6.302-2(c)(2), which requires VA to “…request offers from as many potential sources as is practicable under the circumstances.” As stated above, VA is not aware of any other contractor(s) who currently have the required infrastructure, ordering capability, or EDI in place, for the facilities contemplated under this contract, to deliver the necessary medical supplies required to support patient care and safety without interruption or degradation to quality of care upon current MSPV contract expiration. Obtaining competition for this requirement is not feasible given the time required to complete a competitive action of this scope.

7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable:

In efforts to increase competition in procurement of the 70,000+ unique supplies for distribution to all VHA facilities located in the United States (US) and all US Territories, VHA issued twenty-three RFQs for the acquisition of the consumable commodities in support of the MSPV Program catalog on a tiered evaluation basis. These RFQs were set-aside based on an order of priority to maximize SDVOSB and VOSB participation. Likewise, the SAC issued RFP 36C10G19R0022, for the MSPV 2.0 Prime Vendor distribution requirement as a partial set-aside, to maximize the participation of SDVOSB, VOSB, and other small business concerns.

Prior to the close of RFP 36C10G19R0050, a bid protest was filed challenging the unrestricted basis, for full and open competition, of the acquisition. This protest was sustained, and in performing corrective action, the SAC amended RFP 36C10G19R0050 to incorporate small business set-asides for line items associated with multiple VISNs for small business concerns using a tiered evaluation approach. Considering this procurement history, the SAC is currently conducting market research through vendor engagement and RFI postings, to produce a comprehensive, competitively awarded long-term solution.