P03.__2019-0063_LSJ_Quest_Lab_Testing_36C26118AP3598.pdf

VHAPM Part 808.405-6 Limiting Sources Page 1 of 7 Original Date: 08/30/2017 Revision 01 Eff Date: 04/23/2018

LIMITED SOURCES JUSTIFICATION

ORDER >SAT

FAR PART 8.405-6

Acquisition Plan Action ID: 36C261-18-AP-3598, VA261-18-AP-9401

1. Contracting Activity: U.S. Dept. of Veterans Affairs

Network Contracting Office (NCO) 21 VA Sierra Pacific Network

2. Description of Action: This acquisition is conducted under the authority of the Multiple-Award Schedule Program (41 U.S.C. 251 and 40 U.S.C. 501).

This acquisition is conducted under the authority of the Multiple-Award Schedule Program (41 U.S.C. 251 and 40 U.S.C. 501). The limited source justification is for Reference Laboratory Testing services for the Veterans Integrated Service Network (VISN) 21 San Francisco VA Medical Center (SFVAMC), VA Northern California Healthcare System (VANCHCS), VA Pacific Islands Healthcare System (VAPIHCS), and VA Las Vegas Healthcare System (VALVHCS) under NAICS code 621511, Medical Laboratories. The Network Contracting Office (NCO) 21 plans to award a single award Federal Supply Schedule Blanket Purchase Agreement (FSS-BPA) for a base year and four option years. The current task orders under FSS contract# V797D-70090, WSNC BPA# VA260- 16-A-0009, VA261-16-J-3032 (VAPIHCS) and VA261-17-F-3129 (VANCHCS) awarded to Quest Diagnostics Incorporated (“Quest”) expires on March 31, 2019 with no options for increased quantity.

The WSNC BPA has an ordering limit of $1,000,000.00 and services for these three locations are expected to exceed $1,000,000.00 over a five-year term. As a result, continued utilization of the WSNC BPA is impractical. The Government intends to establish an FSS BPA to Quest Diagnostics for use by NCO 21.

Order against: FSS Contract Number: V797D-70090

Name of Proposed Contractor: Quest Diagnostics Incorporated

Street Address: 3 Giralda Farms

City, State, Zip: Madison, NJ 07940

Phone: (615) 498-7347

3. Description of Supplies or Services:

The estimated value of the proposed action is $7,200,000.00

The estimated value of the proposed action is $7,200,000.00. The reference laboratory shall provide laboratory services to include pre-analytic processing as defined in its laboratory manual; analysis, reporting of analytic results, and interpretation. The reference laboratory is responsible for providing requisition forms, special instructions, and current list of tests with reference ranges, turnaround times, specimen requirement, specimen transport supplies, and courier service. The contractor is also responsible for providing an interconnection for exchanging data between Veterans Health Information Systems and Technology Architecture (VistA) Laboratory Electronic Data Interchange https://www.gpo.gov/fdsys/pkg/USCODE-2009-title41/pdf/USCODE-2009-title41-chap4-subchapIV-sec251.pdf https://www.gpo.gov/fdsys/pkg/USCODE-2011-title40/pdf/USCODE-2011-title40-subtitleI-chap5-subchapI-sec501.pdf

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(LEDI) System owned by the VA and the Reference Laboratory’s Electronic Data Interchange (EDI) System for delivering laboratory orders to the reference laboratory and to deliver the reference laboratory test results to each site/station’s VistA. This interchange connection shall be protected using VA approved encryption algorithms and products as required. Connections at each end shall be located within a controlled access facility. All access shall be controlled by authentication methods to validated approved users.

4. IDENTIFY THE AUTHORITY AND SUPPORTING RATIONALE (see 8.405-6(a)(1)(i)(A), (B), and (C) or 8.405-6(b)), AND IF APPLICABLE, A DEMONSTRATION OF THE

PROPOSED CONTRACTOR’S UNIQUE QUALIFICATIONS TO PROVIDE THE

REQUIRED SUPPLY OR SERVICE.

