P03_CJNA_MSPV_GenZ_T2_Ex2_1Year_FINAL_09102024_Redacted.pdf

Control Number: 36C10X-22-AP-1244

AS3-24-105

CLASS JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

PURSUANT TO FAR 6.302-2(d)(4)

1. Contracting Activity: Department of Veterans Affairs (VA) Office of Procurement, Acquisition, and Logistics Strategic Acquisition Center (SAC) Acquisition Service 3 (AS3) 5202 Presidents Court, Suite 103 Frederick, MD 21703

2. Nature and/or description of the action being approved:

The purpose of this document is to obtain Senior Procurement Executive (SPE) approval for the use of Federal Acquisition Regulation (FAR) 6.302-2(d)(2)(i) Unusual and Compelling Urgency, to extend the period of performance (PoP) beyond one year for an additional twelve months, for the Veterans Health Administration (VHA), Office of Procurement & Logistics’ Medical Surgical Prime Vendor (MSPV) – Generation Z (Gen-Z) Transition 2 contractors. Use of this authority will allow the SAC to meet the Department's medical and surgical supply needs from December 1, 2024, until November 30, 2025, and provide the time necessary to transition to the awarded competitive long-term contracts supporting the MSPV Program once the Government Accountability Office (GAO) protests are resolved.

This class justification and approval (CJ&A) will authorize the subsequent modification for this transition effort, enabling the current contractors to continue to meet the needs of the agency from December 1, 2024, until November 30, 2025.

This justification will extend the contract’s performance period to include four (4) three (3)-month option periods: Option Period 7 - December 1, 2024, through February 28, 2025; Option Period 8 - March 1, 2025, through May 31, 2025; Option Period 9 - June 1, 2025, through August 31, 2025;

and Option Period 10 - September 1, 2025, through November 30, 2025.

3. A description of the supplies or services required to meet the agency’s needs (including the estimated value):

VA, through the VHA and SAC, administers the MSPV Program, MSPV Supply Blanket Purchase Agreements (BPAs), and MSPV Gen-Z Transition distribution contracts for the distribution and supply management of medical and surgical supplies across VHA facilities 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 is mandatory for all VA Medical Centers (VAMCs) in accordance with VHA Directive 1761, dated December 30, 2020 (valid through recertification date of December 31, 2025), and was developed as the key element in VA’s integrated healthcare supply chain improvement initiative, and was designed to enhance efficiency, accuracy, and patient safety, because VA lacked sufficient internal capability to warehouse, coordinate deliveries, and consolidate supply stores. The MSPV Gen-Z Transition 2 contracts afford VA critical benefits not available through other contract methodologies, including traditional single-source supply contracts, and establish a national strategic sourcing solution that combines a Government capability for

The work performed is integral to VA’s mission of delivering healthcare services to the approximately nine (9) million Veterans currently receiving care through our nation’s VA healthcare system.

c. VA will suffer direct financial and operational injury and mission loss across the MSPV

Program. VA’s efficient, cost-effective, just-in-time ordering and distribution processes provided by these contracts will be severely impacted. A program lapse will result in approximately 2,000 contracting staff forced to attempt to process nearly 600,000 formal contracting actions (in addition to their existing workload). Procuring medical supplies outside of the current vehicles will result in duplicative contract actions and gross inefficiency. VA will also lose essential allocations of Personal Protective Equipment (PPE) necessary to support VAMCs due to supply chain disruptions. Thus, effectively rendering VAMCs unable to safely deliver patient care.

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 of or degradation to quality of care upon MSPV Gen-Z Transition 2 contract expiration. A new contractor would take months and excessive cost to start up versus utilizing the current contract action where VA healthcare facilities can continue to immediately procure their required supplies using the Government-sourced MSPV Product List.

e. Local procurement of individual supplies outside of the established statement of work

(SOW) best practices and oversight affect VA’s ability to make key decisions about the distribution of necessary supplies and monitor the entire supply chain for any critical issues.

This includes medical item recalls, filtering out non-Food and Drug Administration (FDA)-compliant or grey-market items, and non-Buy American Act (BAA) / non-Trade Agreements Act (TAA) compliant items. Doing so could quickly undermine the safety and efficiency of VHA patient care.

f. VA’s promise to Veterans, implemented through the Maintaining Internal Systems and

Strengthening Integrated Outside Networks Act (MISSION Act) of 2018, could be compromised as VA’s ability to provide Veterans with an excellent healthcare experience and delivery of the right care, at the right time, at the right place under these contracts will be jeopardized. Ensuring that covered Veterans do not experience a lapse in care resulting from errors or delays by the Department, it is imperative that the current contract is extended beyond one year.

g. VA does not have sufficient infrastructure to stock and distribute the required quantity of medical supplies in all locations.

