A.02.04_Justification_adn_Approval_USAHCA_Sole_Source_Justification_under_13.501_(25Feb16)_redacted_Redacted.pdf

Control Number: 18-RHCO-C-269

Sole Source Justification and Approval Under FAR 13.501

1. Contracting Activity: Regional Health Contracting Office – Central (RHCO-C), Fort Carson Health Contracting Cell, Fort Carson, CO 80913.

2. Description of Action: Request a sole source acquisition awarded to Veracyte, Inc, other than small business. This Action will be accomplished through the use of a firm fixed contract using Defense Health Program (DHP) funds which are currently Subject to the Availability of Funds.

3. Description of Supplies/Services: This requirement is for specific thyroid testing:

Afirma Genomic Sequencing Classifier (GSC) testing; this test is replacing the Afirma Gene Expression Classifier (GEC). This testing is used to determine if a thyroid nodule is either benign or suspicious for malignancy. Additionally, the GSC test automatically includes the required BRAF Testing, this testing indicates how aggressive the tumor/nodule is. The requirement for Evans Army Community Hospital (EACH) and is for a base and two option periods (1 April 2018 to 31 March 2021). Estimated aggregate amount is . The previous contract W81K00-16-P-0213 is currently on a 6 month extension and expires 31 Mar 2018. This contract was a sole source requirement to Veracyte, Inc.

4. Authority Cited: 41 United States Code 1901 as implemented in Federal Acquisition Regulation 13.501 (a)(1)(ii), sole source (including brand name) under the authority of the simplified procedures for certain commercial items.

5. Reason for Authority Cited: The Department of Pathology has a continuing need for Veracyte to perform Thyroid Genomic Sequencing Classifier (formerly Thyroid Gene Expression Classifier) testing for patients that are located at EACH. The Afirma Genomic Sequencing Classifier (GSC) test is a proprietary diagnostic test developed by Veracyte, Inc. for the preoperative identification of benign thyroid nodules whose cytology is indeterminate. Patent Registration number for AFIRMA testing is .

Testing is offered through a sole source, Clinical Laboratory Improvement Amendments (CLIA) certified reference laboratory.

6. Efforts to Obtain Competition: A Sources Sought was submitted on FBO for 8 days (27 Jul 2017 to 3 Aug 2017). This resulted in zero vendors interested or capable of providing the required testing. Several GSA vendors were contacted and all FSS price lists were viewed on GSA to identify if they offer the required testing.

Additionally, on-line searches were conducted and Veracyte was the only vendor identified that could provide this specific testing.

a. Effective competition. The Afirma GSC test is protected by a patent portfolio covering the test method (RNA extraction, amplification, etc.) and test algorithm that correlated a thyroid biopsy gene expression signature with a benign tumor histopathology. Market Research indicated that no other tests actually test for the thyroid geneexpression.

For Official Use Only (See FAR 2.101 and 3.104-4)

(25 February 2016)

GSC Thyroid Testing, EACH

(See FAR 2.101 and 3.104-4) (25 February 2016)

Veracyte is currently the sole provider for these particular testing products and does not sell any of its specialized testing services to third parties and has no authorized third party vendors.

b. Subcontracting competition. IAW FAR 19.705-2, the requirement for cancer testing for EACH with an estimated cost of , which does not exceed the $700,000.00.

7. Actions to Increase Competition: When new oncology testing services become available every effort shall be made to increase competition. EACH will continue to evaluate capabilities of other vendor’s products and if other products meet the needs of the government, the government will re-procure the specialized oncology testing services that provide the best value to the Government. The Government will continue to seek new resources that will satisfy these requirements through continued market research, requests for statements of capability, searches on the internet and telephonic inquiries.

8. Market Research: A review of a variety of VA FSS and an on-line review of the market place indicate that the Thyroid Gene Expression Classifier (GEC) tests are only available through one source. Many of the competitors found in both the open market and VA/FSS schedules do not provide the test. A broader review of the DSBS database using NAICS 621511 and keywords Thyroid Gene Expression Classifier (GEC) test indicated that there are zero small businesses that provide the Thyroid Gene Expression Classifier (GEC) test. A Google search for Thyroid Gene Expression Classifier (GEC) test returned one vendor that currently is the only one that actually conducts the test for the Thyroid Gene Expression Classifier (GEC) test. Since the Thyroid Gene Expression Classifier (GEC) test is owned by Veracyte, Inc. it is determined that a sole source award to Veracyte, would be most advantageous to the Government. A Federal Business Opportunities (FBO) sources sought post was done on 27 Jul 2017 and closed 3 August 2017, no responses were received. This procurement has been identified as a commercial item IAW FAR 2.101. The NAICS is 621511, Medical Laboratories and the Product Service Code (PSC) is Q301, Laboratory Testing Services. The SBA size standard is $32.5 Million.

9. Interested Sources: Veracyte, Inc. is an interested vendor as market research has identified them as the only company available to provide the required testing based on Veracyte owning the test.

10. Other Facts: Gene Expression Classifier (GEC) testing is being replaced with the Genomic Sequencing Classifier (GSC) testing. GSC testing analyzes 10,000 genes versus 160 genes from the GEC testing and GSC is more technology advanced. The BRAF, which formerly was a separate line item line, is now an automatic test with the GSC testing.

For Official Use Only

(See FAR 2.101 and 3.104-4) (25 February 2016)

11. Procurement History. Reasonable efforts to retrieve the following items from computer records, contract files, competition advocate office files or other sources have been accomplished:

(1) Previous contract: W81K00-16-P-0213 for EACH expires in March 31, 2017 which is on a 6 month extension. This contract was a sole source requirement toVeracyte.

(2) Competitive status of these actions: Sole Source to Veracyte, Inc.

(3) Authority previously used for less than full and open competition was FAR 13.106- 1(b)(1)(i), Only one source reasonably available.

(4) If a justification was prepared to support the procurement made before this one, a summary of the actions taken to remove/overcome barriers for that procurement and an explanation of the results: Efforts to provide full and open competition will include, posting a sources sought announcement on Fed Biz Ops and conducting thorough market research to seek other vendors who can provide similar testing.

(5) If any prior award was accomplished by full and open competition, a detailed explanation of the changed circumstances: N/A, the previous requirement was awarded as a sole source.

(6) An explanation of any unusual patterns which may be revealed by the history, e.g., several consecutive, urgent buys: N/A

(7) If a justification was prepared to support the procurement made before this one, briefly describe the circumstances justifying the buy and whether there have been any significant changes: W81K00-16-P-0213 was awarded sole source on the basis that Veracyte was the only company that can provide the specific GSC testing, formerly GEC testing, and that this specific testing is a technology unique to Veracyte, Inc.

11. Technical Certification:

I certify 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.

Typed Name: Date:

Title: Contracting Officer Representative Signature:

(See FAR 2.101 and 3.104-4) (25 February 2016)

12. Requirements Certification:

I certify 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.

Typed Name: Date:

Title: Anatomic Pathology Supervisor Signatur

13. Fair and Reasonable Cost Determination:

I hereby determine that the anticipated cost to the Government for this contract action will be fair and reasonable. The basis for this determination is similar contract pricing, market research and the Independent Government Estimate. Certified cost or pricing will not be required per FAR 15.4039b) (3).

Typed Name: Troy L. Davis Date:

Title: Contracting Officer Signature:

14. Contracting Officer Certification: This certification shall be made by the contracting officer who will sign the contract resulting from this justification and approval. Include the following statement:

I certify that this justification is accurate and complete to the best of my knowledge and belief.

Typed Name: Date:

Title: Contracting Officer Signature: