JA _Laboratory Proficiency Testing_redacted v2.pdf

DEPARTMENT OF VETERANS AFFAIRS

Office of Procurement, Acquisition and Logistics (OPAL)

Strategic Acquisition Center (SAC) 10300 Spotsylvania Ave, Suite 400

Fredericksburg, VA 22408

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

(1) Identification of the agency and the contracting activity, and specific identification of the document as a "Justification for Other Than Full and Open Competition."

This Justification and Approval (J&A) for Other Than Full and Open Competition is executed by the Strategic Acquisition Center (SAC), on behalf of the Department of Veterans Affairs (VA), VA Central Office, Pathology and Laboratory Medicine (PLM).

(2) Nature and/or description of the action being approved.

This proposed action is for a sole source Firm Fixed-Price (FFP) follow-on contract with College of American Pathologists (CAP), 325 Waukegan Rd. Northfield, Il 60093, a non-profit organization. The services to be acquired from CAP require the contractor to provide proficiency testing program and evaluation to all VHA medical laboratories. As identified in the Performance Work Statement (PWS), this contractor must meet the federal regulations, Veterans Health Administration (VHA of Government) regulations, and maintain Center for Medicare and Medicaid Services (CMS) approval as a proficiency testing supplier. The federal requirements outline analytes, frequency, quantity, and grading of proficiency testing:

42 U.S.C. 263a Certification of laboratories (also known as Clinical Laboratory Improvement Amendments of 1988 (CLIA))

42 C.F.R. Part 493 Subpart H Participation in Proficiency Testing for Laboratories Performing Nonwaived Testing

42 C.F.R. Part 493 Subpart I Proficiency Testing Programs for Nonwaived Testing

38 C.F.R. 17.3500 -- VA application of 42 CFR part 493 standards for clinical laboratory operations

VHA Directive 1106 Pathology and Laboratory Medicine Service

Each VHA laboratory must participate in the CMS determined and regulated analytes as outlined in the regulations, if they offer that specialty/subspeciality for patient testing.

Additionally, VHA Directive 1106 – Pathology and Laboratory Medicine Service, requires “all VA medical facility laboratories and ancillary testing sites that perform laboratory testing on patients must participate in external CMS-approved PT programs for all analytes for which PT is available including waived testing, Provider Performed Microcopy (PPM) and non-regulated analytes. VA medical facility laboratories must order a separate PT kit for each instrument, method and site utilized for patient testing.

Strategic Acquisition Center (SAC)

The period of performance includes a 12-month base period with four 12-month options periods, and a 6-month option for the FAR Subpart 52.217-8 -- Option to Extend Services clause.

(3) A description of the supplies or services required to meet the agency’s needs (including the estimated value).

The VHA laboratory community comprises of over 1,100 laboratory locations. Within these locations, most CMS defined specialties are present. With this procurement the contractor must annually offer proficiency testing that meets CMS and VHA regulations and for all CLIA specialties/subspecialties regulated analytes in the categories below as outlined in 42 C.F.R. Part 493 Subpart I:

Microbiology Bacteriology Mycobacteriology Mycology Parasitology Virology Diagnostic Immunology Syphilis Serology General Immunology Chemistry Routine Chemistry Endocrinology Toxicology Hematology and Coagulation Immunohematology Cytology

The additional proficiency testing products offered by the contractor also needed to meet VHA Directive 1106 requirements for external PT programs for all analytes used for patient testing for which PT is available. The whole blood glucose quality cross-check is the only contractor cross-check program approved by VHA as a proficiency testing product. Additionally, Anatomic Pathology programs used to assess the proficiency of individuals as part of a VHA laboratory quality management plan are also required.

Offerings must minimally meet 42 C.F.R. Part 493 Subpart I requirements for quantity, frequency, and grading for regulated analytes. Other analytes must be supplied at least twice yearly and formally evaluated by the contractor for acceptability.

Strategic Acquisition Center (SAC)

The contractor must supply a shipping calendar of events or shipping table and notify affected VHA laboratories if any changes to the established schedule are made.

Delivery of the PT products will be to individual laboratories throughout the VA enterprise to include locations in the contiguous 48 states as well as Alaska, Hawaii, Philippines, American Samoa, Guam, and Puerto Rico.

Other products offered by the contractor are not covered in this contract to include:

linearity products, quality cross-check products (except whole blood glucose), publications, and quality management tools. Non-Gynecological Cytology products are not required under this contract.

The anticipated value of this contract is $59.950M including the option periods.

(4) An identification of the statutory authority permitting other than full and open competition.

Given the range, volume, and complexity of VHA's needs, the statutory authority permitting other than full and open competition is 41 U.S.C.3304(a)(1) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.302-1 entitled, “Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements.”

(5) A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

This procurement is a follow-on contract for the highly specialized process of Clinical Laboratory Proficiency Testing. This requirement must meet all the federal requirements outlined in the PWS to offer a Proficiency Testing Program, regulations listed below:

42 U.S.C. 263a Certification of laboratories (also known as Clinical Laboratory Improvement Amendments of 1988 (CLIA)) mandates Proficiency Testing be performed for Clinical Laboratories.

