Consolidation DF - OCONUS MQS_Redact.pdf

D

9 April 2026

Determination and Finding Consolidation of Contract Requirements

MEDICAL “Q” Coded Support and Services for OCONUS Locations

1. Agency/Contracting Activity: The Defense Health Agency (DHA) Contracting Activity (DHACA) Healthcare Contracting Division - West (HCD-W), San Diego, California.

2. Nature and/or Description of Action being approved: This Determination and Finding (D&F) justifies the consolidation of Outside the Continental United States (OCONUS) Medical "Q" Coded Services (MQS) into five (5) separate single-award Indefinite-Delivery Indefinite- Quantity (IDIQ) contracts for locations OCONUS not currently covered by the existing Medical Q-coded Support & Services – Next Generation (MQS2-NG) contract which covers Military Treatment Facilities (MTFs) within the 50 United States (U.S.), the District of Columbia, and the U.S. Territories of Guam and Puerto Rico (Enclosure 1).

3. Background and Course of Action: Historically, medical services and medical support services have been provided to OCONUS MTFs through a variety of contract means, to include IDIQs with overlapping labor segments and individual purchase orders. As such, DHA has been researching the best path for consolidating like requirements gathered across the various Military Departments (MILDEPS) into labor segmented acquisitions capable of providing scalable medical services based on geographic location.

The current enterprise-level contract for MQS explicitly excludes OCONUS MTFs, including key locations in Japan and South Korea. As such, HCD-W and its predecessor, Naval Medical Logistics Command, established five (5) IDIQ contracts on an 8(a) direct award basis to four

(4) 8(a) contract companies and three (3) purchase orders (POs) to provide medical services and medical support services to MTFs within Japan, not including existing support contracts established by the Army for medical support across South Korea. Four (4) of the five (5) IDIQs and all three (3) POs contain overlapping areas of responsibility (AORs) with regards to labor categories in the same geographic location as shown in Table 1 below:

DEFENSE HEALTH AGENCY

7700 ARLINGTON BOULEVARD, SUITE 5101

FALLS CHURCH, VIRGINIA 22042-5101

Table 1

Throughout performance of the task orders (TOs) established under these IDIQs, the MTFs have experienced significant issues directly related to the overlap in labor requirements across these awards to competing contract companies. This has created an internal competition for sourcing individuals to fill same or similar roles within an MTF or neighboring facility. In discussions with existing contractors, it has been expressed that most of the labor currently resides within the AOR and is provided by military spouses and/or dependents. While the contractors maintain the ability to deploy resources from CONUS, this is a last resort to fill positions due to the delay in credentialing, security, and relocation of an identified candidate.

This internal competition between contract companies has resulted in widespread staffing

Current IDIQ # Labor Segments Expiration Date

N6264521D5014 Q201-PHYSICIANS

Q201-ALLIED HEALTH

Q401-ADVANCED PRACTICE NURSE

Q401-NURSING (LN/LVN)

Q500+-TECHNOLOGISTS

Q500+-TECHNICIANS

9/7/2026

HT941022D0002 Q401-NURSING (LPN/LVN)

Q401-NURSING (RN)

Q401-PHYSICIAN ASSISTANT/NURSE

Q401-NURSING (L&D)

Q401-NURSE PRACTICIONER

Q519/Q528-ANCILLARY (SOCIAL WORKER/LCSW/MENTAL HEALTH)

Q802-CLERICAL MEDICAL SUPPORT

8/28/2027

HT941022D5018 Q503-DENTAL ASSISTANT

Q503-DENTAL HYGIENIST

Q503-DENTISTS

Q503-DENTAL LAB TECHNICIAN

3/28/2028

HT941023D5009 Q201-PHYSICIANS

Q401-NURSING

Q519-ANCILLARY

3/6/2029

HT941024D0001 Q602-MEDICAL RECORDS

Q701-SPECIALIZED MEDICAL SUPPORT

Q801-MEDICAL APPOINTING SERVICES

Q802-CLERICAL MEDICAL SUPPORT

Q999-MEDICAL - OTHER

8/31/2026

HT941022P0002 R499-SUPPORT-PROFESSIONAL: OTHER

Q999-MEDICAL - OTHER 11/30/2026

HT941022P0013 Q503-DENTAL ASSISTANT 9/25/2025

HT941024P0126 R608-SUPPORT-ADMINISTRATIVE: TRANSLATION AND

INTERPRETING 9/30/2027

HT941024P0225 Q519-BEHAVIORAL AND MENTAL HEALTH 8/31/2025

delays and has significantly decreased each contractor’s backfill capabilities. For example, issuing a TO today could result in a slight pay increase for a specified labor category, so a qualified candidate from another contract would likely apply for and be hired in the new position leaving their prior contract position unfilled. This creates gaps in available care and support until a backfill can be identified, credentialed, and relocated to an MTF. The onboarding process has been known to take more than 180 days from the time a position becomes vacant to a new candidate’s ability to physically begin work under the contract.

To resolve this, HCD-W will establish a suite of five (5) new, strategically aligned IDIQ contracts, based on Product Service Code (PSC) and labor segment. This approach enables DHA to implement standardized requirements and business practices across the various MILDEPs within the region for the first time, leveraging an enterprise-wide buying strategy.

The acquisition will result in five (5) distinct contract vehicles to align with specialized labor segments and ensure clarity in ordering. The TOs issued against these contract vehicles will be strategically aligned to ensure no overlap between PSCs or geographic location, thus reducing the performance risks associated with overlapping labor categories and AORs. Table 2 demonstrates the realignment of PSCs to each proposed strategic sourcing vehicle.

Table 2

4. Citation of the appropriate statute and/or regulation upon which the determination and findings (D&F) is based: In accordance with Federal Acquisition Regulation (FAR) 7.107, consolidation may provide substantial benefits to the Government. However, because of the potential impact on small business participation, before conducting an acquisition that

Planned IDIQ PSC Certified Medical Support Certified Services

Direct Patient Service Providers

Q201 Q501-533 (Except Q503)

MEDICAL - MANAGED HEALTHCARE

MEDICAL-MEDICAL/SURGICAL

Anesthesiology, Cardiology, Dentristry, Dermatology, Gastroenterology, Obstetrics and Gynecology, Hematology, Oncology, Family and Internal Medicine services, Neurology, Radiology, etc.

Mental Health

Q401 Q519 Q528

NURSING (MENTAL HEALTH

SPECIFIC)

INPATIENT/OUTPATIENT

PROFESSIONALS

CLINICAL SOCIAL WORKERS

Nurses, Licensed Clinical Social Workers, Social Worders in Case Management, and clinical social work for mental health treatment and substance abuse treatment.

Nursing Services Q401-Q403

NURSING

(ALL NON-MENTAL HEALTH

SPECIALTIES)

Medical Nursing, Medical Nursing Home, Long-Term, and Adult Day Care Services. Medical - Evaluation and Screening Services.

Medical Support

Q301 Q601-Q603 Q701 Q702 Q801 Q802 R608 R499

MEDICAL CODING & AUDITING

MEDICAL RECORDS

MEDICAL

TRANSCRIPTION/SPECIALIZED/TEC

HNICAL MEDICAL SUPPORT

CLERICAL MEDICAL SUPPORT

MEDICAL APPOINTING SERVICES

Inpatient, outpatient, and ambulatory procedure coders and auditors; coding trainers, compliance coders, records technicians, translators, transcriptionists, specialized/technical services, medical billing, third party liability, tumor registrat, referral management, medical evaluation board, medical logistics, biomedical equipment, occupational/public heal, medical supply, medical readiness, clerical services, schedulers, appointment clerks, office/ward clerks, admission and disposition, medical secretaries, healthcare program assistants

Dental Services Q503 DENTAL SERVICES

Family/General Dentists, pediatric dentistry, endodontist, periodontist, prosthodontist, oral & maxilliofacial pathologist, oral & maxillofacial surgeon, oral surgery technicians, dental hygienist, dental assistants, and dental laboratory technicians.

is a consolidation of requirements with an estimated total dollar value exceeding $2 million, the senior procurement executive (SPE) or chief acquisition officer (CAO) shall make a written determination that the consolidation is necessary and justified in accordance with 15 U.S.C. 657q after ensuring that –

(1) Conduct market research;

(2) Identify any alternative contracting approaches that would involve a lesser degree of consolidation or bundling (e.g., separate smaller contracts or orders);

(3) Coordinate with the agency's Office of Small Disadvantaged Business Utilization or the Office of Small Business Programs;

(4) Identify any negative impact by the acquisition strategy on contracting with small business concerns; and

(5) Take steps to include small business concerns in the acquisition strategy; and

(6) When required in paragraph (b) of this section, make a written determination that the consolidation (15 U.S.C. 657q) or bundling (15 U.S.C. 644(e)) of contract requirements is necessary and justified.

