Notice of Special Procurement Amd# 2 - Netsmart Application Services for OHA

Notice of Special Procurement Amd# 2 - Netsmart Application Services for OHA THIS IS A NOTICE, NOT A BID. SEE ATTACHMENTS FOR INFORMATION REQ-DASOBO-00139522 Special Procurement Amedment #2 - OHA Netsmart Application Services system upgrade REQUEST FOR SPECIAL PROCUREMENT No. REQ-DASOBO-00139522 (previously Original SP-841-16 and SP-841-16, AMD-1), Amendment No. 2 PART A. Requesting Agency must complete Items 1 through 13. 1. Requesting Agency Name: The Department of Administrative Services, State Procurement Services (“DAS SPS”) on behalf of Oregon Health Authority (“OHA”) and Oregon State Hospital (“OSH”) 2. Date of Request: February 25, 2026 3. Agency Number: 10700 OBO 44300 4. Agency Contact Name: Brian Eilerts 5. Phone: 971-283-5302 6. Type of Request: Class Special Procurement X_ Co ntract-specific Special Procurement 7. Amendment Time Period Requested: From: Upon Approval To: June 30, 2031 8. Total Estimated Cost for Amendment Time Period: $27,000,000.00 Note: With approval of this SP AMD-2 Request and execution of the anticipated Contract Amendment #5, the cumulative maximum not-to-exceed (the “NTE”) compensation payable under the Contract will be $41,990,402.22 (see Table 10.c.1 for breakdown). 9. Title: Supplies and/or Services to be acquired: Maintenance and Support Services for the Hospital Management System (“HMS”) / Electronic Health Record (“EHR") System including upgrades to myAvatar NX and Inovalon Direct Data Entry (“DDE”) Verification and professional services (collectively “Services”) 10. Amendment Request, Background, Current Need, and Proposed Contracting Procedure: a. Amendment Request: DAS SPS, on behalf of OHA / OSH, requests approval of this Special Procurement (“SP”) REQ-DASOBO- 00139522 (previously Original SP-841-16 and SP AMD-1), Amendment No. 2 (“SP AMD-2”) to amend Contract No. DASPS-1638-17 (“Contract”) with Netsmart Technologies, Inc. (“Netsmart” or “Contractor”), as follows: 1. extend the Contract for an additional five (5) years; and 2. increase the NTE by $27,767,131.22 as follows: i. ‘true up’ spend from Contract Amendment(s) No. 2 and 4 for $6,152,147.36, and ii. increase future spend through Contract Amendment No. 5 by $21,614,983.86 for a Contract maximum NTE of $41,990,402.22. b. Background: In December 2009, the Behavioral Health Integration Project (“BHIP”) awarded DHS Contract No. 130374 to Netsmart. Since this date, OSH has worked with Netsmart to implement the Avatar REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 1 of 9 REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 2 of 9 HMS/EHR system. The first elements of the Avatar HMS/EHR system were put into production in November 2011. The Avatar HMS/EHR system is a complex set of core Avatar applications, integrated with ancillary applications, such as Lab and Pharmacy Management. The current Contract #DASPS-1638-17 is set to expire on June 30, 2026. OSH has worked with Netsmart over the last fifteen years developing a custom Avatar HMS/EHR system. This decade and a half collaboration between OSH and Netsmart has provided specific, hands- on, knowledge of how the Avatar HMS/EHR system and the ancillary applications that are used by OSH. OSH requested additional funding in three (3) different Policy Packages (“POP”) in FY21-23, FY23-25, and FY25-27. Policy Package FY25-27 was approved by legislation because of an audit finding by the Joint Commission and to ensure compliance with Oregon Administrative Rules (“OAR”) 333-505-0050, related to Medical Records and components of Oregon Revised Statutes (“ORS”) 441 and 442. This Special Procurement request contains enhancements that promote the safety and wellbeing of patients, ensure data integrity of patient health records, efficient management of hospital staffing and scheduling and identification and analysis of risk factors affecting patients and staff. This request will replace an outdated version of OSH’s EHR that is no longer supported. May 2016 - March 2018 – On or about May 5, 2016, the State issued Special Procurement SP-841-16 (“original SP-841-16”) authorizing the State to enter into a co ntract with Netsmart to continue the maintenance and support services for the Hospital Management System HMS / Electronic Health Record EHR System; the original SP-841-16 had an estimated NTE of $15,000,000. On or about October 31, 2017, the State