P08 Sole Source JA - VISN 10 Emergent Bulk Oxygen - HCA Signed.pdf

DEPARTMENT OF VETERANS AFFAIRS

Justification and Approval (J&A) For

SDVOSB Sole Source Justification

Acquisition Plan Action ID: 36C776-21-AP-3761

1. Contracting Activity: The Department of Veterans Affairs, Procurement Contracting Activity Central (PCAC), 212 3rd Avenue South, Minneapolis, MN 55401, on behalf of Veterans Integrated System Network (VISN) 10. It is the intent of the contracting activity to award a short-term contract on a sole source basis. This document sets forth the justification and approval in accordance with FAR Part 13.501, VAAR 813.106-70 and VAAR 819.7007.

2. Nature and/or Description of the Action Being Processed: VISN 10 has an urgent and ongoing requirement for medical grade bulk liquid oxygen and associated services for an estimated twelve

(12) VA Medical Centers. The Government intends to award a short-term sole-source contract pursuant to 38 USC § 8127(c) and VAAR 819.7007 to RAS Enterprise, LLC (RAS), located at 2512 25th Avenue, Suite 3, Gulfport, MS 39501, for the period of June 28, 2021 through March 27, 2022.

3. Description of Supplies/Services Required to Meet the Agency’s Needs: VISN 10’s current contract 36C77619D0005 awarded to RAS on June 17, 2019 will expire on June 27, 2021. VISN 10 does not have the capabilities to produce/manufacture medical grade bulk liquid oxygen on its own, therefore upon expiration of the current contract there will be an immediate need to continue receiving medical grade bulk liquid oxygen on a continual basis to prevent disruption of these critical healthcare supply and services for clinics, wards, surgery and pharmacy services. The resulting contract shall be awarded as an Indefinite Delivery Indefinite Quantity (IDIQ) with an Independent Government Estimate (IGE) of $966,853.65 for this requirement.

4. Statutory Authority Permitting Other than Full and Open Competition: 41 USC §3304(a)(5), 38 U.S. Code § 8127(c), as implemented by VAAR 819.7007. Check the specific VAAR clause used below:

(X) 38 USC § 8127 and 819.7007 Sole source awards to a verified service-disabled veteran-owned small business. The contracting officer confirms that:

i. The anticipated award price of the contract (to include options) will not exceed the $5 million dollar threshold.

ii. RAS has the capability to provide medical grade bulk liquid oxygen and associated services for VISN 10 in its entirety. RAS has relevant experience providing medical grade bulk liquid oxygen and is currently doing so in VISN 10 since 2019. Furthermore, RAS can provide the requirement in its entirety immediately upon award.

iii. The contracting officer has determined that award will be made to RAS at a fair and reasonable price. The contracting officer will utilize the pricing under the current contract 36C77619D0005 as well as other procurements of medical grade bulk liquid oxygen where prices were previously determined to be fair and reasonable to assist in the determination that the pricing for this short-term sole source contract is fair and reasonable.

Request for SDVOSB/VOSB Sole Source Justification Format >SAT

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

An agency protest was filed on May 5, 2021 challenging the agency’s solicitation 36C77621Q0199 for the provision of medical grade bulk liquid oxygen and associated services for VISN 10. As a result of the agency protest, the agency determined that corrective action is required. The corrective action includes 1) The cancellation solicitation 36C77621Q0199, 2) revisit the requirement and 3) conduct additional market research. Current contract number 36C77619D0005,which includes VISNs 10 and 12, expires on June 27, 2021 with no further options to exercise leaving VISN 10 without life sustaining supply of medical grade bulk liquid oxygen. The immediate cessation of medical grade bulk liquid oxygen would put Veterans’ lives at risk. The use of medical grade bulk liquid oxygen is critical to the care of Veterans. Any delay or disruption to this supply would result in a significant, dangerous interruption that will adversely affect all aspects of patient care and the agency’s mission.

The pending corrective action will require a short-term contract to bridge the gap in supply and associated services until a long term contract can be awarded. Medical grade bulk liquid oxygen is dispersed in the pipes to surgical suites, patient beds and used for surgical and laboratory equipment.

