Company F - Q and A.pdf

Question 1: The majority of masks and no PAP device has lasted 10 years in the market. For many CLINs, offerors will be bidding on products that will phase out over contract years 3-10.

This means most CLINS in this solicitation lack a legitimate 10-year product to bid, making it impossible for offerors to submit accurate bids and for the agency to evaluate proposals fairly.

How does the agency expect offerors to propose pricing when the product is expected to be unavailable in, for example, year 3, but everyone can only speculate when the manufacturer will ultimately cease production?

The government expects offerors to provide the best and most accurate pricing possible. We understand that as items become obsolete and new items are competed, the best price for any given CLIN will not be known until the proposals for the new item is evaluated. However, your suggestion will be taken into consideration.

Question 2: The solicitation requires pricing for all 10 ordering periods to determine the "lowest total evaluated price or lowest total average evaluated price" for award. How will VA ensure this evaluation method doesn't incentivize unbalanced bidding, where offerors front-load higher early year pricing (guaranteed orders) and offer unrealistically low prices in later years when products are likely to be obsolete or discontinued and unavailable? The chart below illustrates how the proposed evaluation methodology could work, resulting in award to Offeror A and a significant price premium paid by the VA during the years before the item becomes obsolete. The VA never receives the benefit of out-year proposed pricing. Is this approach aligned with the agency's intent?

The government intends to evaluate price with unbalanced pricing in mind. Hence other than certified cost data may be requested IAW FAR 52.215-20. There are also ongoing discussions on potentially calling in other pricing information such as what an offeror may be providing to a like sized entity. Also, "An offer may be rejected if the contracting officer determines that the lack of balance poses an unacceptable risk to the Government" IAW FAR 15.404-1(g)(3).

Question 3: To prevent unbalanced and unrealistic bidding, will the agency consider:

3a - Base Year Pricing with EPA Adjustments: Will VA consider requiring offerors to price only the base ordering year, with that price carried forward to subsequent years subject to EPA clause adjustments? This approach is consistent with DLA’s ECAT pricing structure and addresses the commercial impracticality of forecasting fixed prices for products that likely will not exist 10 years from now.

This can be taken into consideration considering precedent is set through DLA. The government also knows that the proposed price for option year 3 will not necessarily be the price in option year 3 if an item becomes obsolete and a new item needs to be competed amongst awardees. This could change who is the best priced offeror for that year and subsequent years.

3b - Year-by-Year LPTA Award: If VA maintains the requirement to price all 10 ordering years separately, will VA consider awarding each ordering year independently based on that year's LPTA rather than awarding all 10 years to a single contractor based on combined pricing? This would help ensure competitive pricing during early contract years when market conditions are more predictable.

The government intends to make multiple awards on CLINS 0001 – 0006, which includes their SUBCLINs. However, all CLINs will be subject to multiple awards.

The government does not intend to make individual awards per option year which would be in the same frame of thought as competing yearly awards.

The best priced offer per CLIN, per ordering period with be the primary contractor receiving the initial quantities required. The second best priced contractor will receive the quantities the best priced was unable to fill. To reiterate, as CLINS become obsolete and new items are competed amongst awardees, a new precedent may be set for best priced awardee moving forward

3c Will VA allow semi-annual or annual competition among multiple awardees when placing orders, using the awarded contract prices as a competitive baseline? In other words, the competitors would submit their proposed price for a CLIN and VA would award a contract for that CLIN to any offeror that submitted a fair and reasonable price.

Those contract prices would be the baseline for subsequent task order competitions for this CLIN. This would discourage front-loaded pricing strategies because contractors must compete at each order placement to win business, with their baseline price preventing unsustainably low initial bids while ongoing competition drives order pricing down.

Front loaded pricing will be scrutinized as it will raise a red flag for unbalanced pricing. In such a scenario the government may call in other than certified cost data and hold discussions to verify how pricing would decrease over years rather than increase. The government does not intend to hold competitions at the order level.

The invocation of 38 U.S.C § 8123 specifies that clinicians have the ability to order what they deem necessary in a case by case basis. This is extrapolated to the ordering process through the IDIQs.

Question 4: Are commercial off-the-shelf PAP devices truly "unique or highly specialized" enough to justify eliminating fair opportunity at the order level?

PAPs are specialized in the sense that the need of the veteran supersedes the ordering process. No different than ordering prosthetics implants, or limbs. Hence the invocation of 38 U.S.C § 8123.

Question 5: Will VA consider implementing order-level competition where awardees could submit updated pricing for each order, ensuring the agency pays current market rates rather than prices based on a 10-year price fixed at contract award?

All suggestions and concerns will be considered to one degree or another, but the stance of the government is to not compete at the order level. The government expects industry to offer their best prices up front, during tech refreshes if applicable, and during new item competitions.

