Fair Opportunity Exception Justification - STR_Redacted.pdf

Control Number: FY26-00

Justification for an Exception to Fair Opportunity

Federal Acquisition Regulation (FAR)16.507-6(b)(2)

1. Identification of the Agency and Contracting Activity:

The Defense Health Agency, Contracting Division - Defense Healthcare Management Systems (CD-DHMS), plans to award a task-order contract, on an exception to fair opportunity basis, based on the statutory exception and supporting rationale provided herein.

2. Nature and/or Description of Action being Approved:

The Enterprise Information Data System (EIDS) Program Management Office (PMO) operates within a highly complex Defense Health Agency (DHA) data enterprise that supports clinical, business, operational, and analytical mission needs across the Military Health System (MHS), and federal partners. This operational scale introduces challenges such as fragmented workflows, duplicative development pipelines, inconsistent governance practices, and limited enterprise visibility into resource utilization, dependencies, and performance. All of these challenges are exacerbated by years of hyper-tactical management of individual components of the ecosystem rather than a strategic approach. What is referred to as a �platform� is largely nothing more than loosely coupled and random capabilities/cloud services deployed in isolation with a 1:1 relationship to a use case. The resulting ecosystem is sprawling, nearly ten times the size of comparable benchmark organizations, and has entered a self-reinforcing spiral where each new increase in scale comes with an outsized increase in complexity and resources required.

Accordingly, MHS data users are profoundly frustrated. It is clear the current approach is untenable, but what then should replace it?

Since the unlocking of neural computing at scale in the early 2020s, data capabilities have accelerated at a pace that was previously unthinkable. The Government�s research suggests that best practice is now an ecosystem that benefits from multiple approaches to suit more granular types of data requirements. Appropriate dynamic tailoring should deliver capability faster, cheaper, and better than the current approach. Accordingly, the Government is conducting a series of experimental efforts to inform the future path forward for its overall data need. One to three use cases (of approximately 100 backlogged) will be utilized to gather data on how best to define use case archetypes, how best to match each archetype to a capability approach, and when/how to scale pilots at pace. The Government expects between three to five contractors will perform the efforts. Each contractor will represent a spectrum of potential technical modalities, existing knowledge of the organization at various levels, and varying implementation and management styles/approaches. Except for the effort described herein, these will be conducted under existing contract vehicles with the appropriate scope or competed under various other authorities.

CUI

Notional Experiment Matrix (for illustration purposes only) Performer Modality Knowledge Implementation /

Management Leidos DoW-style highly integrated point-to-point Uniquely specialized knowledge of the Federal

EHR

Traditional large systems integrator

A Ontology-driven, off-the-shelf DoW knowledge Forward deployed engineers B Lightweight consumer/producer API-driven model Uniquely specialized knowledge of DHMS

Lean Startup

For the task order contract contemplated by this document, expertise gained implementing the federal EHR system-of-systems is essential to successfully complete this portion of the experiment. Notably, the federal EHR produces the overwhelming predominance of data utilized across the MHS data ecosystem � it is the primary source. Bulk Data Extract (BDE) has remained an elusive goal for every iteration of the EIDS solutions. It remains highly manual, unreliable, and costly. Given how essential the data in the federal EHR is to any MHS data ecosystem, it is essential to overcome this obstacle. While Leidos will not be the only company addressing this use case, it will be the only one to do so with over a decade of experience with the largest partner system. Without this highly specialized knowledge to be utilized as a �control� group for this experiment, the Government would be unable to make critical inferences from the data gathered by other pilots. These pilots are required to help plot the future satisfaction of data requirements that will arrive in months, not years. The data ecosystem is a core capability for medical situational awareness and command and control both at Military Treatment Facilities in a readiness context, but also in active warfighting operations around the globe.

3. Description of Supplies/Services and Estimated Value:

Leidos services are required to support pre-implementation, user adoption, change management and cutover preparation activities in support of a �control� pilot for a Service Treatment Record (STR) Zero Day capability.

Until recently, Leidos was on contract to provide product improvement engineering (PIE) services for the design, configuration, development, integration, testing, and training content development for MHS GENESIS, the federal EHR. They implemented a highly specialized and �tailored to the Program� approach to implement numerous capabilities. Notably, the previous contract has been extended on a �bridge� basis while a follow-on is being prepared, and PIE capabilities were not considered essential on a minimal �bridge�, otherwise the work contemplated herein would likely have been performed under that contract.

As an example, Leidos initiated the effort by conducting nine design workshops over the course of two years for Revenue Cycle Expansion (RevX). The workshops with the Program Office, DHA Stakeholders, and functional subject matter experts, enabled the understanding of commercial processes, identified where the commercial best practices could be leveraged, identified the Federal Statues and DoW regulations that were non-negotiable and required custom configuration or custom development, and established the baseline of understanding prior to the development and integration effort commencing.

