Link: GAO Opinion
Agency: Department of Health and Human Services
Disposition: Protests denied.
Keywords: Clarifications; Discussions; Organizational Conflicts of Interest (OCI)
General Counsel P.C. Highlight: Clarifications are “limited exchanges” between an agency and an offeror for the purpose of eliminating minor uncertainties or irregularities in a proposal, and do not give an offeror the opportunity to revise or modify its proposal. Discussions, on the other hand, occur when an agency communicates with an offeror for the purpose of obtaining information essential to determine the acceptability of a proposal, or provides the offeror with an opportunity to revise or modify its proposal in some material respect.
Highmark Medicare Services, Inc. (Highmark), Cahaba Government Benefit Administrators, LLC (Cahaba), and National Government Services, Inc., (NGS) protest the award of a contract to CIGNA Government Services, LLC (CIGNA) under a request for proposals (RFP), issued by the Center for Medicare and Medicaid Services (CMS), Department of Health and Human Services (HHS), to obtain a Medicare Administrative Contractor (MAC) to provide certain health insurance benefit administrative services.
This protest follows the protest discussed above (see CIGNA Government Services, LLC , File: B-401062.2; B-401062.3 (May 6, 2009)). GAO issued a decision sustaining CIGNA’s protest, finding that the agency had failed to conduct meaningful discussions with CIGNA regarding its proposed costs for printing and postage services and had improperly considered one of Highmark’s (the original awardee of the contract) proposed subcontractor’s past performance in its evaluation of Highmark’s proposal under the solicitation’s past performance factor, and that the source selection authority (SSA) had otherwise acted unreasonably in selecting Highmark’s proposal for award. 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.
The agency notified CIGNA, Highmark, Cahaba, and NGS that the agency was reopening discussions on a limited basis pertaining only to the proposed costs for the printing and postage services, and that proposal revisions in response to discussions would be limited to proposed printing and postage costs. CIGNA filed a second protest with GAO, challenging the adequacy of the agency’s proposed corrective action. The agency responded by informing GAO and the protester that the agency was “still evaluating the full range of corrective actions required by the decision” issued by GAO sustaining the protest, and that “the scope of discussions has not yet been definitively established.” In light of the agency’s representation that it was still considering the corrective action to be taken, including the appropriate scope of discussions, GAO dismissed the protest as premature.
The agency subsequently determined that it would conduct discussions addressing “all open weaknesses, and significant weaknesses,” as identified during the previous evaluation, and allow CIGNA, Highmark, Cahaba, and NGS to submit revised proposals. The contracting officer, who also served as the SSA here, ultimately “concluded that the J15 offerors are essentially technically equal” and that as such, “the most probable cost and fee becomes the deciding factor in determining who offers the best value.” The contracting officer determined that CIGNA’s proposal, with an evaluated cost that was more than $14 million lower than that of the next lowest cost proposal, appeared to be in line for award. The agency, after engaging in a lengthy examination of whether an award to CIGNA would pose an organizational conflict of interest (OCI), ultimately selected CIGNA’s proposal for award. The agency awarded a contract to CIGNA for the J15 MAC services, and after requesting and receiving debriefings, HMS, Cahaba, and NGS filed these protests.
The protesters first argue that certain exchanges between the agency and CIGNA that were related to CIGNA’s staffing plan, which was evaluated under the staffing plan subfactor of the personnel evaluation factor, constituted discussions, thereby requiring discussions with Highmark, Cahaba, and NGS.
The solicitation included detailed proposal preparation instructions, and, as relevant here, stated that each offeror “shall submit a staffing plan that presents its methodologies for providing qualified personnel in sufficient numbers for each CLIN [contract line item number] of the contract and for ensuring its proposed team, including subcontractors, has the skills to meet the requirements stated in the SOW.”
CIGNA responded in a timely manner. However, given the period of time that had elapsed from the submission of CIGNA’s response, CIGNA was asked for “clarification to confirm information provided by CIGNA” in its August 2009 RFPR “regarding CIGNA’s proposed staffing plan.” This letter noted that it was for purposes of “clarification only, and should not be viewed as discussions, or an opportunity to revise or modify [CIGNA’s] proposal.” The letter further stated that CIGNA’s “response should merely confirm ‘yes, the above statement is still accurate’ or ‘no, the statement is no longer accurate'” and that “[n]o additional explanations, rationale, or narrative should be provided with [CIGNA’s] response.” CIGNA responded “Yes, the above statement is still accurate.”
FAR sect. 15.306 describes a range of exchanges that may take place between an agency and an offeror during negotiated procurements. Clarifications are “limited exchanges” between an agency and an offeror for the purpose of eliminating minor uncertainties or irregularities in a proposal, and do not give an offeror the opportunity to revise or modify its proposal. Discussions, on the other hand, occur when an agency communicates with an offeror for the purpose of obtaining information essential to determine the acceptability of a proposal, or provides the offeror with an opportunity to revise or modify its proposal in some material respect. When an agency conducts discussions with one offeror, it must conduct discussions with all other offerors whose proposals are in the competitive range. It is the actions of the parties that determine whether discussions have been held and not the characterization of the communications by the agency. In situations where there is a dispute regarding whether communications between an agency and an offeror constituted discussions, the acid test is whether an offeror has been afforded an opportunity to revise or modify its proposal. Communications that do not permit an offeror to revise or modify its proposal, but rather request that the offeror confirm what the offeror has already committed to do in its proposal, are clarifications and not discussions.
