FINAL_JA_OTFOC_VA Claims Processing and Customer Services.pdf

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

1. Contracting Activity: Department of Veterans Affairs (VA) Office of Acquisition, Logistics & Construction Enterprise Procurement Office (EPO) Spotsylvania Ave, STE 400 Fredericksburg, VA 22408

2. Description of Action:

The proposed action is to award a non-competitive (sole source) Firm Fixed Price (FFP) Indefinite Delivery / Indefinite Quantity (IDIQ) contract to Signature Choice, LLC for VA Claims Processing and Customer Services.

This Justification and Approval (J&A) will facilitate the award of an FFP IDIQ Contract that will prevent a lapse in critical services for the Veterans Health Administration (VHA) Office of Veterans Community Care (VCC) in support of Veteran and family member care in the community, while the follow-on transition is underway.

3. Description of Supplies or Services:

VHA VCC claims processing and customer service functions are critical to ensuring uninterrupted access to healthcare services for Veterans and their families. VHA’s existing resources are inadequate to manage the workload required to fulfill mission requirements.

These services include verifying eligibility and authorizations, adjudicating claims for community-provided care, and issuing billing guidance to prevent improper payments and minimize reimbursement delays. These functions also support the complex IT systems that enable accurate claims processing and continuity of care. Customer service needs include the operation of customer service call centers to address billing, claims, and eligibility inquiries, including a 24/7 emergency care notification line that serves Veterans in crisis, helps VHA meet reimbursement timelines and ensures Veterans can report urgent care episodes promptly for payment authorization. Timely adjudication of medical claims for services performed by community-based providers guarantees that Veterans and family members of permanent and total service-connected disabled Veterans receive uninterrupted care.

The current contract provides these services on a nationwide scale, processing millions of claims annually, adjudicating complex medical billing issues, and handling a high volume of provider, Veteran, and family member inquiries through its call centers. These functions are indispensable to VHA’s mission to provide timely access to care. Any lapse in the provided claims processing, eligibility determination, or call center operation services could result in delayed access to critical medical treatment, delayed payments to providers, increased financial hardship for Veterans and family members covered, and potential loss of trust in VA’s ability to deliver earned benefits. VHA does not anticipate a sufficient increase in the resources needed to absorb these services by the current contract end date. Continuation of these services is therefore essential to maintaining seamless support to Veterans until transition to the follow-on effort reaches Full Operational Capability (FOC).

Estimated Value: $517M

Justification & Approval – VA Claims Processing & Customer Services

4. Statutory Authority Permitting Other Than Full and Open Competition:

The statutory authority permitting other than full and open competition is 41 U.S.C.

§ 3304(a)(1) as implemented by the Revolutionary Federal Acquisition Regulation (FAR) Overhaul (RFO) Subpart 6.103-1, only one responsible source and no other supplies or services will satisfy agency requirements.

5. Rationale Justifying Use of Cited Statutory Authority:

Continuity of these services is essential to maintaining seamless support to Veterans until the long-term solution is in place and fully operational. The incumbent contractor has demonstrated the requisite expertise, management, responsiveness, and experienced personnel critical to providing seamless, uninterrupted claims processing and customer support services. Since the current contract award in March 2024, the contractor has processed 49.4 million Veteran and family member claims, 6.2 million customer service calls, and 8.2 million emergent notifications. The contractor serves as a Managed Service Organization (MSO) for VCC to process Veteran Family Member Program (VFMP) claims within the contractor-owned automated claims system, ClaimsXM (CXM). To date, Signature Choice has processed over 47 million claims in the CXM system.

With the approaching expiration of the current Claims Processing and Customer Services IDIQ contract 36C10G24D0051 (final date of performance 11/7/2026), it is imperative that VA establish this IDIQ contract for continuity of these essential services. Without this contract action, VA would lack a contractual vehicle to process claims and effectively respond to Veterans and providers for care in the community.

