Sole Source Telepath Service BPA Redact Final.pdf

DEPARTMENT OF VETERANS AFFAIRS

Office of Procurement, Acquisition and Logistics (OPAL)

Strategic Acquisition Center (SAC) 5202 Presidents Ct, Suite 103

Frederick, MD 21703

JUSTIFICATION AND APPROVAL

FOR OTHER THAN FULL AND OPEN COMPETITION

(Prepared in accordance with FAR 6.104-1) 1

(1) Identification of the agency and the contracting activity, and specific identification of the document as a "Justification for Other Than Full and Open Competition."

This Justification and Approval (J&A) for Other Than Full and Open Competition is executed by the Strategic Acquisition Center (SAC), on behalf of the Department of Veterans Affairs (VA), Pathology and Laboratory Medicine (PLM) National Program Office.

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

This action proposes establishing a non-competitive, firm-fixed-price Blanket Purchase Agreement (BPA) with Philips North America dba Philips Healthcare to provide maintenance and support services for enterprise digital telepathology equipment.

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

The digital telepathology equipment service maintenance provider, Philips North America, shall provide end user customer support, planned maintenance activities, corrective maintenance activities, replacement parts, and updates/upgrades to keep equipment in optimal working condition. This service is offered commercially with service level tiers, and the VA adopting that model in this requirement allows each location to right size the service level for their equipment and urgency need. The contractor shall provide support to all VA medical centers that have Philips digital telepathology equipment and service scope will grow as new equipment is obtained. VA anticipates that approximately 20 locations will utilize the BPA in the Base Year and up to 60 locations will utilize the BPA by the fourth Option Year.

Base Period:

The estimated cost for the base year support is $492,000. This includes business-hours coverage for complete systems, scanner coverage, and additional scanners at the same location. Extended-hours coverage CLINs and non-priced support items (e.g., PIV access, kickoff meeting, BAA, and MOU/ISA) are identified but not costed in the base estimate.

1 Justification citations based upon Federal Acquisition Regulatory Council’s Revolutionary FAR Overhaul model deviation text to FAR Part 6, issued June 27, 2025 and adopted by VA via class deviation June 22, 2025.

Option Periods:

Option Year 1 (CY 2027): $1,486,000 Option Year 2 (CY 2028): $1,626,000 Option Year 3 (CY 2029): $1,716,000 Option Year 4 (CY 2030): $1,566,000

The option year estimates reflect increased scanner counts and expanded system coverage aligned with projected program growth, while maintaining consistent unit pricing assumptions across years.

Total Estimated Value:

The total estimated value of the requirement across the base period and all option periods is $6,886,000.

(4) An identification of the statutory authority permitting other than full and open competition.

The statutory authority permitting other than full and open competition is 41 U.S.C. § 1901, as implemented by FAR 12.102(b), which authorizes the acquisition of commercial products and commercial services using procedures other than those prescribed in FAR Parts 13, 14, or 15 when appropriate, provided the acquisition complies with applicable competition requirements.

(5) A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited.

Digital Telepathology equipment within VA is used to scan surgical specimens for diagnostic evaluation by pathology staff in support of Veteran patient care. Because this equipment is used in a clinical environment and directly supports medical decision-making, both the hardware and associated software must be U.S. Food and Drug Administration (FDA)–cleared to ensure patient safety, regulatory compliance, and proper medical device oversight.

The Digital Telepathology systems deployed within VA are proprietary to Philips North America.

Philips exclusively owns the system architecture, operating software, diagnostic algorithms, and maintenance procedures. Philips does not license its proprietary software or authorize, train, or certify third-party vendors to perform maintenance, calibration, software updates, or repairs on this equipment. As a result, no other contractor possesses the proprietary data rights, OEM tools, or manufacturer authorization required to support the systems.

Due to the proprietary and FDA-regulated nature of the equipment, only Philips North America has the unique technical capability to provide maintenance and support services without risk to system integrity, FDA compliance, warranty coverage, or continuity of clinical operations. Philips has demonstrated this capability through successful performance under prior Government contracts. Accordingly, the nature of the requirement and Philips’ exclusive qualifications necessitate use of the cited authority to ensure safe, compliant, and uninterrupted pathology services in support of VA’s mission.

