P03_Justification and Approvals_OVER 250K_764-21-3-915-0016_Engineering Services_APFS (002)_COMPLETE_Redacted.pdf

VHAPM Part 806.3 Other Than Full and Open Competition (OFOC) SOP Attachment 5: Request for Sole Source Justification Format >SAT

OFOC SOP Revision 11 Page 1 of 9 Original Date: 03/22/11 Revision 11 Date: 02/11/2021

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval (J&A)

For Other Than Full and Open Competition (>SAT)

Acquisition Plan Action ID: 36C770-21-AP-0561 (764-21-3-915-0016)

1. Contracting Activity:

Network Contracting Office (NCO) 15 CMOP Contracting Division 3450 S. 4th St. Trafficway Leavenworth, KS 66048-5581

Requesting Activity:

VA CMOP Murfreesboro EF 3209 Elam Farms Parkway Murfreesboro, TN 37127-8830

PR-IFCAP (2237): 764-21-3-915-0016

2. Nature and/or Description of the Action Being Processed:

Description of Action: Individual Justification and Approval (J&A) authorizing other than full and open competition.

Funding (eCMS PR-IFCAP): 764-21-3-915-0016 Action Requested: New requirement to be awarded as a new indefinite-delivery, indefinite-quantity (IDIQ) contract with firm-fixed pricing Description: Automation Engineering Support Service Contract Type: Services Procurement Vehicle: Sole-Source IDIQ contract with firm-fixed pricing Procurement Method: Non-competitive Socioeconomic Category: Not set-aside (no small business opportunities for a set-aside exist; subcontracting opportunities do exist) Purchasing Scope: Single site Estimated Award Date: 06-18-2021 Estimated Completion Date: 06-17-2023 (24 months following award date)

The period of performance will be 24 months from the award date of the contract. The acquisition is to provide engineering support services to the Government in developing a contract Performance Work Statement (PWS) to include the key performance milestones and deliverables necessary to stand up (or

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Revision 11 Date: 02/11/2021 retrofit) the existing underperforming automated prescription fulfillment system (APFS) and software platform to sustain operations and meet required productivity levels at the Murfreesboro CMOP. It is the Government’s intent to request that a Contract Execution Plan (CEP) be submitted that reflects a performance-based contracting approach. Deliverable identification /acknowledgement and schedule will be requirements of the CEP.

3. Description of Supplies/Services Required to Meet the Agency’s Needs:

Engineering support services for the Murfreesboro, TN VA Consolidated Mail Outpatient Pharmacy (CMOP) located at 3209 Elam Farms Parkway, Murfreesboro, TN 37127.

Principal NAICS Code: 541330 (Engineering Services) Product Code: R425 (Engineering and Technical Services) Estimated Value (Independent Government Cost Estimate):

The Department of Veterans Affairs (VA) National Consolidated Mail Outpatient Pharmacy (CMOP) program serves over seven million enrolled Veterans, dispensing over 110 million prescriptions per year for Department of Veterans Affairs Medical Centers (VAMCs) and Community Based Outpatient Clinics (CBOCs) throughout the United States (US) and territories. There is a total of seven CMOP production facilities strategically located throughout the U.S. that rely heavily upon automated and semi-automated systems to fulfill prescription orders; these systems are referred to as automated prescription fulfillment systems (APFS).

This acquisition is in support of the APFS located at the Murfreesboro CMOP (station 764) production facility and is being developed to support the facility’s needs now that the Government has determined to default the current contractor and terminate for cause. The contract to develop the new APFS has been terminated due to the ongoing inability of the current contractor to meet the contract’s requirements to include production standards. An APFS to meet the Murfreesboro CMOP is immediately required to meet these production (or processing) standards.

A 12-phase transition plan (“transition plan”) to retrofit the current inadequate APFS has been developed to ensure the Murfreesboro CMOP can continue to provide prescription fulfillment services to Veteran patients during the retrofit and will be included as an attachment to the proposed contract so that the Government’s requirements and timelines are ensured and understood by both parties. The result of the transition plan will be a successful retrofit of the current APFS to an APFS that can meet the workload demands necessary for the CMOP to continue order fulfillment operations during the transition phase and into the future. The proposed contract includes support for the Murfreesboro CMOP to retrofit the current APFS that consists of the following subsystems:

Tablet /capsule automation (TCA) Unit-of-use automation (UOU) Automated labeling Manual and bulk processing Automated packaging equipment

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Revision 11 Date: 02/11/2021

The new APFS (with subsystems) must be properly designed, tested, evaluated, and validated to ensure quality and patient safety. This includes the evaluation and selection of an overarching software platform to manage the processes as well as the various subsystems that make up the APFS.

4. Statutory Authority Permitting Other than Full and Open Competition:

(X) (1) Only One Responsible Source and No Other Supplies or Services Will Satisfy Agency Requirements per 41 USC §3304(a)(1) as implemented by FAR 6.302-1;

( ) (2) Unusual and Compelling Urgency per 41 USC §3304(a)(2) as implemented by FAR 6.302-2;

( ) (3) Industrial Mobilization, Engineering, Developmental or Research Capability or Expert Services per 41 USC §3304(a)(3) as implemented by FAR 6.302-3;

( ) (4) International Agreement per 41 USC §3304(a)(4) as implemented by FAR 6.302-4 ( ) (5) Authorized or Required by Statute per 41 USC §3304(a)(5) as implemented by FAR 6.302-5;

( ) (6) National Security per 41 USC §3304(a)(6) as implemented by FAR 6.302-6;

( ) (7) Public Interest per 41 USC §3304(a)(7) as implemented by FAR 6.302-7;

5. Demonstration that the Contractor’s Unique Qualifications or Nature of the Acquisition Requires the Use of the Authority Cited Above (applicability of authority):

St. Onge is the only vendor that possesses the qualifications to include an intimate understanding of the complexities of the ongoing limitations and data issues with the current APFS and has the required familiarity with the transition plan to meet the Government’s urgent needs; this knowledge gained through engineering support services provided under separate contract(s). These contract/order actions with dollar value and award date follow:

May 30, 2019 36C77019D0013 36C77019N0142 Sep 19, 2019 36C77019D0013 36C77020N0083 Jul 01, 2020 36C77019D0013 36C77020N0126 Sep 24, 2020 36C77019D0013 6C77020N0160 May 26,2021 36C77021D0015 36C77021N0168

Based on St. Onge’s comprehensive understanding of the software, controls programming, hardware design and interface architecture with current APFS, St. Onge is the only source qualified to meet the Government’s immediate need to design and oversee the retrofit of the current APFS to an acceptable level of production.

Other sources currently do not possess the in-depth functional knowledge of the Murfreesboro CMOP’s operations and APFS limitations necessary to retrofit the current APFS and would require a substantial investment in resources (e.g. time and funds) that the Government would not be able to recover through competition. To date, the Government has spent to contract with St. Onge for engineering support services for the automated prescription fulfillment systems for CMOP. These contracts awarded over the time period of two years have provided St. Onge a progressive understanding and intimate familiarity with the Murfreesboro APFS -- an APFS that now requires immediate retrofit to meet current and future production needs. To award to another vendor would require the Government to invest in a contractor that has no

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Revision 11 Date: 02/11/2021 familiarity with a system that needs immediate retrofitting. Essentially, the Government would have to spend time and additional expense on a contractor that must start at “ground zero.” The daily operational cost of the Murfreesboro CMOP is approximately per day; therefore, for every day the APFS is not operational (i.e. down for retrofit), the Government is spending in idle costs. Accordingly, St. Onge is the only firm capable of providing the supplies and services described in Section 3 above without the Government experiencing substantial duplication of cost, delays, and idle costs that could not be expected to be recovered through competition.

Additionally, if awarded to any other vendor, the Government would experience unacceptable delays in fulfilling its requirements. Delays in the immediate execution of the transition plan to retrofit the current APFS to the required production capacity could result in an interruption of prescription service to Veterans, disruption to the VA pharmacy supply chain and place additional burden on CMOP operations by having to offload work to the other CMOP facilities. This offloading of work to the other CMOP facilities would result in further cost to the Government by requiring the ramping up of operations that would equate to increased operational costs (e.g. overtime hours, utilities) to meet the additional workload.

The termination of the current APFS contract has escalated the CMOP’s need to quickly get a contractor on board that is familiar with the current system’s failures as well as the plan to transition the current underperforming system into an operationally viable system. This termination leaves the CMOP without a source to provide technical support and expertise. Taking into consideration the following:

The highly specialized nature of CMOP processes and equipment;

Funds already expended for engineering support services;

Time constraints for having an APFS that meets production needs;

Idle costs;

Increased operational costs due to offloading workload; and Necessity for the retrofit software, controls programming, hardware design and interface architecture to interface with current system;

St. Onge is the only responsible source that can meet the immediate needs of the Murfreesboro CMOP. The CMOP Program Office and Contracting Officer, therefore, recommend a sole-source award to St. Onge. This award is considered in the best interest of the CMOP, Government and general public.

