HHS LSJ Redacted.pdf

CUI//SP-SSEL

Limited Sources Justification (FAR 8.405-6)

Items Peculiar to One Manufacturer (Brand Name) for the

Health and Human Services (HHS)

Microsoft Enterprise License Agreement

1. Identification of the Agency and the Contracting Activity:

General Services Administration (GSA) Information Technology Category (ITC) Special

Projects Branch intends to establish a single award Blanket Purchase Agreement (BPA) for the

Department of Health and Human Services (HHS) through its GSA Advantage Select platform to support procurement of Microsoft products. This Limited Source Justification (LSJ) is designed to justify limitation of sources to a single manufacturer (Microsoft) to acquire software products and licenses across all of HHS and its Operating Divisions (OpDivs) and Staff Divisions

(StaffDivs).

Sponsoring Organization

HHS Office of the Secretary (OS)/ Assistant Secretary for Administration (ASA) /Office of the

Chief Information Officer (OCIO)/ Office of Enterprise Services (OES) Vendor Management

Office (VMO), in collaboration with Food and Drug Administration (FDA)/ Centers for

Medicare and Medicaid Services (CMS)/ Centers for Disease Control (CDC)/ National Institutes of Health (NIH), and other HHS OpDivs/StaffDivs.

Project Officer Information

Director, Vendor Management Office (VMO)

2. Nature and/or Description of the Acquisition Being Approved:

This LSJ is being provided in accordance with the Federal Acquisition Regulation (FAR) 8.405-

6(b)(1) - items peculiar to one manufacturer can be a particular brand name, product, or a feature of a product peculiar to one manufacturer. A brand name item, whether available on one or more schedule contracts, is an item peculiar to one manufacturer. The BPA established under GSA

MAS - IT Category, SIN 518210C will restrict consideration of schedule contractors only to items peculiar to one manufacturer, Microsoft.

The purpose of this acquisition is to provide a flexible and efficient purchasing mechanism that will allow HHS to continue supporting its existing Microsoft infrastructure. Microsoft’s products and services are essential to HHS’s day-to-day operating activities, and their continued optimal functionality is of the utmost importance. HHS currently holds multiple Microsoft Enterprise

License Agreements (ELAs), 12 contracted to several different resellers, with varying terms and conditions, price structures, and different periods of performance. The BPA will provide an integrated and comprehensive HHS-wide vehicle to obtain Microsoft products and services. The

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ELA BPA for Microsoft products and services will enable HHS OpDivs andStaffDivs to acquire

Microsoft products via an enrollment, and to purchase related professional services. The proposed acquisition will allow HHS to establish enrollments, from which OpDivs/StaffDivs may choose to meet their requirements. Each enrollment will detail the suite of products and services a particular OpDiv/StaffDiv is purchasing, including the terms and conditions for the products and services. Microsoft products support the core of HHS’s business operations through a range of offerings including productivity software (Microsoft Office and Microsoft Project), client operating systems (Microsoft Windows); and infrastructure systems (Active Directory, Windows Server, Unified Communications, database management systems, and business intelligence systems).

Increasingly, Microsoft’s products are tied to its cloud offerings; e.g., Azure Infrastructure as a

Service (IaaS); Azure Platform as a Service (PaaS) products such as Dynamics 365; and

Software as a Service (SaaS), including Office 365, OneDrive for Business, and SharePoint

Online. The healthcare and human services mission of HHS presents unique challenges and opportunities for use of these products. When Microsoft’s software products are paired with appropriate consulting services for planning, implementation, and technical support, HHS achieves optimal benefits.

Microsoft products and services will be acquired under a single BPA issued against the GSA

MAS Schedule for Information Technology. Competition is restricted to Microsoft brand name products only, through Microsoft-authorized resellers. The applicable SIN 518210C will maximize competition, while allowing HHS to meet its goals and objectives for this acquisition.

OCIO initiated this HHS-wide Microsoft ELA effort to acquire and deliver volume-discounted products, leveraging HHS-wide purchasing power to secure significantly discounted prices. The

Microsoft ELA program staff conducted market research, collected product information, and collaborated with the HHS Contracting Officer (CO) on vendor negotiations to obtain the best possible price at the BPA level, which will result in substantially lower pricing of individual licenses for Commercial-off-the-Shelf (COTS) products. The Microsoft ELA program will generate cost savings in the form of volume discounts and reduced management overhead, allowing customers to select the most effective product pricing options at the order level.

Additionally, a central HHS Program Management Officewill offer streamlined processes to manage costs and forecast demand. Thus, the administrative overhead that would result from separate acquisition efforts by each OpDiv/StaffDiv will be significantly reduced.

3. Description of the Supplies or Services Required to Meet the Agency’s Needs:

The HHS Microsoft ELA includes subscription license and software support (also referred to as software maintenance support) which provides end users with access to 24x7 technical support

(telephone/web/email); software version updates and upgrades; security vulnerability fixes and software patching; and software license inventory management solutions for end user enterprise virtualized servers, end-user devices, storage, and distinct network equipment. Additionally, the software automates operations management of the virtualized environments to ensure optimal capacity and real-time performance specifications are available. The estimated value of the BPA

DocuSign Envelope ID: 97DBACC8-75F0-441A-BC87-71C8C6DA5ACDDocuSign Envelope ID: FE173EB9-D196-401A-B869-439AF3646AFBDocuSign Envelope ID: 5ED78171-CE7B-4531-B828-B24337A86D98 is $480 million. The estimate was derived by totaling the aggregate cost of the current contracts/agreements held by HHS and their various operatives while also considering inflation.

The BPA will have an ordering period of one year with four one-year optional ordering periods.

The period of performance will allow the agency the flexibility (and reduces the risk of loss of support) to review the strategy prior to executing any option periods to determine if use of the

BPA remains in the best interest of the government. It is currently anticipated that the BPA will transition onto the government cloud BPA as option periods arise. Orders may be issued for a base year with four 12 month option periods for a total ordering period of five (5) years.

4. Identification of the Statutory Authority and Supporting Rationale for Limiting Sources

Demonstrating the Contractor’s Unique Qualifications to Provide the Required Supply or

Service

The authority for this action is Section 863 of the Duncan Hunter National Defense

Appropriations Act (NDAA) for fiscal year 2009, Pub.L. 110-417 (Oct. 14, 2008), as implemented in FAR 8.405-6(a)(1)(B) and 8.405-6(b) pertaining to items peculiar to one manufacturer. An item peculiar to one manufacturer can be a particular brand name, product, or a feature of a product, peculiar to one manufacturer. A brand name item, whether available on one or more schedule contracts, is an item peculiar to one manufacturer.

HHS’s existing information technology infrastructure relies on Microsoft products and services.

This acquisition is critical to ensure HHS employees can continue to fulfill the agency’s mission.

To match the same functionality and obtain the same level of service from other products, HHS and its OpDivs/StaffDivs would have to negotiate with multiple vendors. For example, different vendors would have to provide server operating systems (OS), desktop OS, and office productivity tools such as spreadsheet programs, word processing programs, e-mail, and presentation software. Regarding consideration of non-Microsoft commercial products, the disruption resulting from an HHS-wide transition from Microsoft to an alternate solution

(Google Workspace/GSuite or another manufacturer’s offering) and the additional costs

(training, configuration, security evaluations/ATO) would far outweigh the potential savings.

Microsoft products are unique in several of their features, and use of the full suite of compatible

Microsoft products offers expanded capabilities.

For example, HHS scientists and researchers rely on a variety of software from different vendors to help perform complex data analysis, such as IBM’s Statistical Package for the Social Sciences (SPSS), which is only compatible with the Microsoft OS.

Microsoft products also provide some features that cannot be obtained from other sources to include more security add-ons and more data location options than Google Workspace.

Microsoft works synergistically with HHS’s sophisticated security requirements. Microsoft has a

DocuSign Envelope ID: 97DBACC8-75F0-441A-BC87-71C8C6DA5ACDDocuSign Envelope ID: FE173EB9-D196-401A-B869-439AF3646AFBDocuSign Envelope ID: 5ED78171-CE7B-4531-B828-B24337A86D98 system centric architecture (which is required to support HHSs security requirements) whereas

Google is user centric (HHS is a system centric architecture). Microsoft allows multiple people to own files which allays the requirement for administrators to devote time and effort tracking down files if an employee should leave. All of these product specifications were taken into consideration along with the cost to transition to a new software publisher.

Transition away from Microsoft to Google or an open source platform would be prohibitively expensive and disruptive. An analysis was conducted (see breakdown which follows) and it is estimated that the cost to transition to another platform would be approximately The cost of switching to a software publisher other than Microsoft was also considered. Although the cost of identifying a new product or vendor cannot be the sole justification for remaining with that vendor it still must be taken into consideration. HHS identified a total estimated cost to transition to be in the millions of dollars. A breakdown of some of these costs and how they were established follows:

Software. Off-the-shelf software usually has an up-front software cost plus user licenses. This would require 12-24 months of transition from old software to new.

