JusTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION MEDICAL SURGICAL FLEET PRIME VENDOR.pdf

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

MEDICAL/SURGICAL FEET PRIME VENDOR

1. The Defense Logistics Agency (DLA), DLA Troop Support, Medical Supplier

Operations Directorate is the contracting activity.

2. The action submitted for approval is for the acquisition of supplies on an other than full and open competition basis. This justification is for a third bridge contract for a period of 270 days to ensure continuation of the Medical/Surgical Fleet Prime Vendor contract currently held by American Medical Depot (AMD) under contract number SPM200-09-

D-7150. The second bridge contract will expire on July 29, 2010. The proposed 270-day third bridge contract will provide accessibility to all items currently on

Medical/Surgical Distribution and Pricing Agreements (DAPAs) through April 26, 2011.

The first generation Med/Surg Fleet Prime Vendor contract was awarded as a sole-source 8(a) set-aside to American Medical Depot. AMD has since graduated from the

8(a) program and partnered with APS Technologies, Inc. to form a new 8(a) firm, Allied Joint Venture (AJV). While negotiations are still ongoing with Allied Joint

Venture on the Gen II Med/Surg Fleet Prime Vendor contract, AMD is the firm currently being considered for this third bridge contract.

3. The supplies required to meet the Navy Fleet’s needs are a wide array of medical/surgical items, including surgical dressing materials, medical and surgical instruments, utensils, and supplies. The estimated dollar value of the 9-month bridge is

$2.8 million, based upon sales for calendar year 2009.

4. The applicable authority permitting other than full and open competition is 10 U.S.C.

2304(c) (1) as implemented by FAR 6.302-1, Only one responsible source and no other supplies or services will satisfy agency requirements.

5. a. The use of this authority is necessary because the second-generation Med/Surg Fleet

Prime Vendor contract was not awarded by the July 29, 2010 expiration date of the second bridge contract, as originally anticipated, due to a variety of unforeseen circumstances.

1. Negotiations were interrupted for approximately 45 days as a result of the Haiti earthquake. AMD was a major supplier of emergency requisitions for the hospital ships and had to turn their attention completely to responding to the requirements generated by this natural disaster.

2. After emergency requisitions for Haiti wound down, an additional 45 days were required to reconcile contractor statement of work concerns with the Navy.

3. AJV originally proposed distribution fees significantly greater than the estimated fair market price. Detailed negotiations were conducted to identify the major cost drivers impacting AJV’s proposed pricing. After considerable discussions, numerous changes to the statement of work were made. This process took approximately 90 days.

b. Historically, the Fleet desired the inclusion of military-unique ordering data elements such as the National Stock Number (NSN) and the customer requisition number on packing slips to track its purchases. At the time of the first generation

Medical/Surgical Fleet Prime Vendor contract twelve years ago, the EDI 3030 version of American National Standards (ANSI) X12 transaction sets was modified to be capable of providing this military-unique data. In recent years, however, a newer 4010 version of transaction sets was adopted by the commercial industry which does not currently have the capability of providing military unique data. AMD is the only known Prime Vendor with business practices currently in place which accept the previous generation EDI-3030 version of 850 (purchase order) transactions which allows for receipt and processing of extra key data elements such as NSNs and requisition numbers.

c. There are approximately 3,163 current active items on the Fleet’s Outline

Agreement for which it relies 100% on the DLA Fleet Prime Vendor contract. As only approximately 107 are currently depot-stocked, failure to keep the current Prime

Vendor contract in place would result in delivery delays for the thousands of items currently being supplied by AMD on a routine basis. Additionally, a lapse in coverage would result in having to dedicate more DLA Troop Support personnel resources to handle a significant increase in customer direct requisitions to keep the

Fleet supplied. Without a third bridge contract, a severe gap in coverage would result.

d. AMD is the only known firm which has been using the EDI 3030 version of

American National Standards (ANSI) X12 transaction sets technology on an ongoing basis. The current Regional Prime Vendors and the other non-governmental

Prime Vendors don’t use this older technology, nor is there time before the expiration of the current bridge contract for these vendors to make changes to their current systems to accommodate the EDI 3030 technology. Therefore, AMD is the only known source which can currently fulfill these requirements in the required timeframe.