An urgent and compelling need exists, and following the ordering procedures would result in unacceptable delays.

Only one source can provide the supplies or services required at the level of quality required because the supplies or services are unique or highly specialized;

This service requires that the laboratory test results be uploaded electronically into VistA onto custom interfaced forms. Each laboratory test requires a custom-built form that has been developed from scratch by the laboratory and vetted and data field connectivity validated by a VA Laboratory Information Manager, before the test is interfaced in the VistA system. The electronic interface is required to insure the accurate capture, documentation, and timely receipt of the test results transmitted back to the medical record in VistA. These laboratory forms are vendor-specific based on a vendor’s test methodology and vendor’s interfacing/IT system/software. Therefore, a new contractor cannot simply use the forms from the incumbent contractor. To get the forms into VistA would require building the forms, testing, interfacing, etc. Locally developed test forms in VistA are not shared across sites/stations. Each station/site covered under this action (SFVAMC, VANCHCS, VAPIHCS, and VALVHCS) would require building of forms, testing, and interfacing prior to the start of performance. There are other laboratories that have interfaces with VistA; however, the laboratories typically cover specific tests with no overlap. In other words, there is not two or more laboratories that have forms built for the same type of lab test.

The proposed BPA action is required to prevent the clinic from losing lab testing capabilities.

Currently, Quest is the only contractor with access to the data system/test forms currently interfaced, to correctly input test results and other test notifications into the system as required. Potential contractors would require a minimum of 90-days lead time to build an acceptable interface plus an additional six months to build lab forms in VistA for each test. Execution of this contract will allow for continued operations without substantial delay or possible clinic shut-down. If not electronically transmitted, the facilities would have no way to search historic laboratory data by test type or test result. The facilities would also not be able to trend or run reports for each patient without manually re-entering test results into another system and then querying. The risk of clerical error in manual data re-entry is high and could be potentially detrimental to patient care.

To obtain access to the VA’s network, establish a direct connection between a third-party site and the Government, and access through the VA’s firewall, the vendor must undergo a lengthy IT security process that involves collaboration with the National Security Operations Center (NSOC). The vendor must establish an Interconnection Security Agreement and Memorandum of Understanding (ISA MOU) with the Department of Veterans Affairs. Establishing an ISA MOU takes approximately 6 months to one year.

https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%208_4.html#wp1091891 https://www.acquisition.gov/sites/default/files/current/far/html/Subpart%208_4.html#wp1091891

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Multiple national laboratory companies already have national VA ISA MOUs. Once an ISA MOU is established, a vendor must then work with local IT personnel to establish an interchange to the local VistA system. In addition, the vendor must work with the local laboratory and Laboratory Information Manager to build the lab package (lab forms for each test). Each test form must undergo a production phase (where forms are created), then a test or validation phase (where forms are tested to determine transmission accuracy), and then a go-live phase. Each test form would take at least 3 hours to develop. There are hundreds of tests required by each site/station and VistA is site/station specific (they do not share information). The laboratories in VISN 21 would require eight Full-Time Equivalents (FTE) for six months working on building new forms for a new vendor. A typical test/validation phase can take up to 4-6 months to complete depending on the complexity of the test form components and the number of test forms being validated concurrently.

VISN 21 orders thousands of lab tests per year and cannot afford even one day of lapsed service. The Contracting Officer Representative of Lab Services reports that if this service stopped even for one day, all clinical operations would cease as the VA does not have the resources or bodies to fulfill the back-end work of building the lab package and forms for a new vendor. Due to the time and resource constraints of the Government, only the incumbent vendor can perform this work as soon as possible and without any lapse in service.

For the VANCHCS alone over 1,100 personnel hours would be required to make modifications to the facility data base to accept additional reference laboratory testing and analysis. This was calculated by multiplying 2,730-line items (the total number of line items currently in use) by 25 minutes (the average time to modify each record).

