P03 JA Exception to Fair Opp-Philips Imaging_signed.pdf

VHAPM Part 816.5—Indefinite-Delivery Contracts Attachment 1: Request for Exception to Fair Opportunity Memo Format

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 1 of 7 Original Date: 08/30/2017 Date: 02/19/2021 Rev 06

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval

For

Exception to Fair Opportunity Memo

Acquisition Plan Action ID: 36C242-22-AP-0344

1. Contracting Activity: Department of Veterans Affairs, VISN 02, Network Contracting Office (NCO 2), 2875 Union Road, Suite 3500, Cheektowaga, NY 14227 procuring the requirement for Department of Veterans Affairs, VISN 02, Northport Medical Center, 79 Middleville Road, Northport, NY 11768.

2237: 632-22-1-454-0037

2. Description of Action: This is a request for approval of a sole source task order under Joint DoD, VA NAC HTME Contract (DSCP/VA) SPE2D1-17-D-0014 for full-service maintenance coverage on the Philips Healthcare imaging equipment located at the Northport Medical Center (632).

This procurement will be conducted in accordance with FAR Part 16.505(b)(2)(i)(B). The purpose of the service agreement is to reduce service costs and improve equipment turn-around time and reliability. This will be a firm-fixed price task order from contract# SPE2D1-17-D-0014. The anticipated period of performance is from February 1, 2022 to January 31, 2023 with a provision of four (4) option years. The estimated base year cost is $648,048.80, and the total estimated cost is $3,240,244.00.

3. Description of Supplies or Services: The Northport VAMC (address listed above) require a service maintenance plan for the Philips HTME (High Tech Medical Equipment) currently in use. The full-service to include replacement parts coverage, remote service support, telephone support, operating system software and hardware reliability reports, as well as continuing education and support service. The contractor will be responsible for full maintenance coverage by providing all replacement parts, labor, travel expenses, tools, test equipment and other incidentals necessary to maintain or restore the listed equipment to operating specifications according to the manufacturer’s recommendations throughout the term of the task order.

Covered equipment includes the following:

Site # Catalog# Serial # System Name Equipment Description

66964975 728323-74 Ingenuity Core 128 Ingenuity CT 728326 Protection Service Plan

728323-77 Ingenuity CT 728326 Protection Supplemental Coverage (26-150 kVA UPS)

728323-97 Ingenuity Core128 Protection (Tube Coverage CT-Unlimited)

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65114330 728323-74 Ingenuity Core 128 Ingenuity CT 728326 Protection Service Plan

728323-97 Ingenuity Core128 Protection (Tube Coverage CT-Unlimited)

64504848 728323-77 480 VAC/60Hz/125 KVA

UPS

Ingenuity CT 728326 Protection Supplemental Coverage (26-150 kVA UPS)

81369855 718132-37 Veradius Unity Veradius Unity Primary Service Plan

718132-62 Veradius Unity Primary (X-Ray Tube & 1 Flat Detector)

64626738 79520001-V US115B0043 EPIQ 7G EPIQ 7 GI / CV Value Service Plan 79520001-V7 B16ML1 L12-5 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B176F8 L15-7io EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B2C10Q L18-5 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B170RY L12-3 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B160KL C10-3V EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B173XH C5-1 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V10 B15QX9 X6-1 EPIQ 7 GI / CV Value Specialty

Transducers (3D or Matrix Array Transducer)

64626773 79520001-V US115B0044 EPIQ 7G EPIQ 7 GI / CV Value Service Plan 79520001-V7 F03KG5 C10-3V EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B2Z8Q5 C5-1 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B27P8X L12-5 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B1VQCV L12-3 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B176FL L15-7io EPIQ 7 GI / CV Value Standard

Transducers 79520001-V7 B17690 L18-5 EPIQ 7 GI / CV Value Standard

Transducers 79520001-V10 B15RNW X6-1 EPIQ 7 GI / CV Value Specialty

Transducers (3D or Matrix Array

36C242-22-AP-0344

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 3 of 7 Original Date: 08/30/2017 Date: 02/19/2021 Rev 06

Transducer) 42861834 718095-37 BV Pulsera 2.3 BV Pulsera, rel. 2.3 Primary Service

Plan 718095-62 BV Pulsera, rel. 2.3 Primary Service

Option (X-Ray Tube and II) 62941532 718131-37 B36H3V Veradius 1.2 NEO Veradius 1.2 Neo Primary Service

Plan 718131-62 Veradius 1.2 Neo Primary

Supplemental Coverage (X-Ray Tube & 1 Flat Detector)

73158090 882446-42 Vereors PET/CT Vereos PET/CT Primary Service Plan

882446-45 Vereos PET/CT Primary Supplemental Coverage (26-150 kVA UPS)

882446-71 Vereos PET/CT Primary Tube Coverage- Low

Pricing was agreed upon to be an equal annual cost between Philips and accepted by the DSCP/VA.

