P03 JA FAR Part 8_FINAL_20260715_MB_mc_fd_kh DOC.pdf

DEPARTMENT OF VETERANS AFFAIRS

Office of Procurement, Acquisition and Logistics (OPAL)

Enterprise Procurement Office 5202 Presidents Ct, Suite 103

Frederick, MD 21703

AS3-26-039

LIMITED-SOURCES JUSTIFICATION

(1) Identification of the agency and the contracting activity, and specific identification of the document as a "Limited-Sources Justification."

This justification for limited sources is executed by the Enterprise Procurement Office (EPO), on behalf of the Department of Veterans Affairs (VA) Medical Supply Program Office (MSPO). This document constitutes a Limited-Sources Justification pursuant to GSAR 538.7104-3(b)(ii), as guided by the Revolutionary FAR Overhaul (RFO).

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

The proposed action is a modification to Option Period 1 of firm-fixed-price task order 36C10X26F0006, awarded December 25, 2025, to Deloitte Consulting, LLP, 1919 N Lynn Street, Arlington, VA 22209-1742, under GSA Federal Supply Schedule (FSS) 47QRAA18D001P. The modification increases the level of effort during Option Period 1 (June 25, 2026 – December 24, 2026) to a level commensurate with the base period of performance, as established under modification P00001 (effective February 9, 2026).

The option period has already begun, and the modification will increase the level of effort upon its effective date through the remainder of the period of performance.

At the time of award, the Government anticipated a drawdown of contractor support during Option Period 1, reflecting the projected maturation of key activities and the planned transition of responsibilities to Government staff and VA Office of Information Technology (O&IT). Subsequent to award, a series of unforeseen operational, geopolitical, and regulatory developments—detailed in Section 4 below—have materially precluded the planned reduction in support. As a consequence, the Government has determined that continued services at the base period level of effort are essential to sustain MSPV program operations, protect Veteran care, and fulfill statutory and regulatory obligations through December 24, 2026.

The Government acknowledges that increasing the level of effort beyond what was contemplated at the time of option exercise may constitute a modification outside the scope of the original task order as awarded. This justification is prepared consistent with that determination and with the Government's obligation to publish notice on SAM.gov affording any interested FSS contractors the opportunity to submit a capability statement for consideration prior to proceeding. That notice was published on Thursday, June 18, 2026, with a response deadline of Friday, June 26, 2026. The government did not receive any eligible responses thus demonstrating the Government’s ability to assume operational responsibility for the required services within the remaining period of performance without unacceptable risk of disruption to MSPV program operations.

LSJ | 36C10X26F0006 | Deloitte Consulting, LLP

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

The required services are identical in nature to those established under the base period Performance Work Statement (PWS) dated February 6, 2026, as modified by modification P00001. The modification to Option Period 1 aligns the level of effort across all four task areas to match the base period monthly rates. Specifically:

• Clinical Product Tool (CPT) Managed Service: Continuation of automated process support, stakeholder management, data analysis and upload, sprint and backlog support for O&IT, user acceptance testing, training, help desk operations, and bug investigation to sustain CPT operability. Level of effort aligns to the base period at approximately 26,880 hours for the six-month period.

• Clinically Driven Strategic Sourcing (CDSS): Development and refinement of medical supply requirements with active clinician input, Technical Evaluation Panel (TEP) support, Custom Pack sustainment, and supplier engagement activities in compliance with P.L. 115-407, Section 703. Level of effort aligns to the base period at approximately 6,332 hours for the six-month period.

• Program Management: Stakeholder coordination, Prime Vendor performance monitoring, GAO/OIG recommendation closure, supply chain resiliency management, Facility Utilization Acceleration, and ongoing regulatory compliance under Trade Agreement Act (TAA), Buy American Act (BAA), and the Make PPE in America Act. Level of effort aligns to the base period at approximately 22,015 hours for the six-month period.

• Enterprise Modernization, Automation, and Innovation: Continued Power BI dashboard development, supply chain resilience modeling, AI and automation opportunity identification, and alignment with the VA FY 2026-2030 Supply Chain Transformation Plan. Level of effort aligns to the base period at approximately 3,045 hours for the six-month period.

The estimated value of this modification is approximately $6,198,519.91, representing the difference between the Option Period 1 level of effort as originally awarded (approximately $3,749,052.23) and the base period level of effort (approximately $9,947,572.14). If the modification is executed at base period monthly rates established under P00001, the total estimated value of Option Period 1 would be approximately $9,947,572.14, bringing the total estimated contract value (base plus modified Option Period 1) to approximately $19,895,144.28, subject to final negotiation and availability of funds. In summary, the option was originally priced lower because the Government anticipated the complete O&IT off‑ramp and due to unforeseen supply chain events.

Since MSPO still requires some CPT to work with O&IT and to provide additional support for supply chain challenges, this modification simply restores Option Period 1 to the full level of effort required, matching the base period value of $9,947,572.14.

(4) The authority and supporting rationale GSAR 538.7104-3(b)(ii) and, if applicable, a demonstration of the proposed contractor's unique qualifications to provide the required supply or service.

The authority for this limited-sources justification is GSAR 538.7104-3(b)(ii): only one source immediately available to provide the services required at the level of quality without disruption. The MSPO requires immediate continued service at the same level of effort provided by the base period of the order. Although MSPO intended to reduce the need for contract support over time, several incidents outside the Government’s control changed the government’s need for continued support commensurate with that of the base period.

Changed Circumstances Necessitating Increased Level of Effort:

At the time task order 36C10X26F0006 was awarded in December 2025, the Government's acquisition strategy reflected an anticipated reduction in contractor support during Option Period 1 as key activities matured and responsibilities transitioned to Government staff. Three unforeseen developments have since materially precluded the planned drawdown:

a. Unforeseen Operational Emergencies. During the base period of performance, MSPO encountered unplanned supply disruptions and operational emergencies (e.g.

Stryker cyber attack, Kimberly-Clark distribution center fire in Ontario, CA, Medline distribution center fire in Tracy, CA) requiring sustained contractor surge support that was not anticipated at the time of award. These events consumed capacity originally allocated toward transitioning work to Government staff, preventing the planned reduction in contractor support across all four task areas. During the base period of performance, the MSPO experienced multiple unforeseen operational emergencies and supply chain disruptions that materially affected mission execution. Significant incidents included the Stryker cyberattack, a fire at the Kimberly‑Clark distribution center in Ontario, CA, and a separate fire at the Medline distribution center in Tracy, CA. These events created immediate and unplanned constraints on the availability, distribution, and continuity of critical medical supplies.

In addition to these discrete emergencies, the medical supply chain continues to face sustained global pressures. Ongoing disruptions across the petrochemical, helium, and specialty chemical sectors are constraining production of essential medical devices and their component inputs, leading to localized and intermittent shortages, which has required extensive research and resources to identify Made In America products as suitable alternatives.

These activities directly correspond to services provided under Task Areas 5.3 (Program Management) and 5.4 (Enterprise Modernization, Automation, and Innovation) of the PWS.

b. Geopolitical Conflict and Associated Supply Chain Disruptions. Conflict in Iran has introduced volatility into global medical supply distribution networks, affecting manufacturing, transportation, and raw material inputs for critical medical and surgical products, and freight transportation delays, and shortages in petrochemical inputs critical for medical supply production. Global logistics instability is restricting commercial vessel movement through critical corridors such as the Strait of Hormuz, and driving up prices for key commodities, including jet fuel. Simultaneously, persistent disruptions across petrochemical, helium, and specialty chemical supply chains are constraining medical device production, limiting availability of essential inputs, and creating localized shortages. This has materially increased the operational burden on MSPO logisticians and contracting personnel, requiring heightened real-time risk monitoring, supplier disruption communications, and field coordination at levels substantially beyond those anticipated during acquisition planning. These activities directly correspond to services provided under Task Areas 5.3 (Program Management) and 5.4 (Enterprise Modernization, Automation, and Innovation) of the PWS.

c. Increased Compliance Requirements – Make PPE in America Act. Federal emphasis on compliance with the Make Personal Protective Equipment (PPE) in America Act intensified substantially during the base period, resulting in a materially greater compliance, sourcing, and oversight workload than was projected at the time of award.

