Link: GAO Opinion
Agency: Department of Health and Human Services
Disposition: Protest denied.
General Counsel P.C. Highlight:
GAO denied the protest of Wisconsin Physicians Service Insurance Corporation (WPS), based on the award of a contract to National Government Services, Inc. (NGS), under a request for proposals (RFP), issued by the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS), to obtain Medicare administrative contractor services.
CMS first published the solicitation at issue in 2007, but after selecting an awardee in 2009, protests were filed challenging the selection. The agency then cancelled the award, amended the solicitation, and requested new proposals. The amended solicitation included two evaluation factors: offeror capability and cost/price. After selecting NGS for award, WPS filed its first protest. The agency determined that it would take corrective action. In 2012, WPS and NGS again submitted proposals, and again NGS was selected. WPS protests the latest evaluation and source selection decision regarding the offerors’ past performance, technical understanding of the requirements, and cost realism.
In challenging the past performance evaluation, WPS argued that the agency improperly considered its prior failures to comply with section 912 security requirements. WPS also argued that the agency failed to consider WPS’s “corrective action,” “trend of improvement,” and “commitment to improve in systems security.” GAO found that WPS never challenged the agency’s determination regarding its failures to comply with security requirements before and the documentation supported the agency’s conclusion that WPS’s section 912 audit contained high-risk findings. GAO also found that the record established that the agency did consider WPS’s “corrective action,” “trend of improvement,” and “commitment to improve in systems security.” Although the agency found some positive aspects of these past performance elements, NGS’s past performance rated higher.
WPS next argued that the agency erroneously questioned WPS’s understanding of the solicitation requirements, improperly credited NGS with fully understanding the requirements, and improperly evaluated NGS’s proposed staffing plan. After reviewing the record, GAO concluded that: (1) WPS’s proposed level of effort assumed productivity that was substantially higher than its historic J5 productivity; (2) during discussions, the agency advised WPS that its level of effort and proposed productivity appeared to be unreasonable, requesting that WPS provide its rationale for its low level of effort and high productivity; (3) WPS responded, stating that it believed the J6 claims processing workload was “less complex” than the J5 workload; (4) the agency rejected WPS’s view regarding the relative complexity of the J6 workload and, accordingly, concluded that WPS did not fully understand the J6 contract requirements; and (5) nothing in the record provided a basis for GAO to conclude that the agency’s substantive disagreement with WPS regarding the relative complexity of the J6 workload was unreasonable. GAO also concluded, based on the record, that there was nothing unreasonable in the agency’s favorable consideration of NGS’s proposed innovations as demonstrating a superior technical understanding of the J6 requirements. Finally, the record established that NGS fully disclosed its proposed staffing intentions to the agency with regard to re-hiring its experienced employees, listing by name each of the employees that had signed letters of interest. In this regard, GAO found the agency’s determination to accept NGS’s proposed staffing plan to be reasonable.
Lastly, WPS challenged the agency’s cost realism evaluation, but the upward adjustment to WPS’s cost was justified where the agency specifically requested a “detailed rationale,” including “data and research conducted to estimate/project savings,” and WPS did not comply.