2,730 records x 25 minutes/record = 68,250 total number of minutes to input modifications 68,250 / 60 = 1,137.5 hours

Each additional facility covered under this action (VAPIHCS, SFVAMC, and VALVHCS) would also require this type of up front labor.

Due to the limitations on personnel with capabilities to make such modifications and the Government's inability to recover costs of doing so, this process is not feasible now however ongoing market research efforts will continue indefinitely.

The current contractor can perform immediately and has been performing satisfactorily. The incumbent is the only source capable of providing the reference laboratory testing and analysis processing services required as this contractor retains the system interface capabilities.

In the interest of economy and efficiency, the new work is a logical follow-on to an original

Federal Supply Schedule order provided that the original order was placed in accordance with the applicable Federal Supply Schedule ordering procedures. The original order must not have been previously issued under sole source or limited source procedures.

Items peculiar to one manufacturer:

A patent, copyright or proprietary data limits competition. The proprietary data is: (If FAR 8.405-6(a)(2)iii before posting. Do not include specific proprietary data. Only mention the type of equipment, procedure, etc. to show that proprietary supplies or services are being procured.)

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These are “direct replacements” parts/components for existing equipment.

The material/service must be compatible in all aspects (form, fit and function) with existing systems presently installed/performing. Describe the equipment/function you have now and how the new item/service must coordinate, connect, or interface with the existing system.

5. DESCRIBE WHY YOU BELIEVE THE ORDER REPRESENTS THE BEST VALUE

CONSISTENT WITH FAR 8.404(d) TO AID THE CONTRACTING OFFICER IN MAKING

THIS BEST VALUE DETERMINATION:

The prices were determined fair and reasonable on the FSS contract. The proposed BPA action will be written against the FSS contract and establish prices at or below FSS contract prices. An FSS BPA to Quest represents the best value to the Government. Quest can perform with no transition or mobilization down-time. They currently have an interface set up with each facility’s VistA, and the lab package with all test forms have been completed and tested. No additional transition time or effort would be required. In addition, as noted above, Quest has an FSS contract with discounted pricing.

There is also a WSNC BPA with even greater discounts from the FSS pricing. As mentioned above, the WSNC BPA is not practical for this action since the BPA states a call limit of $1,000,000.00. The Government anticipates it will exceed this call limit over 5 years and it is not practical to establish a new BPA call each year. The Government will compare the quote on this action to the WSNC BPA pricing and attempt to establish prices that match or are lower than the WSNC BPA pricing.

6. DESCRIBE THE MARKET RESEARCH CONDUCTED AMONG SCHEDULE HOLDERS

AND THE RESULTS OR A STATEMENT OF THE REASON MARKET RESEARCH WAS

NOT CONDUCTED:

Market research was conducted by the Contract Specialist in accordance with FAR Part 10 and is included in the contract file.

FPDS.gov A search for SDVOSB/VOSB Laboratory Testing vendors was conducted on FPDS to determine if any companies can perform the needed services (see FPDS 621511). The initial search returned four potential vendors: (1) D&D Laboratory, Inc, (2) Water Treatment Services, (3) Alliant Enterprises, and (4) Hot Shot Pick-up, LLC. (see FPDS 621511). Additional research into these companies determined that they are not suitable for this requirement. (1) D&D Laboratory specializes in testing water and dialysate for bacteria, microbials, colony count, endotoxin, LAL, pyrogen and AAMI contaminant panel for metals and anions. (2) Water Treatment Services specializes in providing specialty water treatment chemicals and custom delivery equipment. (3) Alliant is a medical manufacturer of 100 Latex Free Med/Surg products with additional resources in, Capital Hospital Equipment, Engineering, Tooling, Sub-assembly, Packaging and Laboratory supplies. (4) Hot Shot Pick-up, LLC has had an expired SAM status since 2/14/14. The results of this search do not support a potential for competition or set-aside for SDVOSB, VOSB, or other small business set-aside.

