Sole Source Justification- 6 month VISN 19 Short-Term Medical Gas.pdf

JOFOC Tracking Number: FY25 ‐ NCO 19 ‐ 1614

VHAPG Part 819.7008/7009 Sole Source Awards to SDVOSB/VOSB Page 1 of 5 Revision: 03 Effective Date: 06/15/2024

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval (J&A) For

Other Than Full and Open Competition

Action ID: 36C259‐25‐AP‐3476

1. Contracting Activity: Organizational Activity:

Department of Veterans Affairs Department of Veterans Affairs (VA) Network Contracting Office 19 (NCO 19) VISN 19 – VA Rocky Mountain Network 6162 South Willow Drive, Suite 300 4100 E. Mississippi Ave., Suite 600 Greenwood Village, CO 80111 Glendale, CO 80246

2237#: 554‐25‐3‐175‐0207, 660‐25‐3‐039‐0036, 442‐25‐3‐041‐0043, 623‐25‐3‐050‐5888, 635‐25‐3‐ 062‐0028, 666‐25‐3‐095‐1837

2. Nature and/or Description of the Action Being Approved: Veterans Integrated Services Network (VISN) 19 has an urgent and compelling requirement for on‐going medical gases and cylinder rentals for six (6) of VISN 19’s VA Health Care Systems: VA Eastern Colorado Health Care System (ECHCS), Salt Lake City VA Health Care System (SLC), Oklahoma City VA Health Care System (OKC), Cheyenne VA Health Care System (CHY), Eastern Oklahoma VA Health System (MUS), and Sheridan VA Health Care System (SHER). The Government intends to award a new short‐term sole‐source firm‐fixed‐ price contract necessary and essential to support the agency’s mission and to maintain this critical and life sustaining supply pursuant to 38 USC § 8127(c) and VAAR 819.7008(DEVIATION) to the incumbent, RAS Enterprise, LLC (RAS), located at 2512 25th Avenue, Suite 3, Gulfport, MS 39501.

3. Description of Supplies/Services Required to Meet the Agency’s Needs: VISN 19 competed its requirement for on‐going medical gases and cylinder rentals through RFP 36C25925R0019 and competitively awarded Indefinite Delivery Indefinite Quantity (IDIQ) contract 36C25925D0023 to RAS on January 31, 2025. In response to a protest filed at the U.S. Court of Federal Claims (COFC) challenging this award decision, contract 36C25925D0023 has been terminated. VISN 19 does not have the capabilities to produce/manufacture medical gases on its own and there is an immediate need to continue receiving medical gases and cylinder rentals on a continual basis to prevent disruption of these critical healthcare supply and services for clinics, wards, surgery and pharmacy services. Any delay in supplying these medical gases would negatively impact the six VISN 19 stations. Therefore, a short‐term contract awarded to the incumbent , RAS, is needed to continue the supply of required items to the stations. The incumbent is the only vendor that can begin performing the required critical services on July 01, 2025, the day the services are needed. If the agency were to award a sole‐source bridge contract to a successor contractor, the successor contractor could not begin performing services on July 01, 2025, because at least 3‐4 months of transition (incumbent ramp down and successor contractor ramp up activities) would be needed.

The estimated total contract amount is $532,696.83. The estimated period of performance of this short‐term contract is July 01, 2025, through December 31, 2025.

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4. Statutory Authority Permitting Other than Full and Open Competition: 41 USC §3304(a)(5), as implemented by FAR 6.302‐5 (Authorized or Required by Statute), and 38 U.S. Code § 8127(c), as implemented by VAAR 819.7008 (DEVIATION). The contracting officer confirms that:

a) The anticipated award price of the contract (including options) will not exceed $5 million.

b) The requirement will be synopsized and the required justification pursuant to FAR 6.302‐ 5(c)(2)(ii) will be posted in accordance with FAR part 5.

c) RAS has been determined to be a responsible contractor to provide medical gas, cylinder rentals, and associated services to VISN 19. RAS has relevant experience providing medical gas and is currently doing so in VISN 19 since 2018. Furthermore, RAS can provide the requirement in its entirety immediately upon award without a need for transition.

d) The contracting officer has determined that award will be made to RAS at a fair and reasonable price. The Contracting Officer utilized the pricing under prior VISN 19 contracts and other procurements of medical gases and cylinder rentals where prices were previously determined to be fair and reasonable to assist in the determination that the pricing for this short‐term sole source contract is fair and reasonable.

