JA Pega- Redacted.pdf

Pega Full Time Equivalents Software Licensing CONTROL NUMBER VA-25-00005196

JUSTIFICATION FOR AN EXCEPTION TO FAIR OPPORTUNITY

1. Contracting Activity: Department of Veterans Affairs (VA)

Office of Procurement, Acquisition, and Logistics Technology Acquisition Center 23 Christopher Way Eatontown, NJ 07724

2. Description of Action:

The proposed action is for a firm-fixed-price delivery order, issued under the National Aeronautics and Space Administration (NASA) Solutions for Enterprise-Wide Procurement (SEWP) V, Government-Wide Acquisition Contract (GWAC), to procure brand name Pega Systems Business Process Manager (BPM) and Customer Relationship Manager (CRM) software, maintenance support, and consulting services.

3. Description of the Supplies or Services:

The VA Financial Services Center (FSC) portfolio includes 12 large custom-coded applications including the Invoice Payment Processing System (IPPS), the Customer Relationship Management system used by the National Service Desk, the Customer Engagement Portal (CEP), the Charge Card Portal (CCP), Electronic Funds Transfer (EFT) Rejects, 10091, Pay Adjustment Transaction (PAT) Defense Civilian Pay System Data Exchange (DDE), Business Office Portal (BOP), Document Management System (DMS) and Lockbox, Prior Year Recovery (PYR), and the Office of Acquisition and Logistics (OAL) Ratification Tracking System (RTS). Each of these applications use the Pega platform as a base. FSC has a requirement to renew Pega licenses to maintain access to BPM and CRM subscriptions which include Automatic Event Service (AES), Business Intelligence Exchange (BIX), and Pega Customer Process Manager (CPM) modules. The FSC requires a base license amount of up to 10,000 CRM Full Time Equivalents (FTE) to support FSC's Customer Relationship Management tool and a base license amount of up to 71,000 platform FTEs to support all other FSC Pega applications. The FSC also requires optional quantities of up to 6,000 CRM FTE not to exceed user subscriptions per performance period, which are exercisable in 50 monthly FTE bundles in the base period and each of the 2 option periods. The maximum quantity of CRM licenses that may be procured under the optional tasks is 18,000 (6,000 per performance period). The FSC also requires optional quantities of up to 12,000 platform FTEs per performance period, which are exercisable in 100 monthly FTE bundles in the base period and each of the option periods. The maximum quantity of platform FTEs that may be procured under the optional tasks is 36,000 (12,000 per performance period). The FSC requires an optional CLIN to convert existing on premises licenses to the Pega Systems’ Pega Cloud for Government in the base period and each of the two option periods. The FSC also has a requirement for Pega consulting services on the best practices and architecture for the use of the Pega Software. This requirement includes the maintenance and support of the

Pega Full Time Equivalent Software Licensing CONTROL NUMBER VA-25-00005196 aforementioned software. The maintenance support shall include software patches, updates, 8x5 phone support for troubleshooting technical issues, and access to the technical support online information. The base period of performance shall be November 1, 2024, through October 31, 2025, and shall consist of the following: a 12-month base period with 2, 12-month option periods and up to 20 optional tasks that can be exercised during each period of performance. The optional tasks for additional licenses and consulting hours can be exercised at any point throughout the base or option periods. The total estimated value of the proposed action is $61,800,772.82, inclusive of all option periods and all optional tasks.

4. Statutory Authority:

Pursuant to Federal Acquisition Regulation (FAR) 16.505(a)(4), the following brand name requirement is being justified and approved as an exception to fair opportunity under the statutory authority of Section 41 U.S.C. 4106(c)(2) as implemented by FAR paragraph 16.505(b)(2)(i)(B), entitled “Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.”

5. Rationale Supporting Use of Authority Cited Above:

The FSC’s Pega solution portfolio includes 12 large custom-coded applications, including 2 of FSC’s largest and most complex applications, the IPPS and the Customer Relationship Management system used by the National Service Desk. Other FSC Pega specific applications include the CEP, the CCP, EFT Rejects, 10091, PAT DDE, BOP, DMS and Lockbox, PYR, OAL RTS as well as several supporting Pega robotic process applications. Each of these complex applications use the Pega platform as a base and include custom coded layers that allow for communication between them. VA requires the procurement of brand name Pega BPM and CRM software licenses as it is the low code platform upon which the 12 large custom-coded applications are built.

Procurement of any other alternative low code software product would not be compatible with the existing product platform without extensive rework of the existing customized solutions necessitating completely rebuilding a new platform. VA requires the Pega software to be interoperable and compatible with the existing infrastructure protocols and requires functionality for continued operational availability. This interoperation is key to assisting the FSC with responding to Veteran questions when they are received by FSC staff using the Customer Relationship Management tool. The Pega software is also the only platform that allows for layered services across the FSC.

Use of any other brand name software would not communicate with the existing platform since the current solutions are dependent upon the specific interfaces, workflows and controls that were created in Pega’s proprietary toolset. Only Pega or an authorized reseller can provide the required software maintenance and support because of the propriety source code required to develop and implement software updates and upgrades. Without access to this code, maintenance support services provided on the software would not be properly configured and would render the software inoperable.

Pega Systems software and support is required to maintain compatibility with existing Information Technology (IT) platforms currently installed and operating within the VA FSC’s environment. VA FSC has a substantial investment in its current network and IT infrastructure. If the Pega products were abandoned in favor of a different product, FSC would need to completely replace the entire existing architecture which includes the Pega BPM workflow automation engine, the low code platform environment in which all Pega applications run, as well as completely rewrite all 12 custom-coded applications that were written and developed utilizing the Pega interface. Workflow and graphical controls developed over the span of a decade would also require replacement. Multiple actions would need to be taken by VA to replace the existing Pega solution in support of any potential future competitive acquisitions. The first step would require performing an analysis to define the scope of the full amount of work required to replace the existing architecture. This analysis would be necessary because the 12 custom coded applications were developed over the course of a decade and are currently running within, and dependent upon, the Pega Workflow engine operating environment, thereby requiring a considerable investment in time and resources to analyze and design all new replacement applications that would be implemented in a completely new product architecture. Based on FSC’s Technical Leadership expertise, analysis of current architecture, and engagement with similar acquisitions, the cost of this analysis is estimated to be $7 million and would require a minimum of 12 months to complete. The Government would then need to socialize the analysis described above with industry to discover which products or services exist in the marketplace that may meet FSC’s full breadth of requirements. The time required to fully vet the analysis with industry is not entirely known but estimated to require a minimum of 18 months to complete. Industry feedback taken during this stage would be utilized to develop the requirements of a future acquisition. These estimated duplicated costs are not expected to be recovered through competition. Finally, without the acquisition of the required brand name Pega software or software maintenance there would be a direct negative impact on the prompt payment of invoices processed through the IPPS. This would have a cascading effect on VA causing invoices to not be processed timely, vendors to not be paid promptly, and ultimately would produce a catastrophic effect on Veterans’ ability to receive ongoing care.

6. Efforts to Obtain Competition:

Market research was conducted, details of which are in Section 8 of this justification.

This effort did not yield any additional sources that can meet the Government's requirements. However, the undersigned VA technical representative determined that limited competition is available among authorized resellers of the required brand name Pega Systems software and software maintenance support. In accordance with FAR

5.301 and 16.505(b)(2)(ii)(D), notice of award of this action will be synopsized and this justification will be made publicly available within 14 days of award on the Federal www.sam.gov. In accordance with FAR 16.505(a)(4)(iii)(A), this justification will be posted with the request for quotation on the NASA SEWP V GWAC website to notify all interested parties.

http://www.sam.gov/

7. Actions to Increase Competition:

In order to remove or overcome barriers to competition in future acquisitions for the requirements described herein, the Government’s technical experts will continue to conduct market research to ascertain if there are changes in the marketplace that would enable future actions to be competed. To that end, the Government will issue a request for information (RFI) to discover if alternative software products or services may exist in the marketplace that could meet FSC’s needs or if the current Pega solution could be scoped in a manner that would reduce or eliminate vendor lock in. The Government’s technical experts will continue to conduct market research based on the results of this

RFI.

