JA Software Dev.pdf

Financial Services Center Software CONTROL NUMBER: VA-25-00041556 Development Services Task Order Extension

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

1. Contracting Activity: Department of Veterans Affairs (VA) Office of Procurement, Acquisition, and Logistics Technology Acquisition Center 23 Christopher Way Eatontown, NJ 07724

2. Description of Action: The proposed sole source action is for a hybrid Firm Fixed Price (FFP)/Time and Materials (T&M) modification for a four month extension to task order 36C10B20N10060036 issued under Transformation Twenty-One Total Technology Next Generation (T4NG) Contract VA118-16-D-1006 for Financial Services Center (FSC) Software Development Services with Favor TechConsulting, LLC (FTC), 8075 Leesburg Pike STE 300, Vienna VA 22182.

3. Description of the Supplies or Services: VA requires a four month extension for the current FSC Software Development Services task order in order to avoid a gap in service and provide the time necessary to transition services to a new competitive contract. The current task order supports FSC’s ability to provide the necessary Information Technology (IT) infrastructure, software engineering, Electronic Commerce, and system support services required to provide high-quality financial services for VA and Other Government Agencies (OGAs). The scope of the task order includes project management, research and assessment, development guidelines, technical services, software development and deployment support to the FSC including software engineering, software development, and system solution architect expertise to perform system development life cycle (SDLC) tasks in the development of applications and systems. The Contractor also provides Tier 3 system sustainment support, production and analytical support for the over 100 in-house applications developed to support VA FSC initiatives.

FSC began working on the requirements for a competitive procurement to recompete the current task order, and submitted its initial draft acquisition package in April 2024.

However, due to a significant cybersecurity attack targeting Optum Change Healthcare Systems that was ongoing from February 2024 through October 2024, FSC was unable to definitize the technical requirements for the recompete effort. Specifically, Optum Change Healthcare processes between 50% and 65% of U.S. healthcare claims, and the cybersecurity attack which occurred on February 21, 2024 resulted in a complete shutdown of operations across their clearinghouse platforms. This unprecedented disruption profoundly impacted personnel, claims submission, payment processing, and overall revenue cycle management for VA, as Optum Change Healthcare is integral to processing VA healthcare claims. While FSC worked diligently to restore the necessary financial and operational interfaces, which included identifying the breach, isolating affected systems, and conducting a thorough investigation to understand the scope and impact, system reconstruction and recovery efforts ultimately took over seven months.

During this time, the Performance Work Statement (PWS) for the new procurement could not be finalized, as the scope and technical requirements for future FSC Software Development Services were dependent on this resolution. Specifically, the requirements for the follow-on procurement would have needed to be expanded significantly to include the development of an in-house clearinghouse solution as an alternative to Optum, if the restoration efforts were not successful.

Additionally, a new 508 compliance directive (VA and NCA Directive 6221). was issued in October 2024. FSC was required to validate that the PWS for the new procurement fully conformed with this new Directive, which requires all enterprise financial management systems to meet Section 508 accessibility standards before being deployed into production. As a result of the need to ensure compliance with this new Directive, the PWS scope and technical requirements required additional changes and reviews prior to being finalized. Furthermore, on November 6, 2024, FSC received a request from the Deputy Assistant Secretary for Financial Management Business Transformation Service (FMBT) to revise the requirements for the new Software Development Services procurement to include additional services to support new requirements for FMBT implementation and migration. While FSC immediately created draft requirements language for the PWS, it was also necessary to revise acquisition documentation to support this change to the requirements. Due to these events that directly impacted the scope and technical requirements for the new competitive FSC Software Development Services procurement, the acquisition package was not finalized until December 10, 2024. As a result, the release of the solicitation was delayed and the anticipated award of the new contract will not occur prior to the expiration date of the current task order, as was originally anticipated when the acquisition package was submitted in April 2024.

The current task order was awarded with a 12-month base period with four (4) 12-month option periods. The last option period is set to expire on March 9, 2025. The requirements development for a new competitive procurement began in the second quarter of Fiscal Year (FY) 2024; however, due to the impact of the Optum cybersecurity attack and the receipt of new and unexpected changes in 508 and FMBT requirements, as detailed above, the technical scope and requirements for the competitive acquisition were unable to be completed until the first quarter of FY 2025.

Due to these delays, the solicitation was not issued until February 6, 2025 with an estimated award date expected to occur in April 2025. Furthermore, once the competitive award is executed, the transition of services is expected to take at least 60 days for a new vendor to onboard its staff, including at least 30 days to receive the necessary access and obtain Government Furnished Equipment (GFE) as well as an additional 30 days to assume the ongoing development work, which is required for performance of the contract.

As a result, VA faces a gap in service for this critical support if the current task order expires on March 9, 2025. A break in service for FSC Software Development Services would be disastrous, not only for VA but also for OGAs, that utilize these IT systems in order to provide financial services and payments to Veterans. As such, a four month extension to task order 36C10B20N10060036 is being sought to ensure there will be no lapse in support while the new competitive order is being awarded, and to provide an estimated 60 days for the services to be successfully transitioned. This support is considered mission-critical as the task order provides the necessary technical resources the necessary access and GFE in order to begin transitioning the work. Furthermore, FSC’s IT platform consists of over 100 in-house developed applications, most of which include both custom code and Commercial Off the Shelf software, thereby requiring additional transition time of at least 30 days for a new vendor to develop plans, procedures, and methods to assume ongoing development tasks in order to provide meaningful support. As such, it is estimated that any vendor, other than FTC, would need a minimum of 60 days to fully staff and begin providing the software development services required to support FSC’s IT portfolio. From a functional, technical, and administrative perspective, the time required to compete, award, and onboard resources under a separate contract vehicle to provide FSC Software Development Services during the required timeframe (i.e. March 10, 2025 – July 9, 2025) would take at least three months of procurement lead-time, be a duplication of effort of the ongoing competitive procurement for these services and cause an unacceptable lapse in service. Only FTC has the requisite resources in place and understanding of the FSC IT platform to provide the necessary support starting on day one. As such, this task order extension is essential to avoid gap in services that would leave FSC without the necessary technical resources to support the financial systems essential to VA’s core functions. Any disruption in these services would undermine VA’s ability to process healthcare claims, settle contractual obligations, order medical supplies, and make provider payments, thereby severely affecting patient care and safety. Specifically, any lapse in the services being provided under this task order would cause significant harm to both the Agency and, ultimately, Veterans by creating unnecessary delays in approval for patient care and processing claims.

6. Efforts to Obtain Competition: Market research was conducted, details of which are in Section 8 of this document. This effort did not yield any additional sources that can meet the Government’s requirements. Specifically, aside from FTC, there are no other sources capable of providing the services required with the ability to start work immediately to ensure VA continues to receive the support necessary for its financial management IT systems until the services are transitioned to a new competitive contract. There is no competition anticipated for this acquisition. In accordance with FAR 5.301 and 16.505(b)(2)(ii)(D), the award notice for this action will be synopsized on the Contracting Opportunities website, SAM.gov, and the justification will be made publicly available within 14 days of award.

7. Actions to Increase Competition: No barriers to future competition are anticipated. A competitive procurement is currently in progress for the next iteration of FSC’s software development contract. The solicitation was posted on February 6, 2025 and is anticipated to be awarded in April 2025. Future requirements are expected to be awarded on a competitive basis as well.

8. Market Research: Market research was performed for this action. VA reviewed the capability statements received in response to the Request for Information (RFI) posted to SAM.gov on October 7, 2024 for the recompete procurement for FSC Software Development Services. Based on this review, it was determined that while there are other vendors capable of providing general software development services, FTC is the only source capable of supporting FSC’s software development requirements during the necessary timeframe of March 10, 2025 through July 9, 2025. No source, other than FTC, would be able to successfully onboard the necessary resources and gain the highly specialized knowledge needed in time to guarantee no failures in support, as detailed above in Section 5 of this justification, until the new competitive award is executed and the services have been transitioned. This extension will provide for the timely continuance of this critically needed support in order to ensure there is no gap in service.

9. Other Facts: None.

Approval

In my role as procuring activity Advocate for Competition, based on the foregoing justification, I hereby approve the acquisition of a four (4) month extension to task order 36C10B20N10060036 for FSC Software Development Services on an other than fair opportunity basis pursuant to the authority cited in Section 4 above, subject to availability of funds, and provided that the services herein described have otherwise been authorized for acquisition.

Date: ____________ Signature:

Advocate for Competition Technology Acquisition Center Office of Procurement, Acquisition, and Logistics

2/7/2025