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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 Design to Outcome Year 2 J&A Number: JA-23-0134 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 successful performance of the Year 1 Core Task Order in accordance with the performance metrics and outcomes agreed upon in the Year 1 Design-to-Outcome Task Order. During the initial source selection for the WF3 contract, BCG was competitively selected as one of the MAC awardees an d was simultaneously competitively selected under the initial fair opportunity process, to perform the Year 1 DTO task order.

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."

Section 4 of the WF3, Attachment 1, Scope and Ordering Guide, established the “Task Order Rules of Engagement", and included a diagram of potential scenarios in which an exception to the fair opportunity process would be utilized by the Government.

This Justification pertains to two sections of the Scope and Ordering Guide: Section 4.1.3 “Performance Assessment" and Section 4.1.4 “Continuation of Lot 1 work when successful", which state:

Section 4.1.3 Performance Assessment: After the fifth month of performance of each Lot 1 Core Task Order, PEO DHMS will assess the overall performance of the contractor against the performance metrics that were agreed upon for that particular Task Order at the completion of the linked Design to Outcome task order. If, based on this assessment, PEO DHMS determines that the contractor's performance meets or exceeds all performance metrics, then PEO DHMS will have a strong basis to develop a justification for using the logical follow-on exception to the Fair Opportunity process, in the interests of “economy and efficiency," for the next cycle of Task Orders (linked Design to Outcome and Core).

Section 4.1.4 Continuation of Lot 1 work when successful: The Government shall assess the awardee's progress against these metrics using methods including but not limited to awardee self-reporting, Government direct measurements, sampled measurements, and systematic measurements. 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 (consistent with the requirements of FAR 16.505(b)(2)(ii)(B)) 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). In such cases, the awardee will then be granted another Design-to-Outcome Task Order to design, plan, and negotiate the objectives, outcomes, and measures for the next Core Task Order.

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, 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 Design-to-Outcome (DTO2) task order builds upon and is a logical follow-on to the competitively awarded Year 1 DTO (DTO1) task order and the Year 1 Core Task Order (CTO1)design execution, in order 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

The total estimated value of the DTO2 task order is not to exceed and will use Operations & Maintenance (O&M) funding appropriated in FY2023, under the Defense Health Program (DHP). The period of performance is two (2) months (15 MAY 2023 – 15 JUL 2023).

TOTAL Contract Value

POP: From 5/15/2023 to 7/15/2023

Estimated Value

BASE

POP: From 5/15/2023 to 7/15/2023

Estimated Value

Type of Contract (Primary):

FAR 16.202 Firm-Fixed-Price

Options: No

Number of Options:

POP (All options): From to

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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

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 first two of the four-pronged strategic contracts that seek to enable the PEO to mirror the operational strategies of leading commercial counterparts. The first two contracts are: Workforce 3.0 (“WF3") to perform mid- and back-office functions, while transforming the organization, and Workplace 3.0 (“WP3"), which will transform the PEO's business infrastructure.

WF3 must enable PEO DHMS to drive patient-centered healthcare through modern solutions to meet four ambitious goals:

Become a world-class technology organization Continuously deliver capability Accelerate Healthcare IT improvements Enhance patient experience through seamless transition of care

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 27 JAN 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.

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).

PEO DHMS has determined BCG's performance has met all performance metrics agreed upon during DTO1 and executed during CTO1.

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 will be 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 is a 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 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 toward towards the transformation outcomes identified in Section 1.3 of the Scope and Ordering Guide.

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 nine months on efforts to transform PEO DHMS into a world class technology organization and to maintain continuity of mission. If DTO2 is not issued as a logical follow-on, 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 DMSM: MHS GENESIS 63 active product improvement engineering projects such as pharmacy billing, dental readiness, tele-critical care, and operational medicine

Duplication of efforts: Over the past nine 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. If the Government does not award the follow-on DTO2 to BCG, the significant efforts already expended by the contractor and Government would need to be reaccomplished by another contractor, which would require a minimum of three additional months to design its Core Task Order and accomplish transition.

Increased cost: If DTO2 is not issued as a logical follow-on, the PEO DHMS would have to unnecessarily expend funds for the following:

New DTO with Transition: $6,914,085 or $3,421,015 depending upon awardee A six-month extension for the current CTO task order would be approximately $98,636,364 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 DTO2 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:

The price was already evaluated as part of the solicitation. Per 52.212-2 Evaluation – Commercial Items (OCT 2014) the Government used adequate price competition as a basis for establishing reasonableness of the proposed price by comparing the prices proposed by all Offerors. In addition, the solicitation stated in 52.216-18 Ordering (AUG 2020), orders for line items “0001, 0x01,0x03, 0x04, and 1001 shall be placed unilaterally at the price agreed upon at the time of contract award, as identified in the schedule, and incorporated as a “catalog" price in accordance with Attachment 1, Scope and Ordering Guide." DTO2 with no transition is CLIN 0101.

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.

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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 DTO2 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, 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.

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: OLIVER, J Title: Contracting Officer, Defense Healthcare Management Systems Contracting Division

Approved: OLIVER, J - 11 May 2023, 10:55:26

Comments:

17. Competition Advocate: Based on the foregoing justification, I hereby approve the procurement of Workforce 3.0 Design to Outcome 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 Tab 1 - FINAL_J_A_FOE_WF3_CTO1 Final_23AUG2022.pdf Delete

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