36C10G20D0029-003.pdf

Control Number: 36C10G20R0008

Source Selection Information – See FAR 2.101 and 3.104

Justification and Approval February 10, 2020

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity: Department of Veterans Affairs (VA) Office of Acquisition Operations Strategic Acquisition Center (SAC) 10300 Spotsylvania Avenue, Suite 400

Fredericksburg, VA 22408

2. Description of the Action:

The proposed action is to award a Firm-Fixed-Price (FFP) Indefinite-Delivery, Indefinite- Quantity (IDIQ) distribution contract, on the basis of other than full and open competition, to the incumbent Medical-Surgical Prime Vendor-Next Generation (MSPV- NG) contractor that is currently providing supply and distribution services of medical and surgical supplies for the VA in support of the VA’s MSPV program.

MSPV is a national program, for which participation is mandatory by policy, Veterans Health Administration (VHA) MSPV Mandatory Policy Memorandum (June 22, 2015), for VA Medical Centers (VAMCs), facilities and VA personnel, that provides a customized distribution system to meet facility requirements by providing an efficient, cost-effective, just-in-time distribution catalog ordering process. The MSPV program is based on standard commercial practices and enables facilities to reduce inventory holding costs and streamline delivery and distribution tasks within the facility. The Prime Vendor (PV) model is required because VA lacks sufficient internal capability to warehouse, coordinate deliveries, and consolidate supply stores.

The current MSPV-NG contract terms are set to conclude on March 31, 2020 and a follow-on competitively acquired contract will not take effect to immediately take its place because, for example, it has been delayed due to statutorily mandated stays of award, on account of bid protests. Additionally, any newly awarded PV, other than the incumbent, would require an initial implementation period, of up to four months, to install required information technology (IT)/software, establish necessary distribution agreements with suppliers, and begin identifying and stocking needed supplies for each facility. During this implementation period, there would be a disruption of MSPV supply deliveries would result in interruptions in patient care on a massive scale. Given current healthcare crises the VA is facing and could potentially face (i.e. long wait times, epidemics, pandemics, etc.) any disruption to the VA supply chain would be unacceptable and injurious. This justification and approval (J&A) will authorize and allow a non-competitively awarded contract to the incumbent to meet the needs of the agency and its approximate nine million Veteran medical patients’ needs for the duration of this gap. The incumbent vendor has demonstrated requisite expertise, knowledge of management, responsiveness, experienced personnel, without which seamless, uninterrupted service of current delivery of medical and surgical equipment would be impossible. MSPV product usage and the ability to obtain volume based committed use pricing until such time as the follow-on competitive MSPV 2.0 contract action is currently in progress and will be awarded with all expediency. The VA’s need for distribution services, is of such an unusual and compelling urgency that the primary mission of the VA will be in jeopardy of failing, unless permitted to limit the number of sources from which Government solicits bids or proposals. Use of non-competitive contracts, awarded for the span of 12 months to an incumbent contractor, poses the least risk to the provision of medical care within VA’s facilities.

On March 23, 2018, the VA executed a J&A modification to the MSPV-NG contract changing the structure from distribution only to a supply and distribution contract. Under this current non-competitive bridge contract action, the VA will be contracting for distribution services only. While it would seem a reverse of course given that VA revised the structure of MSPV on March 23, 2018, the circumstances have changed, and, as currently presented, justify this action. Since 2018, VA’s MSPV-NG functioned as supply and distribution solution- the goal of which was to meet four (4) 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), 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.

When the VA awards its new, competitively awarded contract(s), it will still meet these needs however, the time loss due to protests coupled with the implementation period (needed for IT/ software installation from the new vendor so that orders can be met) has caused a gap in which no new vendor would be able to step into the systems to meet the distribution needs. While VA now has a process to provide the source of supply, the loss of distribution at the same time is insurmountable.

The Period of Performance (PoP) for this contract would be (April 1, 2020 to March 31, 2021). The PoP, for this contract, is apportioned as a six (6) month base and two – three-month options periods. A lapse of service needs to be prevented for the following contract:

VA Contract Number Prime Vendor Contractor VA119-16-D-0006 Medline Industries, Inc.

Because VA’s future MSPV 2.0 competitive contracts (still to be awarded but currently delayed) must provide an implementation period in order to function as planned and to avoid failure to perform- it is not poor advanced acquisition planning to meet the Government’s requirements, but the realities of medical operations and the loss of time due to protests which have necessitated this bridge.

