C01 - Redacted - Sole Source Justification.pdf

VHAPG Part 813.5 Simplified Acquisition Procedures for Certain Commercial Items Attachment 1: Request for Sole Source Justification >SAT-$7.5M under FAR13.5

DEPARTMENT OF VETERANS AFFAIRS

SOLE SOURCE JUSTIFICATION UNDER SIMPLIFIED PROCEDURES FOR

CERTAIN COMMERCIAL ITEMS IN ACCORDANCE WITH FAR 13.5

Acquisition Plan Action ID: 36C250-22-AP-2435

1. Contracting Activity: Department of Veterans Affairs (VA), Veterans Integrated Services

Network (VISN) 10, Network Contracting Office (NCO) 10, 3140 Governors Place Boulevard, Suite 210, Kettering, OH 45409-1337. [VA Form 2237: 655-22-2-159-0076]

2. Nature and/or Description of the Action Being Processed: This procurement is for weight-based inventory management systems at the Aleda E. Lutz Veterans Affairs Medical Center (VAMC) and nine (9) affiliated Community Based Outpatient Clinics (CBOCs) in accordance with (IAW) FAR 13.5 Simplified Procedures for Certain Commercial Items and specifically FAR 13.501 Special Documentation Requirements, where acquisitions conducted under Simplified Acquisition Procedures are exempt from the requirements of FAR Part 6, but still require a justification using the format of FAR 6.303-2. The action being reviewed and approved through this document is a sole source acquisition approach to procure the weight-based inventory managements systems for the Aleda E. Lutz VAMC and its CBOCs under a new firm-fixed price contract (purchase order).

3. Description of Supplies/Services Required to Meet the Agency’s Needs: The proposed sole source acquisition is for the PAR Excellence Systems, Inc. (hereafter PAR Excellence), weight-based inventory management systems to be built and installed at the following 10 locations:

1. Aleda E. Lutz VAMC 5. Cheboygan CBOC 9. Oscoda CBOC 1500 Weiss Street 14540 Mackinaw Hwy 5671 Skeel Avenue, Suite 4 Saginaw, MI 48602 Mackinaw City, MI 49701 Oscoda, MI 48750

2. Alpena CBOC 6. Clare CBOC 10. Traverse City CBOC 180 North State Avenue 11775 N Isabella Rd. 701 U.S. 31 South Alpena, MI 49707 Clare, MI 48617 Traverse City, MI 49685

3. Bad Axe CBOC 7. Gaylord CBOC 1142 S. Van Dyke Rd 2782 South Otsego Bad Axe, MI 48413 Gaylord, MI 49735

4. Cadillac CBOC 8. Grayling CBOC 1909 North Mitchell St. 1680 Hartwick Pines Road Cadillac, MI 49601 Grayling, MI 49738

The PAR Excellence system is an inventory management technology that uses calibrated and weighted bins to capture data related to end user usage, stock replenishment, and other inventory related transactions in a supply closet. This technology captures transactions and usage data and keeps it stored on a user’s workstation, allowing them to run reports, analyze data, and manage inventory. This acquisition is for fully operational PAR Excellence weight-based inventory management systems at the Aleda E. Lutz VAMC and its CBOC locations. The procurement will include scale and bin products; hardware accessories; storage; installation; training; software licenses; service fees; and annual maintenance. The inventory management systems will be able to track approximately 9,000 stock-keeping units (SKUs) and produce an accurate real-time, on-hand reading of supply quantities accessible by a web-based program and provide data mining capabilities that will include, at a minimum, the current stock levels, recommended order points, average usage levels per item, and the ability to track medical supply usage per patient treated at the Aleda E. Lutz VAMC and its CBOC locations. The system will interface with the VA’s Integrated Funds Control Point Activity, Accounting and Procurement (IFCAP) General Inventory System, Generic Inventory Package (GIP) program. GIP is used to manage the receipt, distribution, and maintenance of supplies utilized throughout VAMCs and CBOCs. The primary purpose of the interface is to identify out-of-balance on-hand supply quantities and values between GIP and the PAR Excellence system. The weight-based inventory management system will account for incoming and outgoing supplies. If an out-of-balance condition is caused by a pending incoming or outgoing inventory item, the system will display the item separately for easy identification. The required inventory management system must have the following salient characteristics to meet the minimum requirements needed by the Aleda E. Lutz VAMC and its CBOC locations:

Salient Characteristics - Inventory Management System:

i. Must be weight-based

ii. Easily calibrated and accurate

iii. Provide real-time visibility into the CBOC inventory locations

iv. Must be able to interface with IFCAP GIP

v. Must be capable of tracking, adjusting, and reporting comprehensive real time information pertaining to the inventory of a secondary location

vi. A quantity on-hand adjustment communication must be sent to IFCAP to trigger an accurate pick ticket

vii. Must have a training program available for VA staff

viii. Software is to be intuitive and easy to train on

ix. Software offers different levels of permissions for its users

x. Reports generated by software are to be relevant to the American Production and

Inventory Control Society Principles of Inventory Management

xi. Must be able to handle a wide range of products in variation of size, thickness, and weight

Equipment deliveries will begin to occur 30 days after receipt of order (ARO). Turn-Key Installation is anticipated to be completed approximately 180 days ARO. In totality, the required project is estimated to have a period of performance of 12 months ARO for the base year period and, thereafter, four (4) 12-month option periods. If all option periods are exercised, the period of performance of the purchase order will conclude 60 months ARO. A breakout of the project line items are as follows:

