Justification for Other Than Full and Open - FSAFEDS 2025 Plan Year.pdf

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023

Justification for Other Than Full and Open Competition or Sole Source In Accordance with FAR 6.303-2 or FAR 6.303-2 Modified for FAR Part 13.5

For Contract Actions above the Micro-Purchase Threshold Using FAR Part 14 or 15 Procedures or Contract Actions using FAR Part 13.5 Procedures

1. Agency and Contracting Activity:

a. Contracting Activity: Office of Personnel Management (OPM)/ Healthcare and Insurance (HI)

b. Requesting Activity: FSAFEDS Program

2. Nature/Description of Action:

The FSAFEDS Program provides health care and dependent care flexible spending accounts on a self-supporting basis for active Federal civilian employees and dependent care flexible spending accounts for eligible uniformed service members (Federal employees). In support of its mission, FSAFEDS requires adding an option period for the 2025 plan year to the current contract.

3. Description of Supplies/Services: See below for additional details-

The U.S. Office of Personnel Management (OPM) requires the services of a qualified third-party administrator to administer health and dependent care flexible spending accounts on a self-supporting basis for active Federal civilian employees and eligible uniformed service members (Federal employees). Federal employee enrollment in Flexible Spending Accounts (FSAs) will be voluntary.

These accounts, also referred to as reimbursement accounts, provide tax advantages authorized under the Internal Revenue Code and are widely used by both private and public employers in the United States. In the years since their development, flexible spending account programs have become an expected benefit that is popular among employees. Additionally, in June 2023, the President directed the Department of Defense to coordinate with OPM to establish flexible spending accounts for the care of military dependents.

From the employee's perspective, flexible spending accounts offer an attractive opportunity to convert some health care and dependent care expenses from an after-tax expense to a pre-tax expense or to provide for benefits that may not be provided on a pre- s program. On benefit attitude surveys for individual employers, including the Federal Employee

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023

Benefits Survey for Federal employees, the robustness of the employer's health benefit package regularly ranks in the top two or three factors in importance of employee attitudes toward flexible spending accounts relative to other benefits.

It is important for the Federal Government to provide FSAs for likely participants because the demographics of the Federal workforce show that we can anticipate substantial retirements in the next few years. The Federal Government must compete energetically to recruit high-quality workers and to retain gifted and experienced workers. With many Federal employees eligible to retire by the year 2025, the Government must be able to attract and keep an excellent and high-performing workforce.

The Contractor provides an IRS compliant, healthcare flexible spending account and/or dependent care flexible spending account for all eligible government employees choosing to enroll. The contractor will operate an Open Season Enrollment Period from Monday of the second full workweek in November through the Monday of the second full workweek in December.

The 2025 Health Care FSA plan year runs from January 1, 2025 (or first day of coverage if enrollment is outside of Open Season), through December 31, 2025. The Dependent Care FSA plan year runs from January 1, 2025 (or the first day coverage if enrollment is outside of Open Season) through March 15, 2026.

The Contractor will also offer a Carryover for participants enrolled in Health Care FSAs (HCFSA) and Limited Expense Health Care FSAs (LEX HCFSA) who meet requirements as stated in the FedFlex plan document. Carryover allows eligible participants to utilize a limited amount of excess HCFSA or LEX HCFSA funds from the previous benefit period/calendar year for expenses incurred in the new benefit period/calendar year.

The Contractor coordinates with Login.gov for enrollment and processes all enrollment activities for eligible employees of over 150 federal agencies. They interface with over 40 federal payroll providers in a wide variety of formats, through BENEFEDS. The Contractor handles enrollment, interactive voice response (IVR) systems, customer service, and other customer service functions. The Contractor utilizes BENEFEDS reconciliation processes to ensure that the participants and allotments from each payroll interface accurately reflect the

The Contractor reviews, processes, and reimburses enrollees or providers for eligible expenses and provides auto-claims. The Contractor processes if permitted as an IRS approved Qualifying Life Event (QLE). Additionally, the

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023

Contractor provides each participant with a statement of the amount of any balance deadline to incur eligible expenses, each benefit year.

a. (including all options):

for one 1-year option period. The existing contract ceiling of will remain unchanged.

b. Type of Action: Firm Fixed Price

c. Delivery schedule and/or period of performance: Initial awarded is needed by September 30, 2024 with the period of performance beginning January 1, 2025 and ending December 31, 2025.