3. Description of Supplies or Services:

The VA, through the Veterans Health Administration’s (VHA) and SAC administers the MSPV program and MSPV-NG contracts for the supply and distribution of medical and surgical supplies 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 nationally mandated program was developed as the key element in the VA’s integrated healthcare supply chain improvement initiative, and was designed to significantly improve efficiency, accuracy, and patient safety, because the VA lacked sufficient internal capability to warehouse, coordinate deliveries, and consolidate supply stores. The MSPV-NG contracts afford the 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 master listing with electronic cataloging and ordering capability.

The solution offered by this contract will allow all VA healthcare facilities, 1,255 healthcare facilities including, 170 medical centers, and 1,074 outpatient sites, within all 18 Veterans Integrated Services Networks (VISN) to immediately continue placing orders and avoid an interruption in the healthcare supply chain that would prove injurious to patient health and safety. Under the contract, the PV will provide only distribution services for the medical/surgical (med/surg) items that are added to the Government master listing via VA national and local contracts, VA Distribution and Pricing Agreements (DAPAs), and Blanket Purchase Agreements (BPAs). Distribution services include, but are not limited to, services such as next-scheduled business day delivery, generating inventory status and other performance reports as identified in the Performance Requirements Summary (PRS), providing emergency deliveries, and providing unit of use or low unit of measure shipments for single and multiple end-user delivery points to the facilities designated delivery point(s). As currently required, distribution services would continue for all, medical, surgical, dental, cleaning, rescue and safety, laboratory, prosthetic supplies, other medical/surgical cleaning, rescue and safety supplies, and non-expendable equipment as used by the VA medical facilities.

The estimated value of the contract will be consistent with the PV’s regional area of responsibility. The estimated not to exceed maximum total value for the current planned PV contract is listed below.

Performance Period Medline Industries Base

Option 1 Option 2

Total

4. Statutory Authority:

The statutory authority permitting other than full and open competition is 41 U.S.C.3304(a)(2) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.302-2 entitled, “Unusual and Compelling Urgency.”

5. Rationale Supporting Use of Authority Cited Above:

Due to the statutorily imposed stay because of multiple pre-award protests (B#’s B- 417745.1, B-417745.2, B-417745.3) VA’s awards for the competitive follow-on, MSPV

2.0 contract, was delayed by 9 months.

Under the structure imposed by the J&A executed March 23, 2018, which modified the MSPV-NG contracts from PV “distribution” to PV “supply and distribution”, VA broadened the scope to address patient safety concerns resulting from VA’s supply chain inefficiencies. As a result of the ElectraMed Court of Federal Claims (COFC) appeal decision, the modified “supply and distribution” structure of the MSPV-NG contract cannot be sustained under future contract actions, thereby requiring a reduction in scope, and that this bridge contract action be for “distribution” services only.

When the contract term expires March 31, 2020, the VA will lack contracts to obtain medical and surgical equipment for such needs as even basic operating room procedures1.

VA’s rationale is; an unusual and compelling urgency exists, precluding full and open competition for any comparable type of requirement, prior to the expiration of MSPV-NG contract. Similarly, any effort to award a fully competitive action or divert an already over-stretched VA workforce to address the PV-supported requirements of MSPV, would only result in a break in service and serious jeopardy to patient health and safety and mission loss for the MSPV program as well as other areas of the VA and other Government agency facilities.

A constant and continuous effort is being implemented by VA to make a timely award of the follow on MSPV 2.0 acquisition however, due to circumstances beyond our control an award without a break in service is no longer possible. Likewise, full and open competition for any temporary solution, of a comparable type of requirement, can’t be accomplished without incurring a significant break in service at the conclusion of the MSPV-NG contract. Due to these exceptional circumstances: (1.) Consensus to forgo exercising option year two, (2.) Extraordinary delay and subsequent schedule shift due to protests, and (3.) Required corrective action of MSPV 2.0 pre-award, there now exists an approximate nine-month gap in time for service between the conclusion of

1 (1) it is assumed the J&A modification implemented in March 2018 during the base year, changed the scope of the contract and (2) option year two should not be exercised since the current J&A (sole source) authority will expire before the option year two PoP begins thus, creating the previous situation in supply chain inefficiencies.

MSPV-NG and the estimated startup of MSPV 2.0. With the MSPV-NG contract PoP set to expire on March 31, 2020, it is imperative that distribution services continue and remain uninterrupted until such time that MSPV 2.0 can be awarded. Under this proposed J&A, the Government will resume responsibility for adding/ maintaining items on the master list, and the PVs will act solely in a distribution capacity.