5. Demonstration that the Contractor’s Unique Qualifications and/or Nature of the Acquisition

Requires the Use of the Authority Cited Above (applicability of authority): VISN 19 competitively awarded IDIQ contract 36C25925D0023 to RAS on January 31, 2025. In response to a protest filed at the COFC challenging this award decision, VA determined that it would take the following corrective action: 1) terminate contract 36C25925D0023 and all its orders; 2) re‐assess the agency’s needs; 3) perform additional market research for medical gases and cylinder rentals to determine the acquisition approach that will best support the agency’s requirement for VISN 19; and 4) re‐solicit for the agency’s long‐term requirements. Contract 36C25925D0023 was terminated on June 06, 2025, and the pending corrective action will require a short‐term contract to bridge the gap in medical gas supply and associated services until a new long‐term contract can be competitively solicited for and awarded.

The pending corrective action will require a short‐term contract to bridge the gap in supply and associated services until a long‐term contract can be awarded. As the current distributor, the VISN 19 medical gases and cylinder rentals are currently being provided by RAS. The rented cylinders were inventoried and on RAS’s books as the prime contractor for the VISN 19 medical gases since 2017. Currently, RAS has agreements with their partner manufacturers/distributors for the rented cylinders at the VISN 19 Medical facilities and Community Based Outpatient Clinics; therefore, there will be no break in service in the provision of these critical health care supply and services required at the VA facilities. GPC is currently being used at each individual station but can only be used to the GPC threshold of $10K and is not sustainable with this limit. A break in service would be catastrophic and would be life threatening.

Due to the nature of medical gases, it takes substantial time, effort and coordination to transition over to a new contractor as an inventory at each facility would need to be conducted to account for all on‐hand and missing/lost cylinders for both outgoing and incoming contractor. This coordination can take 30‐60 days. Furthermore, the distribution of medical gases requires the contractor to hold pharmaceutical licenses, permits and/or registrations in the state(s) where there will be distribution.

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This is required by the Pharmacy Board for each state. The licensing, permit and registration process can take up two (2) months or longer depending on state requirements. Based on the proposal submitted in response to RFP 36C25925R0019 by RCG of North Carolina (RCG), the other interested SDVOSB medical gas provider, RCG does not itself have the required licenses and insurance.

Instead, RCG submitted in its proposal in response to RFP 36C25925R0019 the licenses and insurance of its subcontractor (AirGas). For this short‐term contract it is required that all licenses, permits and registrations be obtained by the contractor itself by start of the contract performance.

Additionally, for the new long‐term competitive procurement (which was also a component of the promised corrective action), the contracting officer will need to conduct additional market research, prepare and post a new solicitation for this requirement, adhere to the recently implemented review process, receive and review proposals, evaluate proposals and make a new award decision.

While this acquisition process can occur simultaneously with the required actions described above, it can take 4‐5 months, especially with the current backlog in the approval process for contracts.

Along the way, because this requirement typically yields protests, VA anticipates a pre‐award and/or post‐award protest which will likely trigger a suspension of performance under any newly awarded contract.

To allow reasonable time to fully implement pending corrective action and to ensure that there is no interruption in the provision of these critical health care supply and services to Veterans, it is the Contracting Officer’s intent to sole source medical gas supply and associated services in accordance with 38 U.S. Code § 8127(c) and VAAR 819.7008 (DEVIATION). It has been determined that RAS, the incumbent, can provide the requirement in its entirety immediately upon award, without disruption or interruption to medical facilities. RAS is a verified SDVOSB and is an authorized distributor of medical gases. RAS has agreements in place with all manufacturers/distributors whose cylinders reside at VISN 19 VA facilities. As the primary contractor, RAS possesses the required pharmaceutical licenses, permits and registrations to support this requirement in its entirety.

