Link: GAO Opinion
Agency: Department of Defense
Disposition: Protest sustained.
Protest of award of contract for T-3 TRICARE managed health care support services for the South Region is sustained where evaluation did not adequately account for the network provider discounts associated with protester’s existing TRICARE network.
General Counsel P.C. Highlight:
Humana, the South Region incumbent contractor, asserts that TMA’s technical evaluation unreasonably failed to account for the advantages offered by its established TRICARE network of providers, particularly given its record of obtaining significant network provider discounts from members of its network.
The Technical Evaluation Team (TET) did not refer to any costs savings that would result from the overall average network provider discount available from Humana’s existing network providers. Nor did the TET Humana Consolidated Evaluation Report refer to any particular estimated level of savings in healthcare costs to the government that would result from Humana’s proposal. Likewise, the Source Selection Evaluation Board’s (SSEB) report did not refer to the possibility of cost savings to the government resulting from the availability of Humana’s discount for network providers. Although the SSEB did refer to “significant cost savings for the Government” as a result of the negotiated network discounts available for network providers, the SSEB made no reference to any particular estimated level of healthcare cost savings resulting from those discounts. Thus, the agency neither recognized nor took into account in the evaluation the potential healthcare cost savings from Humana’s proposal to provide discounts, and while it awarded a strength based in part on the fact that Humana’s proposal would result in healthcare savings from available network provider discounts, it did not meaningfully take into account in the technical evaluation the likely magnitude of those savings. GAO concludes that TMA’s evaluation did not adequately account for the network provider discounts associated with Humana’s existing TRICARE network.
TMA unreasonably failed to factor into the technical evaluation and subsequent best value analysis the extent of the likely significant healthcare cost savings to the government as a result of Humana’s proposal to exceed the requirements. Humana included a detailed calculation in its FPR indicating that the savings resulting from reduced healthcare costs could total approximately $[REDACTED] over the life of the contract. Although the SSEB referred to “significant cost savings for the Government” as a result of the negotiated network discounts available the SSEB made no reference to any particular estimated level of savings.
Competitive prejudice is an essential element of any viable protest, and GAO will sustain a protest only if there is a reasonable possibility that the protester was prejudiced by the agency’s action, that is, if it is apparent from the record that, but for the agency’s actions, the protester would have had a reasonable possibility of receiving award. Here, the technical evaluation and resulting best value analysis failed to acknowledge the significant potential cost benefit “’estimated by Humana as totaling approximately $[REDACTED] in healthcare cost savings over the potential life of the contract” ‘from Humana’s record of obtaining an average overall network provider discount for its TRICARE network. In addition, TMA failed to meaningfully factor into the technical evaluation and subsequent best value analysis the extent of the likely significant healthcare cost savings to the government ‘”estimated by Humana as totaling approximately $[REDACTED]”’as a result of Humana’s proposal. Thus, the potential healthcare cost savings likely to be available to the government from application of Humana’s network provider discounts from network providers were likely to be significant. Since Humana’s proposal already was considered to be essentially equal to the awardee’s under the most important technical approach and past performance evaluation factors, GAO concludes that there is a reasonable possibility that Humana would have been in line for award had TMA’s best value analysis reasonably accounted for the likely cost savings associated with Humana’s provider discounts. GAO sustains Humana’s protest on this ground.