Implementation. The cost of setting up, configuring and testing software so it can be used in production plus the associated service contract costs.

o Integration/ External system interface costs. These days no enterprise system operates in isolation and will require interfaces to other systems in the organization.

o Customization. Whenever the software is changed, the custom code no longer works. Sometimes the customizations can even prevent upgrades. Add-on product costs for individual Microsoft Products such as Visio, PowerPoint, Power BI, and

Power Aps were considered.

Training. The cost of training employees to use the new software, which must also be considered, applies to all types of software. Note that in addition to end users, helpdesk and system admin employees must also be trained.

Sunset/ Retirement costs. The cost associated with current (old) software is also relevant.

Removing or deactivating outdated software – which would become necessary if switching to another vendor’s offering – is a labor intensive endeavor.

Archived systems. In this instance a new software would also require a new archiving platform, creating a problem with existing data storage/archiving.

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Data export. HHS must be able to export existing data in a suitable format. Changing software means changing the format of documents. This equates to administrative burden on all users of the new software.

Security. The costs of keeping an application secure, especially if the application is new to the environment, To summarize, hundreds of different Microsoft products are currently deployed across HHS.

Many of these products are interconnected and interdependent, making product compatibility a critical issue. For example, HHS uses multiple Microsoft software licenses and components to facilitate e-mail correspondence throughout the agency, for internal and external correspondence.

Replacing Microsoft software with an alternative would result in tens of millions of dollars in unnecessary costs to the taxpayer (including deployment, training, and migration costs). In addition, HHS would have to expend substantial resources to re-engineer its business infrastructure, which is designed to operate in the Microsoft OS environment.

Microsoft-authorized License Service Products (LSP) have negotiated special, discounted pricing from Microsoft and have extensive knowledge and understanding of the licensing choices and software assurance benefits associated with Microsoft Enterprise License Agreements. Non-LSP partners, such as value-added resellers (VARs), do not have access to LSP pricing. Only LSPs can sell software under Microsoft Enterprise License Agreements, while standard Microsoft

VARs can only resell Open License agreements. In order to obtain the benefits of an Enterprise

License Agreement, the Government must procure from an LSP – no VAR can provide these benefits.

In addition to providing benefits unique to an Enterprise License Agreement, LSPs also provide specialized knowledge and services that make them the best value providers for the Government, including:

o Software support provided via call centers for inbound support, backed by a decade or more experience reselling Microsoft products o Demonstrated competencies specific to HHS’s needs under a new Microsoft

Enterprise License Agreement:

o Cloud relationship management o Cloud platform expertise o Enterprise mobility management o Software asset management (SAM) tools to manage licensing and costs o Licensing sales support o Contract administration o Help Desk/customer support o Customer lifecycle management

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Table 2: Microsoft-authorized LSPs

Reseller GSA Schedule Postal address Email address Phone

CDW Corp. 47QTCA18D004K

Dell Corp. GS-35F-059DA

Insight

Public

Sector

47QTCA19D009G

PC

Connection

GS-35F-0750P

SHI, Inc. 47QTCA19D005D

Minburn

Technology

Group

GS-35F-309AA

Determination by the Ordering Activity Contracting Officer that the Order Represents the Best Value Consistent with FAR 8.404(d)

This acquisition is being conducted under the authority of the Multiple Award Schedule

Program. The Contracting Officer has determined that the anticipated cost to the Government will be fair and reasonable and in the Government’s best interest in accordance with FAR

8.404(d). GSA has already determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates under Schedule contracts, to be fair and reasonable. As the

Contracting Officer, it is my determination the BPA pricing will represent the best value consistent with FAR 8.404(d). Although GSA has already negotiated fair and reasonable pricing, ordering activities will seek additional discounts before placing an order (see 8.405-4).

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6. Description of Market Research:

HHS conducted a series of reseller question and answer 1:1 interviews in November 2020 over a period of two weeks. The 1:1 market research sessions were held with each of the six qualified resellers. Topics covered included HHS experience; other Federal agency experience; large enterprise agreement experience; lessons learned; supplier differentiators and value-adds;

acquisition and contract recommendations; ELA structure recommendations; license enforcement and reporting/monitoring approaches; and integration of Azure services with emphasis on Anti-Deficiency Act compliance. Additionally, HHS released a RFI and received responses from all six resellers. This plan and the resulting acquisition will take all aspects of market research and supplier input into account.

Utilizing an open market procurement was not selected, as the use of the schedules program under FAR Part 8 specifically GSA MAS - IT Category are identified as mandatory sources.

