Justification and Approval Apptio - Redacted.pdf

Control Number VA-24-00046156

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) for annual renewal of brand name Apptio Software as a Service (SaaS) Subscriptions and Support Services including ApptioOne Plus, ApptioOne Billing, Cloudability Government, Cloudability Total Cost, and Apptio Support Services and education entitlements including Apptio Premier Success Support, Apptio Managed Services Support, and Apptio All Access Education Passes.

3. Description of the Supplies of Services: VA, Office of Information and Technology (OIT) has a requirement for 2 ApptioOne Plus subscriptions with an additional ApptioOne Plus environment, 3 ApptioOne Billing Subscriptions, 3 Apptio Premier Success Support Services, 3 Apptio Managed Services Support, 10 Apptio All Access Education Passes (AAEPs), and 17 optional tasks. The optional tasks include 10 optional tasks to allow the Financial Services Center (FSC) to join the contract; 2 optional tasks for the Franchise Fund Enterprise Cloud Solutions Office (ECSO), including ApptioOne Billing subscription and Premier Success; and 5 optional tasks to incrementally increase the quantity of Information Technology (IT) Dollars Under Management for ApptioOne Plus. Apptio is a multi-instance architecture Platform-as-a- Service (PaaS) with software delivered via the internet through a subscription service delivery model, commonly referred to as SaaS. The integrated suite of brand name Apptio modules have been purpose-built for Technology Business Management (TBM) cost transparency and are used to help OIT comply with the Office of Management and Budget (OMB) mandate for Federal agencies to fully report OMB Investment dollars by TBM and Cost Pools through the Capital Planning and Investment Control process.

IT obligations, expenditures, and expenses against all four layers of the TBM taxonomy (Cost Pools, IT Towers, Solutions, and Business Units/Business Capabilities) using a combination of financial coding and operational data to indicate cost drivers and resource consumption. The mapping of current year budget and execution dollars in the ApptioOne Plus module delivers TBM reporting required by OMB and informs current year prioritization efforts and future year programming and budget formulation efforts for OIT, the Electronic Health Record Modernization Integration Office (EHRM-IO) and the FSC. Simultaneously, the Franchise Fund Business Office has implemented the ApptioOne Plus module and the ApptioOne Billing module to categorize their costs through all four layers of the TBM taxonomy and to collect revenue and issue customer statements. Finally, the ECSO has implemented the Cloudability and the ApptioOne Billing module to support the optimization of the VA Enterprise Cloud (VAEC) environment and to generate VAEC customer statements.

Apptio 2024 Control Number VA-24-00046156

The modules managed by the Franchise Fund Business Office and Franchise Fund ECSO are connected to Information Technology Budget and Finance (ITBF)

All out-of-the-box Apptio modules have been heavily configured by the business owners and custom rements using the TBM taxonomy.

The ApptioOne Plus module leverages financial and operational data to deliver a cost model based on the industry standard TBM taxonomy of IT cost categorization.

ApptioOne Plus is purpose-built for TBM and allows organizations to calculate and optimize product and service total cost of ownership, rationalize application and service portfolios, and manage business unit consumption of IT products and services.

The ApptioOne Billing module enables organizations to recover costs directly from business units through the issuance of customer statements and to strategically price services to shape business demand.

The Cloudability Government module allows organizations to accurately allocate and optimize all cloud costs to ensure a full chargeback of cloud costs to the business, to leverage rightsizing capabilities across major cloud services that reduce operating expenses and fund future investments, and to correlate cloud spend to business value for more effective decision making. The Cloudability Total Cost module is an add-on to Cloudability Government that automates the ingestion of billing and telemetry data;

costs to the team, project, or customer driving the costs; and calculates key unit economic metrics and shares them with stakeholders to complete cloud cost visibility.

Apptio Premier Success Support provides technical product expertise, product mentoring, and enablement in the form of weekly office hours and 24/7 enhanced product support. Apptio Managed Services Support provides product configuration and additional hands-on keyboard support for the SaaS product in addition to weekly technical consulting.

Apptio All Access Education Passes are entitlements to Apptio live training delivered via

The period of performance for this proposed action will consist of a 12-month base period, with two 12-month option periods and 17 optional tasks which may be exercised at the Government discretion.