42 C.F.R. Part 493 Subpart H Participation in Proficiency Testing for Laboratories Performing Nonwaived Testing mandates the use of Centers for Medicare and Medicaid Services (CMS) approved proficiency testing provider.

Strategic Acquisition Center (SAC)

38 C.F.R. 17.3500 -- VA application of 42 CFR part 493 standards for clinical laboratory operations gives VA the authority to oversee the proficiency testing program for VHA laboratories.

42 C.F.R. Part 493 Subpart I Proficiency Testing Programs for Nonwaived Testing, mandates regulated analytes proficiency testing that laboratories must participate.

VHA Directive 1106 Pathology and Laboratory Medicine Service mandates nonregulated analytes proficiency testing that laboratories must also participate.

There is only one approved vendor, College of American Pathologists (CAP), listed on the CMS website (Proficiency Testing Programs | CMS) that can both meet the regulations and provide VHA laboratories with the necessary proficiency testing program. CAP is the only vendor that offers all the products required in 42 C.F.R. part 493 subpart I and has the most comprehensive nonregulated menu that meets the VHA Directive 1106 requirement for nonregulated testing proficiency testing participation.

Accordingly, CAP is the only firm capable of providing all specialties and subspecialties outlined in the PWS and Section III of Market Research across VHA laboratories nationwide, in an accurate and timely fashion, without adversely impacting VHA laboratory operations.

See the chart below for regulated analyte comparison based from the CMS website:

Proficiency Testing Programs | CMS :

Specialty/Subspecialty AA B-

M ed ica l L ab or at or y Ev al ua tio n

AP

I A m er ica n

Pr of ici en cy

In st itu te

Ac cu te st

CA

P

- C ol le ge o f A m er ica n

Pa th ol og ist s

Co m m on w ea lth o f Pe nn sy lv an ia

Pu er to R ico P

T Se rv ice s

W

SL

H

AS

CP

Microbiology

Bacteriology + + + + o + + o Mycology + + O + o o + o Mycobacteriology x + O + o o x o Parasitology + + O + o + + o

Strategic Acquisition Center (SAC)

Virology x x X + o x x o Immunology Syphilis + + O + o + + o General Immunology + + O + o + + o Chemistry Routine Chemistry + x X + o + + o Endocrinology + + O + o + + o Toxicology x x O + x x x o Hematology and Coagulation + + O + o + + o Immunohematology + + O + o + + o Cytology o o O + o o o +

+ Approved CMS provider all testing in specialty/subspecialty x Approved CMS provider but does not offer all testing in specialty/subspecialty o Does not offer specialty/subspecialty

(6) A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by subpart 5.2 and, if not, which exception under 5.202 applies.

Competition for this acquisition is already limited due to federal requirements outlined in 42 C.F.R. Part 493 Subpart H which require potential vendors to be CMS approved as a “Proficiency Testing Program for CLIA.” CMS publishes a list of approved providers routinely which was checked (Proficiency Testing Programs | CMS and Cytology Proficiency Testing | CMS).

Market research did not yield any additional sources that meet the Government's regulatory requirement for Proficiency Testing Programs. This J&A will be synopsized on SAM.gov in accordance with FAR 5.201.

(7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

In accordance with FAR 15.404-1(b)(2), the Government may use various price analysis techniques to ensure a fair and reasonable price before making any award. CAP is a nonprofit organization. As such, CAP is required by law to funnel their profits back into

Strategic Acquisition Center (SAC) the organization and not allow individuals to financially benefit from any profits by the nonprofit. Since pricing within CAP has remained consistent over the last “ten” years, except for COVID, CO expects the vendor pricing to remain fair and reasonable.

CAP has consistently granted VHA a 10% discount off its listed, commercial pricing per program.

Pricing has increased annually at about 5%, this is due to increased contractor costs as well as VA growth in laboratory activity. Actual previous contract pricing growth is listed below. 2021 growth is an outlier as it was impacted by the Covid pandemic. Pricing increases can reasonably be estimated for the life of the contract.

Year Growth 2018 4.19% 2019 5.90% 2020 3.75% 2021 9.75%* Covid 2022 6.56% 2023 5.22% 2024 4.57%

One of the deliverables on this contract is a workbook on the VA Proficiency Testing Program activity. This helps with VA utilization and promotes reasonable contract pricing. CO will not award unless the vendor price is fair and reasonable.

No award shall be made until the Contracting Officer determines the cost to the Government to be fair and reasonable. This determination will be based on a comparison of current contract pricing, an Independent Government Cost Estimate, past proposal submissions (if available), and other information as made available.

(8) A description of the market research conducted (see part 10) and the results or a statement of the reason market research was not conducted.

Market research was performed to verify that there are no additional potential vendors.

