36C26119Q0704-005.docx

36C26119Q0704

PAGE 1 OF

1. REQUISITION NO.

2. CONTRACT NO.

3. AWARD/EFFECTIVE DATE

4. ORDER NO.

5. SOLICITATION NUMBER

6. SOLICITATION ISSUE DATE

a. NAME

b. TELEPHONE NO. (No Collect Calls)

8. OFFER DUE DATE/LOCAL

TIME

9. ISSUED BY

CODE

10. THIS ACQUISITION IS

UNRESTRICTED OR

SET ASIDE:

% FOR:

SMALL BUSINESS

HUBZONE SMALL

BUSINESS

SERVICE-DISABLED

VETERAN-OWNED

SMALL BUSINESS

WOMEN-OWNED SMALL BUSINESS

(WOSB) ELIGIBLE UNDER THE WOMEN-OWNED

SMALL BUSINESS PROGRAM

EDWOSB

8(A)

NAICS:

SIZE STANDARD:

11. DELIVERY FOR FOB DESTINA-

TION UNLESS BLOCK IS

MARKED

SEE SCHEDULE

12. DISCOUNT TERMS

13a. THIS CONTRACT IS A

RATED ORDER UNDER

DPAS (15 CFR 700)

13b. RATING

14. METHOD OF SOLICITATION

RFQ

IFB

RFP

15. DELIVER TO

CODE

16. ADMINISTERED BY

CODE

17a. CONTRACTOR/OFFEROR

CODE

FACILITY CODE

18a. PAYMENT WILL BE MADE BY

CODE

TELEPHONE NO.

DUNS:

DUNS+4:

PHONE:

FAX:

17b. CHECK IF REMITTANCE IS DIFFERENT AND PUT SUCH ADDRESS IN OFFER 18b. SUBMIT INVOICES TO ADDRESS SHOWN IN BLOCK 18a UNLESS BLOCK BELOW IS CHECKED

SEE ADDENDUM

19.

20.

21.

22.

23.

24.

ITEM NO.

SCHEDULE OF SUPPLIES/SERVICES

QUANTITY

UNIT

UNIT PRICE

AMOUNT

(Use Reverse and/or Attach Additional Sheets as Necessary)

25. ACCOUNTING AND APPROPRIATION DATA

26. TOTAL AWARD AMOUNT (For Govt. Use Only) 27a. SOLICITATION INCORPORATES BY REFERENCE FAR 52.212-1, 52.212-4. FAR 52.212-3 AND 52.212-5 ARE ATTACHED. ADDENDA

ARE

ARE NOT ATTACHED.

27b. CONTRACT/PURCHASE ORDER INCORPORATES BY REFERENCE FAR 52.212-4. FAR 52.212-5 IS ATTACHED. ADDENDA

ARE

ARE NOT ATTACHED

28. CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN _______________

29. AWARD OF CONTRACT: REF. ___________________________________ OFFER

COPIES TO ISSUING OFFICE. CONTRACTOR AGREES TO FURNISH AND

DATED ________________________________. YOUR OFFER ON SOLICITATION

DELIVER ALL ITEMS SET FORTH OR OTHERWISE IDENTIFIED ABOVE AND ON ANY

(BLOCK 5), INCLUDING ANY ADDITIONS OR CHANGES WHICH ARE

ADDITIONAL SHEETS SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED

SET FORTH HEREIN IS ACCEPTED AS TO ITEMS:

30a. SIGNATURE OF OFFEROR/CONTRACTOR 31a. UNITED STATES OF AMERICA (SIGNATURE OF CONTRACTING OFFICER) 30b. NAME AND TITLE OF SIGNER (TYPE OR PRINT) 30c. DATE SIGNED 31b. NAME OF CONTRACTING OFFICER (TYPE OR PRINT) 31c. DATE SIGNED

AUTHORIZED FOR LOCAL REPRODUCTION

(REV. 2/2012)

PREVIOUS EDITION IS NOT USABLE

Prescribed by GSA - FAR (48 CFR) 53.212

7. FOR SOLICITATION

INFORMATION CALL:

STANDARD FORM 1449

OFFEROR TO COMPLETE BLOCKS 12, 17, 23, 24, & 30

SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS

36C26119Q0704 11-19-2019 Charles Dutkevitch 559.225.6100.4115 12-03-2019 Department of Veterans Affairs Network Contracting Office 21 (NCO 21) 855 M Street, Suite 1020 Fresno

CA

93721 X X 524292 $35 Million N/A X Department of Veterans Affairs VA Central California Health Care System 2615 E. Clinton Ave Fresno

CA

93703 Department of Veterans Affairs Network Contracting Office 21 (NCO 21) 855 M Street, Suite 1020 Fresno

CA

93721

Department of Veterans Affairs FMS-VA-2(101) Financial Services Center

PO BOX 149971

Austin

TX

78714-9971 See CONTINUATION Page Contractor shall provide Pharmacy Benefit Management Services for the VA Central California Health Care System as prescribed in the Performance Work Statement (PWS) contained herein.

