SHIP 2026 Sole Source Justification Form.pdf

Sole Source Justification Form

Version 7.01 Page 1 of 10

Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: IDPH/Office of Racial and Cultural Health Equity/Rural Health

Need Identified Date: 2/28/2026 Supply/Service Need By Date: Feb 28, 2026

Project Title: Small Rural Hospital Improvement Program (SHIP)

Vendor: Illinois Critical Access Hospital Network

Provide a description of the supplies or services required:

Administration and management of the federal Small Rural Hospital Improvement Program SHIP grant, including subgrant execution, monitoring, reporting, and compliance with all Health Resources and Services Administration requirements on behalf of the Illinois Department of Public Health.

Value: Not to Exceed Value of Initial Term, this Change Order or Amendment: 2,448,568

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Source

Section II - Proposed Term

One-Time Purchase Term Contract

Estimated Contract Begin Date: 02/28/2026

Estimated Contract End Date: 05/31/2028

Number of Potential Renewals:

Length of Each Renewal in Months:

Total Value of All Renewals:

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

The SHIP award operates under a federally approved five year project period. Annual funding is issued through Non Competing Continuation approvals within that cycle. Executing a multi year contract aligns the state contract term with the federal project period ending May 31, 2028 and prevents duplicative annual procurement processing.

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

For very specific expertise in working with small hospitals on financial and operational programs under strict federal protocols.

Are there secondary justification(s) for this sole source? Yes No

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

Another justification that this purchase is only available from a sole source is because it is:

CAHN is a nationally recognized subject matter expert (SME) on critical access hospitals, which are the recipients of this funding.

Another justification that this purchase is only available from a sole source is because it is:

There is no other statewide rural organization in Illinois whose membership is the hospitals that benefit from this funding.

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 Feb 28, 2025 Feb 27, 2026 843,752 Small Rural Hospital Improvement Program (SHIP) 51500010M Sole Source

2 Nov 27, 2023 Nov 26, 2024 785,408 Small Rural Hospital Improvement Program (SHIP) 41500001L Sole Source

3 Jun 1, 2022 May 31, 2023 767,649 Small Rural Hospital Improvement Program (SHIP) 22100262J Sole Source

4 Jun 1, 2021 May 31, 2022 718,816 Small Rural Hospital Improvement Program (SHIP) 12100038I Sole Source

5 Jun 27, 2020 May 31, 2021 687,590 Small Rural Hospital Improvement Program (SHIP) 02100032H Sole Source

6 Jul 1, 2019 May 31, 2020 688,228 Small Rural Hospital Improvement Program (SHIP) 92100018G Sole Source

7 Jul 1, 2016 May 31, 2019 1,585,841 Small Rural Hospital Improvement Program (SHIP) 72580026E Sole Source

8 Sep 1, 2015 Aug 31, 2016 518,184 Small Rural Hospital Improvement Program (SHIP) 62580007D Sole Source

9 Sep 1, 2014 Aug 31, 2015 514,800 Small Rural Hospital Improvement Program (SHIP) 52580163C Sole Source

10 Sep 1, 2013 Aug 31, 2014 505,999 Small Rural Hospital Improvement Program (SHIP) 42580155B Sole Source

If more than 10, or if other comments, explain:

SHIP federal project period awards operate June 1 through May 31 and may not align precisely with state contract execution dates reflected above. Federal award amounts fluctuate annually based on HRSA per hospital allocation and participation levels. The amounts listed in Section VI Question 7 reflect the remaining federal project period awards within the current grant cycle.

SHIP was awarded as a:

SOLE SOURCE 9/1/2012-8/31/2013: 32580168A $504,185 SHIP)

GRANT in FY years 2004-2023.

