JEFO - Malkin - 0045.pdf

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval

For

Exception to Fair Opportunity Memo

Acquisition Plan Action ID:

1. Contracting Activity: Department of Veterans Affairs, Network/Program Contracting Office 10, located at 3140 Governor’s Place Blvd. Suite 210, Kettering, OH 45409-1337, in support of VISN 10 VA Health Care System.

• Using Activity: Battle Creek VA Medical Center o Battle Creek VA Medical Center

• Contracting Activity: Network Contract Office (NCO 10)

• Funding Document ID:

o Battle Creek VA Medical Cetner: 515-26-3-469-0045

2. Description of Action:

The proposed sole source task order against DoD (Department of Defense) TRANSCOM IDIQ (Indefinite Delivery Indefinite Quantity) GWAC (Government-Wide Acquisition Contract) contract HTC711-23-D-C025 with vendor United Parcel Service Co. (UPS) is a firm fixed price (FFP), for one year for shipping and package delivery services for the Battle Creek VAMC.

Description of Supplies or Services:

The task order is for package pickup and delivery services at the Battle Creek VA Medical Center.

Shipping services include logistic support and delivery to patients, CBOC’s etc. Daily pickup and drop-off at Medical Centers campuses, Monday – Friday delivery to customers as well as expedited support for items that are time-sensitive. Delivery addresses indicated on the package will be a mostly residential could be commercial as well.

OMB Memoranda M-17-29 directs the Contract Officer to a Best-in-Class mandatory solution for package delivery services. VA directive #7179 directs Contracting Officers (COs) to utilize Next Generation Delivery Service (NGDS) for domestic delivery services. NGDS is available through DoD (TRANSCOM) for Federal Civilian Agencies, and authorized entities.

Due to the uncertainty of the amounts of services that will be required to use during this performance period, the proposed task order will be bulk funded and has a not-to-exceed ceiling amount of $50,000.00. Vendor to bill for actual services rendered.

Statutory Authority: The statutory authority permitting an exception to fair opportunity is Section 41 U.S.C. 4106(c) as implemented by the Federal Acquisition Regulation (FAR) 16.505(b)(2)(i):

( ) FAR 16.505(b)(2)(i)(A): The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays.

(x) FAR 16.505(b)(2)(i)(B): 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.

( ) FAR 16.505(b)(2)(i)(C): The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order.

( ) FAR 16.505(b)(2)(i)(D): It is necessary to place an order to satisfy a minimum guarantee.

( ) FAR 16.505(b)(2)(i)(E): For orders exceeding the simplified acquisition threshold, a statute expressly authorizes or requires that the purchase be made from a specified source”. The statutory authority permitting an exception to fair opportunity for this action is 38 U.S.C. 8127(c), known as the Veterans First Contracting Program which provides the authority to directly contract with a Service-Disabled Veteran-Owned Small Business (SDVOSB) or a Veteran-Owned Small Business

(VOSB).

3. Rationale Supporting Use of Authority Cited Above:

FAR 16.505(b)(2)(i)(B) authority is justified for this task order based on the following:

1. OMB Memorandum M-17-29 designates the Next Generation Delivery Service (NGDS) as a mandatory Best-in-Class solution for package delivery services.

2. NGDS, available through DoD TRANSCOM, offers fair and reasonable pricing for UPS, FedEx, and DHL services, providing better rates than individual solicitations due to its nationwide, multi-agency IDIQ structure.

3. UPS provides the best overall value for Next Day service and Residential Ground service for the region that services VHA VISN 10, when compared to other NGDS GWAC vendor pricing that was provided during the HTC711-23-D-C025 contract solicitation. Below is a summary of the best overall value and the unique qualifications and expertise UPS offers:

• Superior Next Day and Residential Ground service for VHA VISN 10 region compared to other NGDS GWAC vendors.

o Additional time-sensitive shipping expertise as UPS offers a range of urgent transportation options and UPS Express Critical (next-flight-out, charter, hand-carry services).

o 3-Day Air services are available at a reduced cost and expedited shipment cycle when compared to Ground services.

o Specialized handling capabilities including temperature-controlled vehicles and hazardous materials transport.

• Stronger guarantee on ground shipments across all 50 states and some territories.

o UPS also offers international shipping capabilities with the ability to provide coverage to major metropolitan areas worldwide.

• Faster ground service within the continental US (1-5 business days) compared to FedEx (1-7 days, including weekends).

• Better delivery guarantee and cost-effectiveness for mission partners and Veteran patients.

These factors support the use of UPS through the NGDS contract as the most advantageous option for the Government.

6. Efforts to Obtain Competition: A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable.

Despite being directed to utilize NGDS GWAC by OMB Memoranda M17-29, additional market research was conducted as the VA Directive 7179 was recently updated to reflect OMB Memoranda M-22-03, and now states “As directed by OMB Memorandum M-22-03, VA is obligated to consider decentralized contracts in lieu of BIC (Best in Class) vehicles when market research indicates an opportunity for small business participation”… especially true for requirements that may be governed by the mandatory VA Rule of Two…. Market research was performed and a Sources Sought notice was publicized to comply with the updated Directive 7179 and OMB Memorandum M-22-03. Results of market research efforts are detailed below in section 8.

