Link: GAO Opinion
Agency: Department of Health and Human Services
Disposition: Protest sustained.
General Counsel P.C. Highlight: Where an agency undertakes discussions with offerors, the contracting officer shall discuss with each firm being considered for award deficiencies and significant weaknesses identified in the firm’s proposal. Discussions must be meaningful, equitable, and not misleading.
CIGNA Government Services, LLC protests the award of a contract under request for proposals (RFP), issued by the Department of Health and Human Services (HHS), to obtain a Medicare Administrative Contractor (MAC) to provide certain health insurance benefit administrative services.
The RFP provided for the award of four cost-plus-award-fee contracts, each with a base period of one year with four one-year options, for four geographic areas, or “jurisdictions,” in the United States for MAC services. This protest concerns the award of a contract for Jurisdiction 15, which includes the administration of Medicare Part A and Part B services for Kentucky and Ohio, as well as the administration of Home, Health and Hospice (HH&H) services for several other states.
The solicitation stated that the agency would award a contract for each jurisdiction to the offeror submitting the proposal determined to provide the best value to the government, considering the evaluation factors of technical understanding, personnel implementation, past performance, and information security plan. The solicitation further advised that “[o]fferors who propose on more than one jurisdiction will be evaluated independently on each jurisdiction,” and that “[i]f, after the evaluation of each jurisdiction under this solicitation an offeror is the potential winner of more than one jurisdiction, [the agency] will assess the associated risks with awarding one offeror multiple jurisdictions.”
The agency received proposals from five offerors for Jurisdiction 15 and four proposals, including CIGNA’s, were included in the competitive range. Three rounds of discussions were conducted, and final proposal revisions (FPR) were requested and received.
CIGNA first argues that the agency failed to conduct meaningful discussions with it regarding its proposed costs. In this regard, the record reflects that the agency upwardly adjusted CIGNA’s proposed costs, as set forth in CIGNA’s FPR, based primarily on the agency’s “analysis of the FPR output mail and postage [that] revealed that [CIGNA] significantly understated these costs when compared with the costs proposed by the other [Jurisdiction 15] offerors,” and determination that CIGNA’s costs here were thus “unrealistically low.”
The Federal Acquisition Regulation (FAR) requires that where an agency undertakes discussions with offerors, the contracting officer shall discuss with each firm being considered for award deficiencies and significant weaknesses identified in the firm’s proposal. Discussions must be meaningful, equitable, and not misleading. Discussions cannot be meaningful unless they lead an offeror into those weaknesses, excesses or deficiencies in its proposal that must be addressed in order for the proposal to have a reasonable chance of being selected for contract award.
GAO states that it disagrees with the agency’s contention that its concerns with CIGNA’s proposed printing and postage costs, and the resultant upward adjustment to CIGNA’s proposed costs, were “minor” or otherwise concerned matters that did not have to be raised with CIGNA in order for discussions to be meaningful. GAO does not believe that the agency has adequately explained why an upward adjustment to CIGNA’s proposed costs of a certain percent can reasonably be characterized as “minor” or otherwise inconsequential under the circumstances here. Additionally, GAO notes that the agency has not pointed to anything in the contemporaneous record of the evaluation and source selection stating or otherwise providing that the failure to raise this issue with CIGNA during discussions was due to the agency’s view that the cost adjustment was “minor.” As such, GAO gives little weight to the agency’s assertions crafted in the heat of litigation that the agency’s upward cost adjustment to CIGNA’s proposal would have been and should be considered “minor,” and thus was not required to be raised during discussions.
Although the agency correctly points out that an agency has no duty to reopen discussions to allow an offeror to address proposal defects or significant weaknesses first introduced in the offeror’s response to discussions or in a post-discussion proposal revision, such was not the case here. That is, the agency does not claim, and there is nothing in the record to indicate, that the discrepancy between CIGNA’s proposed printing and postage costs and the other offerors’ proposed printing and postage costs was different in any material way between the offerors’ initial proposals and FPRs. The fact that the agency did not realize until after discussions had concluded and the agency had received FPRs that CIGNA’s proposed printing and mailing costs were substantially lower than the costs proposed for these same services by the other offerors, and thus, in the agency’s view, were understated, does not relieve the agency of its obligation to conduct meaningful discussions. Where, as here, the GAO states, an agency, after discussions are completed, identifies a concern pertaining to the proposal as it was prior to discussions that would have had to be raised if it had been identified before discussions were held, the agency is required to reopen discussions in order to raise its concern with the relevant offeror.
CIGNA also argues that the agency’s evaluation of the awardee’s proposal as “very good” with “low risk” under the past performance factor was unreasonable. Specifically, CIGNA points out that the contracting officer, in his award recommendation, specifically mentioned as “strengths” various aspects of one of the subcontractor’s past performance in support of the awardee’s “very good” with “low risk” ratings under the quality of service, cost control, and business relations subfactors to the past performance factor.
GAO will examine an agency’s evaluation of an offeror’s past performance only to ensure that it was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations, since determining the relative merits of an offeror’s past performance is a matter within the contracting agency’s discretion.
Based upon a review of the record, GAO cannot find reasonable the agency’s determination that the awardee’s subcontractor is a “significant” or “critical” subcontractor based upon the subcontractor’s involvement in the proposed effort. The record of the evaluation provides only that the listed subcontractors, including the awardee’s, were “performing similar and major functions and/or a significant portion of the workload,” and fails to provide any analysis or explanation as to why the awardee’s proposed subcontractor was considered either significant or critical.
GAO recommended that the agency reopen discussions, request and review revised proposals, evaluate those submissions consistent with the terms of the solicitation, and make a new source selection. In the event a proposal other than the awardee’s is found to represent the best value to the government, the contract awarded to the awardee should be terminated and a contract should be awarded to the offeror whose proposal is determined to represent the best value in accordance with the terms of the RFP. The protest is sustained.