42580073 07/01/03-06/30/04 $1,080,000 Medicare Rural Hospital Flex Program/SHIP

52580186 07/01/04-06/30/05 $493,680 SHIP

62580033 07/01/05-06/30/06 $557,500 SHIP

72580056 07/01/06-06/30/07 $560,000 SHIP

82580003 07/01/07-06/30/08 $504,000 SHIP

92580180 07/01/08-06/30/09 $495,000 SHIP

02580086 07/01/09-06/30/10 $525,000 SHIP

12580021 10/01/10-09/30/11 $507,790 SHIP

22580111 09/01/11-08/31/12 $498,852 SHIP

Section VI - Business Rationale

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

1. Provide a detailed explanation of the need for the supplies or services:

The Illinois Department of Public Health Department Center for Rural Health Center applied for and received a federal Small Rural Hospital Improvement Program SHIP grant CFDA 93.301 from the Health Resources and Services Administration HRSA. This grant is for the sole purpose of distributing funds to support the efforts of critical access hospitals CAHs and rural hospitals with 49 or fewer staffed beds to advance to a value based system and improve quality and technology standards. The federal SHIP grant award is for five years, although HRSA requires annual noncompetitive applications for continued funding. The current SHIP award operates within a federally approved five year project period ending May 31, 2028. Annual funding is released through Non Competing Continuation approvals within that cycle. SHIP is a federal grant program eligible only to states with critical access and small rural hospitals. Eligible states including Illinois must apply for a noncompetitive continuation award for four consecutive years after the initial award, and the federal funding received by each state is based on the number of eligible hospitals. State offices are required to distribute SHIP funds according to the number of eligible hospitals that applied to the state office for individual hospital grants. The federal SHIP grant program contains required criteria for the types of activities in which hospitals can use the funds. The formula for each state award is based on the number of hospitals and available federal funds, estimated at $13,528 per hospital. This year 59 hospitals will participate in Illinois for a total of $798,152.

The federal SHIP grant process involves writing the state application, conducting a hospital needs assessment to guide project selection based on federal guidelines, administering the state grant program, distributing funds in a timely manner to hospitals, monitoring hospital projects, ensuring funds are spent appropriately, providing progress and final grant reporting, and verifying that the Illinois SHIP program meets federal and state grant accountability and transparency requirements. The vendor is expected to meet these expectations and work cooperatively with the IDPH Center for Rural Health.

The Center has received SHIP since 2002 and has used ICAHN to administer the grant. Due to staff reduction and increased time required to get funds to grantees, which is delaying distribution of money to hospitals for HRSA approved projects, contracting for complete project management is proposed for this iteration of SHIP. ICAHN would assist the 59 hospitals selected for HRSA approved projects, submit applications to HRSA as applicable, develop 59 grant agreements, make site visits of at least 25 percent of participating hospitals which equals 15 hospitals, develop and obtain approval of 59 subgrantee forms, monitor project progress, provide technical assistance to SHIP hospitals, receive final reports, work with IDPH and federal funders on questions or concerns, and provide a final report to IDPH. IDPH Center for Rural Health needs ICAHN fiscal and personnel resources and rural hospital expertise to manage this grant.

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

2. Provide a list and describe in detail the specifications required to satisfy the need:

The Contractor will manage and administer the SHIP grant program for IDPH under HRSA grant number H3HRH00033. The Contractor shall compile all federal reporting, issue and monitor subgrant awards previously approved by the federal Office of Rural Health Policy FORHP to SHIP hospitals. The Contractor shall:

2.1 Participate in all SHIP conference calls and webinars initiated by FORHP or the Department.

2.2 Acquire grant applications and grant agreements for each SHIP hospital application seeking a federally approved subgrant award per the Grant Funds Recovery Act. The Contractor will analyze and assess all proposed SHIP hospital activities for monitoring and oversight consistent with H3HRH00033. Approved subgrant awards shall be funded consistent with H3HRH00033 in the following prioritized manner: International Classification of Diseases ICD 10 as a priority and then among activities listed on the SHIP Purchasing Menu. If a hospital has completed all Purchasing Menu activities, a different purchase may occur only if the purchase will optimally affect transformation into an Accountable Care Organization, increase value based purchasing objectives, support adoption of ICD 10, or the hospital receives written permission from IDPH.

2.3 Each hospital Chief Executive Officer and the individual responsible for the SHIP funded purchase or project must sign the SHIP application in ink or electronically and provide it to the Department. The signatures attest to accuracy of prioritized purchases and certify engagement in Hospital Consumer Assessment of Healthcare Providers and Systems HCAHPS, ICD 10, or other activity. CAHs not participating in HCAHPS or ICD 10 may still receive SHIP funds provided the CAHs spend SHIP funds on HCAHPS or ICD 10 related activities per H3HRH00033. For any request for a different purchase, the Contractor must present the request and obtain written preauthorization from the Department. The Department will notify the Contractor if additional documentation is required.