Currently, all of the medical grade bulk liquid oxygen tank systems and back up systems that are operating in each of the medical facilities in VISN 10 are owned by the manufacturer Messer Group with the medical grade bulk liquid oxygen distributed by RAS. As the current distributor, RAS has agreements with the aforementioned manufacturer; therefore, there will be no break in service in the provision of this critical health care supply and service required at the VA facilities. A break in service would be catastrophic and would be life threatening. Due to the nature of medical grade bulk liquid oxygen, it takes substantial time, effort and coordination to transition over to a new contractor.

For example, a 9000 gallon tank system requires a concrete slab to support the size and weight of the tank, specialized equipment to move and install the tank. This coordination and installation can take 3-6 months. Historically, if tank systems are required to be removed from facility grounds, it requires the use of high-tech equipment and generally necessitates the facility to contract construction services to install new tanks and back up systems. Furthermore, the distribution of medical grade bulk liquid oxygen requires pharmaceutical wholesale distributor licenses, permits and/or registrations in Ohio and Michigan. This is required by the Pharmacy Board for these states. The licensing, permit and registration process can take up two (2) months or longer depending on state requirements. For this short term contract it is required that all licenses, permits and registrations be issued by start of the contract performance.

To allow reasonable time to fully implement pendng corrective action and to ensure that there is no interruption in the provision of this critical health care supply and service to Veterans, it is the Contracting Officer’s intent to sole source medical grade bulk liquid oxygen supply and associated services in accordance with 38 USC 8127(c) and 819.7007. It has been determined that RAS, the incumbent, can provide the requirement in its entirety immediately upon award, without disruption or interruption to medical facilities. RAS is a verified Service-Disabled Veteran-Owned Small Business and is an authorized distributor of medical grade bulk liquid oxygen. RAS has agreements in place with Messer Group whose tanks reside at VISN 10 VA facilities. As the primary contractor, RAS possesses the required wholesale distribution pharmaceutical licenses, permits and/or registrations to support this requirement in its entirety. Furthermore, RAS has proven its ability to provide uninterrupted supply of medical grade bulk liquid oxygen, sustaining stability of support and consistency for the Veteran beneficiaries of VISN 10’s facilities.

The Contracting Officer has reviewed the Non-Manufactuerer Rule and has determined there is a non-manufacturer class waiver in place for NAICS Code 325120-Industrial Gases. In accordance with the Non-Manufactuerer Rule as defined in 13 CFR 121.406(b), RAS can provide medical grade bulk liquid oxygen meeting the non-manufacturer rule criteria identified below:

a. Does not exceed 500 employees

b. Is primarily engaged in the retail wholesale trade and normally sells the type of item being supplied

c. Takes ownership or possession of the item(s) with its personnel, equipment or facilities in a manner consistent with industry practice.

Consolidation of VISN 10 and 12 were considered by the Contracting Officer. The Contracting Officer could not identify any benefit of using consolidation as defined in FAR 7.107-2(c). Therefore, the Contracting Officer will award each VISN as separate short term sole soure contracts.

The intent to award a short-term sole source contract to RAS is deemed necessary and essential to support agency’s mission and to maintain this critical and life sustaining supply. The short term contract is needed to allow reasonable time to fully implement corrective action taken in response to the agency protest, solicit, award and transition a new contract and/or new contractor.

6. Description of Efforts Made to ensure that offers are solicited from as many potential sources as deemed practicable: This justification relates solely to the need of providing medical grade bulk liquid oxygen for the ordering period of June 28, 2021 through March 27, 2022 to bridge the gap of supply and service until pending corrective action is fully implemented and a long term contract is awarded.

7. Determination by the CO that the Anticipated Cost to the Government will be Fair and Reasonable: The Contracting Officer utilized the pricing under the current contract 36C77619D0005 as well as other procurements of medical grade bulk liquid oxygen where prices were previously determined to be fair and reasonable to assist in the determination that the pricing for this short-term sole source contract 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: It is paramount to award a short term contract while pending corrective action is being fully implemented and a long term solution is being solicited, awarded and transitioned. The Contract Officer will conduct market research while pending corrective action is being implemented.

