BNUMBER: B-270185; B-270185.2
DATE: January 25, 1996
TITLE: Health Management Resources, Inc.
**********************************************************************
Matter of:Health Management Resources, Inc.
File: B-270185; B-270185.2
Date: January 25, 1996
Terrence M. O'Connor, Esq., for the protester.
Terrence J. Tychan and Mike Colvin, Department of Health and Human
Services, for the agency.
Paul E. Jordan, Esq., and Paul Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Agency conducted meaningful discussions regarding the protester's
proposed approach to a particular task through discussion questions
which reasonably led the protester into the areas of concern.
2. Agency's decision not to rescore proposals is unobjectionable
where record establishes that agency considered all matters contained
in offerors' best and final offer proposal revisions, and reasonably
determined that relative standing of offerors' proposals did not
change as a result.
3. Award to offeror who submitted higher-cost, higher technically
rated proposal is reasonable where solicitation evaluation scheme
gives greater weight to technical merit than to cost, and record
supports selection official's determination that the relatively slight
cost savings associated with the protester's proposal did not outweigh
technical superiority of awardee's proposal.
DECISION
Health Management Resources, Inc. (HMRI) protests the award of a
contract to
J&E Associates under request for proposals (RFP) No. HRSA
240-BPHC-38(5)
NAB, a small business set-aside, issued by the Health Resources and
Services Administration, Department of Health and Human Services for
furnishing travel and logistical support services. HMRI contends that
the agency failed to conduct meaningful discussions and lacked a
rational basis for its award decision.
We deny the protest.
The RFP, which was issued on March 6, 1995, sought proposals to
furnish conference and travel support for National Health Service
Corps activities and coordinate with other federal, state, and
regional agencies in providing logistics for recruitment and retention
conferences, management development/training conferences, and other
meetings. The RFP contemplated award of a cost-plus-fixed-fee
contract for a base year with 4 option years.
Award was to be made to the offeror whose proposal was most
advantageous to the government with greater consideration given to the
evaluation of technical proposals than to cost. Proposals were
evaluated on the basis of cost and four technical factors: problem
and approach; personnel and organization structure; facilities; and
demonstrated capability of offeror.
Eleven offers, including HMRI's and J&E's, were received by the April
20 closing time for receipt of proposals. Based upon an initial
evaluation, the agency found three proposals, including those of HMRI
and J&E, to be in the competitive range. Prior to discussions, HMRI's
proposal was scored at 79.2 points and J&E's proposal was scored at 84
points. The agency conducted written and oral discussions with each
competitive range offeror. At the close of discussions, the agency
requested best and final offers (BAFO) from the three offerors. The
agency reviewed the BAFOs and found that the offerors had responded to
all questions asked by the technical review committee (TRC). The TRC
determined that it was not necessary to rescore the proposals in light
of the BAFOs. In reviewing HMRI's cost proposal, the evaluators
determined that HMRI had understated the costs of tasks related to
change of station travel and orientation conferences. Accordingly,
the agency added more than $5 million to HMRI's evaluated total cost.
The final scores and evaluated BAFOs are as follows:
Offeror J&E HMRI
Problem-Approach (35)30.6 24.6
Personnel/Org. (30) 26 24.6
Facilities (5) 4.8 3.4
Capability (30) 22.6 26.6
Total Score (100) 84 79.2
Evaluated BAFO Cost $27,591,534 $26,219,386
The third offeror, Casals & Associates, with a proposal score of 86.2
points and the lowest evaluated cost, was selected for award, but the
Small Business Administration (SBA) determined that Casals did not
qualify as a small business for purposes of this procurement.[1] The
contracting officer, finding that the relatively small cost difference
between the remaining proposals ($1.37 million) was not sufficient to
warrant award to the technically lower rated offeror, determined to
award the contract to J&E. Upon learning of the award, HMRI requested
a debriefing and filed a protest with our Office. After receiving its
debriefing, HMRI amended its protest.
HMRI contends that the agency failed to provide it with meaningful
discussions with regard to its proposed costs for the change of
station travel task and for the orientation conference tasks. In
HMRI's view, had the agency properly discussed these matters with it,
there would have been no need to adjust its costs so far upward.
Agencies are required to conduct meaningful discussions with all
competitive range offerors. Stone & Webster Eng'g Corp., B-255286.2,
Apr. 12, 1994, 94-1 CPD para. 306. In order for discussions to be
meaningful, contracting officials must advise offerors of deficiencies
in their proposals and afford offerors an opportunity to revise their
proposals to satisfy the government's requirements. Id. This does
not mean that offerors are entitled to all-encompassing discussions.