The VA’s current need for distribution support on the MSPV program is both unusual and compelling. The need is urgent/unusual and compelling for the following reasons:

1. The work performed is essential to accomplishing the VA mission of delivering healthcare services and supplies to our nation’s, approximate, nine million Veterans currently receiving care through VA’s healthcare system. A disruption of VA’s healthcare supply chain would immediately hinder the delivery of essential medical, surgical, dental, and laboratory supplies and other contracted healthcare such as cleaning, rescue and safety supplies and services used in the direct delivery of patient care. This impairment would cause unacceptable delays in fulfilling the VA’s requirements and would directly impact the health, safety, quality and timeliness of care delivered to Veterans.

2. The current MSPV-NG contract PoP expires March 31, 2020. Without a replacement, the VA will suffer direct financial and operational injury and mission loss across the MSPV program. VA’s efficient, cost-effective, just-in-time ordering, and distribution process 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. Approximately 2,000 contracting staff would have to attempt processing nearly 600,000 formal contracting actions (in addition to their existing work-load) annually, via inefficient, ineffective and frequently duplicative contracting actions and GPC purchases, which have shown to be more than five times the workload burden of using the MSPV ordering method.

3. Current PV is the only source that is immediately capable of meeting the contractual duties through use of Government sources of supply and not require a 75 to 120-day implementation period. No other contractor currently has 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 or degradation to quality of care upon MSPV-NG expiration. Under the proposed contracts, the VA’s healthcare facilities will be able to immediately procure their required supplies using the Government populated master list.

4. VA personnel are not available or able to perform the tasks performed by the PVs. As current regional distributors for the MSPV program, the existing PV’s have the prevailing infrastructure, ordering capability, and required resident knowledge which make them uniquely qualified, and currently the only sources capable of providing enhanced distribution of required medical commodities throughout the entire VA healthcare network. For example, the VA would have to incur the extensive cost of hiring and training additional Government and/or contractor personnel and leasing and/or constructing central warehouses and distribution centers in the effort to fulfill med/surg shipments to VA Medical Centers.

5. Failure to either properly account for or make correct decisions with regard to continued distribution of necessary supplies while simultaneously monitoring the full supply chain spectrum for any critical issues (i.e. medical item recalls, filtering out non-Food and Drug Administration (FDA) compliant or grey-market items or non-Buy American Act/non-Trade Agreements Act compliant items) would rapidly result in diminished levels of safety and efficiency to patient care.

6. In the event MSPV’s Ordering Officers are unable to place orders via the MSPV (EDI) catalogs and those orders are added to the workload of an already overburdened contracting staff, the result would be catastrophic. Lead times to procure these items through contracting for other than emergency orders are 45 days; however, emergency orders require action within three days. Practically all new orders would become immediate emergencies in order to ensure timely delivery of safe, reliable healthcare to Veterans.

7. The VA’s promise to Veterans, via the Maintaining Internal Systems and Strengthening Integrated Outside Networks Act (MISSION Act) of 2018, may be compromised as VA’s ability to continue to provide Veterans with an excellent health care 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 or its contractors or an unusual or excessive burden in accessing hospital care, medical services, or extended care services is a priority

Approval of the previously described non-competitive contract action will enable the VA to avoid disruption of VA’s healthcare supply chain and catastrophic negative impact to the Department’s ability to provide world-class patient care to our nation’s veterans.

Once more, other negative ramifications that would be averted include: the loss of potential savings as facilities source distribution of supplies through other means, increased workload, man-hours, and cost of operations will increase, as already depleting resources are focused on monitoring the full supply chain spectrum for any critical issues. Authorization of the J&A would keep the VA from having to revert to the substantially inefficient and ineffective means of distributing sourced medical supplies.

Therefore, award of the non-competitive contract to the current MSPV-NG PV, Medline Industries, Inc. is necessary in order to avoid grave physical and medical risk to Veteran patients as well as direct financial and operational injury to the Government. There are no other vendors, other than current PVs, that the Government could negotiate with, in quick order, to award contracts for distribution services prior to the expiration of option year one. Any effort to award a fully competitive action or divert an already over-stretched VA workforce to address the PV-supported requirements of MSPV, would only result in mission loss for the MSPV program as well as other areas of the VA and other Government agency facilities.