2.4 Only utilize grant agreements with subcontractors preapproved by the Department in writing and meeting all state laws and requirements outlined in the Grant Funds Recovery Act 30 ILCS 705 and the Grant Accountability and Transparency Act 30 ILCS 708 for each hospital subgrant.

2.5 Continuously monitor all SHIP projects and contractors as approved by FORHP and the Department to assess whether each SHIP project meets all requirements and priorities established by HRSA in H3HRH00033.

2.6 Conduct on site hospital visits yearly to at least 25 percent of all SHIP hospitals awarded a SHIP project subgrant under this agreement. Compliance with approved activities and appropriate use of funds must be thoroughly evaluated. The Contractor will establish an objective non biased written methodology for selecting hospitals for required on site visits. The methodology must be preapproved by the Department. A copy of site visit evaluation forms and the written selection methodology will be maintained by the Contractor for not less than three years.

2.7 Prepare and deliver quarterly reports on Contractor activities to the Department.

2.8 Only use subcontractors if preapproved by the Department in writing. The Department reserves the right to review all subcontracts and subgrants during the agreement term.

2.9 Assume responsibility for distribution of grant funds to subcontractors for services under this agreement and by a budget approved in writing by the Department.

2.10 Execute subgrant agreements for services by December 1 annually. Each subgrant agreement shall identify the subcontractor and include scope of services, budget period, detailed budget, and current mailing address.

2.11 Promptly investigate any subcontractor not performing according to the subgrant agreement. The Contractor is responsible for monitoring, investigating, and taking needed action to protect the integrity of services. Failure may result in rejection of claims for payment or payments reduced by the value of the subcontractor contract until requirements are fulfilled.

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

The Center for Rural Health does not have the staffing capacity to implement this program. IDPH employs one full time equivalent Project Director who manages multiple federal grants and state projects. The Project Director does not have the capacity and specialized experience to administer SHIP requirements at the needed scale, and the cost of hiring additional staff including salary, benefits, travel, and indirect costs exceeds the administrative fee requested by ICAHN.

ICAHN has administered SHIP on behalf of IDPH since 2002 and is the only statewide organization in Illinois whose membership is exclusively the hospitals eligible for SHIP. IDPH seeks a one year sole economically feasible contract to avoid lapse in administration during the grant period. A lapse in service would risk noncompliance with federal grant conditions and delay distribution of SHIP funds to participating hospitals.

The HRSA Notice of Funding Opportunity restricts indirect and administrative costs to 15 percent annually. ICAHN has historically requested and been awarded less than 10 percent and will be capped at less than 10 percent for the one year grant period. The remaining funds will be granted by ICAHN to hospitals for HRSA approved projects. ICAHN has developed staff expertise specific to SHIP administration and understands rural hospital operational challenges relevant to HRSA priorities, including value based care models, accountable care organizations, Medicare related initiatives, data needs, and rural workforce challenges.

Only ICAHN combines Illinois specific rural hospital membership, established SHIP administration experience, and existing compliance infrastructure necessary to administer SHIP without interruption. This expertise and cost structure make ICAHN a sole economically feasible source for Illinois.

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

The Illinois Critical Access Hospital Network is the only statewide organization whose membership is exclusively composed of Illinois critical access hospitals and small rural hospitals eligible under SHIP. ICAHN has administered SHIP on behalf of IDPH for more than twenty consecutive years and has developed institutional knowledge specific to Illinois rural hospital operations, federal SHIP requirements, and HRSA reporting and oversight expectations.

ICAHN maintains established working relationships with participating SHIP hospitals, utilizes standardized subgrant agreements, and operates HRSA compliant monitoring and reporting tools aligned with federal grant requirements. ICAHN has demonstrated the ability to distribute and monitor SHIP subgrants within federally mandated timelines and within administrative cost limits established by the SHIP Notice of Funding Opportunity. No other organization in Illinois combines statewide rural hospital representation, direct SHIP administration experience, HRSA reporting expertise, and existing infrastructure to manage SHIP funds without program interruption.

