JA TPharm4_Redacted JA-22-0079B.pdf

Close

FOR OFFICIAL USE ONLY· Source Selection Information - See FAR 2.101 and 3.104

Justification and Approval (J&A) for Federal Acquisition Regulation (FAR) Subpart 6.3

Other Than Full and Open Competition

Tille: TRICARE Pharmacy 4th Generation (TPharm4)

J&A Number:

Created By:

JA-22-0079B

1. Identification of the agency and contracting activity:

Managed Care Contracting Division

2. Nature and/or Description of Action being Approved:

modification to an existing contract

Additional POCs:

Individual

Approval is being requested under an individual justification for a bridge action, resulting in a Firm Fixed Price (FFP) modification to extend the period of performance for two (2) months until becember 31, 2022 for the Express Scripts, Inc. contract for the Pharmacy Benefit Manager (PBM) services. The original contract was competitively awarded on April 14, 2016 with a current expiration date of October 31, 2022 (which includes the base, all options, and a six-month extension of services). In accordance with (IAW) 10 U.S.C § 1074g, the TRICARE Pharmacy 4th

Generation (TPharm4) contract delivers PBM services for the Military Health System (MHS) by providing access to prescription medications through a retail pharmacy network, dispensing prescriptions at the mail order pharmacy (MOP), and adjudicating Military Treatment Facility (MTF) prescriptions using a central patient profile reflecting transactions at all points of service.

A follow-on contract, TRICARE Pharmacy 5th Generation (TPharm5), has been awarded and in the transition-in phase. Full performance under TPharm5 will begin on January 1, 2023. Prior to the 'current TPharm4 contract end date of April 30, 2022, a six-month extension modification will be processed in accordance with FAR 52.217-8 to continue providing PBM services through October ;31, 2022. At that time, DHA intends to award a 2-month bridge action (November 1, 2022 - December 31, 2022) until the TPharm5 start date. This will ensure continuity of TRICARE Pharmacy !services which is of paramount importance to the Government.

3. Description of Supplies/ Services:

This bridge action will provide continued support of the PBM services until the transition to the TPharm5 contract is complete. TRICARE is the DoD health care program administered by the DHA by means of the MHS for approximately 9.6 million active duty and retired members of the Uniformed Services, and their spouses and children, including TRICARE for Life beneficiaries. The TRICARE Pharmacy program is authorized under 10 U.S.C. § 1074g and 32 C.F.R. 199.21.

The TRI CARE Pharmacy Benefits Program provides a pharmacy benefit to all eligible beneficiaries by providing state of the art technologies to enhance patient safety, efficiency, and cost effectiveness. This program offers pharmacy services through direct care pharmacy at MTFs located at various military bases, retail network pharmacies, authorized retail non-networks pharmacies, or delivery through the MOP.

TOTAL Contract Value

POP: From 5/1/2014 to 10/31/2022

Estimated Value $6,080,148,364.00

Type of Contract (Primary):

FAR 16.204 Fixed-Price Incentive

Funding Type:

Operations & Maintenance (O&M)

BASE

POP: From to

Estimated Value

QQtions: No

Number of Options:

POP (All options): From

Estimated Value (all options):

Extension of Services: No

Clause:

Estimated Value:

Number of Months:

to

4. Statutory and Regulatory Authority Permitting Other Than Full and Open Competition (see FAR 6.302), or the Specification of the Statutory and Regulatory Provision Providing Exception to S(a) Program Competitive Requirements (see FAR 19.805-1):

10 U.S.C. 2304(c)(1) 6.302-1 - Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements

5. Rationale Justifying Use of the Statutory Authority Cited:

The Government intends to issue a sole-source bridge action to extend the TPharm4 contract, HT9402-14-D-0002, to ESI, in accordance with Federal Acquisition Regulation (FAR) 6.302-1, Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements. The bridge action period of performance will be from November 1, 2022, through December 31, ~022. The modification to extend performance is necessary to ensure continued support to the DHA by continuing to meet critical requirements, to prevent a gap in service of pharmacy benefits to all eligible beneficiaries from the end of the current TPharm4 contract on October 31, 2022 until the competitively awarded follow-on contract (TPharm5) full performance begins on January 1, 2023 and to ensure full performance of the new National Prime Vendor (NPV) Pharmaceutical contract, awarded by the Defenses Logistics Agency (DLA), has begun.