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 16.5 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 Apptio SaaS Subscriptions and Support Services were selected via a competitive procurement under the NASA SEWP V GWAC in April of 2018 and in May of 2021 as a requirement for brand name Apptio SaaS subscriptions and support and are comprised of an integrated suite of cost modeling and reporting capability represents nearly six years of continuous configuration and implementation work for the Apptio modules to operate unique financial and operational data and specific reporting requirements. VA does not own the rights to the configuration work within the Apptio platform nor does VA own rights to any code; additionally, the utilization of configuration work requires specific VA financial and operational data and is therefore unique to VA.

VA requires an annual renewal of its subscriptions continued operationalization of the TBM discipline, to meet the OMB mandate, and to support its revenue collection, customer reporting, optimization of the cloud environment, and business process integration. A failure to renew the existing Apptio capabilities, cloud optimization activities, and VA TBM cost modeling and reporting efforts in multiple VA organizations to an immediate halt;

OMB mandate for TBM reporting outlined in the annual Capital Planning and Investment Control Guidance environment and the Franchise Fund, and the ECSO ability to fund their operations due to a disruption in their revenue collection processes. The ongoing operating capability of multiple organizations within VA would be severely compromised without this functionality.

are complex and require a stand-alone solution to avoid ongoing technical configuration risk. A stand-alone solution decouples the solution from other third-party products which eliminates any technical cross system configurations and the associated sustainment. It also eliminates technical dependencies and costs associated with third party products that must be available and remain compatible throughout the period of performance in order for the solution to function and meet all VA requirements. A stand-alone solution also eliminates business risks related to dependencies on the availability, features, support, and pricing of third-party products already in use at VA under other VA contracts. These contracts may have differences (such as periods of performance, service level agreement requirements, support terms, and included features) that could negatively impact the operation of the solution and introduce unacceptable risk. Even if all of the third party bundled products were all available under the solution contract, risk is still increased in that one or more of the vendors may cease operations, be acquired, or change their product in a way that breaks compatibility with the solution so that it is no longer able to meet all of the requirements.

The calculation engine and reporting visualizations that comprise the TBM modeling capability require a tight integration between financial and operational data. Without such an integration, VA introduces risk of to configure reports as required by OMB. Therefore, this solution must stand alone and not have any dependency or requirement that VA purchase or have in operation another solution or tool for it to operate.

The solution must have a multi-instance architecture that allows for different business owners to fully control their instance(s), including access to the configuration environment, data tables, and management of role-based access control to their instance(s). VA has multiple different business owners who need their own her than Apptio that can meet all of the aforementioned requirements as described in Section 8 of this justification. While market research has not identified another product that can meet all of technical requirements, even if another product did exist, VA would need to keep both solutions operating concurrently while multiple organizations reconfigured from scratch in a new software. This would lead to extensive delivery delays of ongoing and planned functionality releases that are necessary to enhance capture the total cost of ownership more accurately for its products and services, support the optimization strategy. All resources would be focused on maintaining the current functionality in Apptio while rebuilding in a new solution. All critical new functionality releases would be put on hold.

Implementing any other brand cost modeling tools environment would involve extensive configuration, human centered design, and testing to support VA workflows, dashboards, and reporting requirements, as well as the need to train system administrators and end users while also updating existing process documentation, standard operating procedures, and knowledge documents. This would lead to estimated duplicated costs that would not be recovered or justified through competition as the same functionality would have to be reconfigured on the new

Apptio-based TBM cost modeling and reporting tool. It is estimated that the total cost to rebuild in a new solution would be approximately $13.95 million and would take up to 28 months to complete, depending on the complexity of the current implementation. These estimates are based on historical experience with implementing the Apptio tool and assume that configuring in a new tool would require the same level of effort. Modules within this tool work as an ecosystem and flaws or delays in one area will impact another area. For example, module pulls data from the Franchise Fund Business Office ApptioOne Plus module and ApptioOne Billing module Cloudability Government module and Cloudability Total Cost module. While its functionality reconfigured in a new tool, the cost model would not be fully populated or fully calculated until the other modules were rebuilt and connections were established to support monthly data pulls.

6. Efforts to Obtain Competition: Market research was conducted, the details of which are in Section 8 of this justification. This effort did not yield any additional sources that can meet all of the Government's requirements as a stand-alone solution. However, the undersigned VA technical representative determined that limited competition is available among authorized resellers for the required brand name Apptio module subscriptions, as well as support services and education entitlements. In accordance with FAR 16.505(a)(4)(iii)(A)(1), this justification will be provided with the solicitation to all appropriate NASA SEWP V GWAC holders. Furthermore, in accordance with FAR 5.301, 16.505(b)(2)(ii)(D) and 16.505(a)(4)(iii), the award notice for this action will be synopsized on the Contracting Opportunities website and this justification will be made publicly available within 14 days of award.