5. Rationale Supporting the Exception to Fair Opportunity:

The baseline of MHS GENESIS (Millennium) is a product of Oracle Health. Oracle Health has a continuing relationship with Leidos as a partner in the Leidos Partnership for Defense Health (LPDH) supporting MHS GENESIS.

Leidos, along with their subcontractor Oracle Health, has worked since 2015 with DHA stakeholders and Service functional SMEs to design, configure, build and test the capabilities for

MHS GENESIS.

As background, MHS GENESIS is a software intensive system of systems that provides a unified platform allowing the Agencies to leverage and manage data. The data constructed as a medical record is the core asset of each Agency�s mission in the provision of care. Sharing data between disparate domains would require physical dependencies to support the exchange of medical records resulting in increased complexity to maintain the disparate systems and the interfaces between them. Sharing data across disparate baselines requires increased complexity in the maintenance of regulatory and meaningful use terminology, which results in a loss of computable data necessary to fully enable automated clinical decision support and analytical digest. Using disparate baselines negatively affects the timing of synchronization of data resulting in lower availability of data and the potential of deviations in the records between two or more systems. For this reason, MHS GENESIS utilizes a common standard baseline to increase the quality, availability, integrity and the timeliness of data all while reducing the complexity of managing multiple baselines, including the implementation of software updates, patches, and upgrades to new functionality. MHS GENESIS is designed to improve speed of the process and accuracy of available data for better-informed decision-making. This type of information decreases the number of unnecessary tests and procedures, which allows the healthcare team more time to focus on providing a care experience that is patient and family centered, compassionate, convenient, equitable, safe and always of the highest quality.

Leidos worked with functional SMEs from DoW, Veterans Affairs (VA), the Coast Guard, NOAA, and others to define multiple scenarios for complex data needs in MHS GENESIS to allow for the capture and utilization of National and local resource sharing agreements between DoW and VA and other federal partners. A thorough, detailed understanding of this construct and the deep partnership with Oracle Health is required to successfully provide data points on whether this type of familiarity with the system is essential to rapidly scaling future data prototypes. Leidos�s knowledge, built over more than a decade, of MHS GENESIS and the DoW configuration is highly complex and would take any other contractor a significant lead time to gain the level of understanding required to provide a meaningful �control� group. No other vendor is situated to deliver such capabilities at this time due to their unique familiarity with the system and technical staff on hand to deliver such products in a reasonable timeline.

6. Other Facts:

a. Procurement History:

(1) Is this a new requirement? No

b. Additional Information:

On 9 JAN 2026, SECWAR issued a memorandum that directed the following:

In the national security domain, AI-enabled warfare and AI-enabled capability development will re-define the character of military affairs over the next decade. This transformation is a race - fueled by the accelerating pace of commercial AI innovation coming out of America's private sector. The United States Military must build on its lead over our adversaries in integrating this technology, established during President Trump's first term, to make our Warfighters more lethal and efficient. To this end, aligned with America's AI Action Plan, I direct the Department of War (DoW) to accelerate America's Military AI Dominance by becoming an "AI-first" warfighting force across all components, from front to back.

The Department will achieve this objective by:

� Unleashing experimentation with America's leading AI models Department-wide, and rewarding AI-first re-conceptions of legacy approaches;

� Aggressively identifying and eliminating bureaucratic barriers to deeper integration, which are vestiges of legacy information technology and modes of warfare

The action contemplated herein is an essential experimental first step to comply with this direction, serving as a �control� group to determine the comparative value of other methodologies against this re-conception of a legacy approach to AI-first.

7. Actions to Remove or Overcome any Barriers to Competition:

The Government is competing amongst different technical solutions and will evaluate those solutions to determine which continue once initial Phases are complete. While this task order contract is being issued on a basis other than fair opportunity, the Government is exploring other potential options to meet the need. If the Government decides to scale this solution, an additional task order action will be issued for Phase 3 and will be supported by another JEFO. Additionally, the Government is competing the larger integration effort for MHS GENESIS in the near future.

If another offeror is selected, it would begin to erode Leidos�s unique and specialized knowledge.

8. Market Research:

Market Research was completed on April 7, 2026, and is documented in the Service Treatment Record Market Research Report dated April 7, 2026. The Government believes the award of a

Review

I have reviewed this justification and find it adequate to support the exception to fair opportunity.

Concurrence

Defense Healthcare Management Systems � Contracting Division

Approval

Based on the foregoing justification, I hereby approve the procurement of Service Treatment Record (STR) Zero Day capability for a not to exceed amount of $8,000,000 on an exception to fair opportunity basis pursuant to the authority of FAR 16.507-6(b)(2) subject to availability of funds, and provided that the supplies or services herein described have otherwise been authorized for acquisition.

Defense Health Agency Contracting Activity