Furthermore, RAS has proven its ability to provide uninterrupted supply of medical gases, sustaining stability of support and consistency for the Veteran beneficiaries of VISN 19’s facilities.

The Contracting Officer has reviewed the Non‐Manufacturer Rule (NMR) and has determined there is an NMR class waiver in place for NAICS Code 325120‐Industrial Gases, which waives the fourth prong of the NMR. In accordance with the NMR as defined in 13 CFR 121.406(b), RAS can provide medical gases meeting the NMR criteria identified below:

a) Does not exceed 500 employees;

b) Is primarily engaged in the retail wholesale trade and normally sells the type of item being supplied; and

c) Takes ownership or possession of the item(s) with its personnel, equipment or facilities in a manner consistent with industry practice.

The intent to award a short‐term sole source contract to RAS is deemed necessary and essential to support the agency’s mission and to maintain this critical and life sustaining supply. The short term contract is needed to allow reasonable time to fully implement corrective action taken in response to a COFC protest, solicit, award and transition a new contract and/or new contractor.

6. Description of Efforts Made to ensure that offers are solicited from as many potential sources as deemed practicable, including whether a notice was or will be publicized as required by FAR

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Subpart 5.2 and, if not, which exception under FAR 5.202 applies: This justification relates solely to the need of providing medical gases and cylinder rentals for the ordering period of July 01, 2025, through December 31, 2025 to bridge the gap of service until pending corrective action is fully implemented and a long‐term contract is competitively awarded.

7. Determination by the CO that the Anticipated Cost to the Government will be Fair and Reasonable: The Contracting Officer utilized the pricing under prior VISN 19 contracts and other procurements of medical gases and cylinder rentals where prices were previously determined to be fair and reasonable to assist in the determination that the pricing for this short‐term sole source contract is fair and reasonable.

8. Description of the Market Research Conducted and the Results, or a Statement of the Reasons

Market Research Was Not Conducted: It is paramount to award a short‐term contract while pending corrective action is being fully implemented and a long‐term solution is being solicited, awarded, and transitioned. The Contract Officer will conduct market research while pending corrective action is being implemented.

9. Any Other Facts Supporting the Use of Other than Full and Open Competition: None. Authority under 38 USC 8127(c).

10. Listing of Sources that Expressed, in Writing, an Interest in the Acquisition:

RAS Enterprises LLC

2512 25TH AVE, STE 3

Gulfport, Mississippi 39501 Cage Code: 3QDR3

SAM UEI: RSCDDXH8DFZ9

RCG of North Carolina, LLC 205 N Carolina AVE Carolina Beach, North Carolina 28428 Cage Code: 57GK3

SAM UEI: FMENMLE5CHB4

11. A Statement of the Actions, if any, the Agency May Take to Remove or Overcome any Barriers to

Competition before Making subsequent acquisitions for the supplies or services required: The Government will conduct additional market research as part of its pending corrective action taken in response to the protest filed at COFC to ascertain if there have been changes in the marketplace and to determine the acquisition approach that will best support the agency’s requirements for VISN 19’s medical facilities. This pending corrective action will assist in removing and/or overcoming barriers for the acquisition of medical gases, cylinder rentals and associated services.

12. 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.

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Rebecca Kemp Date Acquisition & Utilization Specialist

VISN 19

13. Approvals in accordance with the VHAPM Part 806.3 OFOC SOP:

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

Jesse San Nicolas Date Contracting Officer

NCO 19

b. One Level Above the Contracting Officer (Required over the SAT but not exceeding $750K): I certify the justification meets requirements for other than full and open competition.

Sarilynn Thomas Date Branch Chief

NCO 19, Supply/Services Denver