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. Specifically, OIT will continue to monitor market trends and new and emerging products looking for compatible and more advanced technologies to meet VA needs.

8. Market Research: , as detailed below, by reviewing similar SaaS and IT financial management software and associated support services, with a focus on products that are purpose-built for TBM.

The technical experts attend each annual TBM Public Sector Summit and talk to vendors who support TBM implementation, viewing product demos and regularly visit their websites to stay abreast of product offerings. The technical experts also participate in the Federal Technology Investment Management Community of Practice (FTIM CoP) led by the General Services Administration (GSA) and OMB, which combines TBM and CPIC practitioners to develop TBM best practices and specific TBM implementation guidance. Participants share TBM implementation best practices and their experience with cost modeling software.

, in coordination with VA Program Manager, conducted market research in January 2024 via a Request for Information (RFI) on the NASA SEWP GWAC and GSA websites experts reviewed the capability statements from the single reseller that responded to the GSA posting (i3 Integrative Creative Solutions) and the three resellers that responded to the NASA SEWP posting (METGreen, i3 Federal, and New Tech Solutions). The vendors i3 Integrative Creative Solutions (i3ICS) and i3 Federal proposed Apptio. The third and fourth vendors, METGreen Solutions and New Tech Solutions (NTS), proposed Proven Optics, a suite of applications that is integrated with the ServiceNow platform.

VA received a demonstration from Proven Optics in December 2022 and again in January 2024 as a follow up to the RFI. Based upon both demos, Proven Optics does not meet VA technical requirements. Specifically, Proven Optics does not meet technical requirement for a stand-alone solution that does not depend on another third-party product or bundled system comprised of more than one third party product; does not have cloud cost optimization functionality existing independent of Service Cloud Cost Management application; and does not have the multi-instance architecture that allows unique instances for each stakeholder group.

The cloud cost optimization features are not included in the Proven Optics solution; they require VA to bundle Proven Optics with application. The Proven Optics solution requires VA to own and operate ServiceNow, a third-party product; therefore, Proven Optics does not meet the technical requirement for a stand-alone solution.

Further, the Proven Optics solution does not meet the technical requirement of providing a multi-instance architecture that allows for separate instances or bundles of modules for different stakeholder groups. This is important to VA as different organizations need their own instances that exist separately and cannot be accessed by other instances without proper permissions, including OIT, the Franchise Fund Business Office, the Franchise Fund ECSO, and the FSC.

VA technical experts advised METGreen Solutions and New Tech Solutions on February 29, 2024, In January 2024 t ical experts also reviewed available information on another product via web-based market research, Cost Perform, which does not meet the technical requirement for automated billing functionality or issuance of customer statements and does not meet the technical requirement for cloud cost optimization.

Based on the review of similar products by the , it was determined that no other product or associated services can meet all of technical requirements as previously discussed in Section 5 of this justification. Based on market research, it was determined that only brand name Apptio SaaS subscriptions and support services requirements, which sustains and expands existing TBM cost modeling and reporting capability.

On February 13, 2024, the requiring activity emailed the Original Equipment Manufacturer, International Business Machines, who informed them that they would provide pricing to resellers for Apptio if VA was able to solicit on NASA SEWP as full and open, as the Non-Manufacture Rule requires procurements of goods to be from small manufacturers when they are set aside. Given that the OEM is not a small business, the solicitation cannot be set aside to small businesses as they cannot meet the set aside requirements as set forth under the Veterans Affairs Acquisition Regulations 852.219-75 for the Limitations on Subcontracting Certificate of Compliance for Services and Construction.

9. Other Facts: None.

Approval

In my role as Head of the Contracting Activity, based on the foregoing justification, I hereby approve the acquisition for annual renewal of brand name Apptio SaaS Subscriptions and Support Services; including ApptioOne Plus, ApptioOne Billing, Cloudability Government, Cloudability Total Cost, and Apptio Support Services and education entitlements including Apptio Premier Success Support, Apptio Managed Services Support, and Apptio All Access Education Passes pursuant to the authority cited in Section 4 above, subject to availability of funds, and provided that the services herein described have otherwise been authorized for acquisition.