Market Analysis does not support the idea that manufacturer’s market prices fluctuate significantly.

Question 6: Will the agency define "significantly unbalanced" pricing with a specific threshold (e.g., 15% or 20% variance between ordering periods)?

A threshold is unnecessary considering a cognizant Contracting Officer can easily identify unbalanced pricing through pricing techniques outlined in FAR 15.4 and address it within discussions. As previously mentioned, Other than certified cost data IAW FAR 52.215-20 can be required if discussions are deemed appropriate, and an offer can be eliminated from competition IAW FAR 15.404-1(g)(3).

Question 7: Please help us understand how you distinguish between a tech refresh, new product, and Additional Item when making procurement decisions. Hypothetical scenario:

Reference clauses B8 and B9. Suppose the agency orders a PAP with new software in Order Period 2. Is this a tech refresh to replace their existing AirSense 11 device from Period 1, or does the agency consider this new product or an additional item? Would the same analysis and answer apply if the new A11 had new hardware features?

An additional item is described in the RFP as "not previously awarded". A new product and additional item are synonymous. Section B.8 Tech Refresh also specifies new products will not be accepted as part of a Tech refresh. However, I do see 2 instances in section C.11 and Attachment G where new product is referenced in relation to a tech refresh. This will be addressed.

If the Airsense 11 is discontinued and replaced by the manufacturer with different technology, the new item would be considered an additional item. If the Airsense 11 is updated as a next generation model that improves or changes technology or hardware to improve performance of a previous model, it is a tech refresh.

Example: Airsense 11 is discontinued, and the manufacturer introduces AirGalaxy which deviates considerably from the Airsense 11 in terms of form, fit, or function; that is a new product/additional item. If Airsense 11 is replaced with the next generation Airsense 12, which improves machine performance through improved software and minor changes to the form and fit; this is a tech refresh Question 8: PAP device and mask technology evolve quickly and we support the VA’s commitment to providing veterans with the best care as it becomes available. The Technical Refresh provision (Section B.8) allows only "one (1) tech refresh annually per awardee" and only for "existing items on contract," with "new product submissions not accepted." How does this align with the goal to provide Veterans with "the best products as they become available”?

A tech refresh will be allowed for each awarded item once an ordering period. The language will be addressed to mitigate any ambiguity.

Question 9: How will additional items be competed when products become obsolete? Section B.9 states "Additional items will be competed amongst award winners of this solicitation." When a product becomes obsolete mid-contract and must be replaced with a newer model through the Additional Items process, will this competition be based on current market pricing? Additionally, who will be eligible to bid, and what criteria will govern the competition for additional items?

The intent of the government is to require the program office to champion a new item. New items will be competed amongst the vendors who are awardees of the impacted CLIN.

Example: ResMed Airsense 11 is identified as moving toward obsolescence and AirGalaxy is recognized as it’s predecessor. Any awardee of the CLIN being impacted who is an authorized distributor of Resmed would compete for the new item addition.

Exmaple: Philips’ FDA stay is lifted and the program Office champions the Dreamstation as a new item. Market research will be conducted to verify all authorized distributors are awarded contracts, or not. If all authorized distributors are awardees, the competition will be conducted in line with the latter example. However, if authorized distributors who would have otherwise competed are not awardees, new requirement will be required to procure those devices to ensure fair competition.

This process is not clearly defined in the RFP currently but will be when formally published.

Suggestions to this process are welcome.

Question 10: The EPA clause (FAR 52.216-2) allows price adjustments based on changes to the contractor's "established price" (defined as "established catalog or market price for a commercial product sold in substantial quantities to the general public"). In the PAP distribution industry, MSRP remains stable, but distributor costs fluctuate over time. How will VA handle situations where distributor costs (shipping, labor, insurance, regulatory compliance) increase significantly?

The two areas of consideration the government can account for are the increased cost from the manufacturer to the distributor which is accounted for in the EPA clause and the duties or tariffs paid through customs on the delivery of said products. All overhead otherwise is the sole responsibility of the awardee, hence the firm fixed-price contract type.

This will be taken into consideration as there may be more data points required for a quality price evaluation, and EPA adjustment price evaluation.

Question 11: Given the limitations of EPA clause 52.216-2 for this industry, would the agency be willing to consider using the appropriate Producer Price Index? We recommend the following:

Producer Price Index by Industry:

• Surgical Appliance and Supplies Manufacturing

• BLS series ID: PCU339113339113 o Units: Index Jun 1983=100, not seasonally adjusted o Latest available month: August 2024 o Five-year percent increase: 17.25% o Annualized change: approximately 3.23% per year

The government's independent cost estimate based on regression analysis of spend data is what is being taken into consideration along with competition. Index models and inflation models can be taken into consideration.