The Digital Telepathology systems in use directly support clinical pathology diagnoses and are FDA-cleared, regulated medical devices. Selection of any vendor other than the original equipment manufacturer, Philips North America, would violate applicable federal medical device and laboratory safety requirements, invalidate the FDA clearance of the systems, and render the equipment unusable for clinical care. Such an outcome would disrupt pathology services, delay diagnostic results, and pose unacceptable risks to Veteran patient safety. Accordingly, continued OEM maintenance and support is essential to maintain regulatory compliance, protect Veterans, and ensure uninterrupted mission-critical healthcare operations.

(6) A description of efforts made to ensure that offers are solicited from as many potential sources as possible, including whether a notice was or will be publicized as required by part 5 and, if not, which exception under part 5 applies.

Market research was conducted, as documented in the Market Research section of this document, and did not identify any additional sources capable of meeting the Government’s requirements. Accordingly, no competition is anticipated for this acquisition. In accordance with FAR 5.201, a synopsis of the proposed action will be publicized on the Governmentwide Point of Entry (SAM.gov). Any responses received as a result of the synopsis will be considered by the Government.

(7) A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable.

The IGCE was developed to estimate the anticipated cost for enterprise digital telepathology maintenance and support services over a five-year POP, consisting of a one-year base period and four one-year option periods. The IGCE reflects projected coverage levels for scanners, IMS software, and server environments supporting both test and production systems, based on anticipated site counts and projected utilization growth over the POP.

The IGCE will be used as a baseline for evaluating price reasonableness at the BPA and subsequent order levels. No award shall be made until the CO determines the cost to the Government to be fair and reasonable, in accordance with applicable FAR requirements.

(8) The market research conducted (see part 10) and the results or a statement of the reason market research was not conducted.

Market research was conducted in accordance with FAR Part 10 and included a review of GSA eLibrary, SAM.gov RFI/Sources Sought responses, contract database searches, and stakeholder discussions with Philips and OGC. In addition, the contract file contains a proprietary/OEM confirmation letter from Philips Healthcare, the original equipment manufacturer (OEM) of the Philips IntelliSite Pathology Solution.

Based on this research, the Government identified only one viable source capable of performing the required proprietary service and maintenance for Philips digital telepathology equipment:

Philips Healthcare (large business/OEM). Philips confirmed in writing that it is the sole source service provider authorized to maintain its IntelliSite Pathology Solution, including pathology scanners, and that only Philips Field Service Engineers (FSEs) or Philips-authorized representatives are permitted to install proprietary software, perform hardware updates/upgrades, and access OEM diagnostic tools. Philips further confirmed that it will only guarantee work performed by these authorized individuals, and that the use of non-OEM service providers may result in non-certified service, incompatible replacement parts, loss of warranty coverage, and potential regulatory and safety risks.

Although MAS SIN 532490L reflects multiple vendors capable of providing general laboratory equipment maintenance, the Government’s specific requirement cannot be modified to enhance competition because the required services are OEM-controlled and proprietary. Performance by any vendor other than Philips would risk invalidating FDA clearance, compromising laboratory safety and system integrity, and disrupting clinical pathology operations that directly support Veteran patient care.

RFI/Sources Sought responses further supported this conclusion. Four Points Technology confirmed it is an authorized Philips distributor; however, its authorization is limited to equipment provision only and does not include OEM service or maintenance. The other respondent, AnythingIT, LLC, provided capabilities unrelated to OEM digital telepathology maintenance. Contract vehicle research confirmed that while certain vendors hold federal contract vehicles, contract vehicle availability does not overcome the OEM-only service restriction confirmed by Philips.

Accordingly, market research confirms that only Philips Healthcare can meet the Government’s minimum requirements for safe, compliant, and uninterrupted maintenance and support of Philips digital telepathology systems.

(9) Any other facts supporting using other than full and open competition.

The use of other than full and open competition is further supported by the Department of Veterans Affairs’ mission to ensure the safe, continuous, and uninterrupted delivery of healthcare services to Veterans. The requirement supports mission-critical clinical operations that directly impact patient diagnosis and treatment, where any lapse in system availability, regulatory compliance, or equipment integrity could result in delayed care or adverse patient outcomes.

Maintaining continuity of service through the original equipment manufacturer ensures patient safety, regulatory compliance, and operational readiness, while mitigating risks associated with unauthorized maintenance, system degradation, or loss of FDA clearance. Accordingly, limiting competition is necessary to preserve the reliability and safety of essential clinical services and to fulfill VA’s statutory healthcare mission.