On May 12, 2026, the VA held a Make PPE in America Act Industry Day to obtain market research and expand eligible items on the MSPV Product List. In addition, in May 2026, the VA issued a class deviation to the VA Acquisition Regulation at VAAR

825. Implementing these requirements within the MSPV program required expanded clinically driven strategic sourcing activities, supplier engagement, and regulatory reporting within the scope of Task Areas 5.2 (CDSS) and 5.3 (Program Management).

Taken together, these developments prevented MSPO from permitting a successful reduction of contractor support during Option Period 1.

Unique Qualifications of the Incumbent Contractor:

The incumbent contractor possesses unique and irreplaceable institutional knowledge of the VA's procurement and distribution systems, including the Clinical Product Tool (CPT), the National Contingency Response Tool (NCRT), ongoing dynamic geopolitical response strategies, and MSPV Gen-Z V1 contract oversight. As the original contractor for CPT and as the contractor that has sustained and enhanced the tool throughout its operational life, Deloitte is the only entity with the technical and programmatic knowledge necessary to sustain CPT operations without a gap in service.

CPT is critical to MSPV operations, supporting maintenance of the MSPV product list, MSPV service level election forms, prime vendor oversight tools, and facility core lists— distribution stock-in requests for approximately 160 individual accounts servicing more than 1,300 locations across the country, enabling next-day delivery for recurring medical and surgical supply needs. Any failure to maintain CPT on an uninterrupted basis could severely impair next-day delivery of MSPV supplies nationwide, potentially necessitating reliance on Government purchase cards, which would be less efficient, more costly, and introduce risk of non-compliant and gray-market items.

The remaining period of performance is six (6) months. Any new contractor would require no less than six months to develop sufficient understanding of CPT architecture, MSPV program operations, VHA logistics systems, and applicable statutory and regulatory requirements to perform the required services without unacceptable operational risk. Introducing a new contractor within the remaining term is therefore neither practicable nor in the Government's best interest. Retaining the incumbent contractor is the only approach that avoids disruption to MSPV operations and the $100 million in projected annual savings attributable to the MSPV Gen-Z V1 program.

(5) A determination by the ordering activity contracting officer that the order represents the best value.

The Contracting Officer has determined that modifying Option Period 1 to maintain the base period level of effort with the incumbent contractor represents the best value for the Government. This determination reflects the following:

Any new contractor would require at least six months to become minimally proficient in CPT operations and MSPV program requirements which is equivalent to the entire remaining period of performance. The costs associated with transition to a new contractor, inclusive of lost efficiency, relearning, and operational risk, are estimated at no less than $8.7 million, exceeding the cost of this modification. Proceeding with the incumbent contractor avoids these costs while ensuring uninterrupted support to a $1 billion-per-year program serving more than 1,300 VA facilities.

As this action results in a modification to a FSS order, the Government has already determined the contractor's underlying schedule rates to be fair and reasonable. The Contracting Officer will review and ensure that the modified pricing is consistent with the FSS pricing schedule and P00001 monthly rates. The Contracting Officer will also seek additional discounts, ensuring the Government receives the most competitive pricing available.

(6) A description of the market research conducted among schedule holders and the results or a statement of the reason market research was not conducted.

The Contracting Officer conducted market research commensurate with the nature of this action. This research involved a review of current FSS vendors capable of performing the required services, with consideration of small businesses through the SBA certification database, GSA eBuy and eLibrary, Dynamic Small Business Search, System for Award Management, and the Federal Procurement Data System.

