6640--COVID-19: COVID/FLU CEPHEID TEST KITS Justification and Approval Unusual and Compelling Urgency IAW FAR 6.302-2

J&A 36C10X22C0006-001 Cepheid Page 2 of 2 AS3-22-129 DEPARTMENT OF VETERANS AFFAIRS Office of Procurement, Acquisition and Logistics (OPAL) Strategic Acquisition Center (SAC) 5202 Presidents Ct, Suite 103 Frederick, MD 21703 J&A 36C10X22C0006-001 AS3-22-129 JUSTIFICATION AND APPROVAL FOR OTHER THAN FULL AND OPEN COMPETITION 1. Contracting Activity This Justification and Approval (J&A) for Other Than Full and Open Competition is executed by the Strategic Acquisition Center (SAC), on behalf of the Department of Veterans Affairs (VA), VHA Medical Supplies Program Office (MSPO). 2. Description of Action The purpose of this document is to obtain Senior Procurement Executive (SPE) approval for the use of Federal Acquisition Regulation (FAR) 6.302-2 Unusual and Compelling Urgency for the acquisition of Cepheid GeneXpert Xpress test kits (SARS CoV 2/Flu/RSV, SARS-CO-2 test kits and B-100 Swab kits), to resolve extremely urgent supply needs related to the COVID-19 Omicron variant. The proposed action is to urgently procure Cepheid CoV-2 test kits (Quad+ or Single Target CoV-2) to support VA meeting the diagnostic needs of in excess of 1,200 VA healthcare facilities which includes 170 medical centers and over 1,000 outpatient sites within all 18 Veterans Integrated Services Networks (VISNs) throughout the United States and its territories. The GeneXpert Xpress Quad+ test available during the respiratory season also provides detection and differentiation of SARS CoV 2, Flu A, Flu B, and RSV, which all present with similar symptoms allowing accurate diagnoses and identifying potential cases of co infections during respiratory season. Outside of respiratory season, this is typically replaced by a stand-alone SARS-CoV-2 assay which is used clinically and operationally the same as the Quad+ test. The SARS-CoV-2 Omicron variant acutely changed the entire needs landscape for COVID 19 responses. This variant is the most infectious version that has been reported to date, and testing is one of the most important tools for limiting uncontrolled spread. Testing capacity limitations in the face of this rapid COVID 19 expansion have been evident throughout the US, and VA cannot have gaps in current supply. Thus, VA needs more testing supplies in this emergent scenario. Further, as VA has learned over the past year, even with vaccination mandates, there will be large segments of the population who will remain highly susceptible to SARS-CoV-2 infection and disease moving forward, and we must remain diligent in our ability to combat the ongoing spread. For the foreseeable future, testing will continue to be a key tool to identify infected individuals and prevent the spread to others. Many individuals, both patients and employees at the VA Medical Centers (VAMCs), will require recurrent testing to limit transmission within our facilities, and the Cepheid test is a key tool for when rapid Polymerase Chain Reaction (PCR) testing is needed. The Period of Performance (POP) for the contract issued under the authority of this justification is expected to be April 18, 2022 through February 27, 2023, to ensure availability of the test kits and swabs delivered on a weekly schedule to the Defense Logistics Agency Global Distribution Expeditionary Contract warehouse, a VA leased space, in Chambersburg Pennsylvania. The Cepheid contract will be awarded on a firm-fixed-price basis with an estimated total dollar value not to exceed $146,316,240.00, in accordance with the Independent Government Cost Estimate, as developed from using previous historical SAC contract prices identified in 36C10X22P0035. It is SAC s intent to award a contract with an initial obligation that will cover VA s estimated needs for 13 weeks. During this initial delivery period, VA will monitor usage across the enterprise and determine if a change in quantities (+/-) of weekly deliveries is necessary due to conditions of the COVID pandemic at the time of option exercise. Based on historical and current usage, the program office has requested an increase in allocation from the contractor of 50% above the previously contracted quantities. The contractor has communicated to VA that they can meet an increase of 20%, however due to production constraints they currently cannot meet the 50% increase requested. Should the contractor have the production capability to meet an additional increase in allocation in the future, they will notify VA, and VA will exercise the pre-priced contract line items to meet the need at the time of notification. The structure of the proposed contract allows VA to continue receiving the current allocation throughout the period of performance, with a potential increase if the items become available from the manufacturer. The structure