WF3 CTO2 JA Redacted.pdf

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FOR OFFICIAL USE ONLY - Source Selection Information – See FAR 2.101 and 3.104

Justification and Approval (J&A) for an Exception to Fair Opportunity

Federal Acquisition Regulation (FAR) Subpart 16.5 Indefinite-Delivery Contracts

Title: Workforce 3.0 Core Task Order Year 2 J&A Number: JA-23-0241 Created By: Additional POCs:

1. Identification of the agency and contracting activity:

Defense Healthcare Management Systems Contracting Division award a task-order contract

2. Nature and/or Description of Action being Approved:

new contract Individual

This Justification for an Exception to Fair Opportunity (hereinafter “this Justification") supports award of a noncompetitive task order, under the multiple award contract (MAC) referred to as “Workforce 3.0" (WF3), to Boston Consulting Group, Federal (BCG). The task order will be issued on a sole source basis in the interest of economy and efficiency because it is a logical follow-on to BCG's Year 2 Design to Outcome (DTO) task order approach.

The solicitation, and resulting contract, contain FAR Clause 52.212-4 – Addendum 1, which states, “Attachment 1, Scope and Ordering Guide provides the rules of engagement for issuance of task orders that supplement any ordering clauses and provides contract-wide terms and conditions that will be applicable across all task orders."

This Justification pertains to Section 4.1.2 of the Scope and Ordering Guide, “Lot 1 Linked Design-to-Outcome Task Orders". Section 4.1.2 establishes that, if the conditions of FAR 16.505(b)(2)(i)

(C) are satisfied, a logical follow-on Core Task Order (CTO) may be awarded to execute the proposed DTO approach if the Government and contractor agree on the various necessary terms for CTO. This Justification also pertains to Sections 4.1.3 and 4.1.4 of the Scope and Ordering Guide, as discussed in detail below. This Justification documents the Government's determination that these conditions are satisfied.

3. Description of Supplies/ Services:

WF3 is a fully managed end-to-end solution for executing DHMS mid-office and back-office functions to support the full spectrum of the Program Executive Office - Defense Healthcare Management Systems (PEO DHMS) product portfolio. As described in the WF3 contract (HT003822D0001), the Government requires a managed solution (i.e., a stack of capabilities) to cover the full breadth of digital workforce capabilities from technical, administrative, and organizational, across its subordinate and full partner organizations. In this manner, a managed solution will enable one seamless workforce where an individual's Agency or employment status does not affect the individual's experience at work and where this condition can easily scale and accommodate fluctuations in demand rapidly.WF3 designates a high-performing contractor team to execute a unified, long-term PEO 3.0 strategy to achieve year-over-year growth through a cohesive, organization-wide approach.

The Year 2 Core Task Order (CTO 2) is a logical follow-on and the design execution of the agreed upon Year 2 Design-to-Outcome (DTO2) (HT003823F0006) task order. The DTO2 task order built upon, and is, a logical follow-on to the competitively awarded Year 1 DTO (DTO1) task order (HT003822F0010) and the Year 1 Core Task Order (CTO1) (HT003822F0038) design execution, to continue progressing towards the transformation outcomes identified in Section 1.3 of the Scope and Ordering Guide:

When the transformation efforts are complete, the PEO will:

1. Manage a portfolio of product teams and products that prioritize the experience of those using the products

2. Have a culture that prioritizes continuous improvement, rapid decision-making, and streamlining business priorities by maximally leveraging policy and regulatory flexibilities to adopt the very best practices in each area of its business.

3. Be a center of excellence for dynamic, multifaceted technologies, platforms, applications, and cyber security compliance.

4. Adopt effective communications with internal and external stakeholders.

5. Employ technology operations that reduce redundancies across the organization to achieve cost savings and improve agility.

6. Drive collaboration between the federal government, industry, and academia to improve the nation's health.

7. Expertly manage the portfolio to rapidly deliver capabilities across the organization.

8. Recruit high-performing, innovative personnel who are accountable to the organization's mission by making PEO DHMS an employer and business partner of choice.

9. Follow efficient and accountable processes that support corporate operations and audit readiness

It is during the DTO2 task order that the contractor-specific approach, objectives, outcomes, and measures are negotiated and agreed upon with the Government. Collectively, this is the design for CTO2 to make progress against the above overarching outcomes.