Refer to schedule for the period of performance In accordance with FAR 16.504, the Government intends to award a Single Award Indefinite Quantity Contract as a result of this solicitation.

ORDERING PERIOD 1: Jan 01, 2020 - Dec 31, 2021 ORDERING PERIOD 2: Jan 01, 2021 - Dec 31, 2022 ORDERING PERIOD 3: Jan 01, 2022 - Dec 31, 2023 ORDERING PERIOD 4: Jan 01, 2023 - Dec 31, 2024 ORDERING PERIOD 5: Jan 01, 2024 - Dec 31, 2025 See CONTINUATION Page X Joleo Dianala Table of Contents

SECTION B - CONTINUATION OF SF 1449 BLOCKS

B.1 CONTRACT ADMINISTRATION DATA

1. Contract Administration: All contract administration matters will be handled by the following individual(s):

a. Contractor _____________________________________________

Address _____________________________________________

City/State/Zip _____________________________________________

Point of Contact (Name) _____________________________________________

Telephone Number _____________________________________________

Fax Number _____________________________________________

Email Address _____________________________________________

TAX ID Number _____________________________________________

DUNS NUMBER _____________________________________________

b. Government:

Charles Dutkevitch, Contract Specialist Department of Veterans Affairs Network Contracting Office 21 (NCO21) 855 M Street, Suite 1020 Fresno, CA 93721

2. CONTRACTOR REMITTANCE ADDRESS: All payments by the Government to the contractor will be made in accordance with:

3. INVOICES: Invoices shall be submitted in arrears:

4. GOVERNMENT INVOICE ADDRESS: All invoices from the contractor shall be submitted electronically in accordance with VAAR Clause 852.232-72 Electronic Submission of Payment Requests:

5. SOLICITATION/CONTRACT: This solicitation and resulting contract adheres to the format defined in Federal Acquisition Regulation (FAR) Parts 12 and 13. An official copy of the FAR can be obtained at https://www.acquisition.gov/far/ .

6. POST AWARD ORIENTATION (Awards over $1M): The Contracting Officer will schedule a post award orientation conference for contract orientation purposes as required by IL 003A3-12-04, which is available at http://www.va.gov/oal/docs/library/ils/il12-04.pdf.

7. TECHNICAL INQUIRIES: Direct all technical inquiries in writing to Contract Specialist, Charles Dutkevitch via email at: charles.dutkevitch@va.gov . ALL inquiries must be in writing.

8. QUOTE DELIVERY: Offers should be sent to the Contract Specialist, Charles Dutkevitch via email at: charles.dutkevitch@va.gov Late submissions, modifications and withdrawals will be handled as described in 52.212-1 “Instructions to Offerors – Commercial Items.” Faxed or mailed offers will not be accepted.

9. ACKNOWLEDGMENT OF AMENDMENTS: The offeror acknowledges receipt of amendments to the Solicitation numbered and dated as follows:

10. CONTRACT COORDINATOR: The Contractor shall identify in writing to the CO their contact person(s) who shall serve as liaisons between the Contractor and VA and who shall ensure that services are performed in accordance with the contract specifications. The Contractor’s contact person(s) shall be available during VA regular administrative work hours, exclusive of national holidays.

It is anticipated that a Firm fixed price, Single Award, Indefinite Delivery/Indefinite Quantity contract, shall be awarded as a result of this solicitation.

The guaranteed minimum award amount for this contract is $1,000. The maximum aggregate value of orders that can be placed under this contract is $1,000,000.00. The Government does not guarantee that it will place any orders under this contract more than the guaranteed minimum award amount.

Estimated quantity as indicated on this schedule does not limit nor does it guarantee the number of units to any specific number of units at any time. The number of units being utilize may vary from day to day. The total number of units per period shall not be exceeded unless authorized in writing by a warranted, VA Contracting Officer.

B.2 PRICE/COST SCHEDULE

ITEM INFORMATION

Prescription Dispensing Processing Fee in accordance with the PWS.

Estimated Quantity Ordering Period 1: 1 JAN 2020 - 31 DEC 2020

0.00

Generic Drugs Prescription Ingredient Cost Price book name:____________ AWP less ________%

0.00

Brand Name Drugs Prescription Ingredient Cost

AWP less ________%

Prescription Dispensing Processing Fee in accordance with the PWS.

Ordering Period 2: 1 JAN 2021 - 31 DEC 2021

0.00

Generic Drugs Prescription Ingredient Cost

AWP less ________%

0.00

Brand Name Drugs Prescription Ingredient Cost Price book name: ____________ AWP less ________%

Prescription Dispensing Processing Fee in accordance with the PWS.

Ordering Period 3: 1 JAN 2022 - 31 DEC 2022

0.00

Generic Drugs Prescription Ingredient Cost, AWP less ________%

0.00

Brand Name Drugs Prescription Ingredient Cost

AWP less ________%

Prescription Dispensing Processing Fee in accordance with the PWS.

Ordering Period 4: 1 JAN 2023 - 31 DEC 2023

0.00

Generic Drugs Prescription Ingredient Cost Price book name:______ AWP less ________%

0.00

Brand Name Drugs Prescription Ingredient Cost

AWP less ________%

Prescription Dispensing Processing Fee in accordance with the PWS.