Agencies are only required to lead offerors into areas of their
proposals that require amplification. Caldwell Consulting Assocs.,
B-242767; B-242767.2, June 5, 1991, 91-1 CPD para. 530. The degree of
specificity required in conducting discussions is not constant and is
primarily a matter for the procuring agency to determine. JCI Envtl.
Servs., B-250752.3, Apr. 7, 1993, 93-1 CPD para. 299.
Here, during the conduct of discussions, the agency raised the issue
of HMRI's treatment of the change of station task a number of times,
and provided HMRI with a summary of the narrative comments of the
evaluators. For example, the comments advised that the change of
station travel was "weak" and would require further clarification, and
that the proposal did not address how movement of household goods
would occur or the reimbursement process. The agency also addressed
this task in a general information statement, provided to all
offerors, which explained how offerors should base their costs. While
the protester states that the agency made no oral representations
about this task, the agency's summary of negotiation states that all
offerors were advised that the cost of this task would be high and
should be reevaluated before submission of BAFOs. The agency also
raised questions concerning HMRI's travel vendor and the costs
associated with it. While these references did not specifically state
that the protester's costs were too low, they did apprise the
protester that the agency was concerned with the protester's proposal
for these tasks. Implicit in the agency's identification of these
areas was the need for the protester to reevaluate the costs
associated with them. Thus, they were sufficient to lead the
protester into this area of its proposal and provide it the
opportunity to review and revise its cost proposal.
With regard to the orientation conference tasks, in reviewing the
protester's BAFO the agency found that HMRI had proposed only the
minimum number of conferences each year. Since the number of
scholarship conferences was already anticipated to exceed the minimum,
the agency increased the costs, using the protester's own figures.
Similarly, the agency found that HMRI's BAFO had decreased certain
conference costs associated with its subcontractor, without apparent
explanation. Since the RFP advised, and HMRI acknowledged in its
proposal, that the number of certain conference attendees would
increase by 100 persons each year, the agency determined that an
increase in costs was warranted. These matters were not the subject
of discussions. However, since they were first introduced in HMRI's
BAFO, the agency was not required to reopen discussions to obtain
HMRI's input. See Potomac Research, Inc., B-250152.8; B-250152.11,
July 22, 1993, 93-2 CPD para. 109.
HMRI next argues that the agency should have rescored the proposals
after reviewing the offerors' BAFOs. Generally, there is no
requirement that an agency formally rescore BAFOs; rather, all that is
required is that the contracting officer consider the effect on
proposals of any changes contained in the BAFOs. University of Dayton
Research Inst., B-245431, Jan. 2, 1992, 92-1 CPD para. 6. Here, in the
course of its evaluations, the agency scored the initial proposals on
the basis of strengths and weaknesses it identified in each proposal.
The agency then provided each offeror with the narrative comments of
the evaluators. Both J&E and HMRI responded to the initial
identification of weaknesses and questions. These responses resulted
in additional questions and comments from the evaluators, which were
provided to the offerors prior to the conduct of oral discussions. At
the close of discussions, both offerors provided technical and cost
BAFOs. After reviewing the BAFOs, the agency determined that the
offerors had responded to all questions asked, identified the
remaining concerns, and determined that rescoring was not necessary.
While the offerors had responded to all outstanding questions, the
record does not indicate that the responses rendered the proposals
perfect. Rather, since both offerors provided satisfactory responses,
the agency in effect found that each had improved to the same degree.
It is apparently for this reason that no rescoring was done, since any
rescoring would have left HMRI and J&E in the same relative positions.
While the protester argues that its improvements were not considered,
the record makes it clear that the contracting officer reviewed the
final evaluations and considered the relative strengths and weaknesses
under the final evaluation in making his award determination.
Accordingly, we agree with the agency that there was no need to
rescore the BAFOs.
HMRI also argues that the award was flawed because the record does not
establish that it had any rational basis. In the protester's view,
the source selection statement does not support the award
determination.
In a negotiated procurement, the government is not required to make
award to the lowest-cost, technically acceptable offeror unless the
RFP specifies that cost will be the determinative factor for award.
General Servs. Eng'g, Inc., B-245458, Jan. 9, 1992, 92-1 CPD para. 44.