e. The length of the proposed third bridge contract is 270 days. The Government intends to continue price negotiations with AJV to include escalating discussions to the

Chief of the Pricing and Strategy Division, in an effort to reach agreement. It is anticipated that these continued discussions will require 30 to 45 days. If the Government and AJV cannot reach agreement, DLA

Troop Support must request the Navy to re-affirm their requirements and then evaluate and propose alternative strategies to support Fleet Medical/Surgical customer requirements. These alternatives must be presented to and discussed with both DLA

HQ Senior Leadership and Navy Senior Leadership to determine which alternative will best meet Navy needs. These discussions and receipt of a final determination from the

Navy are projected to require an additional 30 to 45 days. Depending on the Navy’s decision, it may be necessary for DSCP to request removal of this requirement from the

8(a) set-aside program. It is estimated that coordination with the Small Business

Administration to accomplish this would require an additional 45 to 60 days.

Depending on the Navy’s decision regarding support for Medical/Surgical products, DLA Troop Support may have to conduct an analysis to assure that the alternative strategy to support the Navy requirements is in compliance with FAR 7.107 and 15

U.S. C. 644 (e)(2). Such an analysis is projected to take 60 days to be conducted and approved by DLA HQ. And finally, it is anticipated that at least 60 days will be required to transition the over 300 Navy ordering activities from the proposed bridge contract to any revised processes associated with the Navy’s selected alternative. It is anticipated that all of the above activities will be accomplished within the proposed

270-day bridge contract period .

6. The proposed bridge contract was synopsized on 19 Jul 2010 in FedBizOpps in accordance with FAR 5.2. In addition, this justification will be made available for public inspection after award in accordance with FAR 6.305.

7. As the Contracting Officer, I hereby determine that the anticipated cost to the

Government will be fair and reasonable based upon two key elements. The items themselves have already been determined to be fair and reasonable based upon a pre-priced Distribution and Pricing Agreement (DAPA) catalog. Prices for items within the

DAPA catalog are individually determined to be fair and reasonable before a new

DAPA is issued or items are added onto existing DAPAs based upon comparison with

Federal Supply Schedule prices, discounts from commercial catalog prices, and by comparison with historical pricing to other customers under an uncommitted volume basis. Secondly, the proposed distribution fee of 8% fell within the range of fair market prices developed by the Pricing Strategy section. AMD’s offered price of 8% represents a 19.1% reduction over the price negotiated for the previous Med/Surg Fleet

Prime Vendor bridge contract

8. Market Research was conducted by analyzing the responses received from synopsizing the third bridge contract on 19 Jul 2010. Of the eight small firms which responded, none indicated that they are currently operating as a Prime Vendor nor have EDI 3030 transaction set capability. Based on the responses, AMD is the only known

Medical/Surgical Prime Vendor which can perform on the proposed bridge contract, as they are the only known Prime Vendor which accepts the previous generation EDI 3030 version of 850 (purchase order) transactions allowing for receipt and processing of extra key, Navy-unique data elements.

9. There are no additional facts supporting Other Than Full and Open Competition.

10. Based on the above, AMD is the only viable source that has expressed an interest in the proposed bridge contract and is the only firm currently positioned to perform on the

30 July 2010 effective date.

11. The second generation acquisition, which incorporates up-to-date EDI technology, has been solicited on a sole-source 8(a) set-aside basis. Should the decision be made to request a release from the 8(a) program, all future acquisitions for these requirements will be competed on a full and open competition basis.

12. As the Contracting Officer, I hereby certify that this justification is accurate and complete to the best of my knowledge and belief.

Date THOMAS SIDOR

Contracting Officer

I have reviewed this justification and recommend approval.

Date ALBERT GATICA

Acting Division Chief, Medical Surgical

Manufacturer & Distribution Team

Medical Supplier Operations Directorate

I have reviewed this justification for legal sufficiency.

Date DLA Troop Support Office of Counsel

I have reviewed and hereby approve this justification.

Date ROBERT J. PANICHELLE

DLA Troop Support Competition Advocate