IAW FAR 6.302-1 (a)(2)(iii)(A-B), for DoD, services may be deemed to be available only from the original source in the case of follow-on contracts for the continued provision of highly specialized services when it is likely that award to any other source would result in (A) substantial duplication of cost to the Government that is not expected to be recovered through competition or (8) unacceptable delays in fulfilling the agency's requirements. The process of a new contract award to a different contractor will require a transition period including but not limited to additional stand up and migration and increased management, resulting in additional costs to the Government. In addition, any contractor who is not the incumbent would require transition time which would result in unacceptable delays and additional expense associated with preparing for performance. It is not practicable for another contractor to perform PBM services for such a limited period of time (two

(b)(6) (b)(6)

~onths). It is in the Government's best interest to continue services with ESI to not only avoid substantial duplication of efforts and unacceptable delays, but to ensure services will continue without disruption.

Failure to extend this contract would disrupt pharmacy services to nearly 9.6 million beneficiaries who are dependent upon this program for healthcare and pharmacy services, both in the Continental United States (CONUS) and overseas.

6. Efforts to Obtain Competition:

IAW FAR subparts 6.302-1 (d) and 5.201, a special notice was posted on the Government point of entry (SAM.gov) on February 1, 2022, notifying the public of the Government's intent to issue a -sole source bridge action to extend the TPharm4 period of performance until the follow-on contract (TPharm5) full performance begins. No responses were received by the due date of February 11, 2022.

7. Determination that Anticipated Cost to the Government will be Fair and Reasonable:

IAW FAR 15.404-1 (b)(2)(ii), Comparison of Proposed Prices to Historical Prices paid, will be used to determine the anticipated price of will be fair and reasonable.

8. Market Research:

Market research was comprised of posting a Request for Information (RFI) on SAM.gov on January 13, 2022, posting a notice of intent to sole source on February 1, 2022, and information 1received during award of TPharm5 contract.

No responses were received as a result of the RFI and notice of intent to sole source. Additionally, results of recent market research that was conducted for similar contracts recently awarded, for 1similar or identical requirements were reviewed. Specifically, contract HT9402-21-C-0007 for TPharm5, which was awarded on August 5, 2021. As part of that market research, six (6) large businesses were identified as PBMs capable of providing PBM services. The sources identified are PBMs that handle pharmacy claims for payers by working closely with pharmaceutical manufacturers and pharmacies. The PBM industry is highly consolidated, due to significant merger and acquisition activity in recent years. The top three (3) PBMs in the Unites States - Express Scripts, CVS Caremark, and OptumRX - represent nearly 75% of covered lives. Vertical integrations has been a trend in the industry; all of the major PBMs are owned by health insurers, including five of the six sources identified. All of the sources identified are able to deliver the core PBM functionalities which include, processing retail pharmacy and paper claims, managing a complex benefit mail order pharmacy; and, providing beneficiary and pharmacy support services. All of the sources identified process large volumes of annual claims and service large beneficiary populations. However, Envision Rx, Prime Therapeutics, and Humana make up a smaller market share and may be challenged to assume PBM responsibility over a TRICARE beneficiary population of 9.6 Million covered lives. Additionally, integrating the TRICARE Pharmacy Program with MTFs and legacy MTF systems presents a set of unique challenges, which is likely to provide those sources with MHS experience a competitive advantage.

Based on the rationale provided in sections 5 and 8, even limited competition for this bridge action is not feasible. It has the potential to cause unacceptable delays due to the time it will take to procure, which would subsequently increase the financial risks to the Government and create a patient safety issue affecting all 9.6 million TRICARE beneficiaries. It is in the Government's best interest to approve the bridge action as it will minimize the time and administrative costs required to continue services through the interim period as the work is fully transitioned to the TPharm5 contract on January 1, 2023.