ICAHN also administers a statewide rural accountable care organization and has operational experience supporting value based care initiatives and rural population health management. ICAHN employs staff with expertise in critical access hospital quality improvement, coding and reimbursement, care coordination, chronic care management, rural health clinic operations, credentialing, and rural hospital project management. ICAHN convenes Illinois rural hospitals through established peer groups including infection control and health information management to implement federally approved initiatives and ensure compliance with program requirements.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

The Agency conducted a market review of organizations that provide rural health support services, grant technical assistance, and hospital association services at the statewide and national level. The review included:

• Statewide hospital associations

• Regional and multi state rural health organizations

• National rural health technical assistance providers

• Private consulting firms offering grant administration and healthcare program management services

The review focused on whether any organization possessed existing Illinois statewide coverage of eligible critical access hospitals, prior experience administering the federal Small Rural Hospital Improvement Program on behalf of a state agency, and established infrastructure to manage HRSA compliant sub grant distribution and monitoring.

No alternative organization was identified that met all statutory, federal, and operational requirements necessary to administer the SHIP program for Illinois

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

Organizations identified during the market review were determined unacceptable because they did not meet one or more mandatory requirements necessary to administer the Small Rural Hospital Improvement Program for Illinois.

Specifically, alternative organizations lacked:

• Exclusive statewide representation of Illinois critical access hospitals and small rural hospitals eligible under SHIP

• Demonstrated experience administering the federal SHIP program on behalf of a state agency

• Existing HRSA compliant infrastructure for subgrant distribution, monitoring, and reporting

• Established contractual and operational relationships with all participating Illinois SHIP hospitals

• The ability to assume full program administration immediately without disruption to federally mandated timelines Private consulting firms were determined unacceptable because they would require development of new hospital relationships, subgrant agreements, monitoring tools, and reporting systems, resulting in unacceptable implementation delays and increased compliance risk.

Regional or national rural health organizations were determined unacceptable because they do not represent all eligible Illinois SHIP hospitals and do not possess Illinois specific SHIP administration experience or established HRSA compliant subgrant processes within the State.

As a result, no alternative organization was capable of satisfying the Agency’s statutory, federal, and operational requirements

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

The market evaluation was conducted through a review of publicly available information to determine whether alternative sources existed that could satisfy the statutory, federal, and operational requirements of the Small Rural Hospital Improvement Program for Illinois. The review included analysis of organizational missions, membership structures, program descriptions, prior state or federal grant administration experience, and documented capacity to administer HRSA compliant subgrant programs.The Agency also relied on institutional knowledge derived from prior SHIP procurements and the historical administration of the SHIP program in Illinois since 2002. The evaluation was limited to identifying the existence of viable sources within the market and did not include product demonstrations, pilot programs, testing, pricing analysis, or quality evaluations.No competitive evaluation activities were conducted.

The purpose of the market evaluation was solely to confirm the availability of alternative sources capable of meeting the required statutory and federal criteria.

6. Are there resellers or distributors?

Yes No N/A

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

The Agency determined the price to be fair and reasonable through comparison with historical pricing for the same services provided under prior Small Rural Hospital Improvement Program contracts administered by the Illinois Critical Access Hospital Network. The scope of work and level of effort for the current procurement are consistent with prior SHIP contract terms and do not represent an expansion of services.

In addition, the proposed administrative cost was reviewed against the federal cost limitations established by the Health Resources and Services Administration Notice of Funding Opportunity. Federal guidance limits administrative and indirect costs to a maximum of fifteen percent of the total SHIP award. The proposed administrative cost for this procurement is capped at less than ten percent of the total grant award, which is below the allowable federal threshold.

The remaining SHIP funds are distributed directly to eligible hospitals for HRSA approved projects and are not retained by the contractor. This pricing structure ensures the maximum amount of federal funding is passed through to subgrantees while maintaining compliance with federal and state grant accountability requirements.

The requested not to exceed amount of 2,448,568 represents the total of the remaining SHIP federal project period awards within the current five year federal grant cycle ending May 31, 2028. The calculation is as follows:

FY 2025 SHIP total award 798,152 FY 2026 SHIP total award 825,208 FY 2027 estimated SHIP award 825,208 Total 2,448,568

The FY 2027 amount is estimated using the most recent federal award as the best available projection. Actual payments under the contract are limited to the federal award amount released for each project period. The contract is structured as not to exceed to align with the approved federal project period and avoid annual amendments while remaining limited to federal award authority.