6. Description of Efforts Made to ensure that offers are solicited from as many potential sources as deemed practicable:

Efforts to locate additional sources to provide the needed engineering support services were attempted on multiple occasions beginning in December 2018 with Request for Quote (RFQ) 36C77019Q0173 and continuing through November 2020 with RFQ 36C77020Q0674. These efforts were posted through Contracting Opportunities (beta.sam.gov) as well as Federal Supply Schedule (FSS) (gsa.gov). Offers received in response to these solicitations follow:

36C77019Q0173 St. Onge Innovation

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Revision 11 Date: 02/11/2021

36C77020Q0674 GLMV Architecture

Based on the market research, as well as the efforts from the previous solicitations and contract awards, only one vendor, St. Onge, Inc., can meet the needs of this requirement. Small business opportunities exist since St.

Onge subcontracts with several small business concerns to fulfill specific highly specialized requirements when needed; these small business partnerships and performance efforts have been determined by the Government to be more than acceptable. St. Onge’s information is below:

St. Onge Company (147413140) – Large Business 1400 Williams Rd York, PA, 17402, United States of America

Timothy Burnham, Director Government Programs

(717) 840-8181 TBurnham@stonge.com www.stonge.com

7. Determination by the CO that the Anticipated Cost to the Government will be Fair and Reasonable:

The CO has determined the anticipated cost to be fair and reasonable. The final cost estimate was arrived through market research that assessed industry standards of rates for various categories of professional services (to include engineering), comparing the requirements to other categories of service contracts, and comparing those prices to CMOP existing contracts. The level of effort for previous CMOP contracts (to include estimated hours for routine task orders) was used to also evaluate pricing. While pricing and the market may vary among vendors for different categories of professional labor, the overall analysis and results provided sufficient information to determine if the pricing submitted by offeror is fair and reasonable.

8. Description of the Market Research Conducted and the Results, or a Statement of the Reasons Market Research Was Not Conducted:

During the performance of market research for this requirement, a review was conducted of the previous efforts to locate sources that began in December 2018 with RFQ 36C77019Q0173 and continued through November 2020 with RFQ 36C77020Q0674. Additionally, queries were performed for Vendor Information Pages (VIP) and SBA Dynamic Small Business Search (DSBS) tool, attempts were made through Contracting Opportunities (beta.sam.gov) as well as Federal Supply Schedule (FSS) (gsa.gov). Reviewing the results of recent market research undertaken to meet these requirements, the market research that was within 18 months of the award was found to be still current, accurate, and relevant.

Knowledgeable individuals were contacted during an interview with the National CMOP Chief Engineer and Assistant Chief Engineer, which was held to discuss the current request, the previous acquisitions that are related, as well as the potential for any other vendor to meet the requirements. The interviewees described the issues of the current APFS contract, which began approximately eight years ago, such as the vendor not producing to meet the scope of the award, never getting production out of the “A-Frame”, as well as issues with the tablet count automation (TCA) and packing. After multiple attempts to resolve the issues, the VA

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Revision 11 Date: 02/11/2021 identified the need for an analysis of the current APFS system which resulted in the previously described competitive solicitations. The interviewees further described the solicitations and the efforts to locate sources. While potential sources were identified through market research and competitive solicitations issued, only St. Onge was the evaluated as being able to meet the needs of the requirements and receive award. As part one of the award requirements, St. Onge was required to analyze and evaluate the current APFS system which identified significant code and safety deficiencies. As part of the award, St. Onge was also required to develop a transition plan, an equipment software overlay system, and provide “proof of concept” that the plan could be successfully implemented to timely retrofit the current APFS to include integrating with the current software architecture. The proposed acquisition and sole source contract are intended to execute and manage the transition plan to make the Murfreesboro CMOP production capacity whole by correcting the issues caused by the current contract and APFS.