Agency officials have broad discretion in determining the manner and
extent to which they will make use of technical and cost evaluation
results. Cost/technical tradeoffs may be made; the extent to which
one may be sacrificed for the other is governed by the test of
rationality and consistency with the established evaluation factors.
Id. Even where a source selection official does not specifically
discuss the technical/cost tradeoff in the selection decision
document, this does not affect the validity of the decision if the
record shows that the agency, in consideration of the relative
technical merit of the awardee's and the lower-cost protester's
proposals, reasonably decided that the higher-cost awardee's proposal
was worth the additional cost. McShade Gov't Contracting Servs.,
B-232977, Feb. 6, 1989, 89-1 CPD para. 118. In this case, the record
supports the contracting officer's decision to award the contract to
J&E as the technically superior offeror, even though J&E proposed a
higher cost.
The contracting officer's source selection statement details the
chronology of the procurement and contains the scores and adjusted
costs for each offeror's proposal. In it, the contracting officer
concludes that award to J&E is in the best interests of the
government, noting that J&E's proposal is higher rated technically
than HMRI's, and that HMRI's costs were understated. This selection
statement alone does not contain sufficient detail to demonstrate that
the contracting officer's decision is rationally based. However,
other documents in the record, including the evaluations and the
contracting officer's statement filed with the agency report, provide
sufficient information to support the award decision.
According to the contracting officer's statement, he reviewed the
TRC's evaluation narratives in determining the original competitive
range and in reviewing the award recommendations of the TRC and
contract specialist. Based on these reviews, he concluded that J&E
had submitted a technically superior proposal. We have reviewed the
TRC's narrative comments on the evaluations and they support the
contracting officer's conclusion.
For example, the evaluations show that J&E's proposal received higher
scores than HMRI's under three of the four evaluation factors. Under
the most important factor, problem and approach, the evaluators found
that J&E had a very positive approach to recruiting and that it had
demonstrated a true understanding of the contract's scope, while
HMRI's proposal was evaluated simply as showing a thorough knowledge
and understanding of the problem. Further, J&E proposed to provide
all services itself, while HMRI proposed the use of subcontractors.
Throughout this factor evaluation, the evaluators praised J&E's
excellence in organization, proposal of experienced staff, and
proposal detail including the narrative on the change of station task.
Conversely, the agency identified twice as many weaknesses in HMRI's
proposal and found its handling of the change of station task to be
very weak. As discussions progressed, the agency had some 21
questions for the protester compared with 14 for J&E. In reviewing
the BAFOs, the agency had only two concerns with J&E's proposal, an
ambiguity regarding the identity of one regional coordinator and the
high cost proposed for that contract activity. Conversely, the agency
identified four concerns with HMRI's proposal, regarding HMRI's
significant understatement of costs for three tasks (including the
change of station task), and the project officer's assessment that it
could not perform the contract at the proposed BAFO costs. Though it
appeared that the remaining concerns with HMRI's proposal could be
"corrected" by increasing the relevant costs, the contracting officer
considered the concerns to be significantly greater than those
identified in J&E's proposal. As a result, notwithstanding the
evaluators' initial conclusion that HMRI had a thorough understanding
of the problem, the contracting officer concluded that the concerns
raised in HMRI's BAFO called into question the protester's overall
understanding and technical capability.
As discussed above, even though HMRI's responses to the discussion
questions improved its proposal, the same conclusion can be made with
regard to J&E's proposal. Implicit in the evaluators' decision not to
rescore the proposals is their finding that both offerors improved
their proposals to the same relative degree. Taking the evaluations,
including the relative strengths and remaining concerns into
consideration, the contracting officer reasonably concluded that J&E's
proposal was technically superior to HMRI's proposal. After
considering the adjustment to HMRI's costs to reflect the more likely
costs involved, he found that J&E's proposal was only $1.37 million
higher than HMRI's for a more than $27 million contract effort. Since
the cost difference only represents about 5 percent of the contract
award over 5 years, we think the contracting officer could reasonably
conclude that this difference was not sufficient to outweigh the
significance of J&E's technical superiority. Accordingly, we have no
basis to object to the source selection decision.[2]
The protest is denied.
Comptroller General
of the United States
1. Casals has appealed the SBA's determination.
2. HMRI also argues that the agency failed to follow the evaluation
criteria because it made technical considerations the sole, rather
than paramount, basis for award without consideration of cost. While
HMRI disagrees with the contracting officer's conclusions regarding
the importance of the cost difference here, it is plain from the
record that the contracting officer did consider cost in making his
source selection.