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

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

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:

The Contracting Officer will perform additional market research for medical grade bulk liquid oxygen to determine the acquisition approach that will best support the agency’s requirements for VISN 10’s medical facilities. This pending corrective action will assist in removing and/or overcoming barriers for the acquisition of medical grade bulk liquid oxygen.

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.

Tanya Kuza Date Program Manager Midwest Consortium Supply Chain Management Sub Committee

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.

Nicole Kutsi Contracting Officer PCAC Strategic Sourcing

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

Paris Everson

Division Chief Program Contracting Activity Central Strategic Sourcing Office

. 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 approve ($700K to $68 million) for other than full and open competition.

Terry Spitzmiller Executive Director Regional Procurement Office Central

Nicole C. Kutsi 3329032

Digitally signed by Nicole C.

Kutsi 3329032 Date: 2021.06.16 09:38:05 -05'00'

Tanya F.

Kuza 313897

Digitally signed by Tanya F. Kuza 313897 Date: 2021.06.16 11:27:06 -04'00'

Paris E. Everson 1721637 Digitally signed by Paris E. Everson 1721637

Date: 2021.06.17 09:06:42 -05'00'

Richard C.

Dahmen 199197

Digitally signed by Richard C. Dahmen 199197 Date: 2021.06.17 17:32:06 -04'00'

TERRY

SPITZMILLER

Digitally signed by

TERRY SPITZMILLER

Date: 2021.06.22 17:15:41 -05'00'

For Official Use Only/Source Selection Sensitive

36C776-21-AP-3761

VISN 10 Sole Source Medical Grade

Bulk Liquid Oxygen

BACKGROUND INFORMATION:

March of 2015, Service Area Office Central Region Contracting Office (SAOC) assisted the VHA VISNs 9, 10, 11 12, 15, 16 and 23 with establishing a regional requirement for medical bulk liquid oxygen. Solicitation number VA240C-15- R-0005 was released on Federal Business Opportunities (FBO) on October 26, 2015 which resulted in two (2) single award Indefinite Delivery, Indefinite Quantity (IDIQ) contracts; VISNs 9, 15, 16 awarded to RAS Enterprises, LLC and VISNS 10, 12 and 23 awarded to Irish Oxygen.

As of 2018, Irish Oxygen was unable to make timely payments to their subcontractors resulting in termination by their subcontractors. The subcontractor terminations deemed Irish Oxygen Company unable to perform resulting in a Termination for Cause effective June 27, 2018 for VISNs 10, 12 and 23.

VISN 23 contracts were awarded to Matheson Tri-Gas Inc, Praxair, A&B Welding and American Welding Gas Supplies.

RAS Enterprises, LLC was awarded VISNs 10 and 12 and is providing medical grade bulk liquid oxygen via IDIQ for VISNs 10 and 12 under contract number 36C77619D0005. This contract includes a base period and two (2) six

(6) month option periods and is set to expire as of June 27, 2021.

Solicitation number 36C77621Q0199 was released to Beta Sam on April 13, 2021 for the provision of medical grade bulk liquid oxygen and associated services. On May 5, 2021 an Agency protest was filed challenging the licensing, registration and permit requirements as being too restrictive. The Agency determined that there were procurement irregularities and that corrective action must be taken. Corrective action includes 1) cancellation of the solicitation, revisiting the requirements, conducting additional market research and re-soliciting the requirement.

While pending corrective action is being taken on the Agency protest, a short-term contract is required to bridge the gap in supply and associated services until a long term contract is awarded.

1. DATE PREPARED: 06/17/2021 2. PREPARED BY: Nicole Kutsi

3. DESCRIPTION OF REQUIREMENT:

The Veterans Health Administration (VHA), Program Contracting Activity Central (PCAC) has established an ongoing requirement which requires a contractor to provide medical liquid bulk oxygen for each of the estimated twelve (12) VA Medical Centers throughout the Veteran Integrated Service Networks (VISNs) 10. The contractor shall be responsible for supplying medical grade bulk liquid oxygen and contractor owned bulk oxygen tanks, if required by the facility.