of the proposed contract also establishes a delivery schedule that provides VA the flexibility to decrease the quantities received on a weekly basis to ensure VA does not stockpile unnecessary items that have 6-month shelf life. 3. Description of Supplies or Services Due to consequences of the COVID-19 pandemic, the Secretary of Health and Human Services renewed the Public Health Emergency Declaration on July 20, 2021. The surge of COVID-19 Delta and Omicron variant cases has proven to be significantly challenging for manufacturers to meet the demand of supply chain. As a result, the supply chain has been overburdened to the point there are significant COVID-19 diagnostic/testing kit shortages. Coupled with increasing supply allocations being implemented, availability of COVID-19 diagnostic/testing kits has been greatly reduced. As this worldwide pandemic continues, all available COVID-19 diagnostic/testing kits are in high demand and the market for supplies is highly volatile. The testing needs of the pandemic, including those imposed by President Biden s COVID-19 Action Plan, require an array of testing modalities to cover the wide variety of testing questions being asked. This includes a variety of rapid antigen tests and a number of different PCR assays that contain SARS-CoV-2 targets. The Cepheid testing serves a unique role within this array of tests in use. The Cepheid assay is a random access PCR test that can be run in parallel on the Cepheid Xpert instruments (meaning you can start an assay at any time and run it alongside another patient s assay that is already running). In other words, Cepheid testing doesn t need to be run in batches like many other PCR assays, so it is always available for rapid testing, but the instrument can still run many samples at the same time. It also has much higher sensitivity than the rapid antigen tests. This critical testing capability is used when a reliable, sensitive, rapid, PCR-based diagnosis of SARS-CoV-2 infection is required, and this is a common clinical need. Examples: this is used for symptomatic patients when timing is important (e.g. inpatient/Community Living Center (CLC) resident testing) and for rapid, accurate screening in critical clinical situations (e.g. pre-admission or emergent pre-surgical cases). However, this reagent is so sought-after in the field and production has a reported fixed limit, Cepheid continues to have this reagent on strict allocation. 4. Statutory Authority The statutory authority permitting other than full and open competition is 41 U.S.C.3304(a)(2) as implemented by the Federal Acquisition Regulation (FAR) Subpart 6.302-2, Unusual and Compelling Urgency. 5. Rationale Supporting Use of Authority Cited VA has an urgent and compelling supply chain need for the unique Cepheid test that absolutely cannot be interrupted at this point in time. VA s ability to manage the pandemic will be significantly compromised and there would be dire consequences. VAMC would need to budget and initiate local open market contract to maintain the supply of the Cepheid testing supplies, and time is needed to execute these local/VISN contracts and budgetary changes. This would create a supply gap. At this time, these test kits are available only through limited allocation, and therefore it is necessary to execute a nation-wide contract for these supplies to ensure distribution across the enterprise. Ninety-two percent (92%) of the VA clinical laboratories (138/150 labs) have acquired the Cepheid GeneXpert equipment and implemented and validated the SARS-CoV-2 testing as a key part of their COVID-19 response and in compliance with the VA s Moving Forward Plan. Many facilities in this group have the Xpert Xpress systems that are or were recently deployed at the point of care in Community-Based Outpatient Clinics (CBOCs) for even more effective management of patients and staff testing. The Cepheid test kits runs on both the Xpress system and the larger testing system in the main lab. Other testing methodologies currently in use cannot functionally replace the GeneXpert Xpress SARS-CoV-2 PCR assay in the desired substantial quantities in such a short period of time on existing government-owned equipment. Over the last 15+ years, the VA has invested $27,781,370.00 in equipment, not including unique VA staff training, for the Cepheid instrumentation. This instrumentation also hosts rapid testing for other infectious disease and hematology testing and cannot be meaningfully replaced for the menu of testing it provides without causing significant disruption to on-going testing. The Cepheid testing platforms continue to play a vital role in the overwhelming majority of our local sites, representing approximately 1/3 of all COVID testing being performed in the system within 92% of clinical labs. 6. Efforts to Obtain Competition Market research was conducted, details of which are in the market research section of this document. This effort did not yield any additional sources that can meet the Government s requirements. There is no competition anticipated for this acquisition. Additionally, the proposed action will be synopsized on the Federal Business Opportunities Page in accordance with FAR 5.201. 