HBN_CLASS Justification and Approval_COVID-19 Foam Swab IBX_20210119_Redacted.pdf

Justification and Approval (J&A) for Other Than Full and Open Competition

CONTROLLED UNCLASSIFIED (CUI)

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Date

25 Jan 2021

Signature

APPROVAL (AFFARS 5306.304(a) )

Date

25 Jan 2021

Signature

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I. Agency and Contracting Activity.

The United States Air Force (USAF), Air Force Material Command (AFMC), Air Force Life Cycle Management Center (AFLCMC), PEO Digital (HB), Foreign Military Sales Division (HBN), Contracting Officer (HBNK) 11 Eglin Street, Bldg. 1618 Hanscom AFB, MA 01731-2100 is the contracting activity.

II. Nature and/or description of the action being approved.

This Class Justification and Approval (J&A) for Other Than Full and Open Competition is intended to result in a new contract to Hardwood Products Company LP, doing business as Puritan Medical Products Company LLC (hereinafter, Puritan), to expand the US domestic production capacity for foam tipped nasal swabs by procuring & installing machinery at, and retrofitting a Puritan-owned factory. The procurement of machinery and the factory retrofitting are the contract actions contemplated by this class J&A.

An Undefinitized Contract Action (UCA)(Contract No. FA8730-21-C-0019) with a Not-To-Exceed (NTE) ceiling of $110,085,000 was awarded to Puritan on 8 Jan 2021 for production equipment procurement and related expenses. A future modification will be made to the contract to add the facility retrofit requirements. This is a commercial contract. The contract type is Firm Fixed Price (FFP). The period of performance is nine (9) months from the date of UCA award, 8 Jan 2021 to 8 October 2021.

III. Description of supplies/services required to meet agency needs (including the estimated value).

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed into law on 27 March 2020 and the Paycheck Protection Program (PPP) and Health Care Enhancement Act (HCEA) was passed into law on 24 April 2020. As a result of these laws being enacted, the Department of Health and Human Services (DHHS) was tasked with expanding facilities and capacity for pharmaceuticals, personal protective equipment (PPE), injection and vaccine delivery systems, and other remedies to combat the COVID-19 pandemic. DHHS does not have the resources or capacity to conduct all of the procurements necessary to respond to the COVID-19 pandemic. Accordingly, DHHS and DoD entered into an Interagency Agreement in furtherance of assisted acquisitions pursuant to the Economy Act. A determination and finding (“D&F”) and an Interagency Agreement Form 7600A were executed to reflect the capabilities DoD, including the USAF, would provide in order to help DHHS fulfill its requirements under the CARES Act and the PPP & HCEA. The Interagency Agreement, D&F and accompanying Form 7600B (which provides the funding for the instant requirement) support the instant assisted acquisition between DHHS (requesting agency) and the United States Air Force (servicing agency).

The supplies/services required are in support of the Industrial Base Expansion (IBX) of the US domestic production capacity of foam tipped nasal swabs. The contractor is required to expand their production capacity from 60 million swabs per month by 200 million swabs per month. The acquisition requires the contractor procure the following machines:

Qty 72 -Foam Swab Tipping production machines

Qty 24 - MULTIVAC automated packaging lines

The contractor will be required to perform all the assembly, integration, and testing of the machines.

Additionally, Puritan will be procuring a production facility, utilizing their own capital investment funds.

The contractor will be required to make facility modifications that include but are not limited to:

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• HVAC particulate and UV filtration

• Electrical

• Pressurized air supply

• Floor finishes

• White Room and Ante Room

• Gowning Area

• QC Laboratory

• Warehouse space

• Laundry area

• Floor plan design for maximum production equipment efficiency and worker movement

• Office areas

The period of performance is nine (9) months from the date of UCA award. The CLIN structure will include two Parent CLINs (0001 - Equipment & Machinery and 0002 - Facility Retrofit), and multiple SubCLINs for the purposes of invoicing. The SubCLINs are initially based on the contractor's spend plan but are subject to change through negotiations and definitization of this effort. The government's estimated value of this acquisition is $270,000,000. The facility retrofit is estimated to be between based on the costs incurred to expand the facility for Flock Nasal Swab production. This estimate is highly variable because the facility has not been identified and therefore we do not know the conditions that exist to more accurately estimate the retrofit activities that will be required. The machinery and production equipment is estimated to be $110M based on previous procurements of the same and/or similar machinery and equipment under contracts FA8730-20-C-0056 and FA8650-20-2-5524. This action is funded with FY21 3080 HCEA funding appropriation.