4. Authority and Circumstance Justifying Other than Full and Open Competition

(including Brand Name):

Authority Circumstance

FAR 6.302-1 / 41

U.S.C.3304(a)(1)

When the supplies or services required by the agency are available from only one responsible source and no other type of supplies or services will satisfy agency requirements.

FAR 6.302-2 / 41

U.S.C.3304(a)(2) services is of such an unusual and compelling urgency that the Government would be permitted to limit the number of sources from which it solicits bids or proposals.

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023

Authority Circumstance

FAR 6.302-3 / 41

U.S.C.3304(a)(3) It is necessary to award the contract to a particular source or sources in order-

(iii) To maintain a facility, producer, manufacturer, or other supplier available for furnishing supplies or services in case of a national emergency or to achieve industrial mobilization;

(ii) To establish or maintain an essential engineering, research, or development capability to be provided by an educational or other nonprofit institution or a federally funded research and development center; or

(iii) To acquire the services of an expert or neutral person for any current or anticipated litigation or dispute.

FAR 6.302-4 / 41

U.S.C.3304(a)(4)

It is precluded by the terms of an international agreement or a treaty between the United States and a foreign government or international organization, or the written directions of a foreign government reimbursing the agency for the cost of the acquisition of the supplies or services for such government.

FAR 6.302-5 / 41

U.S.C.3304(a)(5)

A statute expressly authorizes or requires that the acquisition be made through another agency or from a specified source; or commercial product for authorized resale.

FAR 6.302-6 / 41

U.S.C.3304(a)(6) compromise the national security unless the agency is permitted to limit the number of sources from which it solicits bids or proposals.

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023

Authority Circumstance

FAR 6.302-7 / 41

U.S.C.3304(a)(7) The agency head determines that it is not in the public interest in the particular acquisition concerned.

FAR 13.501(a) / 41 U.S.C.1901 or 41 U.S.C.1903

This is a procurement conducted under FAR 13.5, specific circumstances source or brand name will be provided in Section 5 below.

5. Rationale Supporting the Circumstance to Justify Other than Full and Open

Competition:

There are a number of unique challenges in managing the FSAFEDS Program. First, while the same Federal benefits are applied to a broad population of Federal employees, they are administered and tracked very differently depending upon the capabilities of the responsible payroll office. That payroll office may be quite removed from the employee and from the local human resource office, posing communication challenges. Second, the eligible Federal population includes many whose work involves issues important to our national security. While information regarding these individuals must be protected, we want to ensure that all eligible Federal employees have the opportunity to participate in FSAFEDS.

The Contractor must develop linkages with all Federal payroll systems via BENEFEDS (see below for more information about BENEFEDS), encompassing numerous file layouts. These requirements are outlined in the Appendix A. Much of the work gathering detailed information on the various systems has already been done by BENEFEDS, who is administering the Federal Employees Dental and Vision Insurance Program (FEDVIP) and the Federal Long Term Care Insurance Program (FLTCIP). Similar to the FLTCIP contractor, the FSAFEDS Contractor will need to focus enrollment and reconciliation activities on the individual covered employee/participant. Once the covered employee has been enrolled, the Contractor shall communicate the employee name, social security number, and amount of allotment(s) to BENEFEDS. Each payroll office will transmit allotments to the Contractor on its specified pay date. Allotments will continue to be withheld they are no longer an eligible employee or until the end of the plan year.

The Contractor is required to match up allotments from each payroll office to the correct covered employee. With the support of BENEFEDS (see below), the Contractor will develop exception reports that match up expected allotments from a particular payroll office for a payroll cycle with the actual allotments from that payroll office. If an allotment is missing, then the Contractor must try to

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023 match that employee up with other payroll office allotments. If at the end there is still no allotment from an employee, the Contractor must contact the employee directly to try and resolve the discrepancy.

office employee is not receiving pay. This is perhaps nowhere more apparent than when a Federal employee transfers between agencies. While their years of Federal service, eligibility for benefits, etc. move with them, this individual is very much like a new employee from a payroll perspective.

Reconciliation will be particularly challenging. Unlike other programs, where participants may be direct billed if premiums are not transmitted, FSAFEDS contributions must come via an allotment. When a Federal employee transfers to another agency, there can be a significant lag time for appropriate paperwork documenting an receiving agency. Under IRS rules, an employee who elects to participate in a FSA has made an irrevocable election, and that the account(s) must be funded. If the Contractor is unable to gain the cooperation of the employee, the original payroll office and/or human resource office will provide limited assistance in locating the employee and working with the Contractor to ad

Any vendor awarded a contract for these services, competitively or non-competitively, must perform immediately at the start of a plan year (calendar year) due to Internal Revenue Service (IRS) rules governing FSAs. Therefore, periods of performance for the FSAFEDS IDIQ MAC cannot be less than a full calendar year.