There will not be any service cost increases for the base plus four (4) years per the DSCP/VA contract SPE2D1-17-D-0014 as well as the proposal submitted.

Base Year: 2/1/2021 – 1/31/2023 = $648.048.80 Option year 1: 2/1/2023 – 1/31/2024 = $648.048.80 Option year 2: 2/1/2024 – 1/31/2025 = $648.048.80 Option Year 3: 2/1/2025 – 1/31/2026 = $648.048.80 Option Year 4: 2/1/2026 – 1/31/2027 = $648.048.80 Total task order value: $3,240,244.00

4. Statutory Authority: The statutory authority permitting an exception to fair opportunity is Section 41 U.S.C. 4106(c) as implemented by the Federal Acquisition Regulation (FAR) Subpart 16.505 Subpart 16.505(b)(2)(i):

( ) FAR Subpart 16.505(b)(2)(i)(A): The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays.

( X ) FAR Subpart 16.505(b)(2)(i)(B): Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.

( ) FAR Subpart 16.505(b)(2)(i)(C): The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the

VHAPM Part 816.5—Indefinite-Delivery Contracts Page 4 of 7 Original Date: 08/30/2017 Date: 02/19/2021 Rev 06 contract, provided that all awardees were given a fair opportunity to be considered for the original order.

( ) FAR Subpart 16.505(b)(2)(i)(D): It is necessary to place an order to satisfy a minimum guarantee.

( ) FAR Subpart 16.505(b)(2)(i)(E): For orders exceeding the simplified acquisition threshold, a statute expressly authorizes or requires that the purchase be made from a specified source”. The statutory authority permitting an exception to fair opportunity for this action is 38 U.S.C. 8127(c), known as the Veterans First Contracting Program which provides the authority to directly contract with a Service-Disabled Veteran-Owned Small Business (SDVOSB) or a Veteran-Owned Small Business (VOSB).

5. Rationale Supporting Use of Authority Cited Above: Philips is the only company that can provide all the necessary OEM parts and perform all the necessary repairs for the Philips HTME described above due to patents and copyrights on the equipment. This prevents other possible contractors from accessing the diagnostic software, possessing necessary tooling, and providing OEM parts to the Government. To ensure that services performed on the equipment meets OEM requirements as per Title 21 Part 820, Subpart N, Section 820.200, “Servicing in order to mitigate any liability as a result of equipment failure due to improper servicing of modification of equipment.”

These maintenance services are considered “highly specialized” and thus there is only one responsible source.

6. Efforts to Obtain Competition: A description of efforts made to ensure that offers are solicited from as many potential sources as is practicable.

Past procurement history indicates that this procurement was sole sourced to the joint DSCP/VA contract SPE2D1-17-D-0014 due to patents and copyrights, precluding other contractors from being able to meet all of the service requirements. A search of the VIP database was conducted utilizing NAICS 811219 with keywords “Philips Imaging” which resulted in zero SDVOSB/VOSB. This does not satisfy the rule of two for SDVOSB/VOSB set-aside in accordance with 38 U.S.C. 8127(d). A search under the SBA and GSA websites under NAICS code 811219 with keywords “Philips imaging” produced no results. A search of the NAC database was conducted utilizing key words “Philips Imaging” and did not bring up any service contracts.

Notice of Intent to Sole Source, 36C24222Q0184 was posted to beta.SAM.gov from 12/2/2021 – 12/9/2021 seeking information from contractors who could potentially provide the required maintenance service. One response was received from The Remi Group, LLC (a small business, but for NAICS code 811219 it is considered a large business). The Remi Group stated they have a GSA contract for the required services on Philips equipment, but when looking up “Philips Imaging” in GSA, no services were found. No response was received from Philips due to their submittal of quotes showing their interest. Capability statements were not required as they are the OEM and already performing services at each site either under contract or warranty period.

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7. Actions to Increase Competition: Describe actions taken, or that will be taken, to remove or overcome any barriers to competition before initiating any subsequent acquisitions for the supplies, or services required, including challenges to restrictive data markings, data rights, preparation of a performance based work statement, and etc.

