P03_AS3-22-014_36C10X22R0001_CJA_MSPV-GenZ_Distribution_v7__Posting_Redacted_20211213_Redacted.pdf

Control Number: 36C10X22R0001-001

CLASS JUSTIFICATION AND

APPROVAL

FOR OTHER THAN FULL AND OPEN

COMPETITION PURSUANT TO FAR 6.302-2

1. Contracting Activity: Department of Veterans Affairs (VA)

Office of Procurement, Acquisition and Logistics Strategic Acquisition Center (SAC) 5202 Presidents Court, Suite 103 Frederick, MD 21703

2. Description of the Action:

The purpose of this document is to obtain Senior Procurement Executive (SPE) approval for the use of Federal Acquisition Regulation (FAR) 6.302-2 Unusual and Compelling Urgency, for twelve months, for the Veterans Health Administration (VHA), Office of Procurement & Logistics’ Medical Surgical Prime Vendor (MSPV) – Next Generation contractors. Use of this authority will allow the SAC to meet the medical and surgical supply needs of the Department from December 1, 2021 until November 30, 2022, and provide the time necessary to solicit and award competitive contracts in support of the MSPV program.

Currently, the VHA manages multiple-award firm-fixed-priced (FFP) indefinite-delivery, indefinite-quantity (IDIQ) distribution contracts with Medline Industries, Inc., Concordance Healthcare Solutions, LLC, and Cardinal Health 200, LLC. These MSPV-NG contractors provide mission critical medical/surgical supply distribution services in support of VA’s MSPV program for designated Veterans Integrated Service Networks (VISN) and VA facilities throughout the United States and Puerto Rico.

The estimated value of the new contracts will be consistent with prime vendor regional area of responsibility. The estimated not-to-exceed maximum total value for this requirement, as well as the J&A history, is listed below:

This class justification and approval (CJ&A) will authorize the award(s) of this effort.

These new contracts will meet the critical medical and surgical supply needs of the agency from December 1, 2021 until November 30, 2022. During this time, the SAC will work through the process of awarding new competitive contracts.

MSPV Contracts are designed to meet the mission-critical medical and surgical supply needs of the entire VA Healthcare System, with the program providing services which are not available from within the VA. The contract(s) will meet the four following needs:

(1) to increase the number of healthcare supplies available to VHA facilities nationwide;

(2) to stem the use of non-preferred sources and contracting methods (example:

Government Purchase Card (GPC), local/regional contracts, etc.); (3) to increase cost savings and best pricing obtained by leveraging volume; and (4) to generate increased Veteran- owned business opportunities.

3. Description of Supplies or Services:

VA, through the VHA and SAC, administers the MSPV Program, MSPV Supply Blanket Purchase Agreements (BPAs) and MSPV distribution contracts for the supply and distribution of medical and surgical supplies for the care of Veterans. The MSPV program is based on standard commercial practices and enables facilities to reduce inventory holding costs and streamline delivery and distribution tasks within the facility. The national program was developed as the key element in VA’s integrated healthcare supply chain improvement initiative, and was designed to significantly improve efficiency, accuracy, and patient safety, because VA lacked sufficient internal capability to warehouse, coordinate deliveries, and consolidate supply stores. The MSPV contracts afford VA critical benefits not available through other contract methodologies, including traditional single source supply contracts, and establishes a national strategic sourcing solution that combines a Government provided capability for ordering a wide range of medical, surgical, dental, laboratory, and environmental medical supplies via a master listing with electronic cataloging and ordering capability.

4. Statutory Authority:

The statutory authority permitting other than full and open competition is 41 U.S.C.

§ 3304(a)(2) as implemented by the FAR 6.302-2, Unusual and Compelling Urgency.

5. Rationale Supporting Use of Authority Cited Above:

a. Without the award of new MSPV contract s prior to November 30, 2021, VA would lack the ability to obtain critical medical and surgical materials and equipment for needs such as supporting in-patient care and basic operating room procedures for all healthcare facilities.

b. The work performed is essential to accomplishing VA’s mission of delivering healthcare services to our nation’s approximate nine (9) million Veterans currently receiving care through VA’s healthcare system and can only be accomplished through contract vehicles that leverage the capabilities and capacities of VA’s industry partners.

c. Without these MSPV contracts VA will suffer direct financial and operational injury and mission loss across the healthcare system. VA’s efficient, cost-effective, just-in- time ordering, and distribution process will be severely hindered as facilities will revert to non-preferred contract methods as occurred before the introduction of the national MSPV program in 2005. Approximately 2,000 contracting staff would have to attempt processing nearly 600,000 formal contracting actions (in addition to their existing workload) annually, via inefficient, ineffective, and frequently duplicative contracting actions and GPC purchases, which have shown to be more than five times the workload burden of using the MSPV ordering method. VA will also lose essential allocation of PPE necessary to support VAMCs during the current pandemic if these allocations cannot be managed by a PV capable of warehousing and distributing effectively.