issued an amendment to the original SP-841-16, Amendment No. 1 to SP-841-16, with no change to the NTE of $15,000,000. The State entered into Contract No. DASPS-1638-17 with Netsmart resulting from Original and Amended SP-841-16 to continue Maintenance and Support Services for th e Hospital Management System HMS / Electronic Health Record EHR System through Contract expiration of June 30, 2026. The Maintenance and Support Contract with Netsmart includes, but is not limited to, services for the following Avatar HMS/EHR system components:  Oregon Bundled  RxConnect  Identity Manager  Avatar Practice Management Billing  Food Nutrition Services  Client Funds Management System  Signature  Diagnosis Content Subscription REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 3 of 9 February 2021 – Amendment #1 to the Contract was executed to update both the Contractor and Agency administrator and contact information. October 2021 – Amendment #2 restated the Contract, adding $5,000,004.51 dollars to the NTE, exceeding the approved NTE of $15,000,000 in the Original and Amended SP-841-16. April 2023 – Amendment #3 to the restated Contract added Exhibit K, Carequality Connection terms to the Contract and established an Order of Precedence for those terms. March 2025 – Amendment #4 to the restated Contract was executed, adding the Orchard Point of Care Module, increasing the NTE by $375,413.85, updating Exhibit C Payment Table, and updated policies required for agency contacts; again exceeding the approved NTE of $15,000,000 in the original SP-841- 16 July 2025 - OHA submitted a 2025-2027 Policy Package OHA 9, titled EHR and Information Technology (AVATAR). This request was related to the following legislation requirements; OAR 333-505-0050, related to Medical Records; Sections of ORS 442 related to required records and reporting functionality; Sections of ORS 441 related to staffing requirements and reporting for hospitals. Components within this POP are essential to delivering clinical care and meeting Centers for Medicare and Medicaid Services (“CMS”) requirements at the OSH. This POP was approved by legislation for $3,100,000. For additional historical and background information see SP Attachment 1: Original SP #841-16, and SP Attachment 2: SP-841-16, Amendment #1. c. Current Need: Oregon State Hospital is a secure, psychiatric inpatient facility responsible for delivering complex, high- acuity mental health care to some of Oregon’s most vulnerable citizens. Continuity, safety, and compliance in patient care are inseparable from the stability of the electronic health record, interoperability systems, and point-of-care modules maintained under the existing Netsmart Contract. These systems support critical functions such as admissions, discharges, transfers, clinical documentation, medication management, laboratory integration, and regulatory reporting. The Inovalon Direct Data Entry Verification services, which connects in real time to Fiscal Intermediary Shared System (FISS), is a national system used by Medicare Administrative Contractors (“MACs”) to manage, process, adjudicate, and pay claims for Medicare Part A beneficiaries, covering services in hospitals, home health, and hospice. Terminating or disrupting this Contract would introduce unacceptable risk to patient safety, regulatory compliance, and hospital operations, including meeting The Joint Commission standards for point-of-care testing and HIPAA data security obligations. Extending the Contract ensures that OSH maintains uninterrupted access to secure, hosted clinical platforms and vendor support services that are foundational to its daily operations. Netsmart provides tested, SOC-2 certified hosting environments, annual disaster recovery testing, and contractual service level agreements that safeguard system availability and data integrity. These protections cannot be REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 4 of 9 easily or quickly replicated by another vendor without extensive planning, implementation costs, and clinical risk. A multi-year extension provides the hospital with predictable financial planning, minimizes operational disruption, and supports its statutory mandate to provide safe, effective psychiatric care while meeting state and federal compliance requirements. The breakdown of the service costs incurred over the life of the Contract, along with the projected costs for the next five (5) years