Here, the agency requested that CIGNA confirm that a statement made in its RFPR remained accurate, and nothing more. The agency’s communication with CIGNA specifically requested that CIGNA provide a “yes” or “no” answer, which CIGNA did. That is, the agency’s communication did not permit a revision or modification by CIGNA of its RFPR, nor did CIGNA respond with anything other than a confirmation of its RFPR. GAO is unaware of any authority for the proposition that a confirmation of a proposal, absent more, constitutes discussions. The fact that the response mitigated a possible risk in implementing the contract that CIGNA had identified in its proposal did not make this exchange discussions, given that during the exchange CIGNA provided what was in essence a one word response that only confirmed, and did not modify or amend, its FRPR.
GAO reviewed all of the protesters’ numerous general and specific arguments regarding the propriety of the agency’s evaluation of the protesters’ and awardee’s proposals under the non?cost evaluation factors. GAO did not find the agency’s evaluation of proposals under the non?cost factors to be unreasonable or inconsistent with the solicitation’s evaluation scheme.
Among many other allegations, the protesters argue that the contracting officer’s conclusion in the source selection decision that the RFPRs of CIGNA, Highmark, Cahaba, and NGS were “essentially technically equal” was unreasonable.
Section 15.308 of the FAR requires, in the context of a negotiated procurement, that a source selection decision be based on a comparative assessment of proposals against all of the solicitation’s source selection criteria. The FAR further requires that while the SSA “may use reports and analyses prepared by others, the source selection decision shall represent the SSA’s independent judgment.” Source selection decisions must be documented, and include the rationale and any business judgments and tradeoffs made or relied upon by the SSA. In determining which proposal represents the best value to the agency, an agency may reasonably determine that the benefit of specific features set forth in a proposal are not worth any additional cost associated with the proposal, as long as that determination remains consistent with the solicitation’s evaluation and source selection criteria. In reviewing an agency’s source selection decision, GAO examines the supporting record to determine whether the decision was reasonable, consistent with the stated evaluation criteria, and adequately documented.
The 31-page source selection decision, prepared by the contracting officer in his role as the SSA, begins by describing, the various evaluated strengths and weaknesses of each offerors’ RFPR under each of the evaluation factors and subfactors. The source selection decision continues by explaining the basis for the contracting officer’s agreement with the TEPC’s conclusion that the offerors’ RFPRs “are essentially technically equal” in that “no proposal contains a meaningful advantage that was not otherwise balanced by, encompassed in, or provided for in the other offerors’ proposal[s].” The contracting officer’s source selection decision notes in this regard that while “each proposal may be superior to the others in one or more areas, and that the proposals offer different advantages, overall there is essentially no meaningful difference in what they have to offer.” The contracting officer also testified at length during a hearing before GAO about the process by which he concluded that these proposals–with their disparate evaluated strengths and weaknesses–were essentially technically equal.
Based upon GAO’s review of the record, including the testimony of the contracting officer, GAO finds reasonable the contracting officer’s ultimate conclusion that the RFPRs of CIGNA, Highmark, Cahaba, and NGS were essentially technically equal, and the protesters’ views to the contrary to reflect nothing more than their disagreement with the contracting officer’s judgment.
Highmark lastly argues that the award to CIGNA “created an impaired objectivity” OCI that the contracting officer “never attempted to address or mitigate.” The responsibility for determining whether a conflict exists rests with the procuring agency. In making this determination, the FAR expressly directs contracting officers to examine the particular facts associated with each situation, paying consideration to the nature of the contracts involved, and further directs contracting officers to obtain the advice of counsel and appropriate technical specialists before exercising their own sound discretion in determining whether an OCI exists. In reviewing bid protests that challenge an agency’s conflicts determinations, the Court of Appeals for the Federal Circuit has mandated application of the “arbitrary and capricious” standard established pursuant to the Administrative Procedures Act.See Axiom Res. Mgmt, Inc. v. United States, 564 F.3d 1374, 1381 (Fed. Cir. 2009). In Axiom, the Court of Appeals noted that “the FAR recognizes that the identification of OCIs, and the evaluation of mitigation proposals are fact-specific inquiries that require the exercise of considerable discretion.” The standard of review employed by GAO in reviewing a contracting officer’s OCI determination mirrors the standard required by Axiom. In this regard, where an agency has given meaningful consideration to whether an OCI exists, GAO will not substitute our judgment for the agency’s, absent clear evidence that the agency’s conclusion is unreasonable.
The record reflects that the contracting officer (prior to his receipt of the TEPC report or his preparing of his source selection statement) conducted and documented an OCI analysis on each offeror. The scope of the OCI analysis included “the performance or participation by offerors, offerors’ ownership, offerors’ affiliates or offerors’ successors in interest as a prime contractor, subcontractor, co-sponsor, joint venture, consultant, contractor team arrangement member, or in any similar capacity.” The contracting officer concluded as a result of this analysis that no OCIs existed that “were either significant or would preclude the award of the J15 contract to any of the offerors.”
The record further reflects that once the contracting officer identified CIGNA as the apparent awardee, he “conducted a further analysis of CIGNA, and its successful subcontractor, to ensure that there were not OCI considerations that needed to be resolved prior to award.” As indicated, the record reflects that the agency performed a comprehensive OCI analysis. The contracting officer, as well as the agency’s MAC Program Management staff, OAGM Compliance Office, and Office of General Counsel, all participated in the OCI analysis, and clearly gave “meaningful consideration to whether an OCI exists” with regard to CIGNA’s performance of the J15 MAC contract. Based on GAO’s review of the record, GAO concluded that the contracting officer’s OCI analysis was reasonable. The protests are denied.