P03 JA 6.302-1 da Vinci Transition REDACTED.pdf

DEPARTMENT OF VETERANS AFFAIRS

Office of Procurement, Acquisition and Logistics (OPAL)

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400

Fredericksburg, VA 22408

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

PURSUANT TO FAR 6.302-1

"ONLY ONE RESPONSIBLE SOURCE AND NO OTHER SUPPLIES OR SERVICES

WILL SATISFY AGENCY REQUIREMENTS."

(1) Contracting Activity:

Department of Veterans Affairs (VA)

Strategic Acquisition Center (SAC) Spotsylvania Ave, STE 400 Fredericksburg, VA 224

(2) Description of Action:

The purpose of this document is to obtain approval for the use of Federal Acquisition Regulation (FAR) Section 6.302-1 entitled, "Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements." This is a transition effort for the existing procurement under contract 36C10G19D0092. This action will avoid a gap in service for the critical and essential continued provision of robotic surgical equipment and related services while the agency continues to work toward a new replacement contract. The current award ends on September 30, 2024. This activity proposes to negotiate and award a single, non-competitive requirements contract utilizing the procedures outlined in FAR Parts 12 and 15 with ordering procedures adhering to FAR subpart 16.5. The period of performance is for a three (3) month base period with one (1) 3-month option.

(3) Description of Supplies or Services:

The Veterans Health Administration (VHA) Equipment Life Cycle Management (ELCM) Program identified da Vinci® Robotic Surgical Systems, instruments and accessories (I&A), and allied systems and services (da Vinci®) as the candidate for the VA-wide (otherwise referred to as “national”) single award requirements contract supporting robotic assisted surgeries nationwide. Since 2004, the VA procured 105 da Vinci® Systems and 45 allied ION Systems for 83 Veterans Administration Medical Centers (VAMC). To continue supporting VA’s current robust robotic assisted surgical services program which benefits America’s Veterans, a replacement contract is needed for da Vinci® and allied systems and services. To date, over 330 VA da Vinci® trained surgeons have performed over 125,000 robotic assisted surgeries on Veteran patients.

An estimated 15,000 surgeries will be performed in 2024 alone.

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400

Today, over 330 da Vinci® trained VHA surgeons continue their mission to provide our Veterans with advanced, cutting edge surgical technology and techniques that are comparable to state-of-the-art commercial surgical solutions provided in the private sector. The da Vinci® Robotic Surgical System and allied systems are currently the only robotic surgical systems that meets the VA requirements for minimally invasive surgery (MIS) robotic platform.

VHA requires FDA-approved robotic surgical systems to perform robotic MIS procedures for the following: urologic, general surgery, gynecological, thoracic, thoracic cardiotomy, and ear, nose and throat (ENT) surgeries. FDA approved devices are mandated by law. The DaVinci Robotic System accommodates single and dual surgeon console and provides the surgeon with intuitive controls, range of motion, fine tissue manipulation capability, and 3-D visualization characteristic of open surgery while simultaneously allowing work through small port of MIS surgery, with associated accessories such as fluorescent imaging, skills practice platform, and replaceable components used during surgery.

The da Vinci® Robotic Surgical Systems is the only FDA approved robotic surgical system that can perform the multiple surgical procedures noted above using the same robotic system. Having one uniform FDA approved system which meets every VHA requirement, as recited above, elements the need to purchase separate systems for each procedure, which removes the need for training on multiple platforms. This assures compatibility of parts between existing systems already in use and in place at VA facilities. The requirement includes consumables, instruments, and accessories (I&A), training, warranty, attachments, allied systems, other supplies and services related to the da Vinci®. The VHA ELCM Program identified da Vinci® Robotic Surgical Systems and allied systems as a candidate for a VA-wide (otherwise referred to as “national”) single award Requirements contract. While there are other robotic surgical systems offered in the commercial marketplace, none meet the VHA requirements as cited above.

The Independent Government Cost Estimate (IGCE) for this requirement is $32,187,150.00 (including all options). The IGCE anticipates the replacement costs associated with replacing an aging inventory of the da Vinci® Xi robotic surgical systems (fourth generation of da Vinci®) as well as procuring the most advanced robotic surgical systems, the recently released da Vinci® 5 system (fifth generation of da Vinci® released in late Feb 2024) in addition to expanding the overall inventory of allied robotic systems and services. These replacement and growth projections are expected to keep pace with the aging Veteran population and the VA's commitment to providing the best possible health care available to America's Veterans.

The period of performance is for a (3) month base period with one (1) 3-month option period.

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400

(4) 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)(1) as implemented by the Federal Acquisition Regulation (FAR) Section 6.302-1 entitled, "Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements".

(5) Rationale Justifying Use of Cited Statutory Authority:

The da Vinci® robot system and services are highly specialized and proprietary to Intuitive Surgical, Inc. (ISI), who only utilizes a sole SDVOSB distributor, SDV Medical.

The VA must have a contractual vehicle to procure these essential robotic systems and to provide maintenance support services in which only SDV Medical can perform. Any lapse in service could compromise patient safety and care. Currently, SDV Medical is the only vendor that can meet the agency's needs. No other vendors can provide the necessary maintenance and support without causing significant disruptions for the VA.

The current requirements contract, contract number 36C10G19D0092 was awarded on a sole source basis and it expires on September 30, 2024. A gap or break in services will have substantial adverse consequences for the beneficiaries of these robotic assisted surgeries under the da Vinci® program. The subject procurement is the third iteration of the da Vinci® contract. The first iteration was procured under contract 36C10G140001; the second iteration is the current contract 36C10G190092. It has been determined if VHA were to acquire other robotic surgical systems from different manufacturers there would be significant price consequences to the Government. For example, training requirements and costs would be double logistics and supplying two separate and distinct robotic surgical systems would cause unwarranted, unnecessary burdensome ordering and tracking of supplies for VAMC personnel.

VHA currently owns and utilizes 105 da Vinci® Robotic Surgical Systems and 45 allied ION® systems at 83 Veterans Administration Medical Centers (VAMC). The da Vinci® program will continue to have a robust global presence within VHA. The average age of the existing da Vinci® robotic surgical systems is seven years. The average number of surgeries performed using the existing systems is 55 per quarter per system. VHA seeks additional Robotic Surgical Systems to expand and/or augment the operational capabilities of VAMCs and medical staff.

Regarding the purchase of new or replacement equipment, the da Vinci® surgical system is the only robotic system that allows surgeons to perform a wide variety of MIS surgical procedures, as opposed to limited types of surgery, which is critical to VHA requirements. Specifically, the da Vinci® system can be used to perform urologic, general surgery, gynecological, thoracic, thoracic cardiotomy, and Ear, Nose and Throat robotic procedures. The da Vinci® system allows all the stated procedures to be accomplished with one system opposed to multiple systems. When the da Vinci®

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400 system is used, patients experience less trauma and pain, have minimal scarring, faster recovery, and a shorter hospital stay, which are all goals for VHA patient care. The forgoing significantly reduces overall medical care expenses. For example, da Vinci® systems permit outpatient procedures without costly follow-up visits instead of multi-day hospital stays, minimizing lengths of stay, complications, and readmissions.

Regarding sustainment of existing equipment due to the proprietary nature of the da Vinci® system, the sole ownership of the patents by ISI, and required FDA approvals, the only instruments and accessories that are interoperable with the systems are instruments and accessories manufactured by ISI. No other robotic surgical instruments and accessories are compatible. The da Vinci® robotic surgical system is the only FDA-approved robotic surgical system that can perform all the VHA-required Minimally Invasive Surgery (MIS) surgeries. As a result, no other entity can provide maintenance or service to over 100 existing systems currently used to perform surgeries. This was verified as recently as May 2024. FDA classified the da Vinci® system as a Class II device, which received a Premarket Notification 510(k) clearance approval pursuant to 21 CFR §807 Subpart E. A 510(k) submission is a premarketing submission provided to the FDA to demonstrate that the device to be marketed is safe and effective (i.e., substantially equivalent (SE) to a legally marketed device that is not subject to premarket approval. While market research shows that there are other robotic surgical systems, they are limited to specific types of surgeries and/or are not currently FDA-approved. Regarding installation, training, and the manufacturer's warranty, only SDV Medical, the sole authorized distributor, can perform these services due to the proprietary nature of the robotic surgical system.

Accordingly, SDV Medical is the only firm capable of providing the supplies and services described in Section 3 above.

(6) Description of Efforts to Solicit Offers from as Many Sources as Practicable:

Market research efforts were conducted in IAW FAR 10.002(b)(1). This section states that the extent of market research can vary depending on various factors and specifies that the Contracting Officer may use market research conducted within the past 18 months if the information is still current, accurate, and relevant. The Contracting Officer determined that the market research conducted and approved for the replacement contract met the above factors and would be utilized for this bridge requirement.

A Notice of Intent to sole source to the incumbent contractor, Intuitive Surgical, Inc (ISI), was issued on July 26, 2024 with a closing date of August 9, 2024. ISI responded to the Notice of Intent on July 29, 2024, notifying the Government that it would not be responding to the Request for Proposal (RFP) and going forward the Government will need to utilize their sole distributor, SDV Medical. ISI will no longer directly sell their manufactured da Vinci® robotic system but will authorize a Service-Disabled Veteran- Owned Small Businesses (SDVOSB) to be their sole distributor for the da Vinci® robotic

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400 system. ISI stated that SDV Medical, their sole authorized distributor, will be responding to the Notice of Intent for this bridge effort.

There are no other sources available for this effort currently; therefore, only SDV Medical possesses the unique, proprietary expertise and technical resources essential for the maintenance and support of these systems.

No additional market research was conducted for this action. Additionally, a notice of the proposed action will be synopsized via the Government Point of Entry (GPE) in accordance with FAR Section 5.201, and the agency will make publicly available the justification required by 6.305(a) within 14 days after contract award.

(7) Fair and Reasonable Price Determination:

No award shall be made until the Contracting Officer determines the cost to the Government to be fair and reasonable. In accordance with FAR 15.305(a) (1), normally, competition establishes price reasonableness; however, since this is a sole source acquisition, no competition is anticipated. Instead, the prices quoted will be evaluated, supported, and analyzed to determine whether they are fair and reasonable by any one or combination of the following:

a. Comparison of the proposed prices to historical prices paid, whether by the

Government or other than the Government, for the same or similar items.

b. Comparison with competitive published price lists of similar products, published market prices of commodities, similar indexes, and discount or rebate arrangements.

c. Comparison of proposed prices with Independent Government Cost Estimates.

(8) Market Research:

IAW FAR Part 10, as described in Section 6 above, market research includes a sources-sought announcement issued specifically for the replacement effort, advising the industry of the pending acquisition and soliciting inquiries from interested parties.

The NAICS code for this acquisition is 339112 Surgical and Medical Instrument Manufacturing. The small business size standard for NAICS code 339112 is 500 employees. Market research established that the Government's needs can be met through the acquisition of commercial supply items and services.

Through the replacement effort's market research, it has been determined that ISI entered into a mutual agreement with SDV Office Systems, LLC d/b/a SDV Medical (SDV), whereby SDV is the sole, exclusive, and singular authorized reseller to the government for ISI supply items and services. ISI is the only manufacturer of da Vinci®

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400 supply items and services. Consequently, SDV is the only possible supplier to the federal government. SDV Medical successfully supported VA in similar efforts and has been determined by the VA to be a responsible source with respect to performance pursuant to FAR Part 9 procedures. In addition, the Federal Awardee Performance and Integrity Information System (FAPIIS) was reviewed and FAPIIS shows no reports for SDV that would indicate defective pricing, instances of contractor fault or recipient not-qualified, terminations for cause, default, material failure to comply, or non-responsibility of the contractor.