The CMS approved proficiency testing program vendor lists were reviewed - Proficiency Testing Programs | CMS, Cytology Proficiency Testing | CMS. These lists were compared to the CMS List of Non-waived Testing Which PT Is Required to generate the comparison chart in section 5.b.

Strategic Acquisition Center (SAC)

Additionally, Ability One, GSA, VetBiz(VIP), SAM, FSS, and other existing contracts were reviewed. None of the preferred sources turned up additional information that would impact the need. Contracts from Indian Health Service and DoD were found to sole source the same need to the same vendor as VHA is requesting, CAP.

CAP does maintain an active BAA with VHA, but no patient PHI/PII is expected to be involved in this contract.

(9) Any other facts supporting the use of other than full and open competition.

Utilizing another, or multiple, approved vendors will cause an unacceptable delay in fulfilling VHA’s regulated requirement. Disruption to the established procedures between CAP and VA will also create significant risk to VHA laboratory operations and accreditation. Proficiency testing participation is required for laboratory accreditation.

38 CFR 17.3500 requires VHA PLM Central Office oversight activity. This activity will also be significantly impacted if CAP-contract continuity was lost. Custom database building and data migration infrastructure(s) for proficiency testing result management have already been established by VHA. Selecting a different vendor under a new procurement approach will disrupt VHA operations, in addition to producing a loss on VA's capital investment in the operation. This procurement activity produces over a million proficiency testing result data points per year that 7 staff manage. Not utilizing this infrastructure puts VHA laboratory testing at risk and harms Veterans due to potentially inaccurate laboratory testing not being caught by staff reviewers.

If centralized VHA laboratory proficiency testing programs were not available, all laboratory activity would have to cease testing until a replacement program were obtained locally. This impact would be catastrophic to Veteran care as the operating authority to perform laboratory Veteran testing would be jeopardized. Proficiency testing programs are one of the main measures of laboratory quality and are mandated to be performed by law. The burden to obtain and manage proficiency testing programs would fall on each individual facility, greatly increasing the local manpower and resource need and pull staff away from Veteran care. Veteran services that rely on laboratory testing including primary care, emergency care, surgery service and even bedside point of care testing would all be at risk of disruption. The PLM central office’s legal requirement to oversee proficiency testing within the VA would also be disrupted, further risking the quality of Veteran laboratory testing and overall VA laboratory consistency between facilities.

The CO considered the viability of a multi-award contract and determined that such was inefficient and not sustainable.. A multi-award-contract approach will result in an unduly

Strategic Acquisition Center (SAC) heavy burden on both the Program Office and Contracting Office, given the level of Task Orders needed. In the current process, there is a short lead time between when proficiency testing is ordered and delivered. This is necessary because proficiency testing program participation is based on real-time individual operations. Due to the sheer volume of proficiency testing used by the VA, over 22,000 programs, the current lead time could not be maintained with multiple vendors and there would be an increased risk of proficiency testing gaps. This would cause a heavy logistical strain on all parties and likely result in higher pricing.

The risk of critical service disruption is further amplified by the numerous statutes, regulations, and directives governing who can provide the services and how they must be executed. Furthermore, CMS regulations limiting the universe of potential service providers to their list of approved contractors fundamentally inhibits the agency's capacity to fully compete this requirement.

(10) A listing of the sources, if any, that expressed, in writing, an interest in the acquisition.

No other sources are authorized to provide this service without CMS approval.. There was no list of interested parties who expressed interest in this acquisition.

(11) A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required.

At this time there are no other actions that can be taken to increase competition.

CO and Market Research team reviewed the CMS-approved list of providers against VHA's current needs. There has been no market shift in the approved providers or provider capability for over 15 years. Market Research demonstrates that the market has not shifted for the current acquisition period of performance, so this sole source is being pursued. Government will, in good faith, continue to monitor the market for future procurements.

(12) Technical Representative Certification:

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

Strategic Acquisition Center (SAC)

Signature: _________________________________ Date: ____________ Jill Hancock Program Manager VA Central Office, Pathology and Laboratory Medicine (PLM)

(13) Contracting officer certification that the justification is accurate and complete to the best of the contracting officer’s knowledge and belief.

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

Signature: _________________________________ Date: ______________

Rodney Burgos Cabassa Contracting Officer Strategic Acquisition Center

For acquisitions over $15M not exceeding $75M

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 $15M, the certification below required by FAR 6.304 serves as approval.

Signature: _________________________________ Date: ____________

Christopher D. Parker Associate Executive Director, Strategic Acquisition Center, and Acting Associate Executive Director, National Acquisition Center

8/14/2024

JILL HANCOCK Digitally signed by JILL HANCOCK Date: 2024.08.07 08:43:24 -04'00'

RODNEY BURGOS CABASSA Digitally signed by RODNEY BURGOS CABASSA Date: 2024.08.07 09:13:18 -04'00'

CHRISTOPHER

PARKER

Digitally signed by

CHRISTOPHER PARKER

Date: 2024.08.14 14:47:26 -04'00'