FAR 16 Exception to Fair Opportunity - redacted.pdf

VHAPM Part 816.5—Indefinite-Delivery Contracts Attachment 1: Request for Exception to Fair Opportunity Memo Format

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 1 of 5 Original Date: 08/30/2017 Date: 03/11/2019 Rev 02

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval

For

Exception to Fair Opportunity Memo

Acquisition Plan Action ID: 36C242-20-AP-0781

1. Contracting Activity: Department of Veterans Affairs, VISN 2, New York Harbor Healthcare System, New York campus, Radiology Service, has a requirement for Carestream DRX Revolution X-Ray Systems Maintenance Services, funded with purchase request 630-20-2-4456-0028, to be awarded by the VA Network Contracting Office 2, James J. Peters VA Medical Center, Bronx, New York 10548.

2. Description of Action: This is a request for other than full and open competition for a proposed task order against DSCP contract SPE2D1-17-D-0019, providing for maintenance services of the current Carestream DRX Revolution X-Ray Systems located at the VA New York Harbor Healthcare System, New York campus (423 E. 23rd Street, New York, NY 10010-5011). Proposed task order will be performed by Carestream Health, Inc. (150 Verona St., Rochester, NY 14608-1733) from May 1, 2020 through April 30, 2021 and will include four (4) option years.

3. Description of Supplies or Services: Estimated value of the proposed action is $1,035,116.43 (inclusive of options). Contractor shall provide (a) troubleshooting reported failures of the Licensed Software to substantially perform in conformance with the Documentation; (b) furnish, at no additional charge, updates which the OEM makes generally available to its VA facilities under maintenance without an additional VA fee (collectively, “Updates”); (c) provide telephone support and/or remote access support. The scope of this requirement involves the following service packages applicable to the respective end items currently at the New York campus:

Category # Material Description Product (Service Package) Quantity Unit

1019397 DRX-REVOLUTION MOBILE X-

RAY SYSTEM

SMART CARE COMPLETE-1PM

MON-FRI: 8-5 5 Each

1019397 DRX-REVOLUTION MOBILE X-

RAY SYSTEM DR TUBE COVERAGE 5 Each

1019397 DRX-REVOLUTION MOBILE X-

RAY SYSTEM DR CART BATTERY COVERAGE 5 Each

1019496 DRX-1C DETECTOR FOR DRX-

REVOLUTION

SMART CARE COMPLETE-1PM

MON-FRI: 8-5 5 Each

1019496 DRX-1C DETECTOR FOR DRX-

REVOLUTION

ACCIDENT PLAN ENHANCED

$5KDROP/$5KLIQUID 5 Each

1068154 DRX Plus 3543C Detector SMART CARE COMPLETE-1PM MON-FRI: 8-5 4 Each

1068154 DRX Plus 3543C Detector ACCIDENT PLAN ENHANCED $5KDROP/$5KLIQUID 4 Each

1731678 DRX-EVOLUTION/P-PCSH-P-X SMART CARE COMPLETE-1PM

MON-FRI: 8-5 1 Each

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 2 of 5 Original Date: 08/30/2017 Date: 03/11/2019 Rev 02

1731678 DRX-EVOLUTION/P-PCSH-P-X ACCIDENT PLAN ENHANCED

$5KDROP/$5KLIQUID 1 Each

1739192 DRX-Evolution Plus Automatic - Dual Buck

SMART CARE COMPLETE-1PM

MON-FRI: 8-5 1 Each

1739192 DRX-Evolution Plus Automatic - Dual Buck

ACCIDENT PLAN ENHANCED

$5KDROP/$5KLIQUID 1 Each

4. Statutory Authority: The statutory authority permitting an exception to fair opportunity is Section 41 U.S.C. 4106(c) as implemented by the Federal Acquisition Regulation (FAR) Subpart 16.505 Subpart 16.505(b)(2)(i):

( ) FAR Subpart 16.505(b)(2)(i)(A): The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays.

(X) FAR Subpart 16.505(b)(2)(i)(B): Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.

( ) FAR Subpart 16.505(b)(2)(i)(C): The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order.

( ) FAR Subpart 16.505(b)(2)(i)(D): It is necessary to place an order to satisfy a minimum guarantee.

( ) FAR Subpart 16.505(b)(2)(i)(E): For orders exceeding the simplified acquisition threshold, a statute expressly authorizes or requires that the purchase be made from a specified source”. The statutory authority permitting an exception to fair opportunity for this action is 38 U.S.C. 8127(c), known as the Veterans First Contracting Program which provides the authority to directly contract with a Service-Disabled Veteran-Owned Small Business (SDVOSB) or a Veteran-Owned Small Business (VOSB).

( ) FAR Subpart 16.505(b)(2)(i)(F) In accordance with section 1331 of Public Law 111-240 (15 U.S.C.

644(r)), contracting officers may, at their discretion, set aside orders for any of the small business concerns identified in 19.000(a)(3). When setting aside orders for small business concerns, the specific small business program eligibility requirements identified in part 19 apply.