5. Market Research: The Government conducted extensive market research, Enclosure (1), to determine the best strategy to meet mission requirements. Based on the findings of the market research, the Government determined that market-based, single-award IDIQs are better suited for the needs of the DHA. Market research, in accordance with FAR Part 10, included the following techniques:

a. Review of Current Strategic Contracts: HCD-W began by reviewing current contracts to determine if small businesses are currently providing MQS OCONUS for DHA, Air Force, Army, and Navy MTFs. Based on that review and the spend analysis on FY19-FY25 data from IDIQs currently providing services in the area of responsibility, there are numerous examples of small businesses performing predominantly on single award contracts. The performance assessments on those contracts demonstrate that small businesses are capable of meeting or exceeding the Acceptable Quality Level (AQL) on the contracts. The quantity of single award IDIQs to small businesses in MQS demonstrates those businesses are capable of successful performance. The review of current contracts clearly shows that there are a sufficient number of small businesses that are currently providing MQS at an acceptable level.

b. HCD-W issued Sources Sought (SS) HT941026R2000 on February 23, 2026, as part of the market research effort. The Sources Sought was posted on SAM.gov on February 23, 2026, with responses due on March 10, 2026. The Sources Sought was designed to gain knowledge about the industry. Vendors were asked to confirm their small business status, identify their specific economic concern, and submit a capability statement based on the draft Performance Work Statement attached to the posting. The Sources Sought received a total of responses, including capability statements. of these responses were submitted

6. Alternative Contracting Approach:

a. The team reviewed several strategic contracts to gain an understanding of opportunities for improvement to determine best practices in delivering contract support to OCONUS MTFs. The Government contemplated a single, multiple award IDIQ similar to MQS2-NG;

single-award IDIQ contracts by location and/or market segment; and stand-alone contracts.

The data shows:

(1) Combining DHA and MILDEP requirements on joint strategic procurements will enable standardization of requirements, ordering processes to reduce variation, improve customer service and reduce cost. The contracted HCWs from 2019-2025 are in Table 3.

TABLE 4

PSC Title Total FTEs Q501-Q533 (exludes

Q503,Q515,Q519,Q528) Direct Patient Service Providers

Q515 Direct Patient Service Providers Q515, Q517 Direct Patient Service Providers Q519, Q528 Mental Health Q401, Q403 Nursing Services

Q602, Q801-Q802 Medical Support Q701, Q702 Medical Support

Q503 Dental Services

TOTAL

(2) The use of NAICS 621111 Offices of Physicians (except Mental Health

Specialists) will encompass the full spectrum of requirements for the OCONUS acquisition.

(3) The contracts are commercial contracts, which suggests the requirements are available in the commercial marketplace.

(4) Firm-Fixed Price (FFP) is the pricing methodology used.

(5) The MTFs favor IDIQ arrangements; this suggests the Government knows they have requirements, but did not know definitively where, when or how much was needed at time of award.

(6) The majority of contracts are set aside for small business.

(7) The contract pricing arrangements are a mix or either not to exceed (NTE) rates or rates set at the TO level.

(8) Developing strategic contract vehicles will allow the team to establish high-level objectives with specific performance tasks, set minimum requirements for HCWs, and work through interoperability issues across all military agencies as necessary steps to standardize requirements. This level of development is not possible with a lesser degree of consolidation. As such, developing strategic contract vehicles is a more attractive option for the acquisition in terms of standardizing requirements. Because each MILDEP has their own strategies, procedures, and best business practices the team captured variations in procedures and practices in order to understand the most efficient way to find commonality among MILEDEPs for similar requirements. The team also studied both the MQS and the MQS2-NG to gain an understanding across each of the MILDEPs in order to accomplish the following objectives: standardize requirements where commonality exists as a demand management technique, adopt common and/or best clinical and business processes, gain cost efficiencies, and ensure services equities.

(9) Developing strategic contract vehicles in alignment with how industry recruits employees and delivers services to clients is expected to be more time consuming; however, the investment in time upfront will allow the team to develop the terms and conditions needed to standardize requirements to manage demand, develop common processes and reduce costs. Continuing the current approach of utilizing a variety of IDIQ vehicles and purchase orders will not allow the team to develop a strategic contract vehicle with terms and conditions that leverage the buying power and experience gained from existing service contract vehicles.

b. The alternatives considered:

(1) Status Quo - (Continue using disparate, stand-alone contracts and purchase orders). This approach prevents any meaningful standardization of requirements, clinical processes, or business practices. It fails to leverage the government's buying power and perpetuates the administrative inefficiencies that currently burden the MTFs and contracting staff. Continuing this fragmented model is unacceptable as the overlapping requirements of the IDIQs and POs create competition for the same or similar labor categories within the MTFs or neighboring facilities.

(2) Federal Supply Schedule (FSS) - While the FSS provides a rapid procurement path, it is unsuitable for this strategic requirement. The FSS is a "buy-as-you-go" vehicle that does not allow the DHA to enforce high-level mission objectives, standardize care across the enterprise, or implement effective demand management to control costs and requirements creep. Additionally, the FSS program has limited capabilities in providing HCWs in overseas locations.