The need to require alignment of contract performance to the plan year to conform with IRS requirements creates a risk for a competitive re-procurement for an FSAFEDS vendor.

Moreover, any contract awarded to a vendor (other than the incumbent) requires sufficient lead time from award to beginning performance because of the need to obtain an Authority to Operate (ATO) from the designated OPM Authorizing Official prior to accessing enrollee data, payroll data, and funding. Obtaining an ATO can take up to six months, so award of the contract must be completed sufficiently in advance for the vendor to be ready to start administering the FSAFEDS program.

Office of the Chief Information Officer (OCIO) has begun implementing newer information security requirements for contractor-operated websites supporting HI programs that impacted development of the performance work statement (PWS) needed to recompete the FSAFEDS IDIQ MAC. Similarly, implement requirements related to contractor-related websites that operated in

FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023 support of HI programs, which also has impacted development of the PWS. Delays in finalizing the PWS have had a cascading effect, negatively impacting related pre-award acquisition documents.

The first of these requirements is to provide system logs required by the Executive ficer (CISO). The contractor must pay all costs associated with processing and use of those logs by OPM to OPM.

At this time, requirements associated with the system logs is not known and is not able to be added to the Performance Work Statement (PWS). If OPM releases a PWS without the appropriate requirements, any contractor will be unable to provide information in its proposal to ensure compliance or to build a reasonable cost into its proposal. Additionally, OPM will not be able to review the technical proposal to ensure compliance.

The second of these requirements is that public facing websites must use the “.gov” url. However, the details regarding the implementation of this requirement have not yet been developed by OCIO or communicated to the Contracting Office and the Program Office. Therefore, any contractor will be unable to provide information in its proposal to ensure compliance or to build a reasonable cost into its proposal.

Additionally, OPM will not be able to review the technical proposal to ensure architecture during the contract, it will create significant risk for FSAFEDS and significant additional costs for OPM and participating agencies.

The current con would need to be July 1, 2024, due to a start-up period required for a potential new contractor to receive an Authority to Operate and other potential approvals for its IT systems. At this time, it is too late for the Performance Work Statement to be updated, a Request for Proposals (RFP) submitted, and any proposals to be reviewed for the contract to be awarded by July 1, 2024. If the FSAFEDS contract solicitation would have been published without the details of these requirements, any contractors who submit proposals will be unable to know whether they can meet the requirements.

The proposed contractor is currently performing the contract requirements and is the only responsible source able to satisfy the requirements. Because an adequate PWS is not able to be prepared without significant unknowns due to IT requirements and there is not adequate time to conduct a competitive acquisition with enough time to obtain an Authority to Operate, it is an unusual and compelling urgency for OPM to add an option year to the current contract and allow the current contractor to continue work. Any requirements will be included in the new solicitation to ensure low risk to any system implementation and operation.

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FAR Part 6 Justification for Other than Full and Open Competition or FAR Part 13.5 Sole Source Template Version Date: 12/2023

6. Solicitation of Sources: A Sources Sought Notice was published in December 2023.

One respondent, a large business, was deemed capable. However, subsequent to ed additional information technology requirements that needed additional information from OCIO prior to being included in the PWS. The delay caused due to the additional requirements will make a successful procurement before July 1, 2024 impossible. Therefore, HI has made the decision to extend the current contract for an additional year and publish the Solicitation after the additional requirements are able to be added to the PWS and with enough time to properly compete the procurement.

7. Fair and Reasonable Determination: The contracting officer will negotiate a fair and reasonable cost for the option year based on prior costs and estimated inflation.

8. Description of Market Research: A Sources Sought Notice was published in

December 2023. Four sources responded. Three of the sources were Small Businesses but stated that they would be teaming with a Large Business. The incumbent is a Large Business.

9. Any Other Supporting Facts: Not applicable.

10. Listing of Interested Sources: Not applicable. None of the sources were given the opportunity to respond to as yet undefined IT security requirements.

11. Actions Taken to Remove or Overcome Barriers to Restricted Consideration:

Moving forward, the addition of an option period allows for competition of this contract to begin months prior to the end of the contract. This will allow OPO and HI adequate time to perform market research, prepare the PWS, and take other necessary steps to be able to award the contract with enough time to accommodate any start-up period and potential protests to avoid a gap in performance.

(See next page for approvals and signatures)