Market research included identification of SDVOSB, VOSB’s or other small business categories that were capable of fulfilling the Government’s needs. For this requirement, a current search of the Vendor Information Pages (VIP) was performed with NAICS 541330, PSC R425, and Keyword “Pharmacy”. Only one SDVOSB was found, Pioneer LLC.; however, Pioneer does not have experience with pharmacy automation and is not capable of performing the services as defined in the work statement. The contracting officer has determined, therefore, that Pioneer is not capable of performing or that the price will be fair and reasonable. A query of the SBA Dynamic Small Business Search (DSBS) tool was also performed with NAICS 541330, and Keyword “Automation Pharmacy.” No profiles of small business concerns in any of the individual socio-economic groups met the search criteria.

Based upon the above market research and analysis, the Government does not have a reasonable expectation of receiving at least two offers from small business concerns (to include SDVOSB/VOSB); therefore, the VA Rule of Two cannot be met and there are no opportunities for small business set-asides.

The result of market research is that only one vendor, St. Onge Inc., is qualified and capable to timely provide the required services at a fair and reasonable price.

9. Any Other Facts Supporting the Use of Other than Full and Open Competition:

None

10. Listing of Sources that Expressed, in Writing, an Interest in the Acquisition:

The following sources have expressed interest (in writing):

St. Onge has expressed interest by responding to sources sought notices and providing offers to previous acquisitions for engineering support services. St. Onge has the understanding and intimate familiarity with the Murfreesboro APFS to immediately retrofit the system to meet current and future production requirements.

Innovation

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Revision 11 Date: 02/11/2021

Innovation has expressed interest by responding to sources sought notices and providing offers to previous acquisitions for engineering support services. Innovation, however, does not possess the in-depth functional knowledge of the Murfreesboro CMOP’s operations and APFS limitations necessary to immediately retrofit the current APFS.

GLMV Architecture

GLMV Architecture has expressed interest by responding to sources sought notices and providing offers to previous acquisitions for engineering support services. GLMV Architecture, however, does not possess the functional in-depth knowledge of the Murfreesboro CMOP’s operations and APFS limitations necessary to immediately retrofit the current APFS.

Market research efforts have identified other sources that provide engineering support services; however, these sources do not have engineering expertise with the design and specifications of systems similar to the automated prescription fulfillment system (APFS) currently in place at the Murfreesboro CMOP. The type of engineering services required to design and oversee the retrofit of an APFS would be considered a niche market with very few capable sources.

11. A Statement of the Actions, if any, the Agency May Take to Remove or Overcome any Barriers to Competition before Making subsequent acquisitions for the supplies or services required:

This is a one-time acquisition to retrofit the APFS at the Murfreesboro CMOP; therefore, future acquisitions for these engineering services will not be needed once the transition plan has been implemented and the retrofit completed.

12. 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 and belief.

Abshier, Byron Chief Engineer VA CMOP Murfreesboro EF - 764

BYRON A. ABSHIER 217492 Digitally signed by BYRON A. ABSHIER 217492 Date: 2021.06 23 09:47 08 -05'00'

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13. Approvals in accordance with the VHAPM Part 806.3 OFOC SOP:

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

Prepared by:

McAlhaney, Michael W.

Contract Specialist CMOP Acquisitions Network Contracting Office 15

Concur / Non-concur

Smith, Justin Braden Contracting Officer CMOP Acquisitions

b. 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.

Concur / Non concur

Crum, Ralph R.

Supervisory Contract Specialist CMOP Team 3 CMOP Acquisitions

Concur / Non-Concur

Jackson, Loyd D.

Acting Director of Contracting Network Contracting Office (NCO) 15

MICHAEL MCALHANEY Digitally signed by MICHAEL MCALHANEY Date: 2021.06.23 10:01:37 -05'00'

JUSTIN B. SMITH 493654 Digitally signed by JUSTIN B. SMITH 493654 Date: 2021.06.24 09:51:51 -05'00'

Ralph R. Crum 547284 Digitally signed by Ralph R. Crum 547284 Date: 2021.06.24 10:17:49 -05'00'

LOYD JACKSON Digitally signed by LOYD JACKSON Date: 2021.06.24 11:29:34 -05'00'

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c. VHA RPO HCA Review and Approval: I have reviewed the foregoing justification and find it to be complete and accurate to the best of my knowledge and belief and recommend approval (if over $75 million) or approve ($750K to $75 million) for other than full and open competition.

Approved / Disapproved

Terry L. Spitzmiller Executive Director Regional Procurement Office - Central (VHA) Head of Contracting Activity

TERRY SPITZMILLER Digitally signed by TERRY SPITZMILLER Date: 2021.06.24 14:14:32 -05'00'