In addition to the market research conducted by HHS, a RFI was posted on eBuy by GSA using the Market Research as a Service (MRAS) tool in July 2021. A total of four (4) vendor responses were received. However, the following information should be noted: Orders under the

BPA will be restricted to Microsoft brand name products only. All four (4) vendors that responded to the RFI are capable of providing the Microsoft products that HHS needs. HHS has identified six Microsoft-authorized Licensing Solution Providers (LSP) on GSA MAS - IT

Category. Minburn Technology Group (Minburn), a certified Service-Disabled Veteran-Owned

Small Business (SDVOSB), is the only authorized LSP certified as a small business. Minburn also submitted a response to our RFI/Sources Sought notice, which was published on eBuy. No other small businesses responded to the RFI.

Market research supports establishment of a single award BPA against MAS -IT Category in support of HHS requirements of Microsoft Enterprise License Agreement (ELA) bundle subscription(s). The information obtained through market research supports a firm fixed price

BPA as the most appropriate contract type for this requirement. The requirements of this procurement are well defined. This BPA and task orders place upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties.

7. Other Facts Supporting the Justification:

GSA will issue a competitive solicitation among the 6 identified firms, to establish a single award BPA to a single vendor which will allow HHS to better manage the purchase and administration of Microsoft products. This proposed BPA will provide products and services beyond the scope of the existing OpDiv/StaffDiv contracts. HHS managers will be able to

DocuSign Envelope ID: 97DBACC8-75F0-441A-BC87-71C8C6DA5ACDDocuSign Envelope ID: FE173EB9-D196-401A-B869-439AF3646AFBDocuSign Envelope ID: 5ED78171-CE7B-4531-B828-B24337A86D98 approve, order, and track acquisition of all Microsoft products by OpDiv/StaffDiv, and manage the inventory. In addition, OpDiv/StaffDiv managers will be able to access essential information such as license status, application of software assurance benefits, expiration dates, and depletion rates for Azure cloud services. The LSP will also provide training in use of the portal function, the ordering process, and the differences between licenses and software maintenance options.

Implementation of this ELA is expected to improve HHS’s ability to manage its large investment in Microsoft products across the enterprise, and optimize use of licensing through a single HHS wide view of actual license use, enabling transfer of licensing between OpDivs/StaffDivs.

In addition, the BPA will reduce contracting and open market costs including source searches, development of technical documents and solicitations, and evaluation of bids and offers. The BPA will further decrease costs, reduce paperwork, and save time across HHS by eliminating the need for repetitive, individual purchases from a schedule contract.

8. Actions the Agency May Take to Remove or Overcome Any Barriers that Led to the Restricted Consideration Prior to Subsequent Acquisition for the Supplies or Services:

In accordance with FAR 8.405-6(b)(3)(i)(B), this Limited-Sources Justification will be posted to e-Buy (http://www.ebuy.gsa.gov). Any responses to the Limited Sources Justification will be noted and considered for use in future procurements similar to this one. In addition GSA MAS - IT Software Category will continue to conduct market research as they craft a government wide BPA and reevaluate the marketplace prior to the issuance of any future single award BPA’s.

Additionally, when conducting the annual review of the BPA the requirements will be reevaluated to determine if any other sources are capable of providing the software solutions and support.

9. Certification:

I certify that the supporting data under my cognizance which form the basis for this justification

16:14:27 -04'00'

Digitally signed by Christos

16:33:11 -04'00'

10. Contracting Officer Certification:

The undersigned has determined that the anticipated cost to the Government for this acquisition will be fair and reasonable. The requiring agency has concluded that the order represents the best value (as defined in FAR 2.101) and will result in the lowest overall cost alternative

(considering price, special features, administrative costs, etc.) to meet the Government’s needs in accordance with FAR 8.404(d). Further, I certify that this justification is accurate and complete to the best of my knowledge and belief.

Senior Contracting Officer

Information Technology Category

Federal Acquisition Services

Branch Chief

Information Technology Category

Federal Acquisition Services

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Competition Advocate

Director of Governance

Office of Acquisitions

Executive Director

Office of Acquisition Operations

Office of Information Technology Category

Head of Contracting Activity Executive

Review and Concurrence

Assistant Commissioner

Head of Contracting Activity

Office of Information Technology Category

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I have reviewed the Limited Sources Justification and have determined to the best of my knowledge and belief, based on the information contained herein, that it complies with all applicable policies and regulations.

OFFICE OF POLICY AND COMPLIANCE CONCURRENCE

Assistant Commissioner

Office of Policy and Compliance

Federal Acquisition Service

GSA, FAS

Senior Procurement Executive

GSA, FAS

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22/2022