JUSTIFICATION DETAILS for COVID-19 Class JandA para 5a - Gloves eSigned (Final 22621).doc

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DEPARTMENT OF HEALTH & HUMAN SERVICES Office of the Secretary

Office of the Assistant Secretary for Preparedness & Response Washington, DC 20201

JUSTIFICATION DETAILS FOR COVID-19 EMERGENCY RESPONSE ACTIVITIES

The Department of Health and Human Services (HHS) issued a class Justification & Approval (J&A) in accordance with FAR § 6.303- 1(d) and 6.302-2, Unusual and Compelling Urgency, FAR § 8.405- 6(a)(1)(A), Limiting Sources, and FAR § 16.505(b)(2)(i)(A), Exceptions to the Fair Opportunity Process for all contract actions to facilitate the recovery efforts necessary to address the 2019 Novel Coronavirus (COVID-19). The J & A is essential to respond to urgent requests for immediate support to respond to the expanding outbreak of the COVID-19 global pandemic.

This form must be completed for all actions to meet the requirement set forth in 5(a) of the Department of Health and Human Services (HHS) class J&A for the COVID-19 pandemic response issued via HHS Acquisition Alert 2020-08.

Actions taken under this authority shall include documentation of market research performed and prospective sources of supply and services.

Additionally, shall include evidence of the urgent and compelling nature of the particular action, reviewed and approved at a level above the Contracting Officer.

Identification of Program Office, Contracting Activity, and Proposed Requirement, Justification and Program Office Certification:

Program Office:

Division of Strategic National Stockpile 2945 Flowers Rd. South Atlanta, GA 30341

Contracting Activity:

Health & Human Services Assistant Secretary for Preparedness and Response Office of Resource Management Contracts & Grants Division Strategic National Stockpile (SNS) Contracts Branch

Identification of Requirement:

Nature of Action to be Approved: Sole source acquisition of:

The Strategic National Stockpile (SNS) has an immediate requirement to acquire a total of 3.6B disposable, nitrile gloves used by first responders, healthcare and essential workers as described within the Statement of Work (SOW). 3.6B gloves is the SNS’ 60-day requirement for stockpiling of Nitrile Gloves for a pandemic. The Society of Healthcare Epidemiology of America (SHEA), reports that Domestic and global demand for nitrile gloves in healthcare facilities has surged since the onset of the COVID-19 pandemic. Current US commercial demand for gloves is in excess of 10 Billion per month. As a result, healthcare workers throughout the country have reported dire shortages of nitrile gloves, putting patients and frontline healthcare workers at risk of contracting or transmitting COVID-19 while care is being provided.

In order to mitigate the risks associated with the shortages of nitrile gloves, the SNS must increase the stockpile inventory of disposable gloves that are required to continue to respond to needs from federal, state, local municipalities and tribal partners supporting the COVID-19 response. These nitrile gloves are personal protective equipment (PPE) used to protect the wearer and/or the patient from the spread of infection or illness during medical procedures and examinations. Disposable gloves are reviewed and regulated by the Food and Drug Administration (FDA) as a Class I reserved medical device that requires a 510(k) premarket notification listing, under 21 CFR 880.6250 and the following requirements:

Nitrile, Disposable, Non-Sterile, Powder-Free, Patient Examination Gloves must:

Be commercially available

Meet ASTM D6319-19, (Standard Specification for Nitrile Examination Gloves for Medical Application) in addition to any required noted specifications in 1.c and 1.d, whichever is more stringent

Meet Length requirements for Nitrile Patient Examination Gloves, which must be a minimum of 230mm (9”) and no more than 254mm (10”)

Meet finger thickness and palm thickness for Nitrile Patient Examination Gloves, which must range from 2.8 mils (0.072 mm) up to 8 mils (0.21 mm) as identified in American Society for Testing and Material (ASTM) 3767 standards

Meet tensile strength for patient examination gloves as identified in ASTM D412 standards

Meet minimum unaged elongation percent as identified in relevant ASTM standards

Be disposable, single use

Be powder free

Be non-sterile

Be ambidextrous

Have beaded cuff and textured fingertips

Be packaged in standard commercial box of not more than 100 gloves or 50 pairs

Sizes small, medium, large, extra-large.