are listed in the cost table below. Amendments #1 and #3 were for administrative changes only and had no dollar value. Cost Table 10.c. Item Total Contract NTE Increase from Original Increase from Prior Amendment Original Contract NTE $14,223,271.00 — — Amendment 2 $20,000, 004.51 $5,776,733.51 — Amendment 4 $20,375,418.36 1 $6,152,147.3 6 $375,413.85 Amendment 5 (Proposed) $41,990,402.22 $27,767,131.22 $21,614,983.86 d. Proposed Contracting Procedure: 1. As required by OAR 125-247-0287, DAS SPS will issue a public notice (the “Notice”) on OregonBuys® regarding approval of SP AMD-2 request for a period of seven (7) calendar days. 2. The Notice will include provisions that any Affected Person(s) may protest the approval of SP AMD-2. 3. DAS SPS will respond to and resolve all protests, if any. 4. If no protests to this approved SP AMD-2 are received and sustained, DAS SPS, on behalf of OSH, will proceed with the Contract Amendment as set out in Section 10.a above. 5. DAS SPS and OSH will work with DAS Enterprise Information Services (“EIS”) and obtain its endorsement prior to extending the Contract Amendment, as required. 6. Pursuant to OAR 137-045-0015, DAS SPS will work with Oregon Department of Justice (“DOJ”) and obtain its legal sufficiency approval prior to executing the Contract Amendment, as required. 7. Any additional amendments to the Contract outside of the approved Original SP and SP AMD-1 – whether for additional time, services, or related costs – must first be requested and approved by DAS through an amendment to the SP. 11. 1 A clerical error resulted in a $1.00 discrepancy in the previously reported NTE amount; the figure shown here reflects the correct value. REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 5 of 9 12. Justification for use of Special Procurement: Describe the circumstances that justify the use of Special Procurement. Attach relevant documentation. After the Original SP and SP AMD-1 (SP Attachment 1 and SP Attachment 2) were approved and noticed, the Contract and subsequent amendment(s) became authorized within the provisions of the SP. 1. OSH requested additional funding in three (3) different Policy Packages in FY21-23, FY23-25, and FY25-27. Policy Package FY 25-27 was the only one approved by legislation because of an audit finding by the Joint Commission and to ensure compliance with OAR 333-505-0050, related to Medical Records and components of ORS 442 and ORS 441. 2. OSH needs to implement the NX enhancements for safety and wellbeing of OSH patients, ensuring data integrity of patient health records, efficient management of hospital staffing and scheduling and identification and analysis of risk factors affecting patients and staff. 3. This request will replace an outdated version of OSH’s EHR that is no longer supported. 4. Netsmart is the only entity which provides software updates to the Avatar HMS/EHR system, which OSH relies upon to correct defects, enhance functionality, address new legal/regulatory requirements, and adapt to evolving "best practices" in the mental health field. 5. Netsmart provides prompt assistance in addressing any downtime affecting the Avatar HMS/EHR system. Such assistance requires a level of expertise with the Avatar HMS/EHR system. Due to complex custom modifications, Netsmart is the only Vendor who can legally modify or fix the system. 6. OSH has worked with Netsmart over the last sixteen years developing a custom Avatar HMS/EHR system. This has provided Netsmart knowledge of how Avatar HMS/EHR system and the ancillary applications are used by OSH, which any other vendor could match only by spending hundreds of hours interviewing OSH clinical and technical staff. 7. OSH needs to be able to rely on the Maintenance and Support Services from Netsmart to provide expertise in how to best arrange enhancements and additional clinical- technology interfaces to the custom Avatar HMS/EHR system. The same justification and findings of fact provided in the Original SP and SP AMD-1 (SP Attachment 1 & SP Attachment 2) still apply. 13. Findings to Satisfy the Required Standards: This proposed special procurement: X (a) will be unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts because: 1. The BHIP Services were procured by a fo rmal competitive process under Request For Proposals (“RFP”) #DHS-2903-09. 