5. Rationale Supporting Use of Authority Cited Above: Carestream Health, Inc. is the only company that can provide remote diagnostics on their proprietary equipment. Carestream Health, Inc. uses CARESTREAM Smart Link remote technology, which allows their maintenance Service team to monitor the systems remotely and detect/analyze software and hardware issues, thus enabling Carestream to promptly diagnose and troubleshoot issues. Carestream Health, Inc. asserts that Channel Partners do not have access to this technology, nor do they have the staff, such as their own Service organization, dedicated to monitoring installed Carestream products that the New York Harbor Healthcare System, New York campus, Radiology Service uses since 2008. This prevents other possible contractors from accessing the diagnostic software, possessing necessary tooling and providing OEM parts to the Government. To ensure that services performed on the equipment

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 3 of 5 Original Date: 08/30/2017 Date: 03/11/2019 Rev 02 meets OEM requirements as per Title 21 Part 820, Subpart N, Section 820.200, “Servicing in order to mitigate any liability as a result of equipment failure due to improper servicing of modification of equipment.” a sole source task order to the OEM is warranted. These maintenance services are considered “highly specialized” and thus there is only one responsible source.

6. Efforts to Obtain Competition: A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable. Market research was conducted, details of which are in the market research section of this document. This effort did not yield any additional sources that can meet the Government’s requirements. There is no competition anticipated for this acquisition. In accordance with FAR 5.301 and 16.505(b)(2), this action will be synopsized at award on www.beta.sam.gov Contract Opportunities and the justification will be made publicly available.

7. Actions to Increase Competition: Describe actions taken, or that will be taken, to remove or overcome any barriers to competition before initiating any subsequent acquisitions for the supplies, or services required, including challenges to restrictive data markings, data rights, preparation of a performance based work statement, and etc.

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 equipment, the only alternative would be to replace the existing equipment with a more generic brand. At this time, New York Harbor Healthcare System, New York campus is satisfied with the quality and operation of the installed equipment, its maintenance and repair. New York Harbor Healthcare System, New York campus currently does not have the sufficient budget to replace the X-Ray equipment.

Considerations for new equipment will be made when the existing equipment reaches the end of its life cycle span.

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.

8. Market Research: Provide a description of the market research conducted among the contract holders and the results. If market research was not conducted, the reasons it was not conducted should be stated. When citing 16.505(b)(2(i)(b) or 16.505(b)(2)(i)(e), the only possible way to state in paragraph 5 of the J&A that there is only one contractor who can fulfill the agency’s needs is to conduct market research, and it should be summarized here.

Past procurement history indicates that this procurement is currently supported by competitively-awarded contract VA243-15-C-0049. On that contract solicitation, two offers were received – the large business OEM and another large business. It was determined that Carestream Health, Inc. asserted proprietary rights to its equipment and diagnostic tools. The competing Contractor acknowledged Carestream’s proprietary rights and intended to subcontract most, if not all, of the work to Carestream Health, Inc.

A VetBiz search with keyword “Carestream” produced one match, but a look in the Service Disabled Veteran Owned Small Business’ (SDVOSB) VetBiz profile revealed that this SDVSOB firm only provides equipment manufactured by Carestream Health, Inc. and does not provide maintenance services. A search of the Ability One website with the location New York, NY and Department “Veterans” resulted in only one result for Switchboard Operation, which is not relevant

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 4 of 5 Original Date: 08/30/2017 Date: 03/11/2019 Rev 02 to this requirement. A search in the VA MedSurg Catalog for Carestream Health, Inc. produced 60 product results, but none of which supports this requirement.

9. Other Facts: The use of these consolidated HTME contracts after first considering mandatory sources is strongly encouraged by the NAC.

10. Technical and Requirements Certification: I certify that the supporting data under my cognizance, which are included in this justification, are accurate and complete to the best of my knowledge and belief.

11. Determination that Anticipated Cost is Fair and Reasonable: A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable:

The anticipated cost to the government is considered fair and reasonable based upon adequate competition on the DSCP contract requirements and negotiation of prices prior to contract award.

The pricing for this annual service requirement comes directly from the manufacturer, Carestream Health, Inc. is identical to the pricing available under their DSCP contract.

The proposed pricing for this service agreement has been compared to the annual price of similar service agreements found in previous procurements. For DRX Plus 3543C Detector Smart Care, this requirement’s proposed pricing is 32% lower than the contract pricing in similar task order SPE2D1- 17-D-0019 36C24219F0343. For the DRX Revolution Mobile X-Ray systems smart care coverage, this requirement’s proposed pricing is 24% lower than the contract pricing in similar purchase order 36C24218P2689.

OEM Contractor has provided a quote for this requirement, with discount pricing included, totaling the following: Base Year discount total is $77,709.22, which is 27.79% lower than the open market list price, and each option year discount totals $71,301.40 which is 25.50% lower than the open market list price. Altogether, this proposed task order discount totals $362,914.82, which is 26% cost savings from the open market list price.

12. Contracting Officer's Certification (required): I certify that the foregoing justification is accurate and complete to the best of my knowledge and belief.

Contracting Officer NCO 2 Hudson Valley Healthcare System – FDR Campus

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 5 of 5 Original Date: 08/30/2017 Date: 03/11/2019 Rev 02

13. Approvals in accordance with VHAPM Part 816.505 Indefinite Delivery Contracts: Ordering.

a. One Level Above the Contracting Officer (Required over SAT but not exceeding $700K): I certify the justification meets requirements for other than full and open competition.

NCO 2 Branch Chief – Services Team 3 Stratton VA Medical Center

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

b. VHA SAO HCA REVIEW AND APPROVAL (over $700,000 to $13.5 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 other than full and open competition.

Executive Director Regional Procurement Office – East (RPO-E)

No other signatures required.