Over the past four weeks BCG and the Government refined a set of activities that measurably contribute to targeted transformational outcomes for DHMS mid-and back-office functions. To support those outcomes and maintain mid- and back-office functions the following key capabilities will be delivered as part of the commercial managed solution:

Program Management, Vendor Management, Innovation Management, Product Management, Architecture and Requirements Management, Data Management, Cybersecurity Management, Testing Management, Deployment Management, Infrastructure and Cloud Management, IT Services Management, Business Operations

Below are additional capabilities that are part of BCG's proposed commercial managed solution but will not be immediately delivered during CTO2. If it is determined one or more of the capabilities below is required to meet the outcomes, it may be incorporated into CTO2:

Advanced Analytics, Customer Success and Adoption, User Experience, Integration Management

BCG has evaluated the current state and identified transformational opportunities for Year 2 CTO:

Product Platform Model execution and refinement: Transforms the way work is executed by centralizing capabilities and establishing service catalogues and service level agreements to become more efficient and allow for greater throughput.

Acquisition Strategy: Modernize the acquisition processes to support agile ways of working throughout the acquisition, contracting, and execution.

Reinforce the purpose and culture of the organization to reinforce PEO DHMS purpose across the organization and with stakeholders by embedding a performance culture and improving teaming across the programs.

The total estimated value of the CTO2 task order is not to exceed inclusive of all incentives and award profit, if fully achieved, and will use a mix of funding appropriations under the Defense Health Program. The period of performance is eleven (11) months (1 Aug 2023 – 30 June 2024).

TOTAL Contract Value BASE

POP: From 8/1/2023 to 6/30/2024

Estimated Value

POP: From 8/1/2023 to 6/30/2024

Estimated Value

Type of Contract (Primary):

FAR 16.202 Firm-Fixed-Price

Options: No

Number of Options:

POP (All options): From to

Estimated Value (all options):

Funding Type:

Operations & Maintenance (O&M)

Extension of Services: No

Clause:

Estimated Value:

Number of Months:

4. This acquisition is conducted under the authority of 41 U.S.C. 4104, and Regulatory Authority (see FAR 16.505):

FAR 16.505(b)(2)(i)(C) - Order must be issued on a sole-source basis in the interest of economy & efficiency because it is a logical follow-on to an order already issued under the contract, & all awardees were given fair opportunity for the original order

FAR 16.505(b)(2)(i)(C) – orders must be issued on a sole-source basis in the interest of economy & efficiency because it is a logical follow-on to an order already issued under the contract (HT003822D0001) and all awardees were given fair opportunity for the original order.

5. Rationale Justifying Use of the Statutory Authority Cited:

To issue a non-competitive order under the authority of FAR 16.505(b)(2)(i)(C), three essential criteria must be met; 1) the new work must be a logical follow-on to an order already issued under the contract; 2) all awardees were given a fair opportunity to be considered for the original order; and 3) the order must be issued on a sole-source basis in the interest of economy and efficiency.

Logical Follow-On to an Order Already Issued Under the Contract

PEO DHMS launched the PEO 3.0 transformation initiative in Fiscal Year 2022 with the award of the Workforce 3.0 (“WF3") contract to perform mid- and back-office functions, while transforming the organization. WF3 must enable PEO DHMS to drive patient-centered healthcare through modern solutions to meet ambitious goals pertaining to the organizational maturity of PEO DHMS.

WF3 MAC awards were made in two (2) lots. This Fair Opportunity Exception applies to WF3 Lot 1.

WF3 Lot 1 consists of Task Orders necessary to establish one, seamless team accountable for achieving the specified transformation and growth metrics over a specified length of time to be continuously evaluated against the overarching outcomes specified in WF3 Attachment 1, Scope and Ordering Guide, Section 1.3 (as established by FAR Clause 52.212-4 – Addendum 1). This includes work necessary to ensure all function necessary for operation of the “world class technology" organization are performed in accordance with the agreed upon designs.

The Government awarded the first DTO task order to BCG on January 27, 2022, simultaneously with the award of the IDIQ contracts. The contract requires the DTO awardee to observe, plan, and propose a set of objectives, outcomes, and measures for the performance of its approach, that measurably contribute to targeted transformational outcomes.

Crucially, through extensive market research, and partner interactions, the Government concluded that most digital transformation efforts of even moderate scale fail, and that even in the private sector, success is difficult to achieve. Further, without multiple awardees, the Government is often left "stuck" in a failed transformation for longer than necessary which further burdens its ability to deliver capabilities as efficiently and effectively as required in the modern near-peer competition with other major technology states. Accordingly, the Government developed a methodology for WF3 that allowed for the continuation of successful transformations, which market research indicates, often can take 3-5 years, while having the ability to quickly pivot away if the transformation fails.

This mechanism is enabled by the Scope and Ordering Guide, an attachment to the contract.