(3) Single, Large Multiple-Award IDIQ (Mirroring the CONUS MQS2-NG contract)- While a multiple-award contract is a standard consolidation tool, market research indicates it is counterproductive for the OCONUS environment. Forcing multiple awardees to compete for the same limited pool of specialized healthcare workers in a constrained geographic area would likely decrease, not increase, contractor fill rates. MTFs have experienced significant issues directly related to the overlap in labor requirements across the existing awards to competing contract companies. This has created an internal competition for sourcing individuals to fill same or similar roles within the an MTF or neighboring facility. In discussions with existing contractors, it has been expressed that the majority of the labor currently resides within the AOR and is provided by military spouses and/or dependents. While the contractors maintain the ability to deploy resources from CONUS, this is a last resort to fill positions due to the delay in credentialing, security, and relocation of an identified candidate. These delays have caused gaps in service availability in excess of 180 days for the requiring activity. This internal competition between contract companies has resulted in wide-spread staffing delays and significantly decreases each contractor’s backfill capabilities.

(4) Five (5) Separate Single-Award IDIQs - This is the optimal solution. It strikes the correct balance by consolidating requirements into logical labor segments while recognizing the unique market dynamics of the region. This structure provides five (5) key advantages not offered by the alternatives:

i. Incentivizes Contractor Investment: Guarantees a significant volume of work, making it viable for the contractor to invest in the personnel and processes needed to navigate the burdensome, government-mandated requirements of SOFA and credentialing. Under a multiple-award scenario, a contractor might hesitate to build this capability without a guarantee of winning TOs. The single-award model ensures our partners are capitalized and prepared to navigate these complexities from the outset, directly supporting faster and more reliable delivery of personnel. This streamlines the contractor's administrative burden and ensures our chosen contractor is fully invested in the mission's success.

ii. Maximizes Fill Rates: Aligns with market realities by reducing turnover caused by internal competition sourcing individuals to fill same or similar roles within the an MTF or neighboring facility, which market research shows is critical to staffing success at OCONUS locations, and mitigates wide-spread staffing delays in excess of 180 days to backfill recently vacated positions. This approach fosters stability while enforcing competition in a thin market will be counterproductive and leads to gaps in medical services available to service members and their beneficiaries.

iii. Enables Strategic Management: Consolidating requirements into five

(5) single award IDIQs allows DHA to tap into the specialized expertise of various contractors, standardize requirements, and select the most qualified contractor for each labor segment, ensuring a higher level of service and technical competence. In addition, DHA will gain cost efficiencies and implement best practices across the enterprise—benefits that are impossible to achieve with a lesser degree of consolidation.

iv. The single award model directly reduces the significant government overhead required to manage OCONUS contractors, particularly concerning the complex and burdensome compliance with Synchronized Pre-deployment and Operational Tracker (SPOT) and SOFA, as mandated by DFARS PGI 225.371-3 and DFARS PGI

225.370. By centralizing these responsibilities with a single contractor for each market segment, our contracting team can shift focus from administrative compliance to actively managing performance and ensuring mission outcomes. This directly supports our strategic objective: uninterrupted, high-quality continuity of care.

v. By reducing the government's administrative burden, this allows for a greater focus on contractor performance and mission outcomes— ensuring continuity of care—which is the ultimate measure of success.

7. Small Business Consideration/Coordination: The Government intends to solicit five (5) single-award IDIQs as 8(a) competitive procurements. Each award will cover a labor segment: Direct Patient Service Providers, Mental Health, Nursing, Medical Support, and Dental Services. The DHA Director of Small Business Programs signed the DD Form 2579, Small Business Coordination Record, on 17 March 2026, as amended 1 April 2026. This DD2579 will cover all resultant TOs.

8. Impact of Acquisition Strategy on Small Business: This acquisition will be conducted utilizing source selection procedures in accordance with FAR Parts 12, 15 and 16. The Government intends to award to several 8(a) participants. Based on this strategy there is little to no anticipated impact on small business concerns because several 8(a) participants will receive awards and only 8(a) participants will be competing for awards under the 8(a) competitive procurement.

DETERMINATION

Upon review of the findings above, and pursuant to the authority of 10 U.S.C. § 2382, I hereby determine that the proposed consolidation is necessary and justified. This consolidation applies to requirements for professional medical support and services supporting OCONUS geographic markets, provided they are not already covered by existing MQS2-NG contracts and are within the DHA and/or individual DoD MTFs, or medical requirements funded with Defense Health Program (DHP) dollars, or other federal agencies with healthcare missions and respective funding is necessary and justified.

Pedro Reyes Contracting Officer Healthcare Contracting Division – West Defense Health Agency Contracting Activity

APPROVED:

James E. Watkins Interim Senior Procurement Executive Defense Health Agency

Enclosures:

(1)OCONUS MTF List (2)Market Research Memorandum (3)DD 2579 – Control Number SB2026-WM0081 Amd 01