Sole_Source_Justification_Redacted.pdf

Control No: JA16297

Other than Full and Open Competition Sole Source Justification (SSJ) in accordance with FAR subparts 13.106 using Simplified Acquisitions Procedures

(SAP)

Sole Source for Philips Healthcare Computerized Tomography Equipment Repair Parts

1. Contracting Activity: The Contracting Activity responsible for this action is the U.S.

Army Medical Research Acquisition Activity (USAMRAA), 820 Chandler Street, Fort Detrick, MD.

2. Requiring Activity: The U.S. Army Medical Materiel Agency (USAMMA), 693 Neiman Street, Fort Detrick, MD 21702. However, the required items will be delivered to the USAMMA Medical Maintenance Operations Division depot located at 25600 S.

Chrisman Rd., Tracy, CA 95304.

3. Nature of Action:

Commercial Item Non-Commercial Item New Requirement Follow-on Requirement Mod to Existing Purchase Order/Contract Number

Pricing: Firm-Fixed Price* Time & Materials** Cost*

* See FAR 12.207(a) ** See FAR 12.207(b).

For Hybrid Contracts, list percentage of each type of pricing:

* Firm Fixed Price: ________

**Time & Materials: ________

* Cost: ________

Funds: RDT&E Operations and Maintenance, Army (OMA)

Other Funds:

Fiscal Year of Funds: _FY16______

Estimated Total Dollar Value including Options: $ ________

4. Contractor Name:

Name of Proposed Contractor(s): Philips Healthcare, a Division of PENAC Street Address: 22100 Bothell Everett HWY City, State, Zip: Bothell, WA, 98021-8431

(b) FAR 13.106-1(b)(1)(ii): Only one source can provide a portion of the purchase that is a particular brand-name item; OR

I FAR 13.501(a)(1)(i): Only one source reasonably available (including brand name); OR

(d) FAR 13.501(a)(1)(ii): Only one source can provide a portion of the purchase that is a particular brand-name item.

7. Reason for Authority Cited: Philips Healthcare is the only authorized manufacturer and source of the specific medical equipment components listed in Table 1 above.

Therefore, the parts listed above will be purchased by the Government directly from the manufacturer on a brand name only basis.

USAMMA has three (3) medical equipment repair depots located in Tobyhanna, Pennsylvania; Tracy, California; and Hill Air Force Base, Utah. Medical equipment used by deployed forces in Afghanistan is returned to one of the three depots for repair, refurbishment, or replacement when the repair issue exceeds the deployed unit’s maintenance capability. There are limited spares in theater, so repair and return is a high priority activity at USAMMA’s depots.

Medical equipment repair parts are available only from the manufacturer of the equipment or from a firm that has been licensed by the manufacturer to produce authorized parts. This conclusion is based on Army as well as Food and Drug Administration (FDA) regulations and market research. Army Regulation (AR) 40-61, Medical Logistics Policies, prohibits modifications or alterations of Army medical equipment without the manufacturer’s consent. Section 6-17 provides that even “minor alterations without the manufacturer’s consent may negate any further manufacturer product liability.” AR 40-61 lists four instances under which Army medical maintenance personnel may modify medical equipment to include: (1) modification work order; (2) quality assurance alteration; (3) minor alteration; and (4) component modernization. All four instances require the manufacturer involvement or consent.

USAMMA is the Army’s medical manager and therefore considers any medical equipment alteration, including the substitution of manufacturer-provided or approved repair parts with other repair parts to be contrary to Army and FDA regulations, endangering the device’s FDA certification as a medical device, and incurring product liability on behalf of the Army.

8. Efforts to obtain Competition: The parts listed in Table 1 above, which are required to repair Computerized Tomography (CT) equipment, are available only from the manufacturer directly. Direct correspondence with a Senior Manager, Government Service Programs for Philips Healthcare confirmed that only the Original Equipment Manufacturer (OEM) is authorized to sell these parts. Furthermore, if these parts were purchased from an unauthorized reseller and installed in the Philips CT equipment, that equipment would then become ineligible for future service contracts with the OEM. The Government has also determined that installing parts purchased from unauthorized sources would also violate AR 40-61 referenced above. Therefore, there will be no efforts to consider quotes from any other sources as the market research efforts detailed under paragraph 10 below have determined that these parts can only be purchased from the manufacturer directly.

a. Effective competition. No competition is expected as this procurement action will be accomplished on a sole source basis.

b. Subcontracting competition. Not applicable; as this is a supply-type requirement, the Government does not anticipate subcontracting competition opportunities.