6. Efforts to Obtain Competition:

The original intent was to fully compete and award a competitive action prior to the expiration of MSPV-NG, vis-à-vis MSPV 2.0. Due to the extenuating circumstances as outlined above, exercising the remaining option year two on MSPV-NG nor award of the follow-on competitive contract action MSPV 2.0 is a viable option before expiration of existing contract. The need for MSPV distribution services is immediate and a lack of correlating services would cause irreparable harm to our mission. Obtaining competition for this requirement could not be accomplished due to the time required to complete a competitive action. Previous and current ongoing efforts are being made to maximize and obtain competition for the required supplies under MSPV 2.0. The following timeline and description of past efforts to obtain competition, since the J&A and modification are provided:

- Request for Information (RFI) 36C10X19Q0035 was issued through www.FBO.gov on December 13, 2018 with a response date of January 5, 2019.

- The RFI closed on January 5, 2019. There were 37 interested sources that responded to the RFI.

- RFI 36C10G19Q0032 was issued through www.FBO.gov on December 21, 2018 with a response date of February 1, 2019.

- Amendment A0001 to the RFI was posted on www.FBO.gov on December 27, 2019. The purpose of the Amendment was to add the registration link for the Vendor Engagement Day.

- Amendment A0002 to the RFI was posted on January 15, 2019. The purpose of the Amendment was to provide the slides from the Vendor Engagement Day.

- The RFI closed on February 1, 2019. There were 13 interested sources that responded to the RFI.

- On January 10, 2019, a Vendor Engagement Day was conducted. Four 1-hour sessions were held and limited to two representatives per company. Each session discussed the questionnaire that was included in the RFI.

- Request for Proposal (RFP) 36C10G19R0022 was posted on June 3, 2019 to www.FBO.gov, as a partial set-aside, by order of tiered priority, with a response due date of July 8, 2019. The established order of priority was (1) Service-

Disabled Veteran-Owned Small Business (SDVOSBs); (2) Veteran-Owned Small Business (VOSB); (3) all other small business concerns; (4) other than small businesses. This solicitation was cancelled August 15, 2019.

- RFP 36C10G19R0050 was posted on September 27, 2019 to www.FBO.gov, unrestricted, for full and open competition, with a response due date of October 28, 2019.

- Request for Quotes (RFQs) for 23 various supply categories, were posted to www.FBO.gov from June 17, 2019 to October 18, 2019 with closing dates from October 17, 2019 to December 18, 2019. The RFQs were issued as a set-aside by order of tiered priority, (1) SDVOSB concerns, (2) VOSB concerns, (3) small business concerns with Historically Under-utilized Business Zones (HUBZone) small business concerns and 8(a) participants having priority; and (4) large business concerns.

7. Actions to Increase Competition:

The MSPV Program Office has implemented its Clinician Driven Strategic Sourcing (CDSS) plan to streamline the procurement and delivery of high-use medical, surgical, dental, select prosthetic, laboratory and facility management supplies throughout VA.

The Program Executive Office (PEO) established its CDSS as a central component of MSPV formulary/catalog development and collaboration across VA, facilitating ongoing improvement of VA’s sourcing of key, high-use medical and surgical supply items.

CDSS has increased participation, collaboration, and accountability amongst clinicians and clinical specialists who are the stakeholders and possess the knowledge and education of items needed for the highest quality of care for Veterans. To ensure the MSPV program is fully based on a foundation that is rooted in CDSS principles, a plan of action was put in place with collaboration of Executive Leadership from the MSPV PEO, the Healthcare Commodities PEO, VHA, VHA Procurement and Logistics Office, VA Office of Acquisition and Logistics, National CPOs, Chief Medical Offices, National Center for Patient Safety, and other key offices as required.

MSPV PEO continues to nationally coordinate with healthcare product supply chain stakeholders, clinicians, clinical specialists and leadership to get buy in and engagement on its comprehensive CDSS strategy. The CDSS process recurrently collects, monitors and evaluates market research and conducts its product evaluation and value analysis for best quality products, cost reduction, and streamlined strategic acquisitions.

In efforts to increase competition, for the 49,000 types of supplies for distribution to all VHA facilities located in the United States (US) and all US Territories, VHA issued 23 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 encourage and maximize the involvement of SDVOSB, VOSB, and other small business concerns. With the cancellation of the initial MSPV 2.0 RFP, the SAC issued RFP 36C10G19R0050, unrestricted, for full and open competition, in accordance with market analysis, in the effort to foster and expand vendor competition.

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, requiring corrective action on the part of VA to reexamine its small business set-aside strategy (and adding to the time required to put in place a fully competitive contract solution).