Ordering Period 5: 1 JAN 2024 - 31 DEC 2024

0.00

Generic Drugs Prescription Ingredient Cost

AWP less ________%

0.00

Brand Name Drugs Prescription Ingredient Cost

AWP less ________%

B.3 PERFORMANCE WORK STATEMENT

Performance Work Statement (PWS) VA Central California Health Care System Pharmacy Benefit Management Services

1. Scope

a. This contract is to provide financial management services to ensure reimbursement of emergent fill pharmacy benefits. The contract is between VHA, as a health plan, and the contractor, for the purpose of reimbursing the Contractor a set price for prescriptions filled at the patient’s request for which the patient was not charged.

b. Contractor shall provide these services to VA Central California Health Care System (VACCHCS) patients and those receiving care through Community Based Outreach Clinics (CBOCs). Locations served include VACCHCS located at 2615 E Clinton Ave Fresno CA 93703, Tulare CBOC located at 1050 North Cherry Tulare, CA 93274, Oakhurst CBOC 40597 Westlake Drive, Oakhurst, CA 93644 and Merced CBOC 340 East Yosemite Avenue Suite D Merced, CA 95340. The contractor shall provide coverage using a network of pharmacies located within a 5-mile radius of VACCHCS and the CBOCS. A list of pharmacies is attached for reference, but not limited to.

2. Procedures

a. The pharmacies with which the contractor have a business relationship shall only be reimbursed for prescriptions that were filled and dispensed from original prescriptions written by VA or VA contracted providers assigned to the CBOC.

b. In order to receive reimbursement, prescriptions filled by the contractor’s dispensing pharmacies will be in written form and in accordance with VA policy and procedures as well as applicable state and federal regulations. The contractor’s dispensing pharmacies must be able to accept the written VA Form 10-2577F, Security Prescription Form. Sample form is attached for reference.

c. Prescriptions reimbursed through the financial management services for emergent fill pharmacy benefits contract will be limited to medications of urgent need as determined by VA clinical staff and will follow safe and effective formulary management principles practiced with the VA. The adjudication of medications on a case-by-case basis must follow VACCHCS procedure. The VA pharmacist shall develop a list of emergent drugs that can be reimbursed for under the contract without prior authorization. The Chief of Pharmacy, or designee, will provide this “emergent drug list” to the contractor at the time of contract award and provide updates to the list as necessary. Generic drugs shall be used whenever available. All medications reimbursed for under this contract must meet FDA standards. The Chief of Pharmacy, or designee, will provide the VA National Formulary list to the contractor at the time of contract award and will provide updates to the list of necessary. https://www.pbm.va.gov/nationalformulary.asp

d. Prescriptions processed under this contract shall be filled with generic drugs to the extent permitted by law. Contractor pharmacist will select the least expensive generic drug product in stock. Contractor shall follow the same standards as the VA pharmacy when substituting generic products: same chemical ingredient, same strength, same dosage form as the branded product and an FDA therapeutic equivalency rating of “AB” for oral products or “AT” for topical products. Reference: FDA Electronic Orange Book at www.accessdata.fda.gov

e. Only NEW prescriptions shall be filled and dispensed by the pharmacy from original prescriptions written by VA providers. The Chief of Pharmacy may authorize refills under special conditions, i.e. after natural disasters.

f. All prescriptions shall be filled for the quantities as written, not to exceed a 14-day supply, except for those products that the manufacturer’s package size prohibits dispensing in a smaller quantity (e.g., inhalers, insulin vials).

g. Medical supplies, injectables and prosthetic items are not included in this contract except for emergency supply of insulin vials and syringes.

h. Pharmacies/Pharmacists will provide medication counseling to each patient, will include but not limited to:

i. Name, description and use of medication

ii. Dose, dosage form and route

iii. Special directions and precautions

iv. Common side effects and action required if side effects occur

v. Techniques for self-monitoring drug therapy

vi. Action to be taken if a dose is missed

vii. Proper Storage

viii. What the patient can expect from the medication

ix. The balance of the patient's prescribed medications will be mailed from the VA pharmacy.

i. Pricing information for the medications dispensed on claims can be determined by using the following, Medi-Span, Red Book, Good RX. Price is based on AWP less percentage for Generics and Brand.

3. Documentation

a. The Contractor shall maintain documentation of prescriptions filled under this contract. Documentation shall indicate the following:

i. date the prescription was filled

ii. Name of licensed pharmacy

iii. prescription number

iv. patient’s first and last name

v. patient’s last four of SSN

vi. Indicate generic or brand name formulation

vii. drug label name

viii. total quantity

ix. total day supply

x. total ingredient cost paid

b. Invoices, along with the aforementioned documentation, will be submitted once per month via encrypted email to designated VACCHCS Pharmacy point(s) of contact (POC) and will include a request only for payment for services actually performed. VACCHCS Pharmacy POCs will authorize payment, and the invoice will be sent to VACCHCS Fee Basis staff for payment processing.

c. The Contractor shall provide quarterly reports on the usage, cost, and types of drugs being prescribed by CBOC physicians. Reports must also include all reported errors, incidents and veteran related complaints.

d. All payments made under this contract will be made monthly in arrears in accordance with Federal Acquisition Regulation (FAR) Clause 52.212-4. No advance payments will be authorized.

