B-27906 - DHS-OBS - Fluence Automation R and M - SSJF. ehd - CPO Signed - 3.30.22.pdf

Sole Source Justification Form

Version 7.01 Page 1 of 6

Bulletin Reference Number Bid 27906

Requesting Agency/University Illinois Department of Human Services

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: Office of Business Services

Need Identified Date: Feb 17, 2022 Supply/Service Need By Date: Jul 1, 2022

Project Title: Repair & Maintenance Services - Mail Processing Unit pre-sort equipment

Vendor: Fluence Automation

Provide a description of the supplies or services required:

The State of Illinois Department of Human Services (IDHS) is seeking to secure repair and maintenance services for the Fluence Automation sorting equipment located at 5020A Industrial Drive in Springfield, Illinois. This agreement will cover all required repairs, software installations, and monthly preventative maintenance (PM) performed on both the Criterion IV Sorter and Apex Sorter, using qualified/authorized technicians. The cost of all required parts, as well as any shipping and handling charges that may be required, will strictly be the responsibility of vendor Fluence Automation.

Value: Actual Value of Initial Term, this Change Order or Amendment: 176,897.28

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Source

Section II - Proposed Term

One-Time Purchase Term Contract

Estimated Contract Begin Date: 7/1/2022

Estimated Contract End Date: 6/30/2023

Number of Potential Renewals:

Length of Each Renewal in Months:

Total Value of All Renewals:

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Items are Copyrighted or Patented and the Items are Only Available from the Holder

Are there secondary justification(s) for this sole source? Yes No

Another justification that this purchase is only available from a sole source is because it is:

Compatibility of Equipment, Accessories, Replacement Parts or Service

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Bulletin Reference Number Bid 27906

Requesting Agency/University Illinois Department of Human Services

Another justification that this purchase is only available from a sole source is because it is:

Software License/Upgrade/Maintenance

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 7/1/2021 6/30/2022 165,325.12 Software License/Repair & Maintenance 24100141185 Sole Source

If more than 10, or if other comments, explain:

Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

The State of Illinois Department of Human Services (IDHS) is seeking to secure repair and maintenance services in the amount of $176,897.28 for Fluence Automation sorting equipment located at 5020A Industrial Drive in Springfield, Illinois. Similar repair and maintenance services were purchased from Fluence Automation in an agreement that is still in effect.

We are seeking a new Repair & Maintenance agreement that covers all required repairs, software installations, and monthly preventative maintenance (PMs) performed on both the Criterion IV Sorter and Apex Sorter, using qualified/authorized technicians. The cost of all required parts, as well as any shipping and handling charges that may be required, will strictly be the responsibility of Fluence Automation. Since both pieces of equipment are proprietary to Fluence Automation, no unauthorized entity can service this equipment, nor would they have the training and expertise to provide those services.

2. Provide a list and describe in detail the specifications required to satisfy the need:

Fluence Automation will provide the following:

1. A designated technician assigned as a "Priority Resident Technician" for the Apex and Criterion IV Sorters housed at 5020A Industrial Ave in Springfield, IL;

2. This technician will perform all Preventive Maintenance (monthly) and Remedial Maintenance (break-fix) as necessary to ensure operational readiness;

3. All parts, excluding consumables, will be replaced at no additional charge as necessary;

4. All software installations, updates, or upgrades will be covered under this agreement;

5. In the event the "Priority Resident Technician" is unavailable, Fluence Automation will ensure a replacement technician is dispatched to 5020A Industrial Ave, in order to provide coverage during the period of time in question.

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Bulletin Reference Number Bid 27906

Requesting Agency/University Illinois Department of Human Services

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

Both pieces of equipment are proprietary to Fluence Automation. No unauthorized entity can service this equipment, nor would they have the training and expertise to provide those services. Fluence Automation provided a sole source letter stating the following:

"This letter is to confirm that Fluence Automation, LLC is a single source manufacturer of your Criterion/Apex outbound sorter with 2 tier X-Class pockets, Tag #95015A. As the single source manufacturer we are the only offer of corresponding services with your equipment including maintenance, service and equipment upgrades."

A copy of this letter is included as Attachment A.

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

Because Fluence Automation is the original equipment manufacturer and does not allow resellers, no other company or provider can offer the parts, software subscriptions or upgrades for this equipment. Given the critical need for this equipment in the MPU, it is imperative this procurement be approved to preserve operational viability.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

5a. If no, why weren't alternatives evaluated?

Alternatives were not considered because the Criterion IV Sorter was already in-use and owned by the Illinois Department of Human Services; and that Fluence Automation is the proprietary owner of this equipment technology; operational compatibility and avoiding multiple contracts with different providers was a significant consideration that led to this sole source approach.

6. Are there resellers or distributors?

Yes No N/A

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

IDHS contacted the vendor to see if better pricing would be achieved if these services were secured under the Naspo ValuePoint Cooperative agreement or through any other avenue. Vendor confirmed that the quote supplied to DHS was the best pricing available for these services. See Attachment B.