8. Market Research:

The market research recently conducted for MSPV 2.0 was utilized for this J&A as it was recently amended and completed in August 2019 and is the most up to date market survey available. In preparation for the continuation of the MSPV program, in 2018 SAC assumed responsibility of awarding the MSPV 2.0 distribution contracts and VHA assumed responsibility of awarding the MSPV 2.0 supply contracts. Two RFIs and a Vendor Industry Engagement Day were conducted in support of MPSV 2.0 distribution market research. The RFls played an essential role in determining the market's ability to meet our basic requirements, while offering insight into vendor availability and capability.

Market research was conducted to determine the suitability of commercial items, the geographic regions to be competed, and the potential use of SDVOSB or other small business set-asides. This market research establishes that—

- The Government’s need may be met by a type of item or service customarily available in the commercial marketplace that would meet the definition of a commercial item in accordance with FAR 10.002.

- Competition for geographic regions should be conducted at the VISN level, with the exception of Puerto Rico (PR), Guam, American Samoa, Virgin Islands, and the Philippines. It was contemplated that Oklahoma (OK) should be competed as a single region with VISN 17 Texas (TX), not as part of VISN 19, since the discontinuity between OK and the rest of the VISN. However, the Integrated Product Team (IPT) made the determination to leave OK within VISN 19 in an effort to maintain VISN continuity of management.

Given that the above market research conducted for MSPV 2.0, has shown that there is a limited number of capable vendors that could fulfill the MSPV 2.0 requirement for the VA, none would be able to do so without the sizeable startup period built into MSPV 2.0.

Considering this, none of the vendors, outside of incumbents that submitted proposals in response to the MSPV 2.0 RFP, would be able to immediately provide the required distribution services of MSPV.

9. Other Facts:

This unusual and compelling urgency precludes full and open competition and it is of certain that any delay in award of this contract action will result in serious patient safety considerations across the entire VA network to include detrimental financial costs to the Government as a result. Prior to the MSPV-NG contract modification, the VA had been unsuccessful in populating the Government master list with a large number of medical/surgical items. After the modification, the additional sourcing flexibility to obtain critical healthcare supplies more closely approximates VHA’s existing best in class pharmaceutical PV program that relies heavily on commercial buying practices and has facilitated the inclusion of more than 15,000 additional items. Given the need for facilities to be able to continue to access the broad listing of medical and surgical supplies realized under the MSPV-NG modification, and given that fair and reasonable prices have been confirmed using commercial cost indices, it is in the best interest of VA to ensure the immediate continued distribution through current MSPV distribution channels (Medical-Surgical PVs) while the SAC and VHA offices continue with the implementation of the MSPV 2.0 distribution and supply acquisitions.

The primary mission of the VA is to fulfill President Lincoln's promise “To care for him who shall have borne the battle, and for his widow, and his orphan” by serving and honoring the men and women who are America’s Veterans. We seek to accomplish this mission through our 5 core values of Integrity, Commitment, Advocacy, Respect, and Excellence. These “I CARE” values are incorporated in the SAC partnership with the Veterans Health Administration (VHA), to deliver timely medical and surgical products to our Nation’s Veterans through the MSPV-NG Program.

Currently, the MSPV PVs are the only sources serving in the critical role of comprehensive emergency supply response in support of local, regional, or national emergencies or disasters. Additionally, VA supports the Federal Emergency Management Agency (FEMA) and US Department of Health & Human Services with the delivery of medical supplies and coordination of support missions for response to and recovery from nationally-declared emergencies and disasters. VA accomplishes this requirement through the current regional PVs, who are contractually required to perform a full range of support to healthcare facilities to ensure resiliency, continuity and rapid recovery of healthcare services during disasters and other potential disruptions to healthcare service delivery. Given that VA Medical Centers, and other select federal facilities, are designated FEMA facilities with significant contingency and emergency response roles, a supply chain interruption would not only negatively impact healthcare delivery to our nation’s Veterans and their dependents, but also potentially have a direct, negative impact on the greater public.

Approval

In my role as Head of the Contracting Activity, based on the forgoing justification, I hereby approve the Medical Surgical Prime Vendor Distribution Bridge contract in accordance with Federal Acquisition Regulation (FAR) Subpart 6.302-2 entitled, “Unusual and Compelling Urgency.”, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition.

Date: Signature:

Approval

In my role as Senior Procurement Executive, based on the forgoing justification, I hereby approve the Medical Surgical Prime Vendor Distribution Bridge contract in accordance with Federal Acquisition Regulation (FAR) Subpart 6.302-2 entitled, “Unusual and Compelling Urgency.”, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition.

Date: ____________ Signature: