V797P2065D-031.pdf

VHAPM Part 808.405-6 Limiting Sources Attachment 2: Request for Limited Sources Justification Format >SAT

VHAPM Part 808.405-6 Limiting Sources Page 1 of 8 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018

LIMITED SOURCES JUSTIFICATION

ORDER >SAT

FAR PART 8.405-6

Acquisition Plan Action ID: 36C242-18-AP-2964

1. Contracting Activity: Department of Veterans Affairs, VISN 2, James J. Peters VA Medical Center Clinical Engineering Service, has a requirement for Olympus Scopes Lease and Maintenance Service with a Purchase Option, funded with purchase requests 526-19-1-168- 0001 and 526-19-1-168-0002, to be awarded by the VA Network Contracting Office 2, James J.

Peters VA Medical Center, Bronx, New York 10548.

Description of Action: This acquisition is conducted under the authority of the Multiple-Award Schedule Program (41 U.S.C. 251 and 40 U.S.C. 501). This is a request for approval of equipment leasing with a purchase option and full maintenance service of open market items in conjunction with NAC FSS items, on a delivery order under VA NAC contract V797P-2065D for equipment lease and full-service maintenance, with a purchase option, of various scopes and associated equipment, to be used at the James J. Peters VA Medical Center used in Bronx, NY. This procurement will be conducted in accordance with FAR Part 8. The purpose of the equipment lease with purchase option and full-service agreement is to reduce service costs and improve equipment turn-around time and reliability. This will be a firm-fixed price delivery order contract from contract V797P- 2065D with an anticipated period of performance of twelve months, established by a subsequent modification after all deliveries are completed in February 2019 (estimated timeframe); award will include two lease and service option years and a purchase option.

Order against: FSS Contract Number: V797P-2065D

Name of Proposed Contractor: OLYMPUS AMERICA, INC.

3500 Corporate Parkway, Center Valley, PA 18034-0610 Robert Kellogg, 800.848.9024

2. Description of Supplies or Services:

The estimated value of the proposed action is at least $1,238,048.64 ($683,878.44 NAC value;

$554,170.20 open market value), consisting of $969,398.64 ($874,125.48 NAC value; $95,273.16 open market value) for lease total, a $9,000.00 one-year extended warranty in option year 2 (open market) and $259,650.00 (all open market value) for maintenance service total. Price for purchase option cannot be determined at this time; in accordance with FAR 7.402(b)(4), a formula will be provided in the purchase option CLINs which shows how the purchase price will be established at the time of purchase.

The James J. Peters VA Medical Center requires that the Contractor shall lease to the Government

Olympus scopes and associated equipment with an option to purchase. The contract effort will be a

NAC delivery order, as some of the required items are available on NAC Contract V797P-2065D. The https://www.gpo.gov/fdsys/pkg/USCODE-2009-title41/pdf/USCODE-2009-title41-chap4-subchapIV-sec251.pdf https://www.gpo.gov/fdsys/pkg/USCODE-2011-title40/pdf/USCODE-2011-title40-subtitleI-chap5-subchapI-sec501.pdf

VHAPM Part 808.405-6 Limiting Sources Page 2 of 8 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018 purpose of the equipment lease with purchase option and full-service maintenance agreement is to reduce service costs and improve equipment turn-around time and reliability. This will be a firm-fixed price delivery order contract from contract V797P-2065D with an anticipated period of performance of twelve months, established by a subsequent modification after all deliveries are completed in February

2019 (estimated timeframe); award will include two lease and service option years and a purchase option.

The following GI endoscope equipment will be leased under a full-service contract to be used in endoscopic GI procedures:

AR850 ELASTOGRAPHY: AR850 ELASTOGRAPHY SOFTWARE x1 ARIETTA 850: Exclusive Olympus Config EUS Processor x1 CF-HQ190L: CF-HQ190L EVIS EXERA III HD COLONOSCOPE x9 CF-Q160S: CF-Q160S LARGE IMAGE VIDEO SIGMOIDOSCOPE x1 CLV-190: CLV-190 EVIS EXERA III LIGHT SOURCE x1 CV-190: CV-190 EVIS EXERA III VIDEO PROCESSOR x1 GF-UCT180: GF-UCT180 Curvilinear EUS scope, 3.7 mm x2 GF-UE160-AL5: GF-UE160-AL5 Radial array EUS scope x1 GIF-1TH190: GIF-1TH190 EVIS EXERA III HIG x1 GIF-HQ190: GIF-HQ190 EVIS EXERA III HDTV DF NBI x9 GIF-XP190N: GIF-XP190N ULTRA-SLIM SCOPE 4-WAY NBI x1 MAJ-2056: MAJ-2056 DETACHABLE CABLE FOR EUS&EBUS S x1 PCF-H190DL: PCF-H190DL W/ SCOPEGUIDE x1 TJF-Q180V: TJF-Q180V VIDEO DUODENOSCOPE NBI, GUIDEW x3

(4) IDENTIFY THE AUTHORITY AND SUPPORTING RATIONALE (see 8.405-6(a)(1)(i)(A), (B), and

(C) or 8.405-6(b)), AND IF APPLICABLE, A DEMONSTRATION OF THE PROPOSED

CONTRACTOR’S UNIQUE QUALIFICATIONS TO PROVIDE THE REQUIRED SUPPLY OR SERVICE.

(CHECK ALL THAT APPLY AND COMPLETE)

An urgent and compelling need exists, and following the ordering procedures would result in unacceptable delays.

Only one source is capable of providing the supplies or services required at the level of quality required because the supplies or services are unique or highly specialized;

Olympus America, Inc. is the only company that can provide all the necessary OEM parts and perform all the necessary returns and repairs for the Olympus scopes and associated equipment described above due to VHA Handbook 1761.1 – Standardization of Supplies and Equipment Procedures. It is VHA policy to standardize to the maximum extent possible the types and categories of supplies and equipment VHA purchases, consistent with patient care and practitioner needs. Standardization is expected to facilitate best-value product pricing through volume purchasing and facilitate the delivery of high-quality health care. The requesting service has standardized with Olympus America, Inc. since 2012. Purchasing universal alternatives would cause issues with standardization, which could lead to significant patient risk. Accordingly, Olympus America, Inc. is the only firm capable of providing the supplies and services https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%208_4.html#wp1091891 https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%208_4.html#wp1091891

VHAPM Part 808.405-6 Limiting Sources Page 3 of 8 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018 described in Section III above without the Veteran’s Health Administration experiencing unacceptable delays in fulfilling its requirements.

In the interest of economy and efficiency, the new work is a logical follow-on to an original Federal Supply Schedule order provided that the original order was placed in accordance with the applicable Federal Supply Schedule ordering procedures. The original order must not have been previously issued under sole source or limited source procedures.

Items peculiar to one manufacturer:

A patent, copyright or proprietary data limits competition. The proprietary data is:

Olympus America, Inc. is the only company that can provide all the necessary OEM parts and perform all the necessary returns and repairs for the Olympus scopes and associated equipment described above due to VHA Handbook 1761.1 – Standardization of Supplies and Equipment Procedures. It is VHA policy to standardize to the maximum extent possible the types and categories of supplies and equipment VHA purchases, consistent with patient care and practitioner needs. Standardization is expected to facilitate best-value product pricing through volume purchasing and facilitate the delivery of high-quality health care. The requesting service has standardized with Olympus America, Inc. since 2012. Purchasing universal alternatives would cause issues with standardization, which could lead to significant patient risk. Accordingly, Olympus America, Inc. is the only firm capable of providing the supplies and services described in Section III above without the Veteran’s Health Administration experiencing unacceptable delays in fulfilling its requirements.

These are “direct replacements” parts/components for existing equipment.

The material/service must be compatible in all aspects (form, fit and function) with existing systems presently installed/performing. Describe the equipment/function you have now and how the new item/service must coordinate, connect, or interface with the existing system.

(5) DESCRIBE WHY YOU BELIEVE THE ORDER REPRESENTS THE BEST VALUE CONSISTENT WITH

FAR 8.404(d) TO AID THE CONTRACTING OFFICER IN MAKING THIS BEST VALUE

DETERMINATION:

The Contractor has an indefinite delivery contract with the Department of Veterans Affairs on the GSA Federal Supply Schedule and is an incumbent Contractor for this requirement. The anticipated cost is considered fair and reasonable based on the FSS contract having already been determined fair and reasonable. Award to Olympus America, Inc. for standardized items as a National Acquisition Center (NAC) Order represents the Best Value to the Government.

The ARIETTA 850 Endoscopic Ultrasound (EUS) Processor, complete with AR850 Elastography Software and warranty, are open market items that were introduced to the market in 2018. This new EUS replaces the EU-ME2 Endoscopic Ultrasound (Universal Ultrasound Processer), which came

VHAPM Part 808.405-6 Limiting Sources Page 4 of 8 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018 complete with an OEV-262H LCD 26-inch HD Monitor, a MAJ-1626 Arm Mount Kit, two UM-S20-17S Radial Miniature Probes, and a MAJ-1720 Probe Driving Unit. Since the Arietta 850 EUS Processor is new to the market, it is difficult to find comparable purchase prices to determine price reasonableness. To alleviate this dilemma, the new ARIETTA 850 EUS Processor with software and warranty is compared to prior technology, the EU-ME2 Endoscopic Ultrasound. Enhancements of the ARIETTA 850 EUS Processor over its predecessor include: A new OLED monitor and “eFocusing” technology enhance the ultrasound image, allowing for more detailed observation; Forward/backward compatibility provides lower cost of ownership and more efficient use of assets while on-site support from clinical application specialists reduces training costs; and real-time Tissue Elastography and Strain Histogram Measurement enable a comprehensive examination, a more efficient procedure than what the EU-ME2 provided.

Citing NAC FSS task order V797P-2065D VA242-17-J-3294 (awarded 9/30/2017 for the VA New York Healthcare System Brooklyn campus), the three-year lease price of the EU-ME2 and components is $128,511.00 with a full purchase price of $163,757.00 (purchase option will be based on fair market value at time of purchase, so it may be revised lower at that time). The new ARIETTA 850 EUS Processor with software without warranty is priced at $182,238.24 with a full purchase price of $297,000.00 (subject to fair market value revision). The new ARIETTA 850 system lease total is 42% more, and the purchase total is 83% more than the older EU-ME2 system. The ARIETTA 850 expands clinical utility by offering an enhanced ultrasound image and the most advanced applications for GI tract diseases, supporting diagnosis and treatment to achieve better outcomes. Furthermore, the ARIETTA 850 is fully compatible with the GF-UCT180 Curvilinear EUS scope and the GF-UE160-AL5 Radial array EUS scope (except for the “eFocusing” technology and the Displacement Direction Guide), which both items are included in this proposed order. The significant enhancements the ARIETTA 850 EUS Processor provides are a fair and reasonable trade-off for the increased price from the older EU-ME2 and is considered best value to the government.

The open-market priced AR850 extended warranty is applicable to year 3 (option year 2) only, as the first two years are automatically covered by warranty, and is priced at $9,000.00 for the year. This warranty covers the AR850 software and is separate from the maintenance service portion of the contract, which covers all the hardware. The AR850 software is operationally the most significant portion of the ARIETTA 850 and is a very technical program, delivering advanced technology that assists medical personnel in better diagnosing and treating patients than ever before. If the software fails, the entire system becomes unusable. In consideration of the aspects of this software and associated risk, the one-year warranty price of $9,000.00 is 16.5% of the lease price during the same year. All things considered, the AR850 extended warranty is a fair and reasonable price at $9,000.00 during option year 2.

The open market three-year, hardware maintenance service ($259,650.00) is priced at 32% of the total hardware lease price ($821,656.01, sans extended warranty and AR850 Elastography software).

Comparably, NAC FSS task order V797P-2065D VA242-17-J-3294 open market three-year, hardware maintenance service ($80,174.88) is priced at 20% of the total lease price ($401,330.88). This comparative pricing reflects that the three-year maintenance service price is in line with a current lease and maintenance task order, and for that reason, is determined to be fair and reasonable.

(6) DESCRIBE THE MARKET RESEARCH CONDUCTED AMONG SCHEDULE HOLDERS AND THE

RESULTS OR A STATEMENT OF THE REASON MARKET RESEARCH WAS NOT CONDUCTED:

Due to the proprietary nature, Olympus America, Inc. is the only company than can access its systems remotely and offer certified parts that meet the original equipment manufacturer’s specifications.

Olympus America, Inc. technicians are the only OEM-trained and certified personnel authorized to perform work on this equipment. GSA Advantage/e-buy, VetBiz, Ability One and the VA NAC MedSurg

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Catalog were also used to determine if there were any other sources of providing service maintenance agreements on the Olympus equipment.

(7) ANY OTHER FACTS SUPPORTING THE JUSTIFICATION:

FAR 7.4 – Equipment Lease or Purchase applies. Clause 52.207-5 shall be included in the delivery order.

Some items are not available from the NAC contract and are priced on the open market. The Contractor shall also provide full maintenance service support for the leased equipment, which is also priced on the open market. The following 36-month lease and service items prices, including open market items*, are as follows:

* ARIETTA 850: Exclusive Olympus Config EUS Processor x1 $256,649.64 *AR850 ELASTOGRAPHY: AR850 ELASTOGRAPHY SOFTWARE x1 $28,870.56 CF-HQ190L: CF-HQ190L EVIS EXERA III HD COLONOSCOPE x9 $178,148.52 CF-Q160S: CF-Q160S LARGE IMAGE VIDEO SIGMOIDOSCOPE x1 $11,017.44 CLV-190: CLV-190 EVIS EXERA III LIGHT SOURCE x1 $8,719.56 CV-190: CV-190 EVIS EXERA III VIDEO PROCESSOR x1 $15,113.88 GF-UCT180: GF-UCT180 Curvilinear EUS scope, 3.7 mm x2 $115,797.24 GF-UE160-AL5: GF-UE160-AL5 Radial array EUS scope x1 $59,290.20 GIF-1TH190: GIF-1TH190 EVIS EXERA III HIG x1 $17,733.96 GIF-HQ190: GIF-HQ190 EVIS EXERA III HDTV DF NBI x9 $214,933.68 GIF-XP190N: GIF-XP190N ULTRA-SLIM SCOPE 4-WAY NBI x1 $15,403.32 MAJ-2056: MAJ-2056 DETACHABLE CABLE FOR EUS&EBUS S x1 $4,724.28 PCF-H190DL: PCF-H190DL W/ SCOPEGUIDE x1 $19,423.08 TJF-Q180V: TJF-Q180V VIDEO DUODENOSCOPE NBI, GUIDEW x3 $65,574.00

*Preventive and Maintenance Repair Services (36 Months) $259,650.00

The AR850 extended one-year warranty (open market*) is for software only and is applicable in the third year of the lease (option year 2).

*AR850EXTWAR1YR: AR850ExtWar1yr x1 $9,000.00

When exercising the Purchase Option, lease payments made between contract effective date through the day before the purchase option effective date will be credited toward the purchase price, and will be based on fair market value at the time of purchase. The current purchase price for all items, including the two open market items*, are as follows:

*AR850 ELASTOGRAPHY: AR850 ELASTOGRAPHY SOFTWARE x1 $267,000.00 *ARIETTA 850: Exclusive Olympus Config EUS Processor x1 $30,000.00 CF-HQ190L: CF-HQ190L EVIS EXERA III HD COLONOSCOPE x9 $310,812.03 CF-Q160S: CF-Q160S LARGE IMAGE VIDEO SIGMOIDOSCOPE x1 $13,596.77 CLV-190: CLV-190 EVIS EXERA III LIGHT SOURCE x1 $10,760.80 CV-190: CV-190 EVIS EXERA III VIDEO PROCESSOR x1 $18,652.06 GF-UCT180: GF-UCT180 Curvilinear EUS scope, 3.7 mm x2 $144,400.00 GF-UE160-AL5: GF-UE160-AL5 Radial array EUS scope x1 $73,169.82