The sizing breakout for the current requirement is as follows:

Small – 10% Medium – 40% Large – 40% X-Large – 10%

Grand View Research, one of the world’s largest market research firms, provides market intelligence studies to healthcare industries on the global demand for nitrile gloves. A recent report found the global nitrile glove market was valued at USD $370 billion in 2019 and is expected to increase to $585 billion over the next seven (7) years. Non- Pandemic U.S. weekly demand for nitrile gloves was ~1 Billion per week. COVID weekly demand for gloves is ~3-4 Billion. The SNS had received requests from States in excess of 3 Billion gloves prior to informing them there was no immediate availability to provide them. The more than 300% increase in demand has severely strained current supplies. Historically, the U.S. manufactures less than 100M FDA approved nitrile gloves per year.

Rising awareness regarding the benefits of the product in healthcare facilities coupled with an increasing number of latex allergies are expected to drive market growth over the forecast period. Nitrile gloves are free from latex, which aids their adoption among people with latex allergies. The use of synthetic rubber in their production provides high strength, durability, and enhanced flexibility coupled with the ability to reduce hand fatigue, offer a comfortable fit, and low friction. The recent COVID-19 outbreak is likely to be a major factor driving demand in the U.S. The U.S. is one of the most severely affected countries in the world by the coronavirus pandemic. The rapid spread of COVID-19 in the country has increased the demand for protective gloves, especially in the healthcare sector, in order to reduce further transmission. Increasing occurrences of pandemic diseases, including COVID 19 and swine flu (H1NI), coupled with rising demand for infection control, is anticipated to drive demand over the next several years.

The report identifies major critical aspects of global gloves requirements that will impact the availability of gloves for wide distribution to healthcare industry for the next seven (7) years:

Factories are rationing product types to increase efficiency/output; this will limit some offerings going forward.

Global capacity update for demand indicates imbalance will persist throughout 2021.

Top Glove, the world’s largest producer of disposable gloves, has been banned by U.S. Customs & Border Protection Agency in response to evidence of forced labor practices and the COVID-19 outbreak at Malaysian factories.

According to the Centers for Disease Control and Prevention (CDC), the U.S. is still in a critical state and facing an explosion of diagnosed cases of COVID-19 through 2021. The CDC has warned that the outbreak will continue to further deplete the global supply of gloves and other PPE caused by rising demand, hoarding, and misuse, putting lives at risk when it comes to COVID-19 and other infectious diseases. It is critical that healthcare and essential workers in the U.S. have the necessary PPE to protect themselves and their patients from being infected and infecting others. Shortages are leaving doctors, nurses, and other frontline workers dangerously ill-equipped to care for COVID-19 patients, due to limited access to supplies such as nitrile gloves.

https://www.grandviewresearch.com/

The Journal of Medical Emergency Services (JEMS) reported in August 2020, that 992 medical healthcare workers across the U.S. have died from COVID-19 and its complications, due to a lack of personal protective equipment. This number includes doctors, nurses, paramedics, and critical support staff such as nursing home workers and hospital custodians. Through this acquisition of 3.6B nitrile gloves, the SNS will quickly boost its supply over the next several months.

https://www.jems.com/coronavirus/more-than-900-us-medical-staff-died-covid-19/

Demonstration that the proposed contractor(s) unique qualifications or the nature of the acquisition requires use of the authority cited in the class J&A for the COVID-19 pandemic response

Describe market research performed and prospective sources of supply and services:

There are no existing ASPR contract mechanisms with the ability to satisfy the stated requirement. In June of 2020, the SNS provided the Defense Logistics Agency (DLA), through an Inter-Agency Agreement (IAA) with funding, the requirement to immediately procure 4.6 Billion Nitrile Gloves by September 2020. DLA proceeded to award Contracts SPE8EL-20-F-50RE ($0.12 EA), SPE8EL-20-F-50NJ ($0.112 EA), and SPE8EL-20-F-J25U ($0.09 EA).

To date, these contracts have been extended multiple times and DLA’s vendors have been unable to deliver any acceptable nitrile gloves to the SNS, with no immediate indications this will change over the next several months. In several instances, the manufacturers of these gloves that are under contract with the awarded distributors are being purchased out from under the companies once manufactured and ready for delivery. Other Countries and entities are offering to pay much higher prices for the immediately available product that was destined to the SNS. Further, DLA awarded gloves based upon their own product review; upon review by technical experts from the SNS Science Team and FDA, the ordered products were determined unacceptable and did not meet the minimum specifications. Additional efforts are being made to locate additional product for review however the current review process and evaluation of a product is taking more than 60 days.

