Link: GAO Decision
Protestor: TriWest Healthcare Alliance Corporation
Agency: Office of TRICARE Management
Disposition: Protests Denied.
- Protest that agency misevaluated proposals and made an unreasonable source selection decision is denied where record shows that agency’s evaluation and source selection were reasonable and consistent with the terms of the solicitation and applicable procurement laws and regulations.
- Agency evaluators’ decision not to credit protester’s proposal with approximately $200 million in cost savings for the firm’s additional network discount guarantee related to active duty service member beneficiaries was reasonable where agency analyzed all of the information regarding the discount and concluded that the additional guarantee would not result in quantifiable cost savings above those already obtained by operation of law as a result of the offeror’s primary discount.
- Protest alleging that, in its evaluation of the protester’s proposal, the agency unreasonably ignored information that was “too close at hand” is denied where the protester fails to demonstrate that the information in question was relevant, or that the agency evaluators knew or should have known of the information.
- Protester’s assertions challenging the agency’s past performance evaluation reflect mere disagreement with the agency’s reasonable judgments where the record establishes that the agency comprehensively considered relevant past performance information for both offerors, recognized positive and negative aspects of both offerors’ past performance, and reasonably determined that the proposals were essentially equal.
- In making a best value source selection decision, an agency may properly rely on a single evaluation factor–even a lower-weighted factor–if it is determined to be a key discriminator.
- A patent ambiguity must be protested prior to the next closing time for the submission of proposals in order to be considered timely.
General Counsel PC Highlight:
TriWest Healthcare Alliance Corporation protested the Department of Defense TRICARE Management Authority’s (TMA) award to UnitedHealth Military & Veterans Services (United) of a contract to provide T-3 TRICARE managed health care support services (MCS) for the West Region of the United States. In 2008, TMA issued an RFP for the third generation of MCS contracts, referred to as T-3, with award to be made separately for the three regions: North, South, and West. In July 2009, TriWest was awarded the contract for the West Region; United filed an agency-level protest against the award. The agency held United’s protest in abeyance while protests in the South Region were pending, as United’s West Region protest would have become moot if United had prevailed in Humana Military Health Care Services, Inc.’s protest against United’s award in the South Region. However, Humana prevailed in the South Region protest, and United’s West Region agency-level protest was revived. The agency took corrective action by reopening the procurement and issuing RFP Amendment 0014, which permitted offerors to submit proposed guaranteed network provider discounts and to revise all other parts of their proposals, with the exception of past performance.
The RFP provided that a prime contractor could not receive award for more than one of the three contract regions. The agency was to select “the proposal representing the best value (which will include the risk associated with the proposal) to the Government,” considering three evaluation factors, in decreasing order of importance: technical approach, past performance, and price/cost. As part of their technical approach, offerors were to propose guaranteed network discounts applicable to the two underwritten populations of beneficiaries. Offerors were also permitted to propose additional discounts, but these would be considered only if the offeror committed to incorporating the guaranteed discounts into the awarded contract, and if the guarantee was otherwise determined to be a strength to the agency.
The amended RFP informed offerors that the agency intended to rely on its previous past performance evaluations unless it discovered information that would cause evaluators to question the initial 2009 evaluation. As part of the initial past performance submissions, offerors (as well as first tier subcontractors) were to submit their five largest relevant contracts performed during the past three years, providing descriptive narratives and completed past performance questionnaires for each. In considering the relevancy of this information, TMA would consider how closely related an offeror’s performance history was to the proposed functions and complexities under this solicitation, whether the work was recent, and the magnitude of the effort in terms of size.
For the price/cost evaluation factor, TMA would evaluate specified cost-reimbursement and fixed-price CLINs to calculate the total evaluated price for each offeror. The agency would evaluate certain CLINs for price and cost reasonableness and would perform price realism analyses. The RFP provided that cost realism analyses might be used on the fixed-price CLINs.
Based on the evaluators’ findings, the SSEB chair concluded that United’s proposal was significantly technically superior to TriWest’s, that past performance was essentially equal between the two proposals, and that United’s price was only 0.37% higher based on the total evaluated price. The SSEB chair also concluded that the technical superiority of United’s proposal outweighed the cost difference of approximately $75.6 million, and therefore recommended award to United. The SSA concurred with the findings of the various evaluation teams, noting that the two proposals offered different strengths of varying value, but that United’s overall approach was substantially superior to TriWest’s.