9. Actions to remove or overcome barriers Competition: USAMMA conducts online research as part of its periodic market research efforts to locate other available sources that are capable of meeting this requirement in the future. Additionally, the Government may post a Request for Information (RFI) for any future procurement to determine if there are sources available in the market place that can meet the Government’s need. For example, market research indicates that reseller agreements with Philips Healthcare are established for a 12-month duration. Therefore, authorized resellers may be located in the future through the posting of a Request for Information.

If responses from an RFI posting show that there are competitors in the market place, future acquisitions may be competed.

10. Market Survey: Thorough market research has been completed by both USAMMA and USAMRAA for medical equipment repair and replacement parts. The recent market research efforts include posting a Notice of Intent to Sole Source for a similar requirement on 19 May 2016 and 9 August 2016, direct correspondence with the manufacturer during July 2016, and searches on GSA Advantage to determine availability of these items through required sources. See below for the details of these market research efforts.

A similar requirement for CT equipment repair parts was received by USAMRAA on 31 March 2016. Initial market research indicated that resellers may be available for these parts (manufacturer part #’s: 451220102564; 453567135961; and 459800867761).

Therefore, a special notice was posted to FedBizOpps on 19 May 2016 detailing the Government’s intention to purchase these three (3) part numbers on a brand name only basis and any quotes received from authorized resellers would be considered for award.

However, in response to the brand name only posting, the Contract Specialist was contacted by a Regional Service Manager and a Senior Manager for Government Service Programs from Philips Healthcare. These individuals confirmed that, based on coordination with the Philips Healthcare logistics group, no authorized resellers were located for the parts needed to repair Philips CT equipment. These representatives from Philips Healthcare further stated on 7 July 2016 that if parts were procured from any unauthorized providers and then installed in Philips equipment, Philips would not be able to put the systems under any type of service contract.

Additional market research was conducted on 7 July 2016 for this requirement.

Specifically, the Contract Specialist completed searches on General Services Administration (GSA) Advantage! for a sample of the required brand name Philips Healthcare parts included in Table 1. This search revealed no results for the required brand name parts including a review of Philips Healthcare’s GSA contract for medical equipment and supplies (V797P-2238D). In addition to this search, direct correspondence with the Regional Sales Manager for Philips Healthcare, Mr.

confirmed that Philips Healthcare does not offer the required parts through GSA.

Therefore, the Contract Specialist has determined that these items are only available through the open market.

Finally, USAMMA conducted additional market research on 28 April 2016 using the Medical Product Data Bank (MedPDB) to search for potential purchasing options. The MedPDB is a system that resulted from the Defense Logistics Agency Troop Support and the Department of Veterans Affairs (VA) partnership to enable synchronizing of key data across their joint enterprise. The primary purpose of the MedPDB application is to make data from the MedPDB visible to the DoD and VA business processes. The MPDB is used to help identify contracts and pricing instruments available to the DoD and VA enterprises. The MedPDB helps identify the best cost for an item via a particular contract or pricing instrument (e.g. FSS/BPA/DAPA/ECAT, etc.); assist in finding alternate sources of supply when an item goes on backorder from the main source of supply; and provides visibility of what peers are buying, where they are buying it from, and what their cost is for a medical supply item. The results of the search was unsuccessful in identifying the required brand name parts; therefore, these items are only available through the open market.

11. Interested Sources: In accordance with FAR 5.102, a Notice of Intent to Sole Source will be posted to FedBizOpps on or about 18 August 2016. This announcement will detail the Government’s intent to purchase the required items on a non-competitive basis, directly from Philips Healthcare. However, any responses received from interested sources will be reviewed to determine if a competitive acquisition is in the Government’s best interest.

12. Procurement History and any other facts:

Previous Contract or Purchase Order Number: Not applicable

Previously competed? Not applicable

Previous authority for less than Full & Open Competition: Not applicable

13. Technical / Requirements Certification: I certify that the support data under my cognizance which are included in this SSJ are accurate and complete to the best of my knowledge and belief.

Submitted by Signature:

Printed name:

Agency/Position/Title: Equipment Specialist M3D, USAMMA

E-Mail Address:

Date: 18 August 2016

14. Contracting Officer Certification and Approval: I certify that this justification is accurate and complete to the best of my knowledge and belief. Based upon the facts described herein, I hereby determine that the anticipated price to the Government will be fair and reasonable, and a determination of price reasonableness will be documented and placed in the contract file.

Contracting Officer Signature:

Printed name:

Agency/Position/Title: Contracting Officer, USAMRAA

E-Mail Address:

Date: 22 August 2016