BNUMBER:  B-266043
DATE:  January 23, 1996
TITLE:  ABC HealthCare

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Matter of:ABC HealthCare

File:     B-266043

Date:     January 23, 1996

Alan M. Grayson, Esq., for the protester.                                                            
Philip Kauffman, Esq., and Jeanne Anderson, Esq., Department of 
Veterans Affairs, for the agency.
Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., 
Office of the General Counsel, GAO, participated in the preparation of 
the decision.

DIGEST

Protest objecting to solicitation requirement for contractor 
accreditation by the Joint Commission on Accreditation of Healthcare 
Organizations as unduly restrictive of competition is denied where 
agency demonstrates reasonable basis for the requirement.

DECISION

ABC HealthCare protests the terms of invitation for bids (IFB) No. 
590-05-96, issued by the Department of Veterans Affairs (VA) Medical 
Center in Hampton, Virginia, for home oxygen equipment.  Specifically, 
ABC protests that the solicitation requirement that the contractor be 
accredited by the Joint Commission on Accreditation of Healthcare 
Organizations (JCAHO) is not necessary to meet the agency's minimum 
needs.

We deny the protest.

The IFB, which was issued on July 27, 1995, sought prices for the 
rental of oxygen equipment, delivery service, and monthly visits to 
the homes of eligible VA beneficiaries.  The solicitation required 
that the contractor be accredited by the JCAHO and that a copy of the 
accreditation be submitted to the contracting officer prior to 
contract award.[1]

On August 17, ABC, which has applied for an accreditation survey but 
which is not yet JCAHO-accredited, filed an agency-level protest 
objecting to the requirement for accreditation.  The agency denied the 
protest, and proceeded with bid opening on the scheduled date of 
August 31.  Five bids were received, three of which were from 
JCAHO-accredited companies.  ABC was the low bidder.  On September 8, 
ABC protested to our Office.  By letter dated November 3, the VA 
notified us that it intended to proceed with award notwithstanding the 
protest.

The protester complains that the requirement for JCAHO accreditation 
is unduly restrictive of competition since it excludes from award 
companies such as itself, which meet JCAHO standards but which have 
not yet had their applications for accreditation approved.  ABC points 
out that not all VA facilities that contract for home oxygen services 
require JCAHO accreditation, and further notes that the JCAHO 
Accreditation Manual itself recognizes that accredited facilities 
might contract with non-accredited firms.

In preparing a solicitation for supplies or services, a contracting 
agency must specify its needs and solicit offers in a manner designed 
to achieve full and open competition, 41 U.S.C.  sec.  253a(a)(1)(A) 
(1994), and may include restrictive provisions or conditions only to 
the extent necessary to satisfy the agency's needs.  41 U.S.C.  sec.  
253a(a)(2)(B).  Where a protester alleges that a requirement is unduly 
restrictive, we review the record to determine whether the requirement 
has been justified as necessary to satisfy the agency's minimum needs.  
Aegis Analytical Labs., Inc., B-252511, July 2, 1993, 93-2 CPD  para.  4.  
The determination of the agency's minimum needs and the best method of 
accommodating them are primarily within the agency's discretion and, 
therefore, we will not question such a determination unless the record 
shows that it lacked a reasonable basis.  CardioMetrix, B-257408, Aug. 
3, 1994, 94-2 CPD  para.  57.

Here, we find reasonable the VA's determination that its minimum needs 
require that the home care organization with which it contracts be 
JCAHO-accredited.  The Chief of the VA Medical Center's Prosthetics 
and Sensory Aids Service explains that unless the facility contracts 
with an accredited home health care organization, it will be required 
to expend a substantial amount of time and resources to monitor the 
contractor's compliance with the safety and quality requirements 
established for the home health care industry by JCAHO's Accreditation 
Manual for Home Health Care.[2]  The Medical Center's Quality Manager 
further explains that the hospital could lose its own accreditation by 
entering into a contract with a non-accredited provider.

The protester takes issue with these arguments, contending that the 
agency could ensure compliance with the standards by simply 
incorporating them into the contract and threatening the contractor 
with termination for default if it fails to comply.  ABC also argues 
that the agency would not place its accreditation at risk by 
contracting with a non-accredited provider since the JCAHO manual 
recognizes that accredited facilities may contract with non-accredited 
firms.

The protester's first point fails to address the crux of the agency 
argument, i.e., that the agency will be required to bear the expense 
of monitoring compliance with the JCAHO standards if JCAHO does not 
perform the monitoring through its accreditation process.  In our 
view, the VA's desire to avoid the expenditure of significant agency 
resources to pay for inspection services that would be unnecessary if 
the contractor were accredited provides a reasonable basis for the 
accreditation requirement.  Further, we think it is implicit in the 
agency's position that the need for compliance is critical given the 
nature of the services involved, and that the risk of noncompliance 
will be reduced if the contractor is accredited and thus subject to 
oversight by JCAHO.  In light of the agency's undisputed need for 
compliance with the JCAHO standards, and the critical nature of the 
services being procured, we see no basis to question the agency's 
judgment that compliance can best be ensured through requiring 
accreditation.

Further, with regard to the protester's second point, while an 
accredited facility will not automatically lose its accreditation 
simply because it contracts with a non-accredited provider, it does 
risk not having its accreditation renewed if the non-accredited 
provider fails to comply with JCAHO standards.  In this regard, the 
JCAHO manual requires each accredited organization to apply for, and 
undergo, a full accreditation survey at least once every 3 years, and 
provides that where a facility applying for accreditation contracts 
with a non-accredited provider, the non-accredited firm will be 
included in the scope of the applicant organization's survey. 

ABC suggests that JCAHO accreditation cannot be a minimum requirement 
of the medical center since not all VA medical facilities that 
contract for home oxygen services require it.  We note, however, that 
the vast majority (i.e., 80 percent) of VA's medical facilities do 
require the accreditation.  Moreover, the fact that some medical 
centers do not require JCAHO accreditation does not mean that others 
could not reasonably have concluded that requiring JCAHO accreditation 
is the best means of assuring contractor compliance with the JCAHO 
safety and quality standards.  See Komatsu Dresser Co., B-251944, May 
5, 1993, 93-1 CPD  para.  369.

The protester argues that our decision in CardioMetrix, B-259736, Apr. 
28, 1995, 
74 Comp. Gen. ___, 95-1 CPD  para.  223, should control here.  ABC contends 
that in that case we sustained a protest objecting to a requirement 
for accreditation by the College of American Pathologists (CAP) on the 
grounds that the requirement was unduly restrictive since 
non-accredited contractors had successfully performed similar 
requirements for the agency.  That is not an accurate summary of our 
holding, however.  We did not determine that the accreditation 
requirement was unduly restrictive of competition; rather, we found 
that the requirement that the contractor itself be CAP-accredited was 
too restrictive since the solicitation permitted the contractor to 
subcontract for the services with companies that were CAP-accredited.  
Here, the protester has not suggested that it intends to subcontract 
with JCAHO-accredited companies for the home oxygen equipment and 
services; thus, our decision in CardioMetrix is not on point.

Since the record shows that the agency determination to require JCAHO 
accreditation is reasonable, we have no basis to object to the 
challenged requirement. 

The protest is denied.

Comptroller General
of the United States

1. To obtain JCAHO accreditation, a home care organization must 
demonstrate substantial compliance with a number of standards, 
governing such matters as personnel qualifications, staff training, 
and equipment management.

2. The protester has not complained that the standards set by the 
JCAHO exceed the agency's requirements; its complaint is that 
accreditation is not required to assure compliance with these 
standards.