In the Matter of: Scope Infotech, Inc.
Agency: Department of Health and Human Services, Centers for Medicare and Medicaid Services
Disposition:Protest Sustained in Part, Denied in Part
Decided:March 22, 2018
Published: March 27, 2018
General Counsel P.C. Highlight: When purchasing items off the Federal Supply Schedule (FSS), items included in the task order may not include open market items, where those items can be found on the FSS.
Agencies are free to apply any reasonable standard when evaluating cost realism, so long as it is consistent with the terms of the solicitation.
Summary of Facts
The Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) issued a request for quotations (RFQ) for operations and maintenance of the data services hub system supporting the healthcare exchanges. This RFQ was initially issued on January 20, 2017, as a General Services Administration (GSA) Federal Supply Schedule (FSS) task order to small business vendors holding GSA schedule 70 contracts (commercial information technology equipment, software, and services). The solicitation sought information technology operations, maintenance, and support services to maintain the hub, and allow the public to shop for health insurance in the private health insurance markets. The RFQ anticipated a 1 year base period and four 1 year option periods for a fixed price and time and materials task order. The RFQ advised offerors that the compensation plan would be evaluated to ensure sound management and an understanding of the contract requirements, as well as its impact on recruiting, retention, realism, and consistency with the total compensation plan.
The agency received six quotations in response. In April, the agency reached out to Scope Infotech, Inc. (Scope) and Sparksoft Corporation (Sparksoft), asking whether they could provide any of the non FSS (open market) software licenses on their GSA schedules, or on the GSA schedules of one of their teaming partners. Specifically, both Sparksoft and Scope had listed RedHat JBoss software licenses as open market items. Scope responded teaming partner Carasoft listed RedHat JBoss software licenses on their GSA schedule, however, not at the discount listed as an open market item, which would result in a higher cost.
On April 28, 2017, the agency opened discussions with Scope and Sparksoft, and eliminated the other four offerors from consideration. In discussions, both Scope and Sparksoft were asked questions about the software listed and were requested to “provide a quote with no open market ‘other direct costs’” in the form of software licenses. Upon additional discussion and review, the agency decided Sparksoft provided the best value to the government and awarded them the task order. After several protests and re-evaluations, Scope filed a protest on December 13, 2017. The Agency published a justification and approval allowing Sparksoft to add bundled JBoss software licenses as open market items to their FSS task order award, citing 41 U.S.C. 253 (c)(1), justifying the open market bundled JBoss software licenses because they were not available on the GSA schedule.
Basis for Protest
Scope protests two separate agency actions. First, they argue JBoss software licenses are available on the GSA schedule, and therefore the FSS task order was improper. Second, Scope takes issue with the manner in which the agency evaluated Sparksoft’s compensation plan.
The GAO sustained the protest on the issue of inclusion of open market software licenses, in light of the fact Scope’s quotation provided the same software licenses on a GSA schedule contract. The purpose of placing orders under the procedures established for the FSS program is to provide agencies with a simplified process for obtaining commonly used services and supplies. Because of the procedures established, full and open competition requirements are satisfied. Non-FSS products or services cannot be purchased using FSS procedures. Rather, those items must be obtained using competitive procedures for non-FSS products and services.
The JBoss software licenses were offered on Carasoft’s GSA schedule contract, a teaming partner of Scope. As such, the inclusion of the software as open market items not available on the Federal Supply Schedule is unreasonable. Protest sustained on this ground.
Scope also challenged the agency’s price realism evaluation of Sparksoft. Scope argued the agency should have applied different criteria for evaluating price realism. The protest is denied on this ground. Where the RFQ does not specifically detail how they will evaluate price realism, agencies are free to apply whatever evaluation method they choose, so long as it is reasonable and consistent with the terms of the solicitation.
Protest Sustained on the Above Stated Ground