IV. Statutory authority permitting other than full and open competition.

The statutory authority permitting other than full and open competition is 10 U.S.C. 2304(c)(2), as implemented by Federal Acquisition Regulation (FAR) 6.302-2(a)(2) Unusual and Compelling Urgency and 10 U.S.C 2304(c)(3) as implemented by FAR 6.302-3(a)(2)(i) - Industrial mobilization; engineering, developmental or research capability; or expert services.

V. Demonstration that the contractor's unique qualifications or the nature of the acquisition requires use of the authority cited above (applicability of authority).

Pursuant to the authority cited in Section IV above, the following two subsections address the elements that justify use of each authority.

Unusual and Compelling Urgency IAW FAR 6.302-2(a)(2), when an agency's need for supplies or services is of such an unusual and compelling urgency that the Government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals, full and open competition need not be provided for.

The COVID pandemic currently has 86.6M confirmed cases world-wide which have resulted in 1.9M deaths. In addition, COVID-19 has had massive impacts on the United States and global economy. US Gross Domestic Product (GDP) shrunk by 32.9% in the 2nd quarter of 2020. To put that number into perspective, the largest decline experienced during the Great Recession was 8.4% and the largest

March 2020 CONTROLLED UNCLASSIFIED (CUI) Page 5 of 8March 2020 CONTROLLED UNCLASSIFIED (CUI) Page 5 of 8 decline in history was 10% in 1958. As of November 2020 reporting, the US unemployment rate was 6.7%. According to the Bureau of Labor Statistics monthly job report, the US economy has lost more than 22 million jobs, primarily due to COVID impacts. Recovery of those jobs is anticipated to take more than four (4) years. More than 100,000 businesses have shut down for good and another 100,000 have shut down temporarily due to COVID. These numbers are expected to grow as cities and towns across the U.S. continue to impose lockdown measures to try and control the spread of the virus.

On 13 Mar 2020, the President declared a national emergency, under section 501 (b) of the Stafford Disaster Relief and Emergency Assistance Act 42 USC 512 J-5207 (the "Stafford Act"), recognizing the threat that the novel coronavirus, known as SARS-CoV-2, poses to national security. On 25 Mar 2020, Under Secretary of Defense for Acquisition and Sustainment Ms. Ellen Lord established the COVID-19 Joint Rapid Acquisition Cell (JRAC). Led by the Principal Deputy Assistant Secretary of Defense, Ms. Stacy Cummings, the JRAC team includes acquisition professionals from multiple DoD Agencies, and is synchronizing and supporting acquisition execution to combat the COVID-19 pandemic. JRAC is supporting the Federal Emergency Management Agency (FEMA) and the Department of Health and Human Services (DHHS) in the fight against COVID-19. On 27 April 2020, the Head of the Contracting Agency for DHHS, Assistant Secretary for Preparedness Response, signed a Determination and Findings in accordance with the authority of the Economy Act (31 U.S.C. I 535), as implemented in subpart 17.5 of the Federal Acquisition Regulation (FAR), for DHHS to enter into an inter-agency agreement for acquisition assistance with the Department of Defense (DoD).

AFLCMC/HBN has been tasked to support DHHS in the fight against COVID-19 by providing acquisition support for an Industrial Base Expansion to increase the US domestic production capacity of foam tipped nasal swabs. Current demand for foam tip nasal swabs far outpaces available supplies. As of June 2020, demand for foam tip swabs from the largest US manufacturer of these swabs were backordered by more than 150 million swabs. This effort will require the contractor to expand production capability of foam tipped nasal swabs by 200 million per month. Capacity must be increased and reserves must be rebuilt as soon as possible to accommodate current demand and to prepare for potential future spikes in demand. The emergent need for nasal swabs also includes replenishing and maintaining the Strategic National Supply (SNS) which has had to defer all resupply efforts in order to support the high volume of testing required to support the nation's pandemic response. The current need is to have a 90 day supply for every state allocated to the SNS, so that the United States can support on-going testing needs and be better prepared for any future national emergency needs.

According to a GAO report released in November 2020, “Testing supply shortages have contributed to delays in turnaround times for testing results, which can in turn exacerbate outbreaks by allowing COVID-19 to spread undetected.” Among those shortages, 9 states reported a shortage in swabs and 24 states reported shortage in rapid point-of-care test kits, which utilize the swabs in their test kits.

The rapid expansion of FDA approved Point-of-Care test kits has impacted the supply chain for materials required to produce those kits, specifically nasal swabs. Puritan was selected for this award as they play a key role in the domestic supply chain for Point-of-Care test kits by

These three point of care tests constitute HHS's main effort to bring high volumes of easily accessible COVID-19 test to under served populations. Based on market research conducted by the JRAC, Puritan's foam swabs are the only swabs that are produced domestically and universally qualified by these major suppliers and in fact their swab is the benchmark used when the point of care test kit manufacturers when qualifying other nasal swabs. To date there are no other

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