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GIF-1TH190: GIF-1TH190 EVIS EXERA III HIG x1 $34,860.00 GIF-HQ190: GIF-HQ190 EVIS EXERA III HDTV DF NBI x9 $301,190.40 GIF-XP190N: GIF-XP190N ULTRA-SLIM SCOPE 4-WAY NBI x1 $30,278.40 MAJ-2056: MAJ-2056 DETACHABLE CABLE FOR EUS&EBUS S x1 $8,323.50 PCF-H190DL: PCF-H190DL W/ SCOPEGUIDE x1 $38,180.00 TJF-Q180V: TJF-Q180V VIDEO DUODENOSCOPE NBI, GUIDEW x3 $93,401.46

When exercising the Purchase Option, trade-in values will also be credited toward the purchase price, totaling $127,500.00. The following items are identified for Trade-in credit:

GIF-H180: HDTV NBI GASTROVIDEOSCOPE x7 ($7,500.00 each) $52,500.00 total Serial numbers: 2901527; 2901550; 2901582; 2901584; 2901592; 2901594; 2704610

CF-H180AL: EVIS EXERA II HD COLONOSCOPE x7 ($9,000.00 each) $63,000.00 total Serial numbers: 2909732; 2909770; 2909783; 2704296; 2909773; 2909774; 2909775 PCF:H180AL: EVIS EXERA II ULTRA THIN COLO x1 (9,000.00 each) $9,000.00 total Serial number: 2903902 TJF-160VF: DUODENOVIDEOSCOPE W/V-LOCK ELE x1 ($3,000.00 each) $3,000.00 total Serial number: 2701835

The maintenance service portion of the lease is not credited towards the final purchase price.

(8) A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE OR

OVERCOME ANY BARRIERS THAT LED TO THE RESTRICTED CONSIDERATION BEFORE ANY

SUBSEQUENT ACQUISITION FOR THE SUPPLIES OR SERVICES IS MADE:

In situations involving medical equipment, it is difficult to remove barriers to competition because the OEM is the only qualified company capable to provide the repair and maintenance of its own medical equipment. This is especially true where proprietary software, specific diagnostics tools, and specialized electronics are used to maintain the equipment in accordance with OEM specifications and VA facilities practice standardization. Unless the manufacturer chooses to license its software and authorize local service providers to maintain the Olympus equipment, the only alternative would be to replace the existing Olympus America, Inc. equipment with a more generic brand. James J. Peters VAMC is satisfied with the quality and operation of the installed equipment, its maintenance and repair. James J. Peters VAMC currently does not have the sufficient budget to replace the Olympus equipment. Considerations for new equipment will be made when the existing equipment reaches the end of its life cycle span.

(9) 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. I understand that processing of this limited sources justification restricts consideration of Federal Supply Schedule contractors to fewer than the number required by FAR Subpart 8.4.

VHAPM Part 808.405-6 Limiting Sources Page 7 of 8 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018

Date Biomedical Engineer James J. Peters VA Medical Center

(10) APPROVALS IN ACCORDANCE WITH THE VHAPM Part 806.3 OFOC SOP:

a. CONTRACTING OFFICER’S CERTIFICATION (required): I certify that the foregoing justification is accurate and complete to the best of my knowledge and belief.

Date Contracting Officer NCO 2 – Hudson Valley Healthcare System – FDR Campus

b. One Level Above the Contracting Officer (Required over the SAT but not exceeding $700K):

I certify the justification meets requirements for other than full and open competition.

Date Services II Branch Chief Network Contracting Office (NCO) 2

HIGHER LEVEL APPROVAL (Required for orders over $700,000):

c. VHA SAO HCA REVIEW AND APPROVAL (over $700,000 to $68 million): I have reviewed the foregoing justification and find it to be complete and accurate to the best of my knowledge and belief and approve for restricting consideration of the Federal Supply Schedule contractors to fewer than the number required by FAR Subpart 8.4.

DATE

Executive Director, SAO East Head of Contracting Activity (HCA) https://vaww.pclo.infoshare.va.gov/PMWeb/VHAPM_Part_806.3.aspx https://vaww.pclo.infoshare.va.gov/PMWeb/VHAPM_Part_806.3.aspx

VHAPM Part 808.405-6 Limiting Sources Page 8 of 8 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018

No other signatures are required.