4. Hours of Operation and Support

Contractor will provide a customer service team to ensure that all pharmacy operations are performed in compliance with all VACCHCS, HIPAA and other regulatory requirements. The customer service team will assist with issues that arise regarding authorizations; prescription rejects or claims during normal business hours of 8:00 a.m. to 5:00 p.m. PST Monday through Friday, excluding federal holidays. Contractor shall respond to changes in need or new service requests within 24 to 48 hours.

5. CONTRACTOR QUALIFICATIONS

a. Contractor shall provide a national network that meets the following criteria:

b. Valid National Association of Boards of Pharmacies (NABP) issued by National Council on Prescription Drug Programs (NCPDP);

ii. Maintain a current and valid DEA license;

iii. State pharmacy business license and permit; and

iv. Pharmacists must be licensed in the state in which they practice and have a current Scope of Practice.

6. Personnel Health Information (PHI) The contractor is prohibited from transferring Personnel health Information (PHI) by fax or email and /or from a VA Medical facility unless issued a VA PKI “partner” certificate to allow encrypted email exchange. Invoices, authorizations, and report can then be sent via PKI encrypted email. If prior authorization for the payment of an emergent pharmaceutical is necessary and the contractor does not have a VA issued PKI “partner” certificate, verbal contact is sufficient to obtain the pharmaceutical payment authorization. Contractor shall not store patient information on a mobile device

7. HIPPA Compliance Under Health Insurance Portability and Accountability Act (HIPPA) Privacy and Security Rules, the Contractor providing services under this contract is considered to be a “covered entity” and thus is not required to enter in a Business Associate Agreement with VASNHCS. However, the Contractor must observe Public Law 104-191 and all respective regulations implementing this law while providing services under this contract.

CONFIDENTIALITY OF PATIENT RECORDS

The Contractor, as a VA provider, shall assist in the provision of health care to patients seeking such care from or through the VA. As such, the Contractor is considered as being part of the Department's health care activity. The Contractor is considered to be a VA provider for purposes of the Privacy Act, Title 5 U.S.C. 552A. Further, for the purpose of VA records access and patient confidentiality, the Contractor is considered to be a VA provider for the following provisions: Title 38 U.S.C. 5701, 5705, and 7362. Therefore, the Contractor may have access, as would other appropriate components of the VA, to patient medical records including patient treatment records pertaining to drug and alcohol abuse, HIV, and sickle cell anemia, to the extent necessary to perform his contractual responsibilities. However, like other components of the Department, and not withstanding any other provisions of the contract, the Contractor is restricted from making disclosures of VA records, or information contained in such records, to which it may have access, except to the extent that explicit disclosure authority from the VA has been received. The Contractor is subject to the same penalties and liabilities for unauthorized disclosures of such records as the VA.

The records referred to above shall be and remain the property of the VA and shall not be removed or transferred from the VA except in accordance with U.S.C. 551a (Privacy Act), 38 U.S.C. 5701 (Confidentiality of Claimants Records), 5 U.S.C. 552 (FOIA), 30 U.S.C. 5705 (Confidentiality of Medical Quality Assurance Records), 38 U.S.C. 7332 (Confidentiality of Certain Medical Records), and Federal laws, rules and regulations. Subject to applicable Federal confidentiality or privacy laws, the Contractor, or their designated representatives, and designated representatives of Federal regulatory agencies having jurisdiction over the Contractor, may have access to the VA's records at the VA's place of business on request during normal business hours, to inspect, review, and make copies of such records.

8. TERMS OF THE AGREEMENT

Contractor personnel performing services under this agreement will not be considered VACCHCS employees for any purpose and shall be considered employees of the Contractor. VA will not make payment of any of their employee’s compensation including holidays or leave, including sick leave.

B.4 IT CONTRACT SECURITY

VA INFORMATION AND INFORMATION SYSTEM SECURITY/PRIVACY

1. GENERAL

Contractors, contractor personnel, subcontractors, and subcontractor personnel shall be subject to the same Federal laws, regulations, standards, and VA Directives and Handbooks as VA and VA personnel regarding information and information system security.

