BNUMBER: B-278400
DATE: January 26, 1998
TITLE: University of Kansas Medical Center, B-278400, January 26,
1998
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DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Matter of:University of Kansas Medical Center
File: B-278400
Date:January 26, 1998
Michael J. Blake, Esq., Levy and Craig, for the protester.
Phillipa L. Anderson, Esq., Dennis Foley, Esq., Jane Converse, Esq.,
and Phillip Kauffman, Esq., Department of Veterans Affairs, for the
agency.
Linda C. Glass, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Determination to award to offeror submitting higher-priced,
technically superior proposal under a solicitation which stated that
proposed price was more important than technical evaluation factors is
unobjectionable where the agency reasonably determined that the
awardee's substantial technical advantage warranted payment of the
price premium associated with its proposal.
2. Agency conducted meaningful discussions where it led protester
into area of its proposal that required amplification and improvement.
DECISION
The University of Kansas Medical Center (KUMC) protests the award of a
contract to Health MidWest under request for proposals (RFP) No.
589-07-97 issued by the Department of Veterans Affairs (VA) for
radiation therapy, consultation, and treatment of veterans. The
protester argues that the agency improperly evaluated technical
proposals, failed to conduct meaningful discussions, and made an
improper award based on a defective cost/technical trade-off.
We deny the protest.
The RFP, issued on February 20, 1997, contemplated the award of a
fixed-price contract for a base year, with two 1-year options. The
solicitation, which required that contractors be licensed by the state
in which they operate and be accredited by the Joint Commission on
Accreditation of Healthcare Organizations (JCAHO),[1] provided that
award would be made to the responsible offeror whose offer conforming
to the solicitation was most advantageous to the government, price and
other factors considered. The RFP, as amended, advised offerors that
technical factors when combined were significantly less important than
price. Proposals were to be evaluated under the following factors,
listed in descending order of importance: price; quality;
availability; and management and experience. Under the quality
factor, offerors were required to "[p]rovide results of the latest
JCAHO including date and recommendations." Offerors were also
required to provide a synopsis of the offeror's overall approach to
quality control/quality improvement. Under management and experience,
offerors were asked to address accessibility of management and
management's responsiveness to problems on the proposed contract.
Proposals were received from KUMC and Health MidWest by the closing
date for receipt of initial proposals. KUMC's proposal included a
July 31, 1996, letter from JCAHO granting accreditation to the
hospital. The third paragraph of this letter stated the following:
The enclosed survey report also includes recommendations
intended
to assist you in continuing to achieve this goal. If this
report and its
recommendations are unclear in any way, please contact us
for
clarification.
KUMC did not include with its proposal the JCAHO report or any
material which contained the recommendations referred to in the JCAHO
letter.
The technical proposals were evaluated by the technical evaluation
team, which issued a consensus report awarding KUMC's proposal a score
of [deleted] out of [deleted] possible technical points. Health
MidWest's proposal received a score of 36 technical points. The
contracting officer scored the price proposals by assigning the total
number of available points to KUMC, the lowest-priced offeror, and
assigning points to Health MidWest based on the percentage by which
its offer was higher than KUMC's.[2] Both offerors' proposals were
included in the competitive range and oral discussions were held with
both offerors. The contracting officer states that, during
discussions, she informed KUMC that she could not give an offeror
specific instructions on how to strengthen its proposal, but that she
specifically read KUMC the evaluation factors and subfactors for the
areas of KUMC's proposal that were considered weak. With respect to
the quality factor and its subfactors, the contracting officer states
that she referred KUMC to the requirement to provide results of the
latest JCAHO inspection along with recommendations and date, and
advised that KUMC's overall approach to quality control/quality
improvement and results of pertinent employees competency testing were
weak. The contracting officer also states that she advised KUMC of
weaknesses under KUMC's response to the availability factor, which
included explanation of the offeror's billing process, synopsis of
day-to-day business flow, description of physician resources including
number/type of patient care areas, offices, parking facilities, and
access to public transportation. Lastly, the contracting officer
states that she communicated to KUMC its weaknesses in its response to
management availability and responsiveness to problems on proposed
contracts.
After discussions, best and final offers (BAFO) were requested from
both offerors. With respect to the JCAHO requirement, in its BAFO,
KUMC included the same July 31, 1996, cover letter granting the
hospital accreditation, and stated that the radiation therapy was an
integral part of that survey and that there were no deficiencies cited
with respect to radiation therapy. Upon completion of the evaluation
of BAFOs, the proposals were reevaluated and rescored. KUMC's
proposal received [deleted] total points ([deleted] technical plus
[deleted] price) and Health MidWest's proposal received [deleted]
total points ([deleted] technical plus [deleted] price). KUMC's BAFO
price was $3,722,643; Health MidWest's was $4,365,000.