As stated in the Scope and Ordering Guide in Section 4.1.3, PEO DHMS will assess the overall performance of the contractor against the performance metrics that were agreed upon for that particular task order. If PEO DHMS determines the contractor's performance meets or exceeds all performance metrics, the PEO DHMS will have a strong basis to develop a justification for using the logical follow-on exception to Fair Opportunity process, in the interest of “economy and efficiency" for the next cycle of Task Orders (linked Design to Outcome and Core). Furthermore, as stated in the Scope and Ordering Guide at Section 4.1.4, if the awardee meets performance to a sufficient level determined by the Government BoD, PEO DHMS may use a logical follow-on (exception to the Fair Opportunity process) for the next cycle of Lot 1 Task Orders if it can establish that the value achieved against the agreed metrics, taken into account with other necessary factors, satisfies the “in the interests of economy and efficiency" standard under FAR 16.505(b)(2)(i)(C).

The Government determined BCG's performance met all performance metrics agreed upon during DTO1 and executed during CTO1. The following agreed upon metrics laid a foundation to enable WF3 and the Government towards a world class technology organization:

Establish and publish Service Catalogues for established platforms Established four platforms and service catalogues

Publish a single source of truth and integrated product roadmap Product roadmap established and agreed upon for PEO DHMS

Propose and attempt two or more cadence-transforming tools or techniques and future ways of working Tools and techniques and future ways of working to support communication with internal and external customers and Tools and techniques to support decisions

It was established that the value achieved against these agreed-upon metrics, taking into account other necessary factors, satisfied the “in the interests of economy and efficiency" standard. The logical follow-on DTO2 task order was awarded to BCG on May 15, 2023. Based upon the successful completion of CTO1 PEO DHMS and BCG finalized the set of outcomes and objectives that will be accomplished during the execution of CTO2.

Fair Opportunity to be Considered for the Original Order

Section 1.0 of provision 52.212-2, in the WF3 solicitation advised offerors that, “In addition, this evaluation will result in the concurrent award of the first “Design-To-Outcome" task order.

The “Design-To-Outcome" task order was issued concurrently with the award of the three contracts to the offer determined to provide the “Best Value" of the three awardees. Other awardees will be issued “Incubator" task orders concurrently with contract award to satisfy the “minimum guarantee." The Source Selection Decision Document completed a comparative analysis and determined BCG was the best value. Accordingly, DTO1, the original order, was issued to BCG on a competitive fair opportunity basis.

DTO2 was the logical follow-on to DTO1 and CTO1. DTO1, the original order, was the base design, agreed upon to start transforming PEO DHMS, its subordinate program offices, and the FEHRM into a world class technology organization. CTO1 was issued as a logical follow-on to DTO1, to begin executing on that design. As explained in the previous justification for CTO1 (JA-22-0236), DTO2 (JA-23-0134), and this Justification, the Government's WF3 acquisition strategy anticipated and expressly outlined this Fair Opportunity Exception in the Solicitation. DTO2 builds upon the DTO1 design and CTO1 execution in order to progress towards the transformation outcomes identified in Section 1.3 of the Scope and Ordering Guide. CTO2 is the logical follow-on to execute the agreed upon DTO2 design.

Economy and Efficiency

Disruption of service: As part of the DTO task order, the awardee must design the outcomes for the CTO. BCG was awarded the original DTO1 in FY22 and has worked with the PEO DHMS over the past eleven months on efforts to transform PEO DHMS into a world class technology organization and to maintain continuity of mission. DTO2 was issued as a logical follow-on to the DTO1 and CTO1 task orders. If CTO2 is not issued as a logical follow-on, the current transformation efforts would halt, and mission continuity would be adversely impacted, including, but not limited to disruption and delay in the following critical efforts:

JOMIS: Health Care Delivery product delivery scheduled for completion in September 2023 DHMSM: MHS GENESIS deployments scheduled for completion in March 2024 DHMSM: MHS GENESIS sixty-three (63) active product improvement engineering projects such as pharmacy billing, dental readiness, tele-critical care, and operational medicine

Duplication of efforts: Over the past ten months, BCG and the Government have worked together to document work efforts, create the foundation for transformational design, implement the transformational design, and maintain mission continuity. The Government and BCG have finalized a design for year 2 of WF3 and must start execution of the CTO2. If the Government does not award the follow-on CTO2 to BCG, the significant efforts already expended by the contractor and Government would need to be re-accomplished by another contractor, which would require a minimum of three additional months to design its Core Task Order and accomplish transition.

Increased cost: If CTO2 is not issued as a logical follow-on, the PEO DHMS would have to unnecessarily expend funds for the following:

New DTO with Transition: depending upon awardee A six-month extension for the current CTO1 would be approximately based upon current CTO1 rates. This six-month period includes 3 months to accomplish a DTO fair opportunity competition and another 3 months to execute the DTO with Transition.

This would be in addition to the new CTO awarded amount in Fiscal Year 2024.

For the reasons delineated above, awarding the logical follow-on CTO2 is determined to be in the interest of efficiency and economy.

As all three criteria are satisfied, it is in the Government's best interest to utilize the exception at FAR 16.505(b)(2)(i)(C).

