FAR 13.5 Sole Source Justification -Redacted.pdf

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

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DEPARTMENT OF VETERANS AFFAIRS

SOLE SOURCE JUSTIFICATION UNDER SIMPLIFIED PROCEDURES FOR CERTAIN COMMERCIAL

ITEMS IN ACCORDANCE WITH FAR 13.5

Acquisition Plan Action ID:

1. Contracting Activity: Department of Veterans Affairs, Regional Procurement Office-East (RPOE), Network Contracting Office 4 (NCO 4) provides contracting support for Veterans Integrated Services Network 4 (VISN 04), Philadelphia Medical Center located at 3900 Woodland Ave, Philadelphia, PA, 19104. The funding purchase request has been approved and identified as:

2. Nature and/or Description of the Action Being Processed: This procurement is for a new follow-on contract for annual maintenance on the TeraRecon Picture Archiving Communication System (PACS) software and hardware in accordance with 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 usage of a Firm Fixed Price (FFP) type order is appropriate for this procurement action.

The current order, 36C24421P0324, with TeraRecon Inc. expires on March 10, 2025. Only TeraRecon is able to provide the required services including software licensing, corrective maintenance, software upgrades, and manufacturer recommended operational and safety improvements of the Philadelphia VA Medical C TeraRecon PACS. This requirement is crucial to ensure the continuous reliability of TeraRecon PACS software and hardware identified in the Statement of Work (SOW). The system requires continual licensing, maintenance, and support to uphold the availability and efficacy of the system. The reliable and accurate operation of the system at all times is considered critical to the health of patients and continuous operations at Philadelphia VA Medical Center. Service on this equipment with non-approved software/equipment and/or by non-certified personnel endangers patient safety and information security.

3. Description of Supplies/Services :

Philadelphia VAMC requires full software licenses and hardware support for the continuous reliability of the TeraRecon PACS system. Requirements include:

a. Software licensing and support

b. Computer hardware warranty and support

c. Volume PRO co-processing board warranty and support

d. Telephone and Remote Support

i. Provide necessary operating system and applications software support, including telephone and online support.

ii. Personnel with OEM equipment training will respond directly by phone within no more than 1 hour for critical failure, 1 hour for major failures, 24 hours for minor failure, 48 hours for secondary failures and 96 hours for requests. If situations are responded to by phone and do not resolve the service issue, OEM trained personnel will be required for an on-site visit within 1 business day after receipt of initial notification.

e. On-site emergency service

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f. Ongoing software updates

The total estimated amount,

4. Statutory Authority Permitting Restricted Competition:

FAR 13.5 Simplified Procedures for Certain Commercial Items. The statutory authority for applying the Simplified Procedures for Commercial Items of FAR 13.5 is 41 U.S.C. § 1901 and is implemented by FAR 13.106-1(b)(2) for restricting competition on this procurement. Competition is restricted on this procurement for the reason below:

(x) Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

( ) Unusual and Compelling Urgency ( ) Industrial Mobilization, Engineering, Developmental or Research Capability or Expert

Services ( ) International Agreement ( ) Authorized or Required by Statute ( ) National Security ( ) Public Interest

5. Demonstration that the C Unique Qualifications or Nature of the Acquisition Requires the Use of the Authority Cited Above (applicability of authority): This requirement is for continued servicing of a highly specialized medical equipment system. The current iteration of the TeraRecon system has been used at Philadelphia VA Medical Center since 2018 for the Picture Archiving Communication System (PACS) to manipulate patient diagnostic images and view trouble areas in greater detail. The manufacturer of this equipment, TeraRecon, is the only provider of the required software licenses and the service for their proprietary technology and equipment. Services required include preventive maintenance, software upgrades, equipment upgrades, and system diagnosis. TeraRecon is also the only provider capable of maintaining subscription service agreements on any TeraRecon equipment, ensuring that this critical equipment remains operational at Philadelphia Medical Center. TeraRecon is the only responsible source for this equipment. Service on this equipment with non-approved software or equipment and/or by non-certified personnel would jeopardize patient safety and information security.

Other PACS with advanced visualization are available on the market, however switching to another system would likely require sole sourcing to the original equipment manufacturer due to the highly technical and proprietary equipment and software of each system. The estimated cost to purchase a new PACS system with advanced virtualization would start at $50,000 for a new server and licenses, not including the additional fees required for installation and testing of a new system. Depending on the needs of the department, two servers may be required and would increase the starting price to an estimated cost of $75,000. This pricing comes from the National Acquisition Center (NAC) PACS Pricebook for systems similar to TeraRecon.

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The total price does not include the additional items that would need to be purchased to effectively procure, install, test, and implement the new system. The prices listed on the NAC PACS Pricebook are fixed firm prices already agreed upon for an x number of years. All pricing for a new system is estimated and could increase due to specific system, market conditions and/or inflation.

In addition to the monetary costs for re-procurement, a new system would require training for radiology physicians and residents to use and work with the different software system. Due to our partnership with Pennsylvania University, a majority of Philadelphia VA Medical Center radiologists work on-site only part-time. It would pose a significant challenge to train our radiologists on any new system. The transition to a new system increases the risk of delayed patient care during the transition and training period.

As detailed herein, duplication of costs for re-procurement would be substantial with no increase in competition for ongoing software license and system maintenance requirements. TeraRecon has been in place at best interest to procure a new system. Procuring a new system would result in significant duplication of costs that would not be recovered through competition for the system.

6. Description of Efforts Made to ensure that offers are solicited from as many potential sources as deemed practicable: Market research was conducted in an attempt to identify alternative sources.

A special notice was posted to SAM.gov on February 3, 2025, that the Government intends to issue a sole source award to TeraRecon Inc. The posting closed February 13, 2025, with no challenges received.

7. Determination by the CO that the Anticipated Cost to the Government will be Fair and Reasonable: Price analysis will be conducted using comparison of proposed price with prices found reasonable on previous purchases. A determination will be made by the Contracting Officer that the anticipated cost to the Government is fair and reasonable.

8. Description of the Market Research Conducted and the Results, or a Statement of the Reasons

Market Research Was Not Conducted: A sole source justification was provided by Al Thoman, Vice President of Service Sale, dated May,13, 2024. He states TeraRecon Is the sole provider of the hardware, software, support, and maintenance for their proprietary technology. NAC and GSA eLibrary were searched and it was verified with vendor that no national contract or GSA Schedule are available to place an order. Market research was conducted utilizing VetCert, SBA Dynamic Small Business Search (DSBS), FPDS, and Sam.gov. No alternative sources were identified using search

TeraRecon 281 513210 TeraRecon

TeraRecon TeraRecon s with TeraRecon as the vendor. In conclusion, market research did not yield any additional sources that can meet the for proprietary software licenses and system maintenance.

9. Any Other Facts Supporting the Use of Other than Full and Open Competition: Utilizing a sole source award to TeraRecon Inc. licenses, Effective Date: 11/15/24 Page 5 of 5

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b. One Level Above the Contracting Officer (Required over SAT but not exceeding $750K): I certify the justification meets requirements for other than full and open competition.