SC # SALIENT CHARACTERISTICS METHOD OF EVALUATION

SC 1 FDA approved to perform minimally invasive robotic Urological and related procedures

Literature Review

SC 2 FDA approved to perform minimally invasive robotic General Surgery procedures

Literature Review

SC 3 FDA approved to perform minimally invasive robotic Gynecological and related procedures

Literature Review

SC 4 FDA approved to perform minimally invasive robotic Thoracic and related procedures

Literature Review

SC 5 FDA approved to perform minimally invasive robotic Thoracic Cardiotomy and related procedures

Literature Review

SC 6 FDA approved to perform minimally invasive robotic laparoscopic and related procedures

Literature Review

SC 7 FDA approved to perform minimally invasive robotic Ear, Nose and Throat (ENT) and related procedures

Literature Review

The Market Research reinforces SDV Medical’s claim of being the sole SDVOSB authorized distributor of ISI products in the United States. This was also verified through a meeting with the contracting team on July 29, 2024, with the manufacturer, Intuitive Surgical® Inc., office located in 1266 Kifer Rd, Sunnyvale, CA 94086.

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400

Digitally signed by DANIEL

DANIEL KING KING

-04'00'

(9) Other Facts:

SDV’s approach to meet the requirement includes da Vinci® Surgical Robotic Systems and allied systems manufactured by ISI. ISI, the manufacturer, is a U.S. high-technology company specializing in Robotic Surgical Systems. Awarding the subject action to a SDVOSB satisfies important VA and governmental policies as it fulfills the VA’s overwhelming preference to award to an SDVOSB pursuant to 38 U.S.C. §8127 (a). SDV is likewise a Value Added Reseller (VAR), providing significant enhancements by way of customer service, electronic ordering and invoicing, sales, customer training, program management, and other allied services to the VA.

(10) Sources Expressing Interest:

VA is not aware of any other contractor except for SDV Medical (UEI:

H4F8YGMM78K6), a Service-Disabled Veteran-Owned Small Business (SDVOSB), 34 Redmond Dr Unit C, Fletcher, NC 28732.

(11) Actions to Remove Barriers to Future Competition:

The Government will continue to conduct market research to ascertain if there are changes in the marketplace that would enable future actions to be competed. All future requirements will be handled on a case-by-case basis to determine any future acquisition strategy.

(12) Technical and Requirements Certification:

I certify that the requirement outlined in this justification is a Bona Fide Need of the Department of Veterans Affairs and that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge and belief.

Signature: Date:

Daniel King Program Manager VHA Procurement and Logistics Office (P&LO)

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave Suite 400

(13) Procuring Contracting Officer Certification:

I certify that this justification is accurate and complete to the best of my knowledge and belief.

Signature:

Digitally signed by SARA

VICKROY

Date: 2024.08.08 15:38:16 -04'00'

Sara Vickroy Contracting Officer Strategic Acquisition Center

Date:

For acquisitions over $15M, not exceeding $75M

Approval

Based on the foregoing justification, I hereby approve this acquisition on an "other than full and open competition" basis pursuant to the statutory authority cited in paragraph four above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition. As this action does not exceed $75M, the certification below required by FAR 6.304 serves as approval.

CHRISTOPH

ER PARKER

Digitally signed by

CHRISTOPHER PARKER

Date: 2024.08.13 17:59:56 -04'00'

Signature: Date:

Christopher D. Parker Head Contracting Activity Strategic Acquisition Center and National Acquisition Center

SARA VICKROY

8/13/2024