SHIP funding fluctuates annually based on the federal per hospital allocation established by HRSA and the number of participating Illinois hospitals. Variation in total contract value compared to prior years reflects federal award variability rather than an increase in contractor compensation. Based on historical pricing comparisons, federal administrative cost limitations, consistency of scope, and review of the current budget justification documentation, the Agency determined the price to be fair and reasonable.

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

If this sole source is not approved, the State risks loss of approximately $800,000 in federal SHIP funding. Failure to administer SHIP would prevent distribution of federal funds to 59 Illinois critical access and small rural hospitals, eliminating funding intended to support quality improvement, technology advancement, and financial sustainability in medically underserved communities where rural hospitals serve as primary healthcare providers and significant local economic drivers.

The Center for Rural Health does not have staffing capacity to administer this program. The Center has one full time equivalent employee responsible for multiple federal grants and state projects. Administration of SHIP requires assisting hospitals with selection of eligible SHIP activities, preparation and submission of grant documentation, execution of 59 subgrant agreements, completion of required state and federal reporting, and conducting on site monitoring visits for at least 25 percent of participating hospitals. These activities cannot be performed within existing staffing resources.

The Department evaluated the feasibility of hiring additional staff and determined it is not economically viable. The cost of salary, fringe benefits, travel, and indirect expenses for additional personnel would exceed the administrative cost proposed by ICAHN, which is capped at less than 10 percent of the total federal award and is below the administrative cost limit established by HRSA.

If a different vendor were required, the State would lose Illinois specific institutional knowledge, systems, and infrastructure developed over more than twenty three years of continuous SHIP administration. Any transition would delay program implementation and increase the risk of noncompliance with federal grant conditions.

10. Is there any additional information you would like to add to justify this sole source?

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date Feb 26, 2026

Printed Name Kristen N. Nolen E-mail Address kristen.n.nolen@illinois.gov

Phone Number 217-725-9191

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address mike.caceres@il.gov

Phone Number 217-557-7905 Date Feb 26, 2026

Printed Name Mike Caceres

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 217-299-5883 Date 02/26/2026

Printed Name Rebecca Gossett E-mail Address rebecca.gossett@illinois.gov

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Bulletin Reference Number 26-482DPH-RCHE4-B-51259

Requesting Agency/University IL Dept of Public Health

Sole Source Justification Form - Part II Section I - General Information

Project Title

Vendor

Initial Date of Procurement Bulletin Posting

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone

Printed Name Date

CPO E-mail

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229

SHIP was awarded as a:

SOLE SOURCE 9/1/2012-8/31/2013: 32580168A $504,185 SHIP)

GRANT in FY years 2004-2023.

42580073 07/01/03-06/30/04 $1,080,000 Medicare Rural Hospital Flex Program/SHIP

52580186 07/01/04-06/30/05 $493,680 SHIP

62580033 07/01/05-06/30/06 $557,500 SHIP

72580056 07/01/06-06/30/07 $560,000 SHIP

82580003 07/01/07-06/30/08 $504,000 SHIP

92580180 07/01/08-06/30/09 $495,000 SHIP

02580086 07/01/09-06/30/10 $525,000 SHIP

12580021 10/01/10-09/30/11 $507,790 SHIP

22580111 09/01/11-08/31/12 $498,852 SHIP

Q1Answer: The Illinois Department of Public Health Department Center for Rural Health Center applied for and received a federal Small Rural Hospital Improvement Program SHIP grant CFDA 93.301 from the Health Resources and Services Administration HRSA. This grant is for the sole purpose of distributing funds to support the efforts of critical access hospitals CAHs and rural hospitals with 49 or fewer staffed beds to advance to a value based system and improve quality and technology standards. The federal SHIP grant award is for five years, although HRSA requires annual noncompetitive applications for continued funding. The current SHIP award operates within a federally approved five year project period ending May 31, 2028. Annual funding is released through Non Competing Continuation approvals within that cycle. SHIP is a federal grant program eligible only to states with critical access and small rural hospitals. Eligible states including Illinois must apply for a noncompetitive continuation award for four consecutive years after the initial award, and the federal funding received by each state is based on the number of eligible hospitals. State offices are required to distribute SHIP funds according to the number of eligible hospitals that applied to the state office for individual hospital grants. The federal SHIP grant program contains required criteria for the types of activities in which hospitals can use the funds. The formula for each state award is based on the number of hospitals and available federal funds, estimated at $13,528 per hospital. This year 59 hospitals will participate in Illinois for a total of $798,152.