2. ACCESS TO VA INFORMATION AND VA INFORMATION SYSTEMS

a. A contractor/subcontractor shall request logical (technical) or physical access to VA information and VA information systems for their employees, subcontractors, and affiliates only to the extent necessary to perform the services specified in the contract, agreement, or task order.

b. All contractors, subcontractors, and third-party servicers and associates working with VA information are subject to the same investigative requirements as those of VA appointees or employees who have access to the same types of information. The level and process of background security investigations for contractors must be in accordance with VA Directive and Handbook 0710, Personnel Suitability and Security Program. The Office for Operations, Security, and Preparedness is responsible for these policies and procedures.

c. Contract personnel who require access to national security programs must have a valid security clearance. National Industrial Security Program (NISP) was established by Executive Order 12829 to ensure that cleared U.S. defense industry contract personnel safeguard the classified information in their possession while performing work on contracts, programs, bids, or research and development efforts. The Department of Veterans Affairs does not have a Memorandum of Agreement with Defense Security Service (DSS). Verification of a Security Clearance must be processed through the Special Security Officer located in the Planning and National Security Service within the Office of Operations, Security, and Preparedness.

d. Custom software development and outsourced operations must be located in the U.S. to the maximum extent practical. If such services are proposed to be performed abroad and are not disallowed by other VA policy or mandates, the contractor/subcontractor must state where all non-U.S. services are provided and detail a security plan, deemed to be acceptable by VA, specifically to address mitigation of the resulting problems of communication, control, data protection, and so forth. Location within the U.S. may be an evaluation factor.

e. The contractor or subcontractor must notify the Contracting Officer immediately when an employee working on a VA system or with access to VA information is reassigned or leaves the contractor or subcontractor's employ. The Contracting Officer must also be notified immediately by the contractor or subcontractor prior to an unfriendly termination.

3. VA INFORMATION CUSTODIAL LANGUAGE

a. Information made available to the contractor or subcontractor by VA for the performance or administration of this contract or information developed by the contractor/subcontractor in performance or administration of the contract shall be used only for those purposes and shall not be used in any other way without the prior written agreement of the VA. This clause expressly limits the contractor/subcontractor's rights to use data as described in Rights in Data - General, FAR 52.227-14(d) (1).

b. VA information should not be co-mingled, if possible, with any other data on the contractors/subcontractor's information systems or media storage systems in order to ensure VA requirements related to data protection and media sanitization can be met. If co-mingling must be allowed to meet the requirements of the business need, the contractor must ensure that VA's information is returned to the VA or destroyed in accordance with VA's sanitization requirements. VA reserves the right to conduct on site inspections of contractor and subcontractor IT resources to ensure data security controls, separation of data and job duties, and destruction/media sanitization procedures are in compliance with VA directive requirements.

c. Prior to termination or completion of this contract, contractor/ subcontractor must not destroy information received from VA, or gathered/ created by the contractor in the course of performing this contract without prior written approval by the VA. Any data destruction done on behalf of VA by a contractor/subcontractor must be done in accordance with National Archives and Records Administration (NARA) requirements as outlined in VA Directive 6300, Records and Information Management and its Handbook 6300.1 Records Management Procedures, applicable VA Records Control Schedules, and VA Handbook 6500.1, Electronic Media Sanitization. Self-certification by the contractor that the data destruction requirements above have been met must be sent to the VA Contracting Officer within 30 days of termination of the contract.

d. The contractor/subcontractor must receive, gather, store, back up, maintain, use, disclose and dispose of VA information only in compliance with the terms of the contract and applicable Federal and VA information confidentiality and security laws, regulations and policies. If Federal or VA information confidentiality and security laws, regulations and policies become applicable to the VA information or information systems after execution of the contract, or if NIST issues or updates applicable FIPS or Special Publications (SP) after execution of this contract, the parties agree to negotiate in good faith to implement the information confidentiality and security laws, regulations and policies in this contract.

e. The contractor/subcontractor shall not make copies of VA information except as authorized and necessary to perform the terms of the agreement or to preserve electronic information stored on contractor/subcontractor electronic storage media for restoration in case any electronic equipment or data used by the contractor/subcontractor needs to be restored to an operating state. If copies are made for restoration purposes, after the restoration is complete, the copies must be appropriately destroyed.

f. If VA determines that the contractor has violated any of the information confidentiality, privacy, and security provisions of the contract, it shall be sufficient grounds for VA to withhold payment to the contractor or third party or terminate the contract for default or terminate for cause under Federal Acquisition Regulation (FAR) part 12.

g. If a VHA contract is terminated for cause, the associated BAA must also be terminated and appropriate actions taken in accordance with VHA Handbook 1600.01, Business Associate Agreements. Absent an agreement to use or disclose protected health information, there is no business associate relationship.

h. The contractor/subcontractor must store, transport, or transmit VA sensitive information in an encrypted form, using VA-approved encryption tools that are, at a minimum, FIPS 140-2 validated.

i. The contractor/subcontractor's firewall and Web services security controls, if applicable, shall meet or exceed VA's minimum requirements. VA Configuration Guidelines are available upon request.

j. Except for uses and disclosures of VA information authorized by this contract for performance of the contract, the contractor/subcontractor may use and disclose VA information only in two other situations: (i) in response to a qualifying order of a court of competent jurisdiction, or (ii) with VA's prior written approval. The contractor/subcontractor must refer all requests for, demands for production of, or inquiries about, VA information and information systems to the VA contracting officer for response.

k. Notwithstanding the provision above, the contractor/subcontractor shall not release VA records protected by Title 38 U.S.C. 5705, confidentiality of medical quality assurance records and/or Title 38 U.S.C. 7332, confidentiality of certain health records pertaining to drug addiction, sickle cell anemia, alcoholism or alcohol abuse, or infection with human immunodeficiency virus. If the contractor/subcontractor is in receipt of a court order or other requests for the above mentioned information, that contractor/subcontractor shall immediately refer such court orders or other requests to the VA contracting officer for response.

l. For service that involves the storage, generating, transmitting, or exchanging of VA sensitive information but does not require C&A or an MOU-ISA for system interconnection, the contractor/subcontractor must complete a Contractor Security Control Assessment (CSCA) on a yearly basis and provide it to the COR.

