Attachment 1 - Justification Approval Redacted R3.pdf

DEPARTMENT OF VETERANS AFFAIRS

Office of Acquisition, Logistics and Construction (OALC)

Enterprise Procurement Office (EPO) 10300 Spotsylvania Ave, Suite 400

Fredericksburg, VA 22408

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

Pursuant to RFO 6.103-2

(1) Identification of the agency and the contracting activity, and specific identification of the document as a "Justification for Other Than Full and Open Competition."

Justification and Approval (J&A) for Other Than Full and Open Competition is executed by the Enterprise Procurement Office (EPO), Acquisition Service 6 (AS6), on behalf of the Veterans Health Administration (VHA), Office of Veteran Community Care (VCC).

(2) Nature and/or description of the action being approved.

The purpose of this document is to obtain Senior Procurement Executive (SPE) approval for the use of Revolutionary Federal Acquisition Regulations (FAR) Overhaul (RFO) 6.103-2 Unusual and Compelling Urgency, for up to one (1) year of contract performance, for the VHA, Community Care Network (CCN) Region 3 Indefinite Delivery Indefinite Quantity (IDIQ) contract.

The CCN contract requires the Third-Party Administrator (TPA) to maintain a network of licensed healthcare providers, as well as healthcare practitioners, medical, surgical, Complementary and Integrative Health Services (CIHS), Durable Medical Equipment (DME), pharmacy, and dental services.

This justification includes states and territories within Region 3 as follows: Oklahoma, Arkansas, Louisiana, Tennessee, Mississippi, Alabama, Georgia, South Carolina, Florida, Puerto Rico, and the U.S. Virgin Islands.

The CCN Region 3 contract (36C79119D0006) was awarded on December 28, 2018, with a 12-month base period and seven (7) twelve (12) month option periods. The current contract performance period is in the final option period (option period 7), expiring on September 30, 2026. This J&A supports a sole-source action pursuant to the statutory authority for “unusual and compelling urgency.” This action will allow the current contractor to continue meeting the agency’s mission requirements for up to one

(1) year, covering performance from October 1, 2026, through September 30, 2027, and ensuring the uninterrupted delivery of essential healthcare services.

Enterprise Procurement Office (EPO)

(3) A description of the supplies or services required to meet the agency’s needs (including the estimated value).

VHA is home to the United States' largest integrated healthcare system consisting of 152 medical centers, over 850 community-based outpatient clinics, community living centers, Vet Centers, and Domiciliary facilities. Together, these healthcare facilities and the more than 53,000 independently licensed healthcare practitioners who work within them, provide comprehensive healthcare to more than 8.3 million Veterans each year.

VHA provides methods to access community-based medical care to eligible Veterans when VA facilities are not available. Federal laws set forth eligibility criteria and govern the use of community-based medical care and other policies that specify when and why community care may be used. Prior approval for treatment in the community is required for community-based medical care unless the medical event is an emergency. VHA continues to purchase healthcare services in the community through a variety of methods including fee-for-service, individual provider agreements as authorized by law, local contracts, and national contracts.

The CCN Region 3 contract includes medical, surgical, complementary and integrative services, durable medical equipment, dental, and pharmacy services. The CCN Region 3 contract is a regional contract providing services to the states listed in Section 2 of this document. The CCN Region 3 contract provides Veterans coordinated and timely access to standardized, high-quality care through comprehensive networks of non-VA providers when VA Medical Centers (VAMCs) cannot provide the care in specified timeframes or within specified geographic distance of a Veteran’s residence.

(4) An identification of the statutory authority permitting other than full and open competition.

1) The statutory authority permitting other than full and open competition is 41 U.S.C. 3304(a)(2) as implemented by the RFO Subpart 6.103-2 entitled, “Unusual and Compelling Urgency.”

2) The SPE has authority to approve up to one (1) year of contract performance under this authority. Contract performance may exceed one (1) year, including all options, if the head of the agency determines that exceptional circumstances apply.

Enterprise Procurement Office (EPO)

(5) A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

Only the current CCN Region 3 contractor is uniquely situated to meet the immediate need to continue services of the CCN Region 3 contract past its period of performance (PoP), which expires on September 30, 2026. It is imperative to extend the CCN Region 3 contract to continue VA’s mission-critical healthcare services on a national basis for Veterans located in the continental United States and its territories.

The CCN-Next Generation (CCN-NG) Medical IDIQ RFP together with the East Region Task Order Request for Proposal (RFP) under solicitation number 36C10G26R0003 was issued in December 2025 but requires additional time for award.

The Batch 1 CCN-NG Medical IDIQs were awarded in August 2026. The competitive task order for the East Region that covers services under the current CCN Region 3 contract is projected to be awarded in January 2027. However, this timeline remains tentative. The scope and complexity of the procurement, combined with two protests, more than 1,600 industry questions, and potential future litigation risks, continue to push key milestones to the right. Implementation will then begin after the task order awards and is anticipated to take 12 months. These delays create a significant risk of a lapse in services. Without a readily available interim action, the agency would be unable to ensure the uninterrupted delivery of critical healthcare services to our Veterans.

In addition, the CCN-NG Dental RFP under solicitation number 36C10G26R0004 to transition to a new competitive NG dental network IDIQ contract is also currently in the procurement process but also requires additional time for completion beyond the current CCN Region 3 contract period of performance, which expires on September 30, 2026.

The anticipated award date for the CCN-NG Dental IDIQ is September 2026.

Implementation will begin after award and is anticipated to take 12 months based on the size, scope, and complexity of the requirement. The current procurement timeline for CCN-NG Dental necessitates continued contract performance to enable VA to continue to provide the services that are currently performed under the Region 3 contract, thus preventing a gap in services and allowing time for a competitive CCN- NG Dental acquisition.

The Procurement Administrative Lead Time (PALT) for multi-billion-dollar procurements, including industry engagement, solicitation, evaluation, negotiation, and mandatory reviews and approvals, there is insufficient time to competitively award new contracts for medical and dental services prior to the expiration of the CCN Region 3 contract, Enterprise Procurement Office (EPO) even with a limited competition. VA possesses unique statutory authority, obligations, and procedures for delivering healthcare to Veterans, and these requirements have been operationalized under the existing contractor’s established infrastructure and capabilities. A new contract with a completely new contractor within a short period of time is impossible as it would result in duplication of efforts for future CCN-NG contracts and would not be awarded and implemented timely to meet the needs of our Veterans.

A new contractor for this requirement would require a minimum of 12 months for implementation based on the size, scope, and complexity. It also increases the risk of performance errors and potential statutory violations if implementation is shortened and rushed.

Based on current procurement timelines, the estimated gap in services if this contract action is not approved is October 2026 through July 2028. The two-year gap in service is unacceptable and detrimental to the Veterans. Specifically, a gap in service will directly harm the Veterans across 9 states and 2 territories in this region 3 who depend on continued access to primary and specialty care, surgical procedures, dental, and pharmacy services. Absent continued performance, Veterans would experience delayed or denied treatment, postponed surgical procedures, and disrupted access to necessary medications, outcomes that, for some patients, present a serious and imminent risk to life and health.

Therefore, an urgent need exists for VHA-VCC to utilize the current contractor via an approved sole-source action prior to expiration of the current contract.

This justification and authorization reflects the agency’s adherence to the requirements of the Competition in Contracting Act.

(6) A description of efforts made to ensure that offers are solicited from as many potential sources as possible, including whether a notice was or will be publicized as required by part 5 and, if not, which exception under part 5 applies.

VHA-VCC solicited offers for the CCN-NG follow-on acquisitions. Two (2) requests for proposals (RFP) for Medical and Dental services were posted on SAM.gov on December 15, 2025. These requirements were solicited utilizing full and open competition to solicit offers from as many potential sources as is practicable.

The solicitations were designed to attract a lot of potential offerors with multiple opportunities for industry engagement. The VA published a Request for Information (RFI) with multiple amendments, conducted a preproposal conference with an extensive question and answer (Q&A) period, and facilitated an “open mic” session to address industry comments and concerns.

Enterprise Procurement Office (EPO)

The VA will post this justification in accordance with RFO 6.301(b)(1). The justification must be made publicly available within 30 days after contract award. VA will post a notice to SAM.gov as required by RFO 5.3.

(7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

The contracting officer anticipates that the cost for this sole-source contract action will be fair and reasonable based on the IGCE. However, contract prices may be renegotiated through the resulting sole source contract action if necessary. The contracting officer will ultimately determine whether existing, new, or revised prices are fair and reasonable in accordance with RFO 15.404.

(8) The market research conducted (see part 10) and the results or a statement of the reason market research was not conducted.

VHA-VCC started the development of requirements for CCN-NG in 2021. Multiple industry days, Request for Information (RFI) postings, and site visits took place through June 2025. These engagements with industry were needed for VHA-VCC to develop an acquisition strategy that would increase competition.