Pursuant to FAR 5.201, the Contracting Officer published a Special Notice on SAM.gov on June 18, 2026, announcing the Government's intent to modify contract 36C10X26F0006 to increase Option Period 1 to the base period level of effort. The notice afforded FSS contractors five business days to submit written capability statements demonstrating the ability to provide the required services at the required level of effort within the remaining period of performance. The Contracting Officer did not receive any qualifying capability statements in response. One brief response was received with some of the requested information, but the vendor is not registered in SAM and therefore ineligible for an immediate award. Moreover, the contractor is not familiar with CPT and would not be able to begin any of the required work within the time required.

The Enterprise Procurement Office (formerly SAC) and MSPO previously conducted an extensive market research effort in anticipation of a long-term competitive action and determined that a transition period of at least 6–12 months would be essential to ensure a seamless handoff between contractors. The remaining period of performance is six months, making a full competitive procurement neither practicable nor consistent with the Government's interest in uninterrupted MSPV program operations.

(7) Any other facts supporting the justification.

MSPV is a $1 billion-per-year program serving more than 1,300 VA facilities and managing a product list of over 35,000 items through hundreds of VA suppliers, including Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and Veteran- Owned Small Businesses (VOSBs). This program is critical to VHA operations, and the Clinical Product Tool sustained by this contract is essential to MSPV.

Operational Continuity: The incumbent contractor's continued involvement at the base period level of effort is essential to maintain the momentum of critical supply chain initiatives, including CPT sustainment and transition to O&IT, MSPV Gen-Z V1 contract oversight, and clinically driven strategic sourcing activities.

Regulatory Compliance: The MSPV program requires compliance with the Trade Agreements Act (TAA), Buy American Act (BAA), and the Make PPE in America Act.

The contractor's expertise, developed over the course of multiple task order contracts spanning nearly a decade, ensures continued adherence to these requirements without disruption.

Dependence on CPT: The operational success of the MSPV program is heavily contingent on CPT and all its applications. A lapse in contract coverage or a gap in knowledge and experience to sustain it places the MSPV program—and thereby the effective delivery of medical supplies to VA facilities—at significant risk of disruption.

Financial Risk of Inaction: Based on VA Office of Inspector General findings, MSPV is estimated to save VHA hundreds of millions of dollars through lower prices compared to open market prices and through significantly reduced distribution fees. Any disruption to CPT would invariably lead to increased costs through Government Purchase Card use and would contravene the Agency's policy that MSPV is a mandatory contract for medical and surgical supplies. The MSPV Gen-Z V1 program is projected to save $100 million annually; risks to this projection are unacceptable.

(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.

The Agency's policy is to compete services to the maximum extent practicable. This modification extends performance only through December 26, 2026, and does not extend the period of performance beyond the existing contract term. The Agency will plan and execute a competitive procurement for any required services beyond the current contract term. Advanced acquisition planning is currently underway.

(9) Evidence that any supporting data that is the responsibility of technical or requirements personnel (e.g., verifying the Government ’s minimum needs or requirements or other rationale for limited sources) and which form a basis for the justification have been certified as complete and accurate by the technical or requirements personnel.

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.

Signature: _________________________________ Date: ____________

Maria Carmona-Cheng Medical Supply Program Office VHA Office of Supply Chain

(10) The ordering activity Contracting Officer’s certification that the justification is accurate and complete to the best of the Contracting Officer’s knowledge and belief.

I certify that this justification is accurate and complete to the best of my knowledge and belief.

Felicia DeMita Contracting Officer Enterprise Procurement Office

Signature: ________________________________ Date: ________________ M. Katie Hulse Director, Acquisition Services 3

(11) For justifications under GSAR 538.7104-3(b)(ii), a written determination by the approving official identifying the circumstance that applies.

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.

Lenearo Ashford Director, VHA Logistics Commodity Management VHA Office of Supply Chain

Approval

In my role as Contracting Activity Competition Advocate, based on the foregoing justification, I hereby approve this acquisition on an “other than full and open competition” basis pursuant to the statutory authority cited in paragraph four above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition. As this action does not exceed $15M, the certification below serves as approval.

Efrain J Fernandez Director of Contracts Procuring Activity Advocate for Competition