Currently, the incumbent contractor is uniquely positioned to provide these services within the required timeframe, due to their existing infrastructure, established processes, and familiarity with the project requirements. Utilizing Government personnel is not feasible; the VA workforce is not sufficient to address the requirements, and contractor’s systems are not available to the Government workforce. Specifically, the VA Financial Services Center (FSC) is not ready to process CHAMPVA and VHA Finance claims volumes currently contracted. Due to the long implementation period of 12-24 months for the follow-on effort and inadequate systematic infrastructure, claims processing under the incumbent contractor is vital; hence, the need for this sole source contract with a 12-month Base Year, one 12-month Option and one 6-month Option. In the first phase of this process, establishing the information security and data sharing agreements with VA that allow secure operational connectivity between VA and external systems takes a minimum of six (6) months. Concurrently, a minimum of six (6) months is required to implement VA business rules and front-end edits to support VA Electronic Data Interchange (EDI) transaction activities. The current contract expires in five (5) months. Once system connections have been established, the critical phase of acceptance testing can begin to test each business rule against sample claim scenarios to identify defects in programmed business rules and interface data segments. This process is lengthy as defects are corrected and re-tested. As outlined above, this implementation timeline is expected to span 12 months to 24 months, which precludes another vendor from becoming operational before the current contract expires in

November 2026. Award of this contract to the incumbent is critical to prevent services from being disrupted.

While other vendors are technically capable of providing the required services, operational considerations make it impractical for a new vendor to be fully functional by the end of the current contract period, which concludes in five (5) months. Industry standards indicate that onboarding and integrating a new vendor into VA systems— including achieving operational connectivity and securing the necessary Authority To Operate (ATO)—typically requires up to two (2) years. To ensure the continuity of crucial services and meet the agency’s needs without disruption, VA requires a vendor that is ready to perform on day one. The incumbent contractor possesses the demonstrated expertise, management capability, responsiveness, and experienced personnel necessary to provide seamless, uninterrupted service throughout the transition period.

Leveraging the incumbent’s established familiarity with VA systems and processes minimizes operational risk and ensures that essential services are continuously delivered to Veterans without delay.

The incumbent contractor is uniquely qualified to perform the services under this contract effort for the following reasons:

a. VHA must process healthcare claims within 30 days of receipt of a proper claim according to the Prompt Payment Act, 5 CFR part 1315 - Prompt Payment. The incumbent contractor is currently the only vendor with the capability to support VHA in processing these claims in accordance with the Prompt Payment Act.

Failure to compensate community providers in a timely manner risks disruptions in care, including providers turning beneficiaries away for needed services, and could result in beneficiaries being sent to collections as providers seek payment directly rather than waiting for VA claims to be processed.

b. The current contractor is immediately capable of meeting the contractual language. The current contractor has the required capabilities and facilities to deliver the necessary services to support claims processing and customer service without interruption or degradation of the quality of care.

c. There is no alternative processing system immediately available or compatible if this contract effort is not approved. No commercial or government alternative currently supports VA-specific business rules and Electronic Data Interface (EDI); discontinuing without approval of this contract effort would halt processing capability as of November 7, 2026.

While the transition to FSC is underway, the award of a non-competitive contract to the incumbent contractor is necessary to avoid disruption of healthcare services to Veterans and their families and provide timely customer service to Veterans, their families, and community providers. There are no other vendors capable of providing the required services and meeting VA’s requirement of timely operational connectivity between VA and a new claims processing and customer service vendor by the current contract end date of November 07, 2026.

The option periods described in paragraph 9 below are essential to ensure continuity of services and to mitigate any unexpected delays during the transition period to a long-term solution. The time and effort required to perform the implementation phase functions are critical and essential; these options are necessary as failure to plan for unforeseen delays would pose unacceptable risks to VA’s ongoing mission. Risk of disruption of services is unacceptable; a lack of continuity of services would adversely affect VA’s ability to retain and recruit providers, ultimately resulting in a significant decrease in Veterans’ access to timely and quality healthcare.

Approval of this contract effort is essential to prevent disruptions to VA’s claims processing and customer service operations and to avoid catastrophic impacts on the Department’s ability to deliver and support world-class patient care in the community to our nation’s Veterans and their eligible family members.

6. Description of Efforts to Solicit Offers from as Many Offerors as Practicable:

Notice of this J&A will be publicized in accordance with RFO Subpart 5.1. As this is a sole source contract action, no efforts to solicit potential sources for this action were conducted.

7. Fair and Reasonable Price Determination:

The Contracting Officer anticipates that the cost to the Government will be fair and reasonable based on historical pricing data. An official determination in accordance with RFO 15.404-1(b)(2) and 15.404-1(b)(6) confirming the fairness and reasonableness of the pricing will be made by the Contracting Officer prior to contract award.

Price reasonableness will be determined by comparison to:

• Unit prices established under the current contract (36C10G24D0051), adjusted for applicable escalation per the DOL Wage Determination (WD #2015-5005, effective 7/8/2025) under the Service Contract Act (SCA)

• GSA Schedule pricing benchmarks from BUY.GSA.GOV for equivalent labor categories (General Clerk I, II, III; Customer Service Representative I, II, III), using the Standard Deviation +1 pricing methodology per IGCE calculation assumptions

• Analysis of the Independent Government Cost Estimate (IGCE), which applies a fully burdened rate methodology (labor cost x3 overhead multiplier) consistent with SCA requirements

• Historical pricing and production data from the current contract period (June 2025 – November 2025 actuals)

8. Market Research:

The Market Research Report documents the analysis conducted to identify capable sources for the VA’s requirement for national VA Claims Processing & Customer Services, including Veteran and Family Member Programs (VFMP), Centralized Authorizations for

Emergency Care (CAEC), Customer Service (CS), and non‑network claims processing.

The research was performed in accordance with RFO Part 10 and VAAR 810.001‑70, and included reviews of mandatory sources, VetCert, GSA, NAICS/PSC codes, commercial market capabilities, and prior acquisition history.

The research determined that while healthcare claims processing services exist in the broader commercial marketplace, only one responsible source, the incumbent, currently possesses the established VA systems access, security infrastructure, operational scale, and proven experience necessary to continue providing uninterrupted VA‑specific claims processing. To reach operational capability and system integration for the follow-on effort requires an estimated 12–24 months, exceeding the available transition window before the current contract expires on November 7, 2026. Awarding to any vendor other than the incumbent would cause significant disruption to claims adjudication, provider payments, Veteran reimbursements, and customer service operations.

The findings support awarding a sole source contract to the incumbent SDVOSB to prevent a lapse in services, ensure continuity of claims processing, and protect Veteran access to community care until the long-term follow-on solution is in place.

9. Other Facts:

This contract action is required to ensure no disruption of services and avoid catastrophic impacts on the VA’s ability to deliver and support world-class patient care in the community to include the timely reimbursement of providers.

The contract period of performance to ensure continuity of services is as follows:

Contract Continuity of Services Period Period of Performance Purpose

Base Period 11/1/2026 – 10/31/2027 Continuity; FSC transition; PIV card reissuance (~2,000 cards) required within first 90 days

Option Period 1 (12 Months) 11/1/2027 - 10/31/2028

Transition period to full operational capability

(FOC)

Option Period 2 (6 Months) 11/1/2028 – 4/30/2029

Contingency period for unexpected delays (FSC implementation issues, capacity constraints)

The Government, Veterans, their family members, community providers, and the public would be seriously injured without continuity of these services. The work performed by the incumbent contractor is essential to accomplishing VA’s mission of delivering healthcare services.

10. Sources Expressing Interest:

As noted above, sources were not sought in support of this sole source contract action.

11. Actions to Remove Barriers to Future Competition:

It is anticipated that future barriers will not be encountered as VA transitions this requirement by 2028.

12. Technical and Requirements Certification:

I certify that the supporting data under my cognizance, which are included in this justification, are accurate and complete to the best of my knowledge and belief.

Janet Cabeen Acting Executive Director Networks & Contracts Management VHA Office of Veterans Community Care (VCC)

13. Procuring Contracting Officer Certification:

I certify that this justification is accurate and complete to the best of my knowledge and belief.

Terri Duenas Contracting Officer Division Chief, Acquisition Services 6 Enterprise Procurement Office (EPO)

Concurrence

Based on the foregoing justification, I hereby approve this acquisition on an “other than full and open competition” basis pursuant to the statutory authority cited in paragraph four above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition.

Mr. Gerald (Jerry) Jacobs Head Contracting Activity Enterprise Procurement Office (EPO)

Approval

Based on the foregoing justification, I hereby approve this acquisition on an “other than full and open competition” basis pursuant to the statutory authority cited in paragraph four above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition. As this action exceeds $90M, the certification below required by RFO 6.104.2 serves as approval.

Jeffrey C. Neill Executive Director, Office of Acquisition and Logistics, and VA Senior Procurement Executive