Link: GAO Decision
Protestor: Cognosante, LLC
Agency: Department of Health and Human Services
Disposition: Protest Denied.
Protest against exclusion of protester from the competition is denied where contracting officer reasonably determined that protester’s dual role as both a state and federal audit contractor with respect to the Medicaid program would pose an impaired objectivity organizational conflict of interest that would not be adequately mitigated by protester’s proposed firewall
General Counsel PC Highlight:
Cognosante, LLC protested the issuance of a task order to Health Integrity, LLC for auditing services supporting the integrity of the Medicaid program. Cognosante held one of five ID/IQ contracts with Centers for Medicare and Medicaid Services (CMS) to provide Medicaid Integrity Contractors (Audit MICs), with payment based on cost-plus-award-fee basis. Cognosante submitted a proposal to the State of North Daokta to provide recovery audit contractors (RACs) within the state at the same time it submitted a proposal to CMS to provide Audit MICs for Regions which included North Dakota. Shortly after being awarded the RAC contract by North Dakota, which paid on the basis of a contingency fee based on the amount of overpayments identified for recoupment, Cognosante was notified that CMS intended to issue Cognosante an Audit MIC task order. Cognosante submitted a mitigation plan to CMS addressing a perceived OCI regarding the recently awarded North Dakota RAC contract, but maintained that there was no actual conflict and the mitigation plan was merely a precaution. The agency found the mitigation plan insufficient and requested a new one; when Cognosante declined to provide a new one on the grounds that the first was sufficient, the agency excluded Cognosante from the competition.
The GAO found that the agency had made a reasonable determination that award of the Audit MIC task order, in light of the North Dakota RAC contract, created a potential OCI. The GAO also found that the agency had reasonably evaluated the potential OCI and concluded that it could not be adequately mitigated. The GAO noted the agency’s concerns that the differing payment structures between the two contracts could provide a financial incentive for the contractor to conduct audits under the state RAC contract rather than the CMS contract. The GAO agreed with the agency’s conclusion that Cognosante’s proposed firewall would not properly address any potential OCI involving impaired objectivity, because the conflict at issue pertains to the organization, not the individual employees.
Contractors must always remain aware of OCI concerns. Certain types of OCIs can be prevented or mitigated by maintaining a clear OCI policy, as well as ensuring that all employees are familiar with the company’s policy and know how to react when faced with a situation that could raise an OCI flag. However, where there are concerns of impaired objectivity, OCI mitigation plans that involve placing a firewall between particular employees or subsidiaries could be insufficient to protect the overall organization.