4. INFORMATION SYSTEM DESIGN AND DEVELOPMENT

a. Information systems that are designed or developed for or on behalf of VA at non-VA facilities shall comply with all VA directives developed in accordance with FISMA, HIPAA, NIST, and related VA security and privacy control requirements for Federal information systems. This includes standards for the protection of electronic PHI, outlined in 45 C.F.R. Part 164, Subpart C, information and system security categorization level designations in accordance with FIPS 199 and FIPS 200 with implementation of all baseline security controls commensurate with the FIPS 199 system security categorization (reference Appendix D of VA Handbook 6500, VA Information Security Program). During the development cycle a Privacy Impact Assessment (PIA) must be completed, provided to the COR, and approved by the VA Privacy Service in accordance with Directive 6507, VA Privacy Impact Assessment.

b. The contractor/subcontractor shall certify to the COR that applications are fully functional and operate correctly as intended on systems using the VA Federal Desktop Core Configuration (FDCC), and the common security configuration guidelines provided by NIST or the VA. This includes Internet Explorer 7 configured to operate on Windows XP and Vista (in Protected Mode on Vista) and future versions, as required.

c. The standard installation, operation, maintenance, updating, and patching of software shall not alter the configuration settings from the VA approved and FDCC configuration. Information technology staff must also use the Windows Installer Service for installation to the default "program files" directory and silently install and uninstall.

d. Applications designed for normal end users shall run in the standard user context without elevated system administration privileges.

e. The security controls must be designed, developed, approved by VA, and implemented in accordance with the provisions of VA security system development life cycle as outlined in NIST Special Publication 800-37, Guide for Applying the Risk Management Framework to Federal Information Systems, VA Handbook 6500, Information Security Program and VA Handbook 6500.5, Incorporating Security and Privacy in System Development Lifecycle.

f. The contractor/subcontractor is required to design, develop, or operate a System of Records Notice (SOR) on individuals to accomplish an agency function subject to the Privacy Act of 1974, (as amended), Public Law 93-579, December 31, 1974 (5 U.S.C. 552a) and applicable agency regulations. Violation of the Privacy Act may involve the imposition of criminal and civil penalties.

g. The contractor/subcontractor agrees to:

(1) Comply with the Privacy Act of 1974 (the Act) and the agency rules and regulations issued under the Act in the design, development, or operation of any system of records on individuals to accomplish an agency function when the contract specifically identifies:

(a) The Systems of Records (SOR); and

(b) The design, development, or operation work that the contractor/ subcontractor is to perform;

(1) Include the Privacy Act notification contained in this contract in every solicitation and resulting subcontract and in every subcontract awarded without a solicitation, when the work statement in the proposed subcontract requires the redesign, development, or operation of a SOR on individuals that is subject to the Privacy Act; and

(2) Include this Privacy Act clause, including this subparagraph (3), in all subcontracts awarded under this contract which requires the design, development, or operation of such a SOR.

h. In the event of violations of the Act, a civil action may be brought against the agency involved when the violation concerns the design, development, or operation of a SOR on individuals to accomplish an agency function, and criminal penalties may be imposed upon the officers or employees of the agency when the violation concerns the operation of a SOR on individuals to accomplish an agency function. For purposes of the Act, when the contract is for the operation of a SOR on individuals to accomplish an agency function, the contractor/subcontractor is considered to be an employee of the agency.

(1) "Operation of a System of Records" means performance of any of the activities associated with maintaining the SOR, including the collection, use, maintenance, and dissemination of records.

(2) "Record" means any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, education, financial transactions, medical history, and criminal or employment history and contains the person's name, or identifying number, symbol, or any other identifying particular assigned to the individual, such as a fingerprint or voiceprint, or a photograph.

(3) "System of Records" means a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual.

i. The vendor shall ensure the security of all procured or developed systems and technologies, including their subcomponents (hereinafter referred to as "Systems"), throughout the life of this contract and any extension, warranty, or maintenance periods. This includes, but is not limited to workarounds, patches, hotfixes, upgrades, and any physical components (hereafter referred to as Security Fixes) which may be necessary to fix all security vulnerabilities published or known to the vendor anywhere in the Systems, including Operating Systems and firmware. The vendor shall ensure that Security Fixes shall not negatively impact the Systems.

j. The vendor shall notify VA within 24 hours of the discovery or disclosure of successful exploits of the vulnerability which can compromise the security of the Systems (including the confidentiality or integrity of its data and operations, or the availability of the system). Such issues shall be remediated as quickly as is practical, but in no event longer than 10 days.

k. When the Security Fixes involve installing third party patches (such as Microsoft OS patches or Adobe Acrobat), the vendor will provide written notice to the VA that the patch has been validated as not affecting the Systems within 10 working days. When the vendor is responsible for operations or maintenance of the Systems, they shall apply the Security Fixes within 10 days.

l. All other vulnerabilities shall be remediated as specified in this paragraph in a timely manner based on risk, but within 60 days of discovery or disclosure. Exceptions to this paragraph (e.g. for the convenience of VA) shall only be granted with approval of the contracting officer and the VA Assistant Secretary for Office of Information and Technology.

