Link: GAO Opinion
Agency: Centers for Medicare and Medicaid Services
Disposition: Protest sustained.
Keywords: Organizational conflict of interest; Mitigation strategy
General Counsel, P.C. Highlight: Organizational conflicts of interest issues are, like responsibility issues, matters that can be resolved after evaluation and an award selection. They can be matters for rational negotiation, but will not trigger the requirement to open discussions with all offerors. The agency’s acceptance of an organizational conflict mitigation plan must be reasoned and documented in the agency’s files.
In 2008, the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) issued a request for proposals (RFP) for the award of two separate indefinite-delivery/indefinite-quantity (ID/IQ) contracts in support of CMS’s audit, oversight, and anti-fraud, waste and abuse efforts. The RFP required offerors to include in their proposals a certificate identifying potential organizational conflicts of interest (OCI) and proposing a strategy to mitigate them. CMS received four proposals, including those of Cahaba Safeguard Administrators, LLC and AdvanceMed, the eventual awardee.
In its proposal, AdvanceMed acknowledged a potential conflict of interest relating to CMS contracts held by Computer Sciences Corporation (CSC), the ultimate parent company of AdvanceMed. The contracting officer determined that this relationship created an impaired objectivity OCI for Medicare Part D oversight since AdvanceMed could find itself evaluating work that is being performed by its parent company, CSC.
Despite discussions with CMS and the materials included in AdvanceMed’s proposal, AdvanceMed was not able to sufficiently demonstrate that it had overcome the identified organizational conflicts of interest. Despite this determination, AdvanceMed was not eliminated and continued in the competition. Following the agency’s technical and price evaluation factors, CMS determined that AdvanceMed represented the best value to the government, and was therefore first in line for award. But, rather than make award to AdvanceMed, the contracting officer informed them that CMS was unable to accept their proposal because the contracting officer found the mitigation strategies for the admitted conflicts of interest were unacceptable. CMS then provided AdvanceMed with an opportunity to respond to these concerns prior to making contract award to the next in line.
In response, AdvanceMed produced a letter from CSC in which it claimed that it would divest its ownership of AdvanceMed in the event that it was issued any task orders under the ID/IQ contract that created the admitted conflicts of interest and that it would subcontract out those functions that created a conflict of interest to other companies. CMS deemed this letter amending the proposed mitigation plan acceptable and subsequently awarded AdvanceMed the contract. Cahaba protested, alleging that CMS acted unreasonably in concluding that the amended mitigation strategy was acceptable.
In instances where the basis of a protest relates to a determination of conflicts of interest, GAO will not sustain a protest unless it can be shown that the determination was unreasonable or unsupported by the record. Here, GAO contrasted CMS’s review of the initial mitigation strategies to its review of the amended mitigation strategy (by virtue of the one-sentence letter from CSC), and determined that the latter was hasty and reflected a plan that lacked the necessary level of detail to reasonably assess whether AdvanceMed could actually mitigate the conflicts of interest. In addition, GAO found the attempt to mitigate the OCI with subcontractor participation to be unacceptable. First, the audit functions of the contract could require a retrospective review of work already performed, which could not be mitigated by future subcontracting. Also, the GAO noted that, under the terms of its prime contract, CSC would remain contractually obligated to perform the work that was creating the OCI and that subcontracting the work would not relieve CSC of that original obligation.
Based on CMS’s failure to reasonably consider or evaluate the organizational conflict of interest mitigation strategy presented by AdvanceMed, GAO sustained Cahaba’s protest and recommended that CMS reconsider its determination in light of the GAO’s statements.