VIP.Vetbiz A search under NAICS 621511 was conducted on VIP.VETBIZ to determine if any SDVOSB or VOSB companies can provide Laboratory Testing Services. The search returned four results (see VETBIZ 621511). After further analysis the following was determined: (1) Patriot Supply, Inc only supports the Michigan area. (2) Physicians Laboratory Services, Inc only support the Nebraska and Iowa areas. (3) Village Oaks Pathology Services only supports the Texas area. (4) Washington-Harris

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Group Inc does not perform Reference Laboratory Services. The vendor specializes in healthcare staffing services. The results of this search do not support a potential for competition or set-aside for SDVOSB, VOSB, or other small business set-aside.

Dynamic Small Business Search A search under NAICS 621511 was conducted using the SBA Dynamic Small Business Search Tool to determine if any SDVOSB, VOSB, or small businesses can perform Laboratory Testing Services.

The search returned no results (see DSBS 621511). The results of this search do not support a potential for competition or set-aside for SDVOSB, VOSB, or other small business set-aside.

FBO.gov A search under filters NAICS: 621511, Set-Aside: SDVOSB/VOSB, KEYWORD: “Laboratory Testing” was conducted on FBO.gov to discover if any award notices were posted for Laboratory Testing Services. The purpose is to discover new contractors that have shown interest in the needed services. The search returned no results (see FBO 621511). The search returned no results. The results of this search do not support a potential for competition or set-aside for SDVOSB, VOSB, or other small business set-aside.

Sources Sought On October 2, 2018, Sources Sought Notice 36C26119Q0020 was posted to Fed Biz Opps with a response date of October 23, 2018 to determine if there were any contractors within the VISN 21 area of operation capable of performing the required services (see Sources Sought 621511). One company, MCI Diagnostic Laboratory, an SDVOSB, responded showing interest in the requirement. After an analysis of their capability statement (see MCI Analysis), the following was determined: (1) No existing ISA/MOU for connectivity with VA (for result transfer and generation of sample manifest shipping logs), (2) No mention of method for transporting samples to their testing locations. Water poses a huge barrier in terms of shipping times to the mainland. (3) No listing of their testing laboratory location(s) other than the Oklahoma address. (4) No mention of providing IT support services. (5) No mention of their shipping capabilities or modes. (6) No mention if their information system can even interface with VistA. (7) Appears that they deal quite a bit in the SALES of lab equipment and lab testing is incidental. The results of the Sources Sought do not support a potential for competition or set-aside for SDVOSB, VOSB, or other small business set-aside.

Summary of Market Research Results Market research was conducted through searches on FPDS, VIP.vetbiz, Dynamic Small Business Search, FBO, and a Sources Sought posting to discover any new vendors capable of providing Laboratory Testing Services. The results of the searches did not support a potential for competition or set-aside for SDVOSB, VOSB, or other small business set-aside.

Reference Laboratory Services have historically been difficult requirements to compete. At the current time, Quest has developed an extensive list of test forms to the VA data system to correctly input test results and other test notification into the system as required. Potential contractors would require a minimum of 90-days lead time to build an acceptable interface resulting in only one available source for the required services within the stated timeframe. Award of an FSS BPA to Quest will allow for continued operations without substantial delay or possible clinic shut-down.

7. ANY OTHER FACTS SUPPORTING THE JUSTIFICATION:

VISN 21 (VAPIHCS, VANCHCS, SFVAMC, and VALVHCS) submits thousands of reference laboratory tests per year. VISN 21 does not have the ability or resources to perform most of its

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Revision 01 Eff Date: 04/23/2018 specialty tests in house and must therefore source out these tests to contracted laboratories. A lapse of even one-day of service under contract would result in a complete shutdown of clinic operations.

To obtain access to the VA’s network, establish a direct connection between a third-party site and the Government, and access through the VA’s firewall, the vendor must undergo a lengthy IT security process that involves collaboration with the National Security Operations Center (NSOC). The vendor must establish an Interconnection Security Agreement and Memorandum of Understanding (ISA MOU) with the Department of Veterans Affairs. Establishing an ISA MOU takes approximately 6 months to one year.

