VHAPG Part 806.3 OFOC Page 1 of 9 Revision: 04 Effective Date: 12/15/25 Acquisition ID#: 36C770-26-AP-0200

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval (J&A) For

Other Than Full and Open Competition (>SAT)

Acquisition Plan Action ID: 36C770-26-AP-0200

1. Contracting Activity: Department of Veterans Affairs, VISN 15, located at 3450 S

4th Street Trafficway, Leavenworth, KS, in support of the Consolidated Mail Outpatient Pharmacy (CMOP).

2. Nature and/or Description of the Action Being Approved: The Department of Veterans Affairs (VA), Consolidated Mail Outpatient Pharmacy (CMOP), operates seven CMOP facilities across the United States. CMOP provides prescription fulfillment and mailing services for Veteran patients and fills approximately 84 percent of prescription orders for VA Medical Centers (VAMCs) and Community Based Outpatient Clinics (CBOCs) nationwide. CMOP also supports Indian Health Service (IHS) pharmacies and may support additional Federal partners under future interagency agreements.

At present, the CMOP network is operating at full production capacity. VAMCs also do not have the staff, space, or equipment needed to absorb a large increase in prescription volume. As a result, VA depends on CMOP to fill more than 410,000 Veteran prescriptions each day with an additional 3,600 supplemental nutritional and enternal supplies prescriptions fulfilled per business day by the Direct-to-Patient (DTP) program. Demand continues to grow, requiring longer operating hours and weekend shifts. Even with ongoing modernization efforts, CMOP does not have the capacity to absorb the approximately 3,600 daily prescriptions that are currently filled by the DTP contractors for nutritional and enteral supplies. Unlike standard pharmaceutical dispensing, these items require manual fulfillment processes and specialized equipment because of their size, weight, and handling requirements.

Under the authority of FAR 6.103-1, VA intends to award a new bridge contracts to the incumbent contractor, McKesson Medical Government Solutions LLC, for a one-year period from October 1, 2026, through September 30, 2027, with a six-month extension exercised at the discretion of the Government. This is not an extension of the current contracts. Rather, it is a new bridge action needed to maintain uninterrupted service while VA completes a long-term competitive follow-on acquisition and transitions performance in an orderly manner. The bridge contracts will consist of a 12-month base period and a six-month option period. The Integrated Product Team (IPT) continues to refine the requirement, finalize the acquisition strategy, obtain the required reviews and approvals, and prepare for full and open competition. Additional time has been necessary because of changes in VA policy, VHAPG Part 806.3 OFOC Page 2 of 9

Acquisition ID#: 36C770-26-AP-0200 acquisition guidance, Performance Work Statement (PWS) requirements, and the complexity of transitioning to a nationally critical requirement that depends on validated technical integration and uninterrupted operations. Combined, these factors affected the timely delivery of a full acquisition packet and greatly impacted planning for a solicitation that will maximize competition while maintaining high quality health care that is provided to our Veterans under the DTP program. The Independent Government Estimate for this 18-month

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

VA CMOP relies on the DTP contract to outsource 3,600 Veteran prescriptions to McKesson Government Solutions, for nutritional and enternal supplies each business day that are shipped directly to Veteran patients. This arrangement helps CMOP manage workload, allows CMOP to focus on prescription pharmaceuticals, supports a broad product line, reduces cancellations, and improves timely delivery to Veterans.

Enteral nutrition and associated supplies items are not well-suited for CMOP's automated pharmaceutical production systems. These items often require manual picking, packing, and handling, as well as specialized equipment to process and ship them in large volumes. The contractor's role is therefore essential to maintaining efficient operations and timely delivery for Veteran patients.

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

(X) (1) Only One Responsible Source and No Other Supplies or Services Will

Satisfy Agency Requirements per 41 USC §3304(a)(1) as implemented by

RFO 6.103-1;

( ) (2) Unusual and Compelling Urgency per 41 USC §3304(a)(2) as implemented by RFO 6.103-2;

( ) (3) Industrial Mobilization, Engineering, Developmental or Research Capability or Expert Services per 41 USC §3304(a)(3) as implemented by RFO 6.103-3;

( ) (4) International Agreement per 41 USC §3304(a)(4) as implemented by RFO 6.103-4

( ) (5) Authorized or Required by Statute per 41 USC §3304(a)(5) as implemented by RFO 6.103-5;

( ) (6) National Security per 41 USC §3304(a)(6) as implemented by RFO 6.103-6;

( ) (7) Public Interest per 41 USC §3304(a)(7) as implemented by RFO 6.103-7;

This requirement is a critical national CMOP service that must continue without interruption to avoid unacceptable risk to Veteran health and mission performance.

Although the technical transition for a new contractor can reasonably be estimated at a minimum of 4 months, or approximately 120 days, from award to operational readiness, that estimate reflects only the post-award onboarding effort. It does not include the time needed to complete a full and open competition, obtain all required reviews and approvals for a high-value requirement, and carry out a deliberate, low-risk transition.