At the current time, there are no other viable, alternative contracts for VA to use after the November 30, 2024, expiration date. Therefore, it is urgent to extend the transition effort under FAR 6.302-2, Unusual and Compelling Urgency, to ensure the continuity of VA’s critical MSPV Program.

6. A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable, including whether a notice was or will be publicized as required by FAR Subpart 5.2 and, if not, which exception under 5.202 applies:

VA met its original intent to fully compete and award a competitive action prior to the expiration of MSPV-Next Generation (NG) Bridge contracts in the award of MSPV 2.0. Due to extenuating circumstances, and the Court of Federal Claims (CoFC) decision/injunction, competitive award of any temporary solution comparable to MSPV 2.0 was not feasible before the expiration of the MSPV Gen-Z Transition 2 contracts on November 30, 2023. MSPV Generation-Z Version 1 (Gen-Z V1) Indefinite Delivery, Indefinite Quantity (IDIQ) awards were made to six respective contractors on May 23, 2023. The current long-term competitive MSPV Gen-Z V1 VISN-level delivery order procurement actions are pending GAO dismissal or decision.

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 have the required infrastructure, ordering capability, or EDI in place, for the facilities contemplated under this contract, to timely deliver the necessary medical supplies required to support patient care and safety without interruption or degradation to quality of care upon current MSPV Gen-Z Transition 2 contract expiration. Obtaining competition for this requirement is not feasible given the time required to complete a competitive action of this scope.

The SOW required implementation period provides the Prime Vendor approximately four (4) months (120 days), as defined within the MSPV Gen-Z V1 IDIQ SOW. This implementation period is allocated for installing the required software, establishing necessary distribution agreements with suppliers, and beginning to identify and stock required supplies for each awarded facility. The current contracts are expiring in 4 months; it is impossible to compete and implement new contracts before contract expiration.

The pending 15 remaining delivery order awards for VISNs 1, 2, 4, 5, 6, 7, 9, 10, 12, 15, 16, 17, 21, 23, and Puerto Rico are also impacted by the protests. Should corrective action be required by a GAO decision, it would be in the best interest of the Government to remedy the balance of unawarded delivery order awards per GAO direction, prior to subsequent award, and not cause further delay on the same grounds of protest.

7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable:

The prices were determined fair and reasonable, and the contract prices have stayed the same.

8. A description of the market research conducted and the results or a statement of the reason market research was not conducted:

The market research conducted for MSPV Gen-Z V1 was utilized for this CJ&A as it provided the most up-to-date market survey available. Based on the market research conducted, as documented in the MSPV Gen-Z V1 Market Research Memorandum signed on July 15, 2022, and the resulting analysis, it was determined that all VISNs shall be competed as unrestricted, utilizing Full and Open Competition under authority 41 U.S.C. 3301 and FAR 6.401(b), Competitive Proposals. This determination was made as there was no reasonable expectation that two or more responsible SDVOSBs, VOSBs, or other small businesses would submit proposals and that award could be made at a fair and reasonable price for any VISN. VA conducted further market research, via the issuance of a draft Request for Proposals (RFP) and held a second Industry Engagement

At present, the VHA oversees several decentralized single-award, firm-fixed-priced (FFP) MSPV Gen-Z T2 IDIQ distribution contracts with Medline Industries, LP, Concordance Healthcare Solutions, LLC, and Cardinal Health 200, LLC. These current MSPV Gen-Z Transition 2 contractors provide mission-critical medical/surgical supply distribution services in support of VA’s MSPV Program for designated VISNs and VA facilities across the United States and Puerto Rico. The VA Consolidated Mail Outpatient Pharmacy (CMOP) and OGAs also utilize VA’s vital MSPV Program.

Current OGAs leveraging VA’s MSPV Program through established Inter-Agency Agreements (IAAs) include: Indian Health Services (IHS), Federal Bureau of Prisons (BOP), Department of Health and Human Services (HHS), and Department of State.

It is crucial for VA and the Veterans we serve to ensure continuous MSPV distribution. Any lapse in these critical services would result in a substantial detrimental impact on the Veteran community.

The MSPV Program is responsible for providing PPE to VAMCs through distribution contracts.

Without these contracts, VA facilities would have to individually purchase all items on the MSPV Product List through open market procurement via purchase card, leading to a loss of spend under management as the ~1,400 ordering officers for MSPV would need to independently procure requirements for their individual facilities. Ordering officers for each VAMC would be in direct competition with one another on the open market to procure supplies, including critical PPE items.

Additionally, the management of the MSPV Product List, and underlying BPAs, Basic Ordering Agreements (BOAs), through the MSPV Program address critical supply issues such as medical item recalls, FDA compliance, and BAA/TAA compliance.