5. INFORMATION SYSTEM HOSTING, OPERATION, MAINTENANCE, OR USE

a. For information systems that are hosted, operated, maintained, or used on behalf of VA at non-VA facilities, contractors/subcontractors are fully responsible and accountable for ensuring compliance with all HIPAA, Privacy Act, FISMA, NIST, FIPS, and VA security and privacy directives and handbooks. This includes conducting compliant risk assessments, routine vulnerablity scanning, system patching and change management procedures, and the completion of an acceptable contingency plan for each system. The contractor's security control procedures must be equivalent, to those procedures used to secure VA systems. A Privacy Impact Assessment (PIA) must also be provided to the COR and approved by VA Privacy Service prior to operational approval. All external Internet connections to VA's network involving VA information must be reviewed and approved by VA prior to implementation.

b. Adequate security controls for collecting, processing, transmitting, and storing of Personally Identifiable Information (PII), as determined by the VA Privacy Service, must be in place, tested, and approved by VA prior to hosting, operation, maintenance, or use of the information system, or systems by or on behalf of VA. These security controls are to be assessed and stated within the PIA and if these controls are determined not to be in place, or inadequate, a Plan of Action and Milestones (POA&M) must be submitted and approved prior to the collection of PII.

c. Outsourcing (contractor facility, contractor equipment or contractor staff) of systems or network operations, telecommunications services, or other managed services requires certification and accreditation (authorization) (C&A) of the contractor's systems in accordance with VA Handbook 6500.3, Certification and Accreditation and/or the VA OCS Certification Program Office. Government- owned (government facility or government equipment) contractor-operated systems, third party or business partner networks require memorandums of understanding and interconnection agreements (MOU-ISA) which detail what data types are shared, who has access, and the appropriate level of security controls for all systems connected to VA networks.

d. The contractor/subcontractor's system must adhere to all FISMA, FIPS, and NIST standards related to the annual FISMA security controls assessment and review and update the PIA. Any deficiencies noted during this assessment must be provided to the VA contracting officer and the ISO for entry into VA's POA&M management process. The contractor/subcontractor must use VA's POA&M process to document planned remedial actions to address any deficiencies in information security policies, procedures, and practices, and the completion of those activities. Security deficiencies must be corrected within the timeframes approved by the government. Contractor/subcontractor procedures are subject to periodic, unannounced assessments by VA officials, including the VA Office of Inspector General. The physical security aspects associated with contractor/ subcontractor activities must also be subject to such assessments. If major changes to the system occur that may affect the privacy or security of the data or the system, the C&A of the system may need to be reviewed, retested and re- authorized per VA Handbook 6500.3. This may require reviewing and updating all of the documentation (PIA, System Security Plan, Contingency Plan). The Certification Program Office can provide guidance on whether a new C&A would be necessary.

e. The contractor/subcontractor must conduct an annual self assessment on all systems and outsourced services as required. Both hard copy and electronic copies of the assessment must be provided to the COR. The government reserves the right to conduct such an assessment using government personnel or another contractor/subcontractor. The contractor/subcontractor must take appropriate and timely action (this can be specified in the contract) to correct or mitigate any weaknesses discovered during such testing, generally at no additional cost.

f. VA prohibits the installation and use of personally-owned or contractor/ subcontractor-owned equipment or software on VA's network. If non-VA owned equipment must be used to fulfill the requirements of a contract, it must be stated in the service agreement, SOW or contract. All of the security controls required for government furnished equipment (GFE) must be utilized in approved other equipment (OE) and must be funded by the owner of the equipment. All remote systems must be equipped with, and use, a VA-approved antivirus (AV) software and a personal (host-based or enclave based) firewall that is configured with a VA-approved configuration. Software must be kept current, including all critical updates and patches. Owners of approved OE are responsible for providing and maintaining the anti-viral software and the firewall on the non-VA owned OE.

g. All electronic storage media used on non-VA leased or non-VA owned IT equipment that is used to store, process, or access VA information must be handled in adherence with VA Handbook 6500.1, Electronic Media Sanitization upon: (i) completion or termination of the contract or (ii) disposal or return of the IT equipment by the contractor/subcontractor or any person acting on behalf of the contractor/subcontractor, whichever is earlier. Media (hard drives, optical disks, CDs, back-up tapes, etc.) used by the contractors/ subcontractors that contain VA information must be returned to the VA for sanitization or destruction or the contractor/subcontractor must self-certify that the media has been disposed of per 6500.1 requirements. This must be completed within 30 days of termination of the contract.

h. Bio-Medical devices and other equipment or systems containing media (hard drives, optical disks, etc.) with VA sensitive information must not be returned to the vendor at the end of lease, for trade-in, or other purposes. The options are:

(1) Vendor must accept the system without the drive;

(2) VA's initial medical device purchase includes a spare drive which must be installed in place of the original drive at time of turn-in; or

(3) VA must reimburse the company for media at a reasonable open market replacement cost at time of purchase.