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

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Bulletin Reference Number Bid 27906

Requesting Agency/University Illinois Department of Human Services

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

If this purchase is not approved, the Apex Sorter will be left without any break/fix or repair/maintenance support. Any breakdown would severely impact the ability of the MPU to complete mandated mailings timely, and at lower costs. A long-term breakdown would require a 3rd party vendor be employed to help manage the pre-sort. While the Criterion IV Sorter is still covered under the current agreement, and would remain operational, it has significantly slower sorting speeds and fewer qualifying bins for the pre-sort. If the Apex Sorter were to be out of service, it would result in a significant increase of postage costs and a per-piece fee paid to the vendor for each letter processed.

TThe MPU would also see an increase in paying full-rate for many of the letters mailed, resulting in a significant postage expenditure increase per letter. The pre-sort savings realized by the MPU are in excess of $2M annually - losing the ability to pre-sort the majority of these mailings would eliminate this savings unnecessarily. As stated above, Fluence Automation is the proprietary owner of the Criterion IV Sorter and Apex Sorter equipment and technology. Given the critical need for this equipment in the MPU, it is imperative this procurement be approved to preserve operational viability.

As no other company or vendor can provide the services needed, because Fluence Automation is the proprietary owner of the Apex Sorter equipment and technology, we risk not only seeing increases in mailing costs if this equipment is off-line, we also risk permanent damage to a brand new and critical piece of equipment.

Competitive bid is not a viable option, given the proprietary ownership of the Apex Sorter.

10. Is there any additional information you would like to add to justify this sole source?

No.

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Bulletin Reference Number Bid 27906

Requesting Agency/University Illinois Department of Human Services

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date Mar 8, 2022

Printed Name Paul Hartman E-mail Address Paul.Hartman@Illinois.gov

Phone Number 217-786-6218

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address jean.sandstrom@illinois.gov

Phone Number 217-557-9298 Date Mar 9, 2022

Printed Name Jean Sandstrom

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 217-622-4035 Date Mar 9, 2022

Printed Name Dwayne Curry E-mail Address dwayne.curry@illinois.gov

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Bulletin Reference Number Bid 27906

Requesting Agency/University Illinois Department of Human Services

Sole Source Justification Form - Part II Section I - General Information

Project Title Repair & Maintenance Services - Mail Processing Unit Pre-sort Equipment

Vendor Fluence Automation

Initial Date of Procurement Bulletin Posting Mar 16, 2022

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone 217-558-2231

Printed Name Ellen H. Daley Date

CPO E-mail Ellen.H.Daley@illinois.gov

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229 Ellen.H.Daley@illinois.gov

We are seeking a new Repair & Maintenance agreement that covers all required repairs, software installations, and monthly preventative maintenance (PMs) performed on both the Criterion IV Sorter and Apex Sorter, using qualified/authorized technicians. The cost of all required parts, as well as any shipping and handling charges that may be required, will strictly be the responsibility of Fluence Automation. Since both pieces of equipment are proprietary to Fluence Automation, no unauthorized entity can service this equipment, nor would they have the training and expertise to provide those services.

Q2Answer: Fluence Automation will provide the following:

1. A designated technician assigned as a "Priority Resident Technician" for the Apex and Criterion IV Sorters housed at 5020A Industrial Ave in Springfield, IL;

2. This technician will perform all Preventive Maintenance (monthly) and Remedial Maintenance (break-fix) as necessary to ensure operational readiness;

3. All parts, excluding consumables, will be replaced at no additional charge as necessary;

4. All software installations, updates, or upgrades will be covered under this agreement;

5. In the event the "Priority Resident Technician" is unavailable, Fluence Automation will ensure a replacement technician is dispatched to 5020A Industrial Ave, in order to provide coverage during the period of time in question.

Q3Answer: Both pieces of equipment are proprietary to Fluence Automation. No unauthorized entity can service this equipment, nor would they have the training and expertise to provide those services. Fluence Automation provided a sole source letter stating the following:

"This letter is to confirm that Fluence Automation, LLC is a single source manufacturer of your Criterion/Apex outbound sorter with 2 tier X-Class pockets, Tag #95015A. As the single source manufacturer we are the only offer of corresponding services with your equipment including maintenance, service and equipment upgrades."

A copy of this letter is included as Attachment A.

TThe MPU would also see an increase in paying full-rate for many of the letters mailed, resulting in a significant postage expenditure increase per letter. The pre-sort savings realized by the MPU are in excess of $2M annually - losing the ability to pre-sort the majority of these mailings would eliminate this savings unnecessarily. As stated above, Fluence Automation is the proprietary owner of the Criterion IV Sorter and Apex Sorter equipment and technology. Given the critical need for this equipment in the MPU, it is imperative this procurement be approved to preserve operational viability.

As no other company or vendor can provide the services needed, because Fluence Automation is the proprietary owner of the Apex Sorter equipment and technology, we risk not only seeing increases in mailing costs if this equipment is off-line, we also risk permanent damage to a brand new and critical piece of equipment.

Competitive bid is not a viable option, given the proprietary ownership of the Apex Sorter.