In situations involving complex medical equipment, it is difficult to remove barriers to competition because the OEM is the only qualified company capable to provide the repair and maintenance of its own specialized medical equipment. This is especially true where proprietary software, specific diagnostics tools, and specialized electronics are used to maintain the HTME in accordance with OEM specifications. Unless the manufacturer chooses to license its software and authorize local service providers to maintain the Philips equipment, the only alternative would be to replace the existing Philips equipment with a more generic brand. At this time, the Northport VAMC is satisfied with the quality and operation of the installed equipment, its maintenance and repair. Northport VAMC currently does not have the sufficient budget to replace the Philips equipment thus the reason to have equipment properly maintained through the life of the task order. Considerations for new equipment will be made when the existing equipment reaches the end of its life cycle span.

8. Market Research: Provide a description of the market research conducted among the contract holders and the results. If market research was not conducted, the reasons it was not conducted should be stated. When citing 16.505(b)(2(i)(b) or 16.505(b)(2)(i)(e), the only possible way to state in paragraph 5 of the J&A that there is only one contractor who can fulfill the agency’s needs is to conduct market research, and it should be summarized here.

Due to the proprietary nature, Philips is the only authorized company able to perform maintenance on its imaging equipment. They have the technical expertise to provide maintenance and service, as well as being the only company with access to manuals and design specifications of its imaging equipment. Philips is the only company that can access its systems remotely and offer certified parts that meet the original manufacturer’s specifications. Philips technicians are the only OEM trained and certified personnel authorized to perform service on this HTME (High Tech Medical Equipment).

However, VetBiz, SBA, GSA, and the NAC websites were used to determine if there were any other vendors capable of providing service and/or maintenance on the Philips equipment. Additionally, a Notice of Intent to Sole Source was posted to beta.SAM.gov from 12/2/2021 – 12/9/2021 seeking information from contractors who may be capable of providing the required maintenance service.

No vendors responded that are capable of performing services. Therefore, it has been determined that Philips is the only company capable of providing these services on this highly specialized equipment to the agency.

9. Other Facts: This task order is in support of the VA-DoD Direct Sharing Agreement with the DSCP in consolidation with four of the DOD’s HTME contracts, namely SPE2D1-17-D-0014. The use of these consolidated HTME contracts after first considering mandatory sources is strongly encouraged by the

NAC.

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10. Technical and Requirements Certification: I certify that the supporting data under my cognizance, which are included in this justification, are accurate and complete to the best of my knowledge and belief.

NADER EL-MINIAWI Date Chief, Biomedical Engineer (139) Northport VA Medical Center (632)

11. Determination that Anticipated Cost is Fair and Reasonable: A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable:

The anticipated cost to the government is considered fair and reasonable based upon adequate competition on the DSCP/VA contract requirements and negotiation of prices prior to contract award.

The pricing for this annual service requirement comes directly from the manufacturer, Philips, is identical to the pricing available under their DSCP/VA contract. The Contracting Officer will request additional discounts from Philips during solicitation to the vendor.

12. Contracting Officer's Certification (required): I certify that the foregoing justification is accurate and complete to the best of my knowledge and belief.

Janine Childs Date Contracting Officer RPO-East, NCO2, Buffalo, NY

13. Approvals in accordance with VHAPM Part 816.505 Indefinite Delivery Contracts: Ordering.

a. One Level Above the Contracting Officer (Required over SAT but not exceeding $750K): I certify the justification meets requirements for other than full and open competition.

Rachel Beason Date Branch Chief, Services Team II RPO-East, NCO2, Buffalo, NY

HIGHER LEVEL APPROVAL (Required for orders over $750,000):

12/21/2021

NADER EL-

MINIAWI 154001

Digitally signed by NADER EL-MINIAWI 154001 Date: 2021.12.21 14:44:33 -05'00'

Janine C.

Childs 183575

Digitally signed by Janine C. Childs 183575 Date: 2021.12.21 16:00:52 -05'00'

Rachel A. Beason 966443

Digitally signed by Rachel A.

Beason 966443 Date: 2022.01.04 09:04:26 -05'00'

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b. VHA Advocate for Competition/Head of Contracting Activity (HCA) REVIEW AND APPROVAL (over $750,000 to $15 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 other than full and open competition.

Joseph Maletta Date Executive Director Regional Procurement Office - East