The GAO first denied TriWest’s multiple objections to the agency’s evaluation of the offerors’ network discounts. TriWest objected to the agency’s failure to consider the $200 million in savings associated with TriWest’s discount guarantee for active duty service members (ADSMs). However, the GAO found reasonable the agency’s conclusion that the ADSM discount would not provide any additional cost savings to the government beyond what it would receive under either offeror’s primary discount. The GAO also found that the agency acted reasonably in evaluating and accepting United’s estimates regarding the percentage of dollar value of its claims that would come from in-network providers, noting that the agency analyzed the estimates and ultimately concluded that they were reasonable.
The GAO then rejected TriWest’s argument that the agency’s decision to award strengths based on United’s “aggressive” discounts was unreasonable, in light of United’s statements regarding the unattainable nature of aggressive discounts before the GAO and Court of Federal Claims. It also denied TriWest’s complaint that the agency failed to take into account the “present value” of the cost savings associated with the offerors’ network discount proposals, pointing out that the agency has discretion to decide upon the appropriate method for evaluation of cost or price in a particular procurement. Finally, the GAO agreed with the agency that a $5.4 million mathematical error in the agency’s computation of the offerors’ network discounts was de minimis and did not adversely affect the parties’ competitive standing.
TriWest then raised several challenges to the past performance evaluation. The GAO first found reasonable the agency’s judgments regarding the similarity in scope and magnitude of United’s AARP contract to the TRICARE solicitation. It disagreed with TriWest’s assertion that the AARP contract was nothing more than a licensing agreement and rejected the claim that the AARP questionnaire was the product of a biased evaluation, pointing out that several of United’s exceptional ratings were based on objective contract performance measures. The GAO determined that the agency’s decision to consider Health Net a first tier subcontractor of United was consistent with the solicitation, pointing out that United’s proposal indicated that Health Net would be directly responsible for directing health care. It then declined to question the agency’s rating of Health Net’s past performance on the TRICARE North contract as exceptional, in light of the detailed analysis by the PAG of Health Net’s past performance beyond the single-word adjectives assigned in CPARS.
TriWest also challenged the agency’s assignment of a rating of satisfactory to United’s performance of two contracts for the Centers for Medicare and Medicaid Services (CMS). The GAO concluded that the agency’s decision to retain the satisfactory rating for the CMS contracts, after considering updated information from the CMS points of contact following the initial 2009 past performance evaluation, was reasonable. The GAO found no basis to conclude that the agency improperly disregarded relevant close-at-hand information regarding alleged performance problems, fines, and other legal problems experienced by United. Finally, the GAO denied TriWest’s objection to the downgrading of its past performance from “solidly superior” to United’s past performance to essentially equal in the reevaluation, pointing out that the rating for one of its submitted contracts had changed from “exceptional” to “satisfactory.”
TriWest then argued that the agency failed to perform a sufficient price realism analysis on United’s fixed-price CLINs to evaluate labor rates, relying on an outdated three-year-old DCAA audit to conclude that United’s labor rates were realistic. The GAO first pointed out that TriWest’s assertion that United drastically lowered its rates in its last FPR was incorrect; rather, United reorganized its labor categories. The GAO found that the agency adequately consider the realism of United’s fixed-price CLINs, noting that the agency had DCAA perform labor salary verifications of the firm’s payroll records, and had DCMA review United’s proposed indirect rates and revisions to its cost accounting standards disclosure statement.
The GAO denied TriWest’s claim that the agency improperly gave unequal weight to certain subfactors rather that valuing them equally as required by the RFP. The GAO pointed out that the SSA is allowed to rely on certain subfactors as key discriminators in making his source selection decision. Finally, the GAO dismissed as untimely TriWest’s assertion that United was ineligible for award because its stock and that of other TRICARE contractors are held by common investors, which TriWest argued is prohibited by the restriction in the solicitation that no prime contractor be awarded more than one TRICARE contract. Given the extensive history of this procurement, the GAO held that TriWest had known since 2009 that United was eligible for award, given that TriWest had not objected to United’s ability to protest TriWest’s own award of the West Region contract.
This is the latest in a string of protests regarding the T-3 TRICARE contracts that will primarily affect larger contract awards ranging in the billions of dollars. Regardless of the size of the solicited contract, however, offerors are generally not required to protest the eligibility of a participant in a procurement until the offerors are notified of the agency’s selection decision. Offerors should remain aware of the decision in Honeywell, which held that when a protestor was aware that a company which it believed to have an OCI was not barred from participating in the procurement, that protestor was required to have protested prior to the closing time for the receipt of proposals. If a firm participates in a procurement that, like the TRICARE solicitation, is subject to numerous protests, the failure to object to the eligibility for award, and therefore interested party status, of another protestor at the first opportunity will prevent that firm from raising the issue if they themselves choose to protest at a later date.