9. Other Facts:

follow-on contract, TPharm5, was awarded on August 15, 2021 and allows for a transition period and begin full performance on January 1, 2023. Additionally, this is a replenishment-type contract - ESI provides their initial inventory to sustain operations and Government replenishes that inventory via the NPV contract administered by the DLA. The next generation NPV contract is anticipated to be awarded by the DLA in 1July 2022 and begin full perfonnance in December 2022.

10. Interested Sources:

IA~ ~tated in section 6, a RFI and a notice of intent to sole source were posted and no responses were received. Responses weren't expected due to the fact that it takes 15 months to transition to a new contract which is ~a]jstic for a two month bridge action.

11 . Actions to overcome barriers:

This 2-month bridge will align the period of performance of TPharm5 and the next generation NPV contract. No additional bridge action will be needed.

Coordination & Approval

12. Technical/Functional Representative:

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

Name: Title: COR

Approved -28 Feb 2022, 14:43:59

Comments:

13. Requirements Certification:

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

Name:

Approved: Tuesday, March 1, 2022

Comments:

14. Fair and Reasonable Cost Determination:

Title:

J-Directorate Office:

FAR 15.404-1 (b)(2)(ii), Comparison of Proposed Prices to Historical Prices paid, will be used to determine that the anticipated price of will be fair and reasonable.

I have determined that the anticipated cost to the Government for this contract action is fair and reasonable.

Name:

Approved: 28 Feb 2022, 14:55:58

Comments:

15. Legal Review:

I have reviewed this justification and have found it to be legally sufficient.

Name:

Title: Contracting Officer, Managed Care Contracting Division

Title: Office of General Counsel

(b)(4)

(b)(6) (b)(6)

(b)(6)

(b)(6)

(b)(4)

(b)(6) (b)(6)

Approved: Thursday, March 3, 2022

Comments:

16. Contracting Officer:

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

Name:

Approved: 28 Feb 2022, 15:03:57

Comments:

Title: Contracting Officer, Managed Care Contracting Division

17. Competition Advocate: Based on the foregoing justification, I hereby approve the procurement of TRICARE Pharmacy 4th Generation (TPharm4) on an other than full and open competition basis pursuant to the authority of 10 U.S.C. 2304(c)(1) 6.302-1 --Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, subject to availability of funds, and provided that the supplies and/or services herein described have otherwise been authorized for acquisition.

Name: Title: Competition Advocate (DAD-P&C)

Approved: -4 Mar 2022, 08:27:10

Comments:

18. Head of Contracting Activity (or designee): Based on the foregoing justification, I hereby approve the procurement of TRICARE Pharmacy 4th Generation (TPharrn4) on an other than full and open competition basis pursuant to the authority of 10 U.S.C. 2304(c)(1) 6.302-1 - Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, subject to availability of funds, and provided that the supplies and/or services herein described have otherwise been authorized for acquisition.

Name: Title: Head of the Contracting Activity (HCA) (DAD-P&C)

Approved: 4 Mar 2022, 10:51 :27

Comments: My approval constitutes coordination on this request as dollar value associated with requested extension requires SES/GO approval. I recommend approval.

19. Director of Defense Health Agency, Senior Procurement Executive: Based on the foregoing justification, I hereby approve the procurement of TRICARE Pharmacy 4th Generation (TPharm4) on an other than full and open competition basis pursuant to the authority of 10 U.S.C. 2304(c)(1) 6.302-1 - Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements, subject to availability of funds, and provided that the supplies and/or services herein described have otherwise been authorized for acquisition.

Name: Title: Senior Procurement Executive (SPE)

Approved: 4 Mar 2022, 15:01 :45

Comments:

Version: 246.0 Created at 2/28/202212:46 PM by Close Last modified at 3/4/2022 3:03 PM by Workflow

(b)(6)

(b)(6) (b)(6)

(b)(6)

(b)(6)

(b)(6) (b)(6)

(b)(6)