Feasible Acquisition Alternatives: The following options are considered feasible acquisition alternatives for this requirement:

• In-House Resources

• Purchase Card

• Blanket Purchase Agreements (BPAs)

• Indefinite Quantity Indefinite Delivery Contracts (IDIQ)

The VHA does not have the capabilities to produce and/or manufacture bulk liquid oxygen on its own, therefore in- house resources would not be appropriate for this requirement.

Purchase cards is not a feasible acquisition alternative. The Government prefers not to utilize third party payment structures. This form of payment is prohibited due to the regular and recurring nature of this requirement.

Furthermore, this form of payment offers no terms and conditions and medical centers find it challenging to track spending patterns.

Blanket Purchase Agreements (BPAs) were considered as an acquisition alternative as they give the VISNs the ability for flexible ordering environments. The Government is obligated only to the extent of authorized purchases actually made under the BPA. This vehicle does not require minimum spending and/or quantities and it is a good alternative if the exact quantities and/or delivery requirements are unknown in advance. The issue with utilizing this method is it is at the contractor’s discretion on whether they elect to fulfill an individual order. Medical grade bulk liquid oxygen is required by Supply Processing and Distribution (SPD) for clinics, wards, surgery and pharmacy services and must be provided therefore would not be a feasible alternative for this acquisition.

Multiple Award IDIQs are not feasible for this acquisition. This requirement is integrally related that only a single contractor can reasonably perform the work. Each participating facility utilizes telemetry systems to determine when their tanks systems need to be filled. Once bulk tanks systems reach a certain percentage, the telemetry system will alert the contractor that a supplier of medical grade bulk liquid oxygen needs to be dispatched to fill the tank system. Multiple awards would not be conducive for this ordering environment. Furthermore, Medical grade bulk liquid oxygen tanks are leased by each of the VA medical facilities. Currently, medical grade bulk liquid oxygen can only be filled by the authorized distributor or supplier whose tanks and backup systems reside at each facility to prevent cross contamination of gases. This would require that each awardee ensure they have agreements in place with all suppliers (Praxair, Linde, Airgas, Matheson, and Air Liquid) in order to compete each order.

Additionally, these tanks are filled 2-3 times per month and the cost of administration of multiple contracts in this instance outweighs the expected benefits of making multiple awards.

Single Award IDIQs have historically been considered a feasible vehicle for bulk liquid oxygen. IDIQ type contracts provide for a standardized and flexible process of ordering medical bulk liquid oxygen. This contract type is also beneficial because medical centers cannot predetermine the precise fills of medical bulk liquid oxygen per facility. This is due to fills being based sole on telemetry readings and the specific percentages being based on tank size for each individual facility. This type of contract allows for the Government to state a minimum and maximum quantity of supplies that is reasonable for the VISN and give the facilities within the VISN the capability to place orders based on their individual requirements.

Soliciting and awarding a single award IDIQ to support VISN 10 is the best alternative because it satisfies the requirement in its entirety and allows for flexible and unpredictable ordering of bulk liquid oxygen fills.

It is the intent of the Contracting Officer to award a short term single IDIQ on a sole source basis in accordance with 38 USC 8127, 13.501 Special Documentation Requirements and VAAR Part 819.7007 Sole Source Awards to a Verified Service Disabled Veteran Owned Small Business.

Consolidation of VISN 10 and 12 were considered by the Contracting Officer. The Contracting Officer could not identify any benefit to using consolidation as defined in FAR Part 7.107-2(c). Therefore, the Contracting Officer will award each VISN as a separate contract. The Contracting Officer does not consider this to be a consolidated requirement as defined in FAR Part 7 due to historical acquisition patterns.

Applicable Conditions:

1. Contractors must be able to support differing climates and topographies within the awarded VISNs.

2. Contractors will adhere to the specific laws and regulations regarding the transport and handling of medical grade bulk liquid oxygen.

3. Not all facilities have Government owned tanks. In such cases, the contractor will be required to provide a contractor owned tank with an appropriate back-up system as well as installation of the tank.