2. Terminating or disrupting this Contract woul d bring unacceptable risk to patient safety, REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 6 of 9 regulatory compliance, and ho spital operations, including meeting The Joint Commission standards for point-of-care testing and HIPAA data security obligations. 3. Netsmart Technologies Inc. has intellectual property ownership and expertise of the Avatar HMS/EHR system. and (b)(i) will result in substantial cost savings to the contracting agency or to the public because: or _X (b)(ii) will otherwise substantially promote public interest in a manner that could not practicably be realized by complying with the requirements of ORS 279B.055, 279B.060, 279B.065, or 279B.070, or any rules adopted thereunder because: 1. Extending Contract #DASPS-1638-17 allows for uninterrupted Maintenance and Support Services, therefore, reducing risk to patient and staff safety. 2. The Avatar HMS/EHR system will remain fully functional, maintaining efficiencies in the quality of care, reducing any delays patients receiving treatment. The same justification and findings of fact provided in the Original SP and SP AMD-1 (SP Attachment 1 & SP Attachment 2) still apply. 14. Signature: The actual signature of the Agency Head or designee (e.g., Designated Procurement Officer) is not required on the Request submitted through OregonBuys®. Agency may elect to attach a signed Request as a pdf file through OregonBuys® or submit a signed hard copy Request. Signature: e.g. Electronically in OregonBuys® Name/Title: Date REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 7 of 9 PART B. STATUTORY AND RULE AUTHORITY: ORS 279B.085(2) states the Director of the Department of Administrative Services may approve a special procurement if the Director finds that a written request submitted under ORS 279B.085(4) demonstrates that the use of a special procurement as described in the request, or an alternative procedure prescribed by the Director will: (a) Be unlikely to encourage favoritism in the awarding of public contracts or to substantially diminish competition for public contracts; and (b)(A) Result in substantial cost savings to the contracting agency or to the public; or (B) Otherwise substantially promote the public interest in a manner that could not practicably be realized by complying with requirements that are applicable under ORS 279B.055, 279B.060, 279B.065 or 279B.070 or under any rules adopted thereunder. OAR 125-246-0170 delegates the authority of the Director of the Department of Administrative Services to approve special procurements to the State Chief Procurement Officer. OAR 125-247-0285 through 125- 247-0288 implement ORS 279B.085. OAR 125-247-0700(2) Protests and Judicial Review of Special Procurements designates the State Chief Procurement Officer as the Contract Review Authority. FINDINGS: The findings are accepted, adopted, and incorporated by reference herein. CONDITIONS OF APPROVAL: 1. Notice Period. The Authorized Agency shall post the Public Notice on OregonBuys®. The Special Procurement may not be used until after the completion of the seven (7) day notice period required pursuant to OAR 125-247-0287(4), and either: a. No Written protests are received by the Contract Review Authority, State Chief Procurement Officer, from an Affected Person in response to the notice, or b. If any protest is received during the notice period, then not until: i. the State Chief Procurement Officer or delegate issues a written disposition of the protest in accordance with ORS 279B.400 and OAR 125-247-0700 and OAR 137-047-0700, and ii. confirms in writing the first possible date of use of the Special Procurement. 2. ORS 279A.165 Requirements. Authorized Agency shall comply with the requirements of ORS 279A.165 and OAR 125-247-0287(12) regarding a report about this Special Procurement. Agency shall use a form and follow the instructions provided by the State Chief Procurement Officer or delegate. 3. Authorized Agency shall comply with all Enterprise Information Services (EIS) conditions and requirements prior to Contract Amendment execution, as required. APPROVED: Kathryn Jones, State Chief Procurement Officer Date: Department of Administrative Services, State Procurement Services 2/27/26 REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 8 of 9 SP ATTACHMENT 1 Original SP-841-16 SP-841-16_0 exe Orig SP 20160505 for REQ-DASOBO-00139522_AMD-2_(841-16)_AvatarEHR_OSH Page 9 of 9 SP ATTACHMENT 2 SP-841-16, Amendment #1 SP-841-16_1 exe SPAmd-1 10312017.p