d. No other contractors currently have the required infrastructure, ordering capability, or

Electronic Data Interchange (EDI) in place, for the facilities contemplated under this contract, to deliver the necessary medical supplies required to support patient care and safety without interruption or degradation to quality of care. Under the proposed contract actions, VA’s healthcare facilities will be able to immediately procure their required supplies using the Government-populated master list.

e. Failure to either properly account for or make correct decisions with regard to continued distribution of necessary supplies while simultaneously monitoring the full supply chain spectrum for any critical issues (i.e. medical item recalls, filtering out non-Food and Drug Administration (FDA) compliant or grey-market items or non-Buy American Act/non- Trade Agreements Act compliant items) would rapidly result in diminished levels of safety and efficiency to patient care.

f. VA’s promise to Veterans, via the Maintaining Internal Systems and Strengthening

Integrated Outside Networks Act (MISSION Act) of 2018, may be compromised as VA’s ability to continue to provide Veterans with an excellent healthcare experience and delivery of the right care, at the right time, at the right place may be impacted. Ensuring that covered veterans do not experience a lapse in care resulting from errors or delays by the Department or its contractors or an unusual or excessive burden in accessing hospital care, medical services, or extended care services is a priority.

g. Even if VA could perform and sustain the above referenced inventory actions, VA does not have sufficient warehouse space to stock the required quantity of medical supplies in all locations.

6. Efforts to Obtain Competition:

VA was successful in its original intent, to fully compete and award a competitive action prior to the expiration of MSPV Bridge contracts. Due to extenuating circumstances, and the COFC decision, award of a full and open competition for any temporary solution of a comparable type of requirement cannot be accomplished without incurring a significant break in service before expiration of the MSPV bridge contract 36C10G20D0029. The need for MSPV distribution services is immediate and a lack of correlating services would cause irreparable harm to VA’s mission to provide Veteran care.

VA has also fully considered FAR 6.302-2(c)(2), which requires VA to “…request offers from as many potential sources as is practicable under the circumstances.” As stated above, VA is not aware of any other contractor(s) who currently has the required infrastructure, ordering capability, or Electronic Data Interchange (EDI) in place, for the facilities contemplated under this contract, to deliver the necessary medical supplies required to support patient care and safety without interruption or degradation to quality of care upon current MSPV contract expiration. Finally, obtaining competition for this requirement could not be accomplished due to the time required to complete a competitive action.

7. Actions to Increase Competition:

In efforts to increase competition, for the 49,000 types of supplies for distribution to all VHA facilities located in the United States (US) and all US Territories, VHA issued twenty-three RFQs for the acquisition of the consumable commodities in support of the MSPV Program catalog on a tiered evaluation basis. These RFQs were set-aside based on an order of priority to maximize SDVOSB and VOSB participation. Likewise, the SAC issued RFP 36C10G19R0022, for the MSPV 2.0 Prime Vendor distribution requirement as a partial set-aside, to encourage and maximize the involvement of SDVOSB, VOSB, and other small business concerns. Prior to the close of RFP 36C10G19R0050, a bid protest was filed challenging the unrestricted basis, for full and open competition, of the acquisition. This protest was sustained and in performing corrective action, the SAC amended RFP 36C10G19R0050 to incorporate small business set-asides for CLINs associated with multiple VISNs for Small Business concerns using a tiered evaluation approach. The lessons learned from the MSPV contractual history, MSPV 2.0 solicitation and resultant litigation, and evolving nature of the medical supply and distribution services industry and marketplace will be utilized to maximize competition for the long-term MSPV contracting solutions. Award of the new contracts provides the time necessary for VA to adequately plan for robust competition for these services in the future, while incorporating lessons learned and business improvements.

8. Market Research:

The market research conducted for MSPV 2.0 was utilized for this CJ&A as it was most recent and provided the most up-to-date market survey available. Two RFIs and a Vendor Industry Engagement Day were conducted in support of MPSV 2.0 distribution market research. The RFls played an essential role in determining the market's ability to meet VA’s basic requirements, while offering insight into vendor availability and capability. Market research was also conducted to determine the suitability of commercial items, the geographic regions to be competed, and the potential use of SDVOSB or other small business set-aside.

9. Other Facts Supporting this Justification:

No other supporting facts at this time.