Summary of recent Market Research Events:

1. RFI 36C10G25Q0090 – Issued on May 30, 2025. The purpose of this RFI was to communicate a vision of the scope of services. Additionally, the RFI notice served to inform potential respondents that the VHA was seeking Industry feedback on the draft Performance Work Statement (PWS), Medical East Contractor Manual, and corresponding Quality Assurance Surveillance Plan (QASP), in support of refining requirements and ensuring effective performance oversight and accountability. Finally, the RFI sought to collect further information about current market capabilities and state of practice. Seventeen (17) submitted responses prior to the deadline. An analysis of the responses identified the following primary themes:

Phased Implementation: Noted that the initial operating capability requirement within six (6) months of award would be challenging as well as the full operating capability within 12 to 18 months.

Centralized Oversight: Recommended a national level oversight contract to focus on program integrity and quality assurance. Feedback noted that this could be important to ensure consistency across the East and West regions.

Alignment with Industry Standards: Greater alignment with industry standards to include credentialing, claims processing, utilization review and virtual care.

Enterprise Procurement Office (EPO)

Enhanced Data and Reporting: Recommended deployment of real-time dashboards, data warehouses, and analytics tools for better performance monitoring and care coordination.

Flexibility for Rural Areas: Noted Challenges with rural provider adequacy and proposed tailored approaches to network development and reimbursement flexibility.

Innovation and Technology: Recommended leveraging industry standards such as AI/ML for payment validations, HL7 FHIR APIs to increase interoperability, and integration with existing virtual care networks.

Small Business Participation: Feedback noted that prime contracts will be with large companies, but recommended implementation of quarterly reporting on small business participation and small business utilization goals.

Clear Definitions and Metrics: Recommended updates to some definitions and metrics throughout the Government documentation to help reduce ambiguity and improve program integrity.

2. Amendments to RFI 36C10G25Q0090 #1 were posted June 18, 2025, to provide industry with answers to questions posed to the Government in the original RFI submissions. Amendment 0002 was posted June 24, 2025, to provide additional answers to questions and to seek additional input on industry’s ability to implement the full medical network within specific time periods after award. Finally, Amendment 0003 was posted September 5, 2025, to provide industry with applicable solicitation clauses and a notice of intent to release a solicitation.

Based on market research, there are contractors who would be able to provide these, or similar, services; however, no other offeror would be able to provide services in the time frame needed to ensure continuity of services. New contracts with other contractors would also require a minimum of 12-18 months for implementation to build their network prior to healthcare delivery. Based on current CCN-NG timelines referenced above in section (2), the need for mandatory CCN Veteran services is immediate and a lack of comparable services would cause irreparable harm to VA’s mission and mandate to provide Veteran care.

Due to the unusual and compelling nature of this requirement, no additional market research was conducted specifically for this contract action. Current market research and industry conditions applicable to the underlying CCN requirement for Region 3 remain unchanged and continue to support the basis for this action. The market conditions that originally informed the CCN acquisition strategy, including provider availability, network adequacy, and competitive landscape, implementation timeline, have not materially changed, and therefore continue to serve as the operative basis for proceeding with this contract action without additional market research.

Enterprise Procurement Office (EPO)

(9) Any other facts supporting use of other than full and open competition.

This justification will allow the current contractor to continue meeting the agency’s mission requirements without interruption by continuing performance for up to one year, covering performance from October 1, 2026, through September 30, 2027. Two additional one-year option periods will also be established, from October 1, 2027 through September 30, 2029. These option periods will be utilized only if necessary to allow time for the completion of the competitive follow-on acquisitions for CCN-NG. The options can only be exercised with the approval of head of the agency, and if approved, will be exercised in accordance with RFO 52.217-9 to ensure the uninterrupted delivery of essential healthcare services. Failure to secure a readily available contract vehicle would significantly impact the quality and continuity of medical care and services for Veterans throughout the CCN Region 3 VA network.

(10) A listing of the sources, if any, that expressed an interest in the acquisition in writing.

VA is not aware of any other contractor beyond the current contract holder that has the required infrastructure, including established provider network and associated claims processing, contemplated under this contract, to deliver the necessary healthcare services required to support patient care and safety without interruption or degradation to quality of care within the necessary timeline. The CCN-NG procurements were solicited for full and open competition, and they encourage participation from as many sources as practicable regardless of socioeconomic status.

Fifty-nine (59) sources expressed interest in the CCN-NG medical solicitation. Eight (8) sources expressed interest in the CCN-NG dental solicitation. This high level of interest reflects a robust competitive field, requiring thorough technical, price, and past performance evaluation of each source to ensure a sound award decision. The volume of proposals warrants additional time beyond the original schedule to complete a comprehensive, fair evaluation.

(11) A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

VHA-VCC is currently in the procurement process and engaging with industry for the next generation of medical and dental services. In efforts to increase competition in the future procurements of CCN-NG, two (2) RFPs for Medical and Dental services were posted on SAM.gov on December 15, 2025. The NAICS code for both acquisitions is