In an effort to have some inventory of gloves, a poly-blend mix glove was approved for a smaller quantity and those have been delivered. However, these poly-blend mix gloves have been refused by States and less than 10 Million of these have been distributed in the past 2 months. States will only accept Nitrile gloves that meet both SNS and FDA standards. Given these circumstances, the SNS has chosen to procure portions of this requirement internally.

In December, the SNS coordinated with the Veterans Administration (VA) to post a RFI to their Federal Supply Schedule 65 II A- Medical Supplies and Equipment, Pharmaceuticals, and Healthcare Services (003B6B) vendors. The RFI was submitted to all schedule holders requesting availability and products that meet the minimum specifications. The RFI revealed the following market conditions for nitrile gloves:

The SNS is also investing nearly $500M through DPA Title 3 funds to expand domestic manufacturing to 1.6 Billion nitrile gloves produced in the United States annually. However, this will not be immediate and will take 18+ months until this level is achieved. Nitrile gloves manufactured in the USA will decrease reliance on other countries which have, at times, closed their borders during a pandemic. Being less reliant on product produced from overseas countries will better protect and prepare the United States for future pandemics and public health events.

Proposed Vendor: Airboss Defense Group (ADG)

Estimated Procurement Amount:

Base CLINs; Period of Performance: 6 Months CLIN 1001-Disposable, Nitrile, Non-Sterile, Powder-Free, Patient Examination Gloves - Quantity: 18,200,000 Boxes (1,800,000,000 gloves) x $12.98 (Per Box) = $210,276,000

CLIN 1002- 18,200,000 (Boxes) x $2.85 (Freight) = $51,870,000.00

Optional CLINs; Period of Performance: 4 Months from end of Base CLINs CLIN 1003- OPTIONAL- Disposable, Nitrile, Non-Sterile, Powder-Free, Patient Examination Gloves - Quantity: 18,200,000 Boxes (1,800,000,000 gloves) x $12.98 (Per Box) + 18,200,000 x $2.85 (Freight) = $210,276,000

CLIN 1004- OPTIONAL- 18,200,000 (Boxes) x $2.85 (Freight) = $51,870,000.00

Total Contract Value: $576,212,000.00; Period of Performance: 10 Months

Provide evidence of the urgent and compelling nature of the particular action:

Explain:

The SNS must award a sole-source contract to AirBoss Defense Group (ADG) which is the only vendor to date whose offered product has been approved, despite intense focused efforts to locate and review vendors and acceptable product offerings. Due to the ongoing COVID-19 pandemic, this requirement was urgent when this research and review process began in November 2020, and remains urgent. Now that 1 product has been approved, the SNS must expeditiously acquire these urgently needed nitrile gloves. The starkness of this is highlighted by the fact that 26 products have been disapproved.

The supply chain for nitrile glove is currently experiencing unprecedented conditions with the demand so high that allocations of new supply are being taken within a week. There is also a substantial amount of misrepresentation of glove specifications that is requiring the FDA and SNS Science team to perform lengthy reviews, often more than 60 days, through a thorough evaluation of products, their certifications, specifications, and labeling, then cross referencing this with proprietary data and reports held by the FDA. This situation presents unparalleled risk should the SNS not be able to immediately award this contract for the approved nitrile gloves. Every effort was made to locate acceptable product and current availability of near-term allocations. The Government is unable to competitively solicit this requirement due to these facts and award would not be possible for at least 3 months, further delaying this critical PPE from reaching the healthcare workers that most desperately need it.

This urgent requirement is a result of the public health emergency caused by COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020 and a National Emergency in the United States on March 13, 2020. Because COVID-19 is an emerging disease, there were no vaccines or approved treatments at that time. In time, it became apparent that this was a pandemic the likes of which has not been seen for 100 years. The 1918 Spanish flu is the last time humanity experienced a disease outbreak of this magnitude and impact.

As of February 17, 2021, CDC reported that there are 28,030,330 Americans with confirmed cases of the virus and 492,927 have died from COVID-19.

https://covid.cdc.gov/covid-data-tracker/#cases_casesper100klast7days

The situation in the U.S. and globally, remains dire, with increasing uncertainty due to the rise of variants, including the U.K. variant, the South Africa variant, and the Brazil variant, that are even more contagious than the initial virus. PPE is the healthcare workers primary defense against COVID-19.

With the on-going pandemic and current supply chain shortages, the SNS has and continues to deploy PPE supplies to points of need.

