Link: GAO Opinion
Agency: Centers for Medicare and Medicaid Services
Disposition: Protest denied.
Keywords: Final Evaluation
General Counsel P.C. Highlight: Where a protest challenges an agency’s evaluation, it will review the evaluation record to determine whether the agency’s judgments were reasonably and consistent with the stated evaluation criteria and applicable procurement statutes and regulations
TrailBlazer Health Enterprises, LLC (TrailBlazer) protests the award of a contract under a request for proposals (RFP) issued by the Department of Health and Human Service (HHS), Centers for Medicare and Medicaid Services (CMS), for administration services under Section 1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which requires CMS to pay hospitals and other healthcare providers for costs associated with furnishing emergency healthcare services to undocumented or other specified aliens.
The RFP was for the award of a cost-plus-fixed-fee contract, with a one-year base period, and four one-year options, for services as the administrative contractor for the Section 1011 program. The contractor was required to enroll healthcare provider applicants and process subsequent claim submissions. Award was to be made to the offeror whose proposal represented the best value based on experience, past performance, technical approach, and cost. The RFP also provided “estimated workload assumptions” and specified that offerors “shall use the workload assumptions provided” in preparing their proposals.
CMS received four proposals, held discussions, obtained revised proposals, conducted final evaluations, and made an award decision. During discussions, CMS questioned the awardee’s low staffing for claims processing, to which the awardee responded that the number was sufficient to perform the workload at the assumed 25% suspense rate set forth in the RFP. After reviewing the awardee’s responses, CMS concluded that the staffing levels were sufficient to support the agency’s requirements. The awardee’s proposal was significantly lower in cost than TrailBlazer’s and although TrailBlazer maintained a slight advantage with respect to the non-cost factors, CMS found that this advantage did not justify selection of TrailBlazer. TrailBlazer asserts that the evaluation of the awardee’s proposal was inconsistent with the terms of the RFP and therefore improper.
GAO states that where a protest challenges an agency’s evaluation, it will review the evaluation record to determine whether the agency’s judgments were reasonably and consistent with the stated evaluation criteria and applicable procurement statutes and regulations. Also, when an agency evaluates a proposal for the award of a cost-reimbursement contract, the agency must perform a cost realism analysis to determine the extent to which an offeror’s proposed costs are realistic for the work to be performed. An agency’s evaluation in this area is reviewed only to see that the agency’s cost realism evaluation was reasonably based and not arbitrary.
The RFP provided that CMS would evaluate the extent to which offerors proposed “innovations” and “efficiencies” with respect to the various requirements to include claims processing. Additionally, FAR §15.404-1(d)(1), a cost realism analysis, which CMS was required to perform, provides for independently reviewing whether specific cost elements proposed by an offeror are realistic for the work to be performed considering the unique methods of performance described in the offeror’s proposal. Having identified the awardee’s explanation as to why it would reduce staffing as an innovative and viable technical approach, it was appropriate for CMS to consider the impact of this approach on the awardee’s staffing levels and thereby its overall cost to the government. Also, since the Section 1011 program is essentially a replicate of the Medicare Part A and B processing system, CMS reasonably had little doubt that similar staffing reductions could be achieved. GAO concludes that the agency’s consideration of the awardee’s staffing was reasonable and proper. The protest is denied.