7. Actions to Increase Competition:

The Government will continue to conduct market research to ascertain if there are changes in the marketplace that would enable future actions to be competed in the open market.

8. Market Research: Provide a description of the market research conducted among the contract holders and the results. If market research was not conducted, the reasons it was not conducted should be stated. When citing FAR 16.505(b)(2(i)(b) or FAR 16.505(b)(2)(i)(e), the only possible way to state in paragraph 5 of the J&A that there is only one contractor who can fulfill the agency’s needs is to conduct market research, and it should be summarized here.

• The VA Rule of Two cannot be met for this requirement as there are no 2 or more capable SDVOSB or VOSB concerns that have expressed interest in supplying a quote for services and are deemed capable to provide the breadth of service this requirement compels. An RFI was posted on August 17th, 2025 to all socio-economic entities and large businesses. The Government received responses from SDVOSBs (3), WOSB (1), EDWOSB (1), SB (1), and unknown (1) (not in SAM). All of the responses indicated or implied that subcontractors would be utilized to fulfill the requirement. The CS has determined that awarding this contract to any of these vendors could pose significant risks, including potential loss, delays or disruptions in delivering critical packages such as medication for VA patients. Additional risks include an increased cost for services due to not receiving the negotiated rates for the DoD Transcom contract. The VA Rule of Two cannot be met for this requirement as there are no 2 or more SDVOSB or VOSB concerns that are able to perform this service. SBA Rule of Two cannot be met for this requirement as there are not two or more (of any particular socioeconomic class) that can perform this requirement. Additionally, we cannot take the risk of packages being lost in transition nor will this effort be same price offered by the IDIQ.

• The VA Directive 7179 (Updated 10/2/2023) states that the VA will rely on these contracts (TRANSCOM) for package delivery for shipments originating or terminating internally or for shipments that require use of air transportation domestically. Shipments made overland or for short-haul distances, such as within a Veteran Integrated Services Network, may also rely on the NGDS (Next Generation Delivery Services) vehicles, depending on Market Research.

• However, OMB Memorandum 22-03 (dated 12/2/2021) dictates that the VA is obligated to consider decentralized contracts in lieu of BIC (Best in Class) vehicles when market research indicates an opportunity for small business participation.

• No additional Small Business participation could be identified. Moreover, most of the responses from current and former sources sought notice stated that expedited or longer duration shipping would be accomplished using commercial carriers i.e., UPS or FedEx using the SB volume discount(s).

• The NGDS program is the mandatory acquisition method for small package shipping as directed in OMB M-17-29, Best-in-Class Mandatory Solution – Package Delivery Services, dated July 27, 2017, and VA Directive 7179 (10/02/2023). The CO shall award a Task Order against HTC711-23- D-C025 or HTC711-23-D-C023 to UPS or FedEx.

9. Other Facts:

There is not a single instance, across the entire Veterans’ Health Administration, that a contract for small package pick-up and delivery has been awarded to a vendor other than the established carriers under the Next Generation Delivery Service II (NGDS-2) contract. Due to the complexity of providing the service at a competitive rate, within schedule, and comply with the Limitations on Subcontracting (FAR 52.219-14, VAAR 852.219-75, and 15 U.S.C. § 657s), setting aside this requirement for SB’s has been assessed as very high risk- potentially significant delays and disruptions to veteran patient care and mission-critical operations. The rates offered by the NGDS-2 contract holders (FedEx, UPS, and Polar Air Cargo/DHL) have been competitively solicited and determined to be fair and reasonable through a rigorous evaluation process.

10. Technical and 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.

Channon J Malkin Date Inventory Manager Battle Creek VAMC

11. Determination that Anticipated Cost is Fair and Reasonable: A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

Considering rates and transit delivery guarantees, UPS provides the best overall value for Next Day service and Residential Ground service for the region serviced by VHA VISN 10 when compared to other NGDS MAC vendor pricing that as provided during the HTC711-23-D-C025 contract solicitation. UPS provides a better guarantee on ground shipments throughout the US and their published ground services include all 50 states and some territories. Services performed by UPS ground typically arrive in 1-5 business days. In contrast, FedEx publishes that their ground services take between 1-7 days including weekends. The established NGDS pricing for UPS and FedEx indicates that UPS will cost up to $1.40 less per package for most of our ground residential shipments which constitutes the bulk of our shipping needs. UPS provides better price, efficiency, and guarantee of services for our mission partners and veteran patients.

12. Contracting Officer's Certification (required): I certify that the foregoing justification is accurate and complete to the best of my knowledge and belief.

Josh Kovar Date Contracting Officer Network Contracting Office (NCO-10)