7. A determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable. The Contracting Officer has determined the anticipated cost to the Government to be fair and reasonable. In accordance with FAR 15.404-1(b)(2), this determination is based on a comparison of proposed pricing to historical contract prices, comparison with competitive published price lists from the Medical Product Data Bank (MedPDB) and the United States General Services Administration Advantage website for similar products, in addition to other information made available utilizing price analysis for the Cepheid SARS CoV 2/Flu/RSV test kits, SARS CoV-2 test kits, nasopharyngeal swabs kits, GeneXpert XVI module configurations, and associated accessories. 8. Market Research A Request for Information was issued on October 15, 2021. This search produced seven contractors registered, certified, and qualified as service-disabled veteran-owned small businesses (SDVOSBs) in accordance with the federal small business size standard for the applicable North American Industry Classification System Code (325413) and the Federal Supply Class (6550). However, as the Cepheid SARS CoV 2/Flu/RSV and SARS CoV-2 test kits are for use with the proprietary GeneXpert Xpress platform, and Cepheid has no authorized distributors, no other vendors are considered for this procurement. None of the respondents, except Cepheid, can provide the required compatible kits. 9. Any other facts supporting the use of other than full and open competition. VA supports Federal Emergency Management Agency (FEMA) and United States Department of Health & Human Services with the delivery of medical supplies and coordination of support missions in response-to and recovery-from nationally declared emergencies and disasters. Given that VAMCs and other select federal facilities are designated FEMA facilities with significant contingency and emergency response roles, the failure to rapidly acquire COVID-19 test kits would not only negatively impact healthcare delivery to our nation s Veterans and their dependents, but also potentially have a direct negative impact on the greater public. 10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition N/A 11. A statement of the actions, if any, the agency may take to remove or overcome any barriers to competition before any subsequent acquisition for the supplies or services required. VA Network Contracting Offices will pursue individual competed contracts when the pandemic has subsided. However, Cepheid is not on Federal Supply Schedule and is best able to support VA with maximum supply with bulk deliveries. As noted above, these supplies are currently only available through allocation from the contractor due to production constraints, and therefore it is in VA s best interest to execute a nation-wide contract to ensure distribution to the enterprise without enabling individual facilities to compete amongst one another. 12. Technical and Requirements Certification I certify that the supporting data under my cognizance, which are included in this justification, are accurate and complete to the best of my knowledge and belief. Signature: [SIGNATURE REDACTED]___________ Date: ____________ Director, Medical Supply Program Office VHA Procurement and Logistics Office (19PLO) 13. Contracting Officer Certification I certify that this justification is accurate and complete to the best of my knowledge and belief. Signature: [SIGNATURE REDACTED]___________ Date: ____________ Contracting Officer Strategic Acquisition Center Concur Based on the foregoing justification, I hereby concur with this acquisition on an other than full and open competition basis pursuant to the statutory authority cited in paragraph four above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition. Signature: [SIGNATURE REDACTED]___________ Date: ____________ Associate Executive Director, Strategic Acquisition Center (SAC) and Head of Contracting Activity Approval Based on the foregoing justification, I hereby approve this acquisition on an other than full and open competition basis pursuant to the statutory authority cited in paragraph four above, subject to availability of funds, and provided that the property and services herein described have otherwise been authorized for acquisition. As this action exceeds $75M, the certification below required by FAR 6.304 serves as approval. Signature: [SIGNATURE REDACTED]___________ Date: ____________ Executive Director, Office of Acquisitions and Logistics, and Senior Procurement Executive