The urgency of the need for nitrile gloves has been further increased by the continuing difficulty of obtaining this PPE item. In June of 2020, the SNS provided the Defense Logistics Agency (DLA), through an Interagency Agreement (IAA) with funding, the requirement to immediately procure 4.6 Billion Nitrile Gloves by September 2020. To date, DLA’s awarded vendors have been unable to deliver any acceptable Nitrile Gloves to the SNS with no immediate expectations that this requirement will be fulfilled in the next several months.

Additionally, DLA awarded gloves based upon their own product review and once SNS Science and FDA reviewed these products, they were determined unacceptable. Given these circumstances, the SNS has chosen to procure portions of this requirement internally and request a reduction on the current requirement with DLA. In December, the SNS began with an Acquisition Strategy to utilize the Veterans Administration (VA), Federal Supply Schedule 65 II A- Medical Supplies and Equipment, Pharmaceuticals, and Healthcare Services (003B6B) and to compete among a pool of qualified domestic vendors who have already been vetted, and their prices have been determined to be fair and reasonable for nitrile gloves. The SNS and VA immediately partnered and sent a RFI to all schedule holders requesting availability and products that meet the minimum specifications.

Of all the schedule holders, only 5 responded and none have had their product found technically acceptable. At the same time, SNS continued to reach out to industry for any Nitrile Glove product and availability that could be delivered in the next 12 months. As of 2/15/2021, 27 proposed products have been reviewed by SNS Science and FDA with only 1 product found acceptable. The VA is working to onboard new vendors, however they indicated on 2/12/2021 it may take up to 6 months before they allow new vendors to apply for inclusion into the schedule; this does not meet the SNS’ requirement.

The base quantity of this procurement is to ensure the SNS has some product for immediate needs. We have included an optional quantity in the event that no additional product is approved, and DLA’s vendors continue to not be able to deliver. A larger, long-term requirement is being developed with the assistance of modeling and data analysis in which domestic manufacturing will be a critical element.

Other facts supporting sole source procurement if any: N/A

Due to the urgent nature of this requirement and the uncertainties of the current environment, in accordance with FAR 5.202(a), exception 2, this requirement will not be synopsized. Also, this action is being processed under the HHS Class J&A, which can be found here:

https://intranet.hhs.gov/document/class-justification-other-full-and-open-competition- covid-19-response

5. The SNS Contracting Team has led the effort to provide the VA-NAC Center with nitrile gloves specifications that are in compliance and cleared by the FDA as Class I reserved medical devices that require a 510(k) premarket notification and listing, under 21 CFR 880.6250. FDA. The expected outcome will be to expand the VA FSC 65II schedule with new manufacturer retailers that are interested in doing business with the federal procurement market.

Being less reliant on product produced overseas will better protect and prepare the United States for future pandemics and public health events. The current requirement is a one-time procurement for immediate needs. A larger, long-term requirement is being developed with the assistance of modeling and data analysis in which domestic retail manufacturers will be a critical element. The current acquisition must be sole source because AirBoss Defense Group (ADG) provided the only product determined to be technically acceptable by the SNS Science Department and the FDA after significant time and effort, and review of 27 potential products.

Program Office Certification:

Technical / Requirements Certification: By my signature below, I certify that the supporting data being used under the class J & A and certify the justification is true and accurate to the best of my knowledge.

Contracting Officer Representative’s Name: David Kelley

COR Signature:

Date: 2/22/2021 David M. Kelley -S Digitally signed by David M. Kelley -S Date: 2021.02.22 file_2.png file_3.wmf

19:49:36 -05'00' Contracting Officer’s Certification

I hereby certify that this justification is accurate and complete to the best of my knowledge. I approve this justification subject to availability of funds, and provided that the services and supplies herein describe have otherwise been authorized for acquisition.

Contracting Officer’s Name: Annette Wright file_4.png file_5.wmf

Position Title: Team Lead

Contracting Officer’s Signature:

Date: 2/22/2021 Annette Wright -S Digitally signed by Annette Wright -S Date: 2021.02.26 10:04:21 -05'00'

Approval One Level Above the Contracting Officer

X I have reviewed this justification and approve or □ do not approve the action.

Name: Vivian S. Hubbs.

Position Title: Chief Contracting Officer

Signature:

Digitally signed by Vivian Hubbs Vivian Hubbs -S -S Date: 2021.02.26 18:07:37 -05'00' Date: 2/26/2021