8. Market Research:

VA’s technical experts conducted market research in May 2024 to ascertain if other products would satisfy VA’s requirements. Market research was conducted via communications with industry and an independent website search using the Google search engine. Specifically, the Government's technical experts reviewed similar software products available from Savvion Business Process Management Suite, QPR Process Analyzer, Microsoft and Business Process Management online service.

Although there are products with similar capabilities, the market research determined that no other products are compatible and interoperable with the existing proprietary Pega infrastructure already in place. Since vendors cannot directly import the Pega solution, moving to a new low code platform would require that each application be rewritten to utilize the workflow controls of any potential alternative solution to Pega BPM and would require a complete re-write of VA’s entire suite of Pega applications while simultaneously requiring the continued licensing of VA’s existing products while the replacements are developed. No alternative software can avoid the duplicative time and costs as outlined in Section 5 of this justification. Nor can other products integrate and run with the Pega BPM Workflow engine software that all of the FSC’s Pega applications require. Additionally, the market research confirmed that the source code required to issue the updates required to sustain the existing solution is proprietary, and no other vendor has access to Pega’s proprietary source code required to maintain Input/Output’s existing Pega deployed infrastructure. Pega and its authorized resellers are the only sources capable of providing the required maintenance and additional subscriptions. Based on the above, only brand name Pega software and software maintenance support meets all the Government's current requirements.

Additional Market Research was conducted by the Contracting Officer Representative and the Program Manager from May 8, 2024, to July 22, 2024. A Market Research Request was posted on NASA SEWP, RFI # 315756 was posted on July 11, 2024, with a closing date of July 22, 2024. One Service-Disabled Veterans Owned Small Business (SDVOSB) quote was received. However, the NASA SEWP Market Research Tool indicated that Pega Systems is available in the marketplace through NASA SEWP approved resellers. There are eight potential capable sources that can provide the required products and services, including two

SDVOSB resellers. As a result, there is a reasonable expectation for limited competition on the NASA SEWP V GWAC and this action will be competed as a total SDVOSB set aside.

9. Other Facts: None

10. Technical/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.

Yvonne Edwards Date Business Resources Specialist/COR

11. Fair and Reasonable Cost Determination

I hereby determine that the anticipated price to the Government for this contract action will be fair and reasonable based on anticipation of competition and discounts amount NASA SEWP V GWAC authorized resellers of the required brand name Pega Systems software and software maintenance support. Additionally, catalog pricing for SEWP V GWAC holders has already been determined by NASA to be fair and reasonable.

Kimberly Geran Date Contracting Officer

12. Contracting Officer Certification/Approval

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

Kimberly Geran Date Contracting Officer

Office of General Counsel (OGC) Review

I have reviewed this document and find it legally sufficient, based on the representations set forth in the documents and, if any, attachments. The Head of the Contracting Activity’s approval is an independently supported decision not wholly reliant on the legal sufficiency determination.

Colin Nash Date Office of General Counsel

HCA Approval

In my role as Head of the Contracting Activity, based on the foregoing justification, I hereby approve the acquisition of Pega FTE Software Licensing on an other than fair opportunity basis pursuant to the authority cited in Section 4 above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition.

Mr. Jeffrey C. Neill Date Head of the Contracting Activity Technology Acquisition Center Office of Procurement, Acquisition, and Logistics Department of Veterans Affairs

Date10_af_date: 10/31/24