4. Logistics is responsible for the funding of any future contract that may be awarded from this requirement.

Capability and Performance:

1. Prior to first filling, contractor must perform in-service training to include the following facets for contractor owned and government owned systems: the refill procedure, any preventive maintenance support requirements that may be needed from the medical center systems, and an explanation of all the volume alarm and low pressure set-points. The contractor shall provide written procedures and training for VA staff for protocols to accomplish emergency shutdowns or other sudden, unplanned termination of the refilling process. Contractor shall provide 24/7 emergency contact name(s) and telephone number(s).

2. Prior to first filling, and annually thereafter, alarm set-point testing and written verification must be presented through the use of a qualified third party expert per NFPA 99 Health Care Facilities Code:

Current Edition for contractor owned and government owned systems. Any code deficiencies in the Medical Center’s existing system, as defined by NFPA 55 Bulk Oxygen System: Current Edition, shall be identified by the contractor. A detailed explanation of these deficiencies shall be presented in writing to the COTR. Receipt of this written explanation must be signed for by the COTR.

3. The solicitation schedule will identify the bulk oxygen storage tank(s) at each facility as being either GO (Government Owned) or CO (Contractor Owned). Government owned bulk oxygen storage tanks and appurtenances will be maintained by and at the expense of the Government in a manner that will ensure compliance with applicable regulations, standards and normal good practices. Each Government facility that requires installation of contractor owned equipment, shall provide a suitable location and foundation for the installation of the contractor owned bulk oxygen tank(s). Additionally, each facility shall provide access to an electrical power source and hook-up to a facility- maintained alarm system.

The contractor shall perform the hook-up of contractor owned equipment to the facility- maintained alarm system.

4. For those facilities listed in the schedule as having contractor owned tanks, the contractor shall provide, install and maintain bulk oxygen tank(s) with appropriate back-up system(s). Through the duration of the contract, the contractor shall be liable for the integrity, suitability, and safety of contractor owned tank(s) that will ensure compliance with applicable regulations, standards and normal good practices. The tank capacity and reserve system shown in the schedule are minimum capacities required by the using facilities. Contractor owned equipment shall be kept in good operating condition and appearance, in accordance with applicable regulations, standards and normal good practices. The contractor shall be provided reasonable access to the bulk oxygen systems for this purpose.

5. Bulk oxygen is ordered by and delivered to the individual ordering facilities. The list of facilities and information regarding their unique delivery requirements is included in the solicitation schedule. The contractor shall deliver medical-grade liquid oxygen within the time frame specified in the schedule for each facility. The time frame identified may be either the number of calendar days after receipt of the Government’s order, the specific days of the week for delivery, the specific time intervals between deliveries, a specified reorder point, or other specified ordering and delivery methods. If the time frame for contractor delivery is not identified in the facility requirements, the contractor must provide 24-hour notice prior to delivery or upon mutual agreement between the facility and contractor, alternate ordering/delivery methods such as pre-scheduled deliveries, calling for tank level readings, installing a telemetry unit, etc. may be arranged. If for any reason the contractor is unable to delivery at the agreed upon day or time, the contractor shall provide 24-hour notice to the COTR, so that the facility can initiate an alternate backup action. In accordance with VHA Patient Safety Alert dated April 5, 2004, all deliveries must be monitored by a qualified and trained technical representative that will be designated by each facility.

Delivery/Period of Performance Requirements:

1. The contract for this acquisition shall consist of a nine (9) month contract. The tentative effective period of the contract shall be June 28, 2021 through March 27, 2022.

2. The bulk liquid oxygen that will be furnished under this contract will be issued via delivery order by PCAC contracting office. The tentative ordering period for this contract shall be June 28, 2021 through March 27, 2022.

4. PRODUCT OR SERVICE? Product 5.NAICS/FSC/PSC: 325120-Industrial Gas/6830-Gases:

Compressed and Liquified

6. REQUESTOR: Tanya Kuza, Program Manager, Midwest Consortium

7. PHONE NO: 734-882-3039

8. PLANNED/ACTUAL DATE SUBMITTED:

06/17/2021

9. PLANNED AWARD DATE: 06/27/2021

10. ESTIMATED TOTAL COST: $966,853.65 11. ESTIMATED BASE PERIOD COST: $966,853.65