(4) Due to the highly specialized and sometimes proprietary hardware and software associated with medical equipment/systems, if it is not possible for the VA to retain the hard drive, then;

(a) The equipment vendor must have an existing BAA if the device being traded in has sensitive information stored on it and hard drive(s) from the system are being returned physically intact; and

(b) Any fixed hard drive on the device must be non-destructively sanitized to the greatest extent possible without negatively impacting system operation. Selective clearing down to patient data folder level is recommended using VA approved and validated overwriting technologies/methods/tools. Applicable media sanitization specifications need to be pre-approved and described in the purchase order or contract.

(c) A statement needs to be signed by the Director (System Owner) that states that the drive could not be removed and that (a) and (b) controls above are in place and completed. The ISO needs to maintain the documentation.

6. SECURITY INCIDENT INVESTIGATION

a. The term "security incident" means an event that has, or could have, resulted in unauthorized access to, loss or damage to VA assets, or sensitive information, or an action that breaches VA security procedures. The contractor/ subcontractor shall immediately notify the COR and simultaneously, the designated ISO and Privacy Officer for the contract of any known or suspected security/privacy incidents, or any unauthorized disclosure of sensitive information, including that contained in system(s) to which the contractor/ subcontractor has access.

b. To the extent known by the contractor/subcontractor, the contractor/ subcontractor's notice to VA shall identify the information involved, the circumstances surrounding the incident (including to whom, how, when, and where the VA information or assets were placed at risk or compromised), and any other information that the contractor/subcontractor considers relevant.

c. With respect to unsecured protected health information, the business associate is deemed to have discovered a data breach when the business associate knew or should have known of a breach of such information. Upon discovery, the business associate must notify the covered entity of the breach. Notifications need to be made in accordance with the executed business associate agreement.

d. In instances of theft or break-in or other criminal activity, the contractor/subcontractor must concurrently report the incident to the appropriate law enforcement entity (or entities) of jurisdiction, including the VA OIG and Security and Law Enforcement. The contractor, its employees, and its subcontractors and their employees shall cooperate with VA and any law enforcement authority responsible for the investigation and prosecution of any possible criminal law violation(s) associated with any incident. The contractor/subcontractor shall cooperate with VA in any civil litigation to recover VA information, obtain monetary or other compensation from a third party for damages arising from any incident, or obtain injunctive relief against any third party arising from, or related to, the incident.

7. LIQUIDATED DAMAGES FOR DATA BREACH

a. Consistent with the requirements of 38 U.S.C. 5725, a contract may require access to sensitive personal information. If so, the contractor is liable to VA for liquidated damages in the event of a data breach or privacy incident involving any SPI the contractor/subcontractor processes or maintains under this contract.

b. The contractor/subcontractor shall provide notice to VA of a "security incident" as set forth in the Security Incident Investigation section above. Upon such notification, VA must secure from a non-Department entity or the VA Office of Inspector General an independent risk analysis of the data breach to determine the level of risk associated with the data breach for the potential misuse of any sensitive personal information involved in the data breach. The term 'data breach' means the loss, theft, or other unauthorized access, or any access other than that incidental to the scope of employment, to data containing sensitive personal information, in electronic or printed form, that results in the potential compromise of the confidentiality or integrity of the data. Contractor shall fully cooperate with the entity performing the risk analysis. Failure to cooperate may be deemed a material breach and grounds for contract termination.

c. Each risk analysis shall address all relevant information concerning the data breach, including the following:

(1) Nature of the event (loss, theft, unauthorized access);

(2) Description of the event, including:

(a) date of occurrence;

(b) data elements involved, including any PII, such as full name, social security number, date of birth, home address, account number, disability code;

(3) Number of individuals affected or potentially affected;

(4) Names of individuals or groups affected or potentially affected;

(5) Ease of logical data access to the lost, stolen or improperly accessed data in light of the degree of protection for the data, e.g., unencrypted, plain text;

(6) Amount of time the data has been out of VA control;

(7) The likelihood that the sensitive personal information will or has been compromised (made accessible to and usable by unauthorized persons);

(8) Known misuses of data containing sensitive personal information, if any;

(9) Assessment of the potential harm to the affected individuals;

(10) Data breach analysis as outlined in 6500.2 Handbook, Management of Security and Privacy Incidents, as appropriate; and

(11) Whether credit protection services may assist record subjects in avoiding or mitigating the results of identity theft based on the sensitive personal information that may have been compromised.

d. Based on the determinations of the independent risk analysis, the contractor shall be responsible for paying to the VA liquidated damages in the amount of $37.50 per affected individual…