PAR Excellence have utilized, and continue to use, a Memorandum of Understanding (MOU) to document the terms and conditions for sharing data and information resources in a secure manner. The MOU permits for an interconnection between VA and PAR Excellence information technology (IT) systems. In addition to the MOU, the VA and PAR Excellence utilize an Interconnection Security Agreement (ISA) to formally document the reasons, methodology, and approvals for interconnecting IT systems; to identify the basic components of an interconnection; to identify methods and levels of interconnectivity; and to discuss potential security risks associated with the interconnections. The PAR Excellence servers are hosted within the VA Office of Information Technology (OIT) network. VA OIT manage both the server and database. The PAR Excellence system is the only known tested and proven weight-based inventory management system capable of interfacing with IFCAP GIP, which is the key element separating it from other products in the commercial marketplace (e.g. the CareFusion Solutions LLC, Pyxis ParActive RF; Wavemark Inc., WaveMark Supply Management and Workflow Solutions; and the Omnicell Inc., Omnicell Supply Management System). The PAR Excellence system is able to load information into the VA IFCAP GIP system remotely without requiring additional workarounds for transferring data that can cause corruption or improper entries. Market research efforts support the PAR Excellence system as being the only product that can meet the VA requirement because it uses a physical, weight-based, calibrated scale system that removes the human element from inventory replenishment which often results in inaccurate counting, stocking errors by non-logistics personnel, and frequent stock-out conditions that demand emergency logistics staff response. The PAR Excellence system results in better central control over quantities and types of supplies stored, eliminates the need for clinical staff to inventory supplies manually, and the ability to analyze web-based information from the central logistics hub to improve logistics planning with the extra lead time needed to account for long distance CBOC support. Accordingly, PAR Excellence Systems, Inc. is the only firm capable of providing the supplies and services described in Paragraph 3 above without the Veterans Health Administration experiencing substantial duplication of cost that could not be expected to be recovered through competition.

6. Description of Efforts Made to ensure that offers are solicited from as many potential sources as deemed practicable: A Sources Sought Notice 36C250-22-Q-0332 was posted to the Government Point of Entry (SAM.gov) from 17 February 2022 to 24 February 2022.

The Sources Sought notice included information from the requiring service pertaining to the salient characteristics and general capabilities needed for the inventory management system at the Aleda E. Lutz VAMC and its CBOCs. At notice closing, one response (a capabilities statement) was received from the Pyxis Division of Carefusion Solutions, LLC (hereafter Pyxis). The response from Pyxis was sent to the requiring service for an evaluation. The requiring service determined the Pyxis response does not offer a viable solution as it does not meet all of the VA’s minimum salient characteristics (see Paragraph 3 above) for a weight-based inventory management system. The Pyxis solution uses a Kanban method for inventory management that relies on clinical staff (not trained logistics staff) to manually monitor stock levels and uses a radio-frequency identification scan tag to signal when a product is due for resupply. This Kanban methodology does not eliminate the human element in inventory management and does not improve on current practices of manual inventory control already in use throughout the Aleda E. Lutz VAMC and its CBOC facilities. The only product identified through market research able to meet the VA requirement is the PAR Excellence system.

7. Determination by the CO that the Anticipated Cost to the Government will be Fair and Reasonable: The CO will ensure that the proposed pricing is fair and reasonable using one or more of the price analysis techniques in FAR 13.106-3(a)(2). It is anticipated a comparison of the proposed price with prices found reasonable on previous purchases will be used since the VA has recently (within three years) procured the PAR Excellence system for VISN 10 VAMCs and affiliate CBOCs similar in scope to the Aleda E. Lutz VAMC requirement.

8. Description of the Market Research Conducted and the Results, or a Statement of the Reasons Market Research Was Not Conducted: The requiring service interviewed subject matter experts within the VA to learn about inventory management systems in the marketplace as well as the PAR Excellence system currently being used in more than 20 VAMCs nationwide. Market research efforts included reviewing the previous PAR Excellence system procurements of VISN 10 VAMCs and CBOC facilities under the following purchase orders:

VAMC Purchase Order Number Purchase Order Date Cincinnati 36C250-19-P-1722 July 2019

Indianapolis 36C250-21-P-1468 July 2021

Outside of government channels, the requiring service contacted two inventory management vendors in the marketplace to determine if either business offered a weight-based inventory management system able to satisfy the Aleda E. Lutz VAMC requirement. The two vendors were Omnicell, Inc., and WaveMark, Inc. Omnicell offers solutions that automate the dispensing of medicine within the VA pharmacy departments. WaveMark delivers radio frequency identification real-time location system solutions to VA facilities across the nation to improve the delivery of healthcare services. Both vendors were contacted to determine if they offer any other inventory management systems; however, neither had a weight-based inventory management systems meeting the VA’s requirements. A market research quote has been received from PAR Excellence meeting the specifications of the Aleda E. Lutz VAMC requirement. In an attempt to identify other sources of supply, the following websites and search engines were utilized to bolster market research efforts: The VA Vendor Information Pages (VIP), Federal Procurement Data System (FPDS), Small Business Administration Dynamic Small Business Search (DSBS), System for Award Management (SAM), and General Services Administration (GSA) Advantage. These aforementioned searches did not identify any additional sources of supply meeting the VA’s requirement outside of the PAR Excellence system. A VIP search using NAICS Code 333997 found 21 concerns. A keyword search of “Inventory” along with the same NAICS code resulted in one (1) service-disabled veteran-owned small business (SDVOSB) and one (1) veteran-owned small business (VOSB)