The federal SHIP grant process involves writing the state application, conducting a hospital needs assessment to guide project selection based on federal guidelines, administering the state grant program, distributing funds in a timely manner to hospitals, monitoring hospital projects, ensuring funds are spent appropriately, providing progress and final grant reporting, and verifying that the Illinois SHIP program meets federal and state grant accountability and transparency requirements. The vendor is expected to meet these expectations and work cooperatively with the IDPH Center for Rural Health.

The Center has received SHIP since 2002 and has used ICAHN to administer the grant. Due to staff reduction and increased time required to get funds to grantees, which is delaying distribution of money to hospitals for HRSA approved projects, contracting for complete project management is proposed for this iteration of SHIP. ICAHN would assist the 59 hospitals selected for HRSA approved projects, submit applications to HRSA as applicable, develop 59 grant agreements, make site visits of at least 25 percent of participating hospitals which equals 15 hospitals, develop and obtain approval of 59 subgrantee forms, monitor project progress, provide technical assistance to SHIP hospitals, receive final reports, work with IDPH and federal funders on questions or concerns, and provide a final report to IDPH. IDPH Center for Rural Health needs ICAHN fiscal and personnel resources and rural hospital expertise to manage this grant.

Q2Answer: The Contractor will manage and administer the SHIP grant program for IDPH under HRSA grant number H3HRH00033. The Contractor shall compile all federal reporting, issue and monitor subgrant awards previously approved by the federal Office of Rural Health Policy FORHP to SHIP hospitals. The Contractor shall:

2.1 Participate in all SHIP conference calls and webinars initiated by FORHP or the Department.

2.2 Acquire grant applications and grant agreements for each SHIP hospital application seeking a federally approved subgrant award per the Grant Funds Recovery Act. The Contractor will analyze and assess all proposed SHIP hospital activities for monitoring and oversight consistent with H3HRH00033. Approved subgrant awards shall be funded consistent with H3HRH00033 in the following prioritized manner: International Classification of Diseases ICD 10 as a priority and then among activities listed on the SHIP Purchasing Menu. If a hospital has completed all Purchasing Menu activities, a different purchase may occur only if the purchase will optimally affect transformation into an Accountable Care Organization, increase value based purchasing objectives, support adoption of ICD 10, or the hospital receives written permission from IDPH.

2.3 Each hospital Chief Executive Officer and the individual responsible for the SHIP funded purchase or project must sign the SHIP application in ink or electronically and provide it to the Department. The signatures attest to accuracy of prioritized purchases and certify engagement in Hospital Consumer Assessment of Healthcare Providers and Systems HCAHPS, ICD 10, or other activity. CAHs not participating in HCAHPS or ICD 10 may still receive SHIP funds provided the CAHs spend SHIP funds on HCAHPS or ICD 10 related activities per H3HRH00033. For any request for a different purchase, the Contractor must present the request and obtain written preauthorization from the Department. The Department will notify the Contractor if additional documentation is required.

2.4 Only utilize grant agreements with subcontractors preapproved by the Department in writing and meeting all state laws and requirements outlined in the Grant Funds Recovery Act 30 ILCS 705 and the Grant Accountability and Transparency Act 30 ILCS 708 for each hospital subgrant.

2.5 Continuously monitor all SHIP projects and contractors as approved by FORHP and the Department to assess whether each SHIP project meets all requirements and priorities established by HRSA in H3HRH00033.

2.6 Conduct on site hospital visits yearly to at least 25 percent of all SHIP hospitals awarded a SHIP project subgrant under this agreement. Compliance with approved activities and appropriate use of funds must be thoroughly evaluated. The Contractor will establish an objective non biased written methodology for selecting hospitals for required on site visits. The methodology must be preapproved by the Department. A copy of site visit evaluation forms and the written selection methodology will be maintained by the Contractor for not less than three years.