6. Determination by the ordering activity contracting officer that the anticipated cost to the Government will be fair and reasonable:

Prior to task order award, a price analysis will be performed in accordance with FAR 15.404-1(b) to ensure that the price paid is fair and reasonable relative to the technical requirements. The Government has historical pricing for similar services that was determined to be fair and reasonable for use in comparison.

7. Description of the market research conducted among schedule holders and the results or a statement of the reason market research was not conducted:

Market Research Conducted? Yes When was it conducted? 12/2/2019 to 11/30/2022 Description:

WF3 required extensive market research to both inform and shape requirements. Market research consisted of office calls, Requests for Information, Draft Requests for Proposal, Industry Days, internet research, organizational analyses, and many other methodologies.

Findings from the market research indicated that substantive transformation takes, at a minimum, 24-36 months and accordingly, the Government acquisition strategy anticipated and expressly outlined this Fair Opportunity Exception in the Solicitation.

8. Other Facts:

9. Actions to overcome barriers:

The concept of a “linked" DTO and CTO supported by Fair Opportunity exception is fundamental to the Government's PEO 3.0 acquisition strategy and the resulting WF3 contract. The Government carefully considered performance under CTO1 in accordance with its Scope and Ordering Guide, incentive plans, and outcomes in making the decision to issue CTO2 as a logical follow-on on a sole source basis in the interest of economy and efficiency.

In accordance with DFARS PGI 216.505(b)(2)(A), the previous justification for CTO1, JA 22-0236, and DTO 2, JA-23-0134, is provided to assist the approval authority in determining whether the actions to remove or overcome any barriers that led to the exception to fair opportunity cited on the previous justification were completed. As explained above, the Government's WF3 acquisition strategy anticipated and expressly outlined this Fair Opportunity Exception in the Solicitation.

The contract also includes "on ramp" provisions to add additional contractors to Lot 1 if necessary or beneficial.

Coordination & Approval

12. Technical/Functional Representative:

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

Name: Title:

Approved:

Comments:

13. Requirements Certification:

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

Name: Title:

J-Directorate Office:

Approved:

Comments:

14. Fair and Reasonable Cost Determination:

I have determined that the anticipated cost to the Government for this contract action is fair and reasonable.

Name: Title:

Approved:

Comments:

15. Legal Review:

I have reviewed this justification and have found it to be legally sufficient.

Name: Title:

Approved:

Comments:

16. Contracting Officer:

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

Name: EDOM.SONYA.M Title: Contracting Officer, Defense Healthcare Management Systems Contracting Division

Approved: EDOM.SONYA.M.

Comments:

17. Competition Advocate: Based on the foregoing justification, I hereby approve the procurement of Workforce 3.0 Core Task Order Year 2 on an other than full and open competition basis pursuant to the authority of FAR 16.505(b)(2)(i)(C) - Order must be issued on a sole-source basis in the interest of economy & efficiency because it is a logical follow-on to an order already issued under the contract, & all awardees were given fair opportunity for the original order, subject to availability of funds, and provided that the supplies and/or services herein described have otherwise been authorized for acquisition.

Name: Title:

Approved:

Comments:

18. Head of Contracting Activity (or designee): Based on the foregoing justification, I hereby approve the procurement of Workforce 3.0 Core Task Order Year 2 on an other than full and open competition basis pursuant to the authority of FAR 16.505(b)(2)(i)(C) - Order must be issued on a sole-source basis in the interest of economy & efficiency because it is a logical follow-on to an order already issued under the contract, & all awardees were given fair opportunity for the original order, subject to availability of funds, and provided that the supplies and/or services herein described have otherwise been authorized for acquisition.

Name: Title:

Approved:

Comments:

19. Director of Defense Health Agency, Senior Procurement Executive: Based on the foregoing justification, I hereby approve the procurement of Workforce 3.0 Core Task Order Year 2 on an other than full and open competition basis pursuant to the authority of FAR 16.505(b)(2)(i)(C) - Order must be issued on a sole-source basis in the interest of economy & efficiency because it is a logical follow-on to an order already issued under the contract, & all awardees were given fair opportunity for the original order, subject to availability of funds, and provided that the supplies and/or services herein described have otherwise been authorized for acquisition.

Name: Title:

Approved:

Comments:

Attachments Attachment 1_Scope and Ordering Guide_14APR22.pdf Delete DTO2_FOE_JA.pdf Delete Tab 1 - FINAL_J_A_FOE_WF3_CTO1 Final_23AUG2022.pdf Delete Tab 2 - FINAL_J_A_FOE_WF3_CTO1 Final_23AUG2022_SignaturePage1_23.pdf Delete Tab 3 - FINAL_J_A_FOE_WF3_CTO1 Final_23AUG2022_SignaturePage_23.pdf Delete

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