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Acquisition ID#: 36C770-26-AP-0200

When those activities are considered together, the total time needed for the competitive follow-on acquisition and transition is reasonably estimated at up to 18 months. During that period, CMOP cannot risk a break in service. CMOP facilities are already at full capacity, and VA medical facilities do not have the space, staffing, or specialized equipment needed to take on the outsourced DTP workload. For that reason, the incumbent contractor is the only responsible source capable of continuing performance during the bridge period without unacceptable disruption. McKesson has a specific list of times that cannot be filled by any other existing VA or Federal Government contract.

Performance also depends on compliance with the VA Technical Reference Model (TRM) and the use of VA Office of Information and Technology (OI&T)-approved systems that can securely transmit protected health information, including patient and prescription data. This work requires full integration with VA-approved Health Level 7 (HL7) infrastructure and Application Program Interface (AP), as well as extensive validation, cybersecurity authorization, and interoperability testing. Past onboarding experience for HL7-enabled vendors shows that these integration efforts are time-consuming and resource-intensive, and current OI&T review processes and cybersecurity requirements add additional complexity. This is the only secure way at present available to the VA for secure patient prescription and healthcare information to be transmitted to a non-Government entity to maintain HIPPA compliance. Only the incumbent contractor possesses fully validated VA TRM-approved systems, HL7 interfaces required cybersecurity authorizations, and existing national operations required for uninterrupted service. No other contractor, due to this timeline, can complete the mandatory 120-day HL7, TRM, cybersecurity, and operational onboarding within timeframe needed to satisfy the Government’s immediate requirement for DTP.

5. Demonstration that the Contractor’s Unique Qualifications or Nature of the

Acquisition Requires the Use of the Authority Cited Above (applicability of authority):

Because of the complexity of the DTP outsourced fulfillment requirement, only the current incumbent contractor can meet the Government's immediate need during the bridge period. The incumbent already maintains the VA-approved technical and operational infrastructure in place to receive, process, fill, and ship prescriptions and related supplies directly to Veteran patients without interruption. That infrastructure includes VA TRM and VA OI&T-approved systems, secure transmission capability for patient and prescription data, validated HL7 interfaces, and the workforce, facilities, inventory, and fulfillment processes needed to operate at the required national scale.

The incumbent also has immediate operational capability that cannot be replicated within the available time. They are already meeting this requirement within established delivery standards, including fulfillment on average within 48 hours of order notification, and they maintain the logistics and distribution network needed to support approximately 3,600 prescriptions per business day for enteral nutrition and associated supplies.

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Acquisition ID#: 36C770-26-AP-0200

Although market research indicates that other firms may be able to compete for the long-term requirement in the future, a new contractor could not meet the agency's immediate need for the bridge period because any new source would require significant transition planning, facility and workforce stand-up, systems integration, testing, validation, cybersecurity approvals, and operational start-up before taking on workload. VA estimates that technical onboarding for a new contractor, from award to operational readiness, would require at least 4 months, or approximately 120 days, under the most favorable conditions. That estimate covers only post-award onboarding activities such as systems integration, testing, validation, and cutover. It does not include the time required to complete a full and open competition, evaluate proposals, resolve protests if they occur, make award, and then transition performance in an orderly way.

Given the complexity, value, and national importance of this requirement, the overall timeline for the competitive follow-on acquisition is reasonably estimated at up to 18 months. That timeline includes requirements refinement, acquisition planning, internal reviews and approvals, solicitation issuance, proposal evaluation, award, potential protest resolution, and completion of the minimum 4-month technical onboarding period for the follow-on contractor, if the follow-on is awarded to a contractor other than the incumbent. A shorter bridge period would create a substantial risk of repeated bridge actions, added administrative burden, and possible disruption to prescription fulfillment and patient care. For these reasons, the nature of the acquisition and the incumbents' existing technical integration, validated processes, and immediate operational readiness supports use of the cited authority for an 18-month bridge action.

6. Description of Efforts Made to ensure that offers are solicited from as many potential sources as possible (including whether a notice was or will be publicized as required by RFO Part 5 and, if not, which exception under RFO Part 5 applies):

During the work of the IPT, the team identified revised requirements that may increase future vendor participation, improve competition, and provide better value to VA. One important revision form the current PWS is restructuring the workload by geographic regions. A regional approach could reduce shipping costs and provide better continuity during emergencies, severe weather, and other disruptions.

VA is also considering updates to the long-term contract structure that may allow for new processes, new systems, and broader industry participation. Market research associated with the revised requirements and acquisition approach has required additional time and coordination because of evolving program needs and other unanticipated challenges. The Government published a notice of intent to award sole source bridge contracts in accordance with RFO 5.101 on August 4, 2026, and no capabilities statements were received from industry.

7. Determination by the CO that the Anticipated Cost to the Government will be

Fair and Reasonable:

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Acquisition ID#: 36C770-26-AP-0200

The Independent Government Cost Estimate (IGCE) for the long-term competitive At that value, the acquisition requires Senior

Procurement Executive (SPE) review and other high-level VA and departmental approvals, which extend the normal procurement lead time. The size, complexity, and criticality of the requirement also demand substantial acquisition planning, requirements refinement, governance review, and stakeholder coordination.

Based on market research and internal technical assessment, VA estimates that technical onboarding for a new contractor, from award to operational readiness, would require at least 4 months, or approximately 120 days, under optimal conditions. Full capability development, including systems integration, testing, inventory build-out, workforce scaling, and risk-mitigated cutover, would likely take longer than that minimum. When that onboarding period is combined with the time required to finalize the acquisition strategy, obtain all required reviews and approvals, conduct the competition, evaluate proposals, make award, and resolve any protest activity, the total time needed to transition safely to a new contractor aligns with an overall acquisition timeline of up to 18 months.

Accordingly, market research supports the conclusion that broader competition may be achievable for the long-term requirement once revised requirements, acquisition strategy, and transition planning are completed, but it does not support competition for the immediate bridge need. For the bridge period, consisting of a 12-month base period and a 6-month option period, the incumbent contractor remains the only responsible source capable of providing uninterrupted service primarily because of the post-award compliance and onboarding processes outlined above including possessing an integrated technical environment, validated interfaces, established inventory, trained workforce, and proven operational processes needed to continue performance without unacceptable risk to prescription fulfillment and patient care.

9. Any Other Facts Supporting the Use of Other than Full and Open Competition:

CMOP facilities are already operating at full production capacity, so returning the DTP workload to CMOP is not a viable option. VA medical facilities also do not have the staff, space, or specialized equipment necessary to absorb a high volume of enteral nutrition and medical-surgical supply fulfillment. VA remains dependent on CMOP to fill more than 500,000 Veteran prescriptions each day, and the DTP contractors support that mission by filling approximately 3,600 prescriptions a day that CMOP cannot absorb.

The incumbent contractor, McKesson, is the only vendor with the resources already in place to continue this specialized, Government-integrated DTP operation without disruption. Their current operations are aligned with the size, scope, and technical requirements of the effort, including validated HL7 interfaces, VA TRM/OI&T-approved systems, cybersecurity authorizations, and established fulfillment processes needed to support national-scale prescription and supply distribution. Selecting any other source for the bridge period would put continuity of service at risk and create unacceptable risk to Veteran patients and the VA mission.

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Acquisition ID#: 36C770-26-AP-0200

At a minimum, a new contractor would need a 4-month, approximately 120-day, technical onboarding period after award for system configuration, HL7 integration, VA OI&T review and approval, cybersecurity authorization, end-to-end testing, and operational cutover, followed by inventory build-out and workforce ramp-up. That effort would come on top of the time needed to conduct and complete a full and open competition for the long-term requirement. Given the importance of uninterrupted prescription and supply fulfillment, the size of the national workload, and the time required to complete the competitive follow-on acquisition and transition, award of a new bridge contracts to the incumbent contractor for the 18-month bridge period is the only viable near-term approach that avoids significant risk, service delays, and adverse impacts to patient care.

10. Listing of Sources that Expressed, in Writing, an Interest in the Acquisition:

The following contractors are expected to express an interest in the long-term competed acquisition:

Medline Industries, LP McKesson Medical-Surgical Cardinal Health

11. A Statement of the Actions, if any, the Agency May Take to Remove or

Overcome any Barriers to Competition before Making subsequent acquisitions for the supplies or services required:

The follow-on acquisition is expected to move toward a region coverage model, with regional coverage aligned as evenly as practicable based on CMOP workload distribution. This approach is intended to shorten delivery distances, reduce transportation costs, and build redundancy to help mitigate disruptions caused by severe weather, natural disasters, or other unforeseen events. By distributing fulfillment responsibility across multiple regions, VA expects to improve continuity of operations and create a more flexible operating model.

From a competition standpoint, this regional model should allow vendors to compete within specific regional coverage areas rather than requiring nationwide infrastructure from every offeror. Market research conducted with National CMOP administration indicates that multiple vendors currently have, or could reasonably establish, capability within the proposed regional coverage areas. These actions are intended to remove or reduce barriers to competition for future acquisitions of this requirement.

As to anticipated procurement schedule, the three-region approach is being incorporated into a full and open competitive procurement with an which requires SPE review and other senior-level VA and departmental approvals. The overall acquisition schedule is expected to take approximately 18-months and includes refining the requirements and PWS, completing internal reviews and approvals, developing and issuing the solicitation, evaluating proposals, making award, resolving any protest activity, and completing a minimum 4-month, approximately 120-day, technical onboarding and transition period for the follow-on