2.7 Prepare and deliver quarterly reports on Contractor activities to the Department.

2.8 Only use subcontractors if preapproved by the Department in writing. The Department reserves the right to review all subcontracts and subgrants during the agreement term.

2.9 Assume responsibility for distribution of grant funds to subcontractors for services under this agreement and by a budget approved in writing by the Department.

2.10 Execute subgrant agreements for services by December 1 annually. Each subgrant agreement shall identify the subcontractor and include scope of services, budget period, detailed budget, and current mailing address.

2.11 Promptly investigate any subcontractor not performing according to the subgrant agreement. The Contractor is responsible for monitoring, investigating, and taking needed action to protect the integrity of services. Failure may result in rejection of claims for payment or payments reduced by the value of the subcontractor contract until requirements are fulfilled.

Q3Answer: The Center for Rural Health does not have the staffing capacity to implement this program. IDPH employs one full time equivalent Project Director who manages multiple federal grants and state projects. The Project Director does not have the capacity and specialized experience to administer SHIP requirements at the needed scale, and the cost of hiring additional staff including salary, benefits, travel, and indirect costs exceeds the administrative fee requested by ICAHN.

ICAHN has administered SHIP on behalf of IDPH since 2002 and is the only statewide organization in Illinois whose membership is exclusively the hospitals eligible for SHIP. IDPH seeks a one year sole economically feasible contract to avoid lapse in administration during the grant period. A lapse in service would risk noncompliance with federal grant conditions and delay distribution of SHIP funds to participating hospitals.

The HRSA Notice of Funding Opportunity restricts indirect and administrative costs to 15 percent annually. ICAHN has historically requested and been awarded less than 10 percent and will be capped at less than 10 percent for the one year grant period. The remaining funds will be granted by ICAHN to hospitals for HRSA approved projects. ICAHN has developed staff expertise specific to SHIP administration and understands rural hospital operational challenges relevant to HRSA priorities, including value based care models, accountable care organizations, Medicare related initiatives, data needs, and rural workforce challenges.

Only ICAHN combines Illinois specific rural hospital membership, established SHIP administration experience, and existing compliance infrastructure necessary to administer SHIP without interruption. This expertise and cost structure make ICAHN a sole economically feasible source for Illinois.

Q4Answer: The Illinois Critical Access Hospital Network is the only statewide organization whose membership is exclusively composed of Illinois critical access hospitals and small rural hospitals eligible under SHIP. ICAHN has administered SHIP on behalf of IDPH for more than twenty consecutive years and has developed institutional knowledge specific to Illinois rural hospital operations, federal SHIP requirements, and HRSA reporting and oversight expectations.

ICAHN maintains established working relationships with participating SHIP hospitals, utilizes standardized subgrant agreements, and operates HRSA compliant monitoring and reporting tools aligned with federal grant requirements. ICAHN has demonstrated the ability to distribute and monitor SHIP subgrants within federally mandated timelines and within administrative cost limits established by the SHIP Notice of Funding Opportunity. No other organization in Illinois combines statewide rural hospital representation, direct SHIP administration experience, HRSA reporting expertise, and existing infrastructure to manage SHIP funds without program interruption.

ICAHN also administers a statewide rural accountable care organization and has operational experience supporting value based care initiatives and rural population health management. ICAHN employs staff with expertise in critical access hospital quality improvement, coding and reimbursement, care coordination, chronic care management, rural health clinic operations, credentialing, and rural hospital project management. ICAHN convenes Illinois rural hospitals through established peer groups including infection control and health information management to implement federally approved initiatives and ensure compliance with program requirements.

• Statewide hospital associations

• Regional and multi state rural health organizations

• National rural health technical assistance providers

• Private consulting firms offering grant administration and healthcare program management services

The review focused on whether any organization possessed existing Illinois statewide coverage of eligible critical access hospitals, prior experience administering the federal Small Rural Hospital Improvement Program on behalf of a state agency, and established infrastructure to manage HRSA compliant sub grant distribution and monitoring.

No alternative organization was identified that met all statutory, federal, and operational requirements necessary to administer the SHIP…