Multiple national laboratory companies already have national VA ISA MOUs. Once an ISA MOU is established, a vendor must then work with local IT personnel to establish an interchange to the local VistA system. In addition, the vendor must work with the local laboratory and bio-medical engineer to build the lab package (lab forms for each test). Each test form must undergo a production phase (where forms are created), then a test or validation phase (where forms are tested to determine transmission accuracy), and then a go-live phase. Each test form would take at least 3 hours to develop. There are a minimum 140 tests per facility. Because VistA is specific to each facility location, each facility will require its own lab package. VISN 21 would require eight FTEs for 6 months working on building new forms for a new vendor. VISN 21 does not have these types of resources to dedicate to building new lab packages for each facility (station). A typical test/validation phase can take up to 4-6 months to complete.

8. A STATEMENT OF THE ACTIONS, IF ANY, THE AGENCY MAY TAKE TO REMOVE

OR OVERCOME ANY BARRIERS THAT LED TO THE RESTRICTED CONSIDERATION

BEFORE ANY SUBSEQUENT ACQUISITION FOR THE SUPPLIES OR SERVICES IS

MADE:

Market research is continuous and has been ongoing for some time due to similar requirements across VISN facilities and the results are typically similar as each facility has a system interface requirement, resulting in various vendors being utilized at various facilities under other than full and open competition. Although interfaces can be implemented with additional vendors at various sites, additional market research as to the feasibility of doing so indicated additional interfaces were unrealistic because of the length of time required to develop interfaces and the overall limitation on manpower resources. Until the system interface is no longer a key requirement for these labs testing services, competing these services will continue to be challenge. The end-users at each site were encouraged to gauge the market place and determine any other viable vendors that can perform this breadth of lab testing services. If any vendors are identified, the Government will work towards procuring a new competitive contract at least two years in advance of the required start date to allow time for VistA interfacing.

9. REQUIREMENTS CERTIFICATION: I certify that the requirement outlined in this justification is a Bona Fide Need of the Department of Veterans Affairs and that the supporting data under my cognizance, which are included in the justification, are accurate and complete to the best of my knowledge. I understand that processing of this limited sources justification restricts consideration of Federal Supply Schedule contractors to fewer than the number required by FAR Subpart 8.4.

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IVAN D. MEADOWS

MD, Chief Pathology & Lab Medicine VA Northern California Healthcare System

JODI LIAO

Chief, Laboratory Services VA Pacific Islands Healthcare System

(10) APPROVALS IN ACCORDANCE WITH THE VHAPM Part 806.3 OFOC SOP:

a. CONTRACTING OFFICER’S CERTIFICATION (required): I certify that the foregoing justification is accurate and complete to the best of my knowledge and belief.

BRIAN J. SANKO

Contracting Officer, NCO 21 Deputy Director of Contracting, NCO 21

b. One Level Above the Contracting Officer (Required over the SAT but not exceeding $700K): I certify the justification meets requirements for other than full and open competition.

BROOKE C. ROBISON

Director of Contracting, NCO 21

Approved / Disapproved (if applicable)

HIGHER LEVEL APPROVAL (Required for orders over $700,000):

c. VHA SAO HCA REVIEW AND APPROVAL (over $700,000 to $68 million): I have reviewed the foregoing justification and find it to be complete and accurate to the best of my knowledge and belief and approve for restricting consideration of the Federal Supply Schedule contractors to fewer than the number required by FAR Subpart 8.4.

CHRISTOPHER S. WILLIAMS

Acting Executive Director, SAO West Head of Contracting Activity (HCA)

Approved / Disapproved (if applicable) https://vaww.pclo.infoshare.va.gov/PMWeb/VHAPM_Part_806.3.aspx https://vaww.pclo.infoshare.va.gov/PMWeb/VHAPM_Part_806.3.aspx

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