In the agency's view, the most significant weakness associated with
KUMC's technical approach was its lack of quality management
activities. KUMC's quality management activities were assessed as
more oriented to providers rather than to patient outcomes. The
agency felt that KUMC's lack of attention to evaluation of overall
patient satisfaction was at odds with the VA's requirements.
The contracting officer concluded that Health MidWest provided
excellent documentation of attention to quality patient care/outcomes,
and that its proposal contained clear and concise commitment to
providing care for veterans consistent with the VA's patient care
policy. In this regard, the agency considered that Health MidWest's
approach utilizing all four of its medical centers would enable
veteran patients to choose which site to use for their radiation
therapy, which would reduce travel time and expenses. The contracting
officer considered the price difference between the offerors and
concluded that, based on the superior approach to quality management
provided by Health MidWest and the convenience to veteran patients of
being able to choose from several sites throughout the metropolitan
area versus being forced to travel to the single KUMC facility, Health
MidWest's offer represented the best value to the government. Award
was made to Health MidWest on August 27, 1997. On September 15, the
contracting officer recorded her rationale for the award decision.
After a debriefing held on September 17, the protester filed an
agency-level protest by letter of September 22, which was denied on
October 6. This protest to our Office was filed on October 16.
KUMC first argues that its proposal was improperly downgraded by the
application of an unstated technical factor. Specifically, KUMC
maintains that the evaluation team concluded that its offer contained
a significant weakness in the area of quality because it did not
include a copy of the entire JCAHO report for the entire KUMC medical
facility in its proposal. KUMC takes the position that the
solicitation did not require the submission of the JCAHO report on the
entire medical center, especially in view of the fact that the cancer
center was a separate facility with its own complete support staff.
The determination of the relative merits of proposals is primarily a
matter of agency discretion, which we will not disturb unless it is
shown to be unreasonable or inconsistent with the stated evaluation
criteria. Systems & Processes Eng'g Corp., B-234142, May 10, 1989,
89-1 CPD para. 441 at 5. A protester's mere disagreement with the
agency's judgment does not establish that the judgment was
unreasonable. Id.
Here, the record shows that the most significant weakness the
evaluators found associated with KUMC's technical approach was its
lack of quality management activities. [deleted]. While the majority
of the evaluation team found that KUMC's failure to provide its JCAHO
report, including scores and related information, made an assessment
of quality management difficult, the record shows that KUMC's
technical approach to quality management was lacking in detail and was
reasonably evaluated as failing to demonstrate an ability to meet the
agency's needs.
Essentially, the protester is contending that it should not have been
required to submit the recommendations associated with the JCAHO
report. The protester apparently relies on the fact that, while the
proposal at issue here was submitted by the KUMC cancer center, the
JCAHO performance report is for the entire KUMC medical facility and
includes an evaluation of all aspects of services provided by the
medical facility, including pathology and clinical laboratory
services. The cancer center (as evaluated under the clinical
laboratory services) scored well in the report, but the report
contains information concerning previous recommendations in areas that
affect the entire medical facility and indicates when they were
resolved. [deleted]. The protester's position that it was not
required to submit the report or its recommendations is apparently
based on the fact that the report covered parts of the medical
facility not involved in this procurement.
We conclude that the agency evaluated the protester's proposal
reasonably in this area and did not apply an unstated evaluation
criterion. While the protester argues that the solicitation did not
require that it submit the JCAHO report for the entire medical
facility, as explained above, the solicitation did require, under
quality (the most important technical evaluation factor), that
offerors provide the results of the latest JCAHO review, including
recommendations. The JCAHO report cover letter, which was included in
KUMC's proposal, indicated that the JCAHO report contained
recommendations, without indicating what areas were addressed. In our
view, the solicitation requirement justified the agency's marking down
the protester's proposal for failure to submit the recommendations
associated with the JCAHO report. The protester failed to explain in
its proposal that it viewed the recommendations as irrelevant (and the
agency may reasonably have seen them as relevant, notwithstanding the
protester's position, since they involved relevant matters such as the
management of the environment of care).[3]
More importantly, the protester has not rebutted the agency's position
about the other weaknesses in its proposal involving quality
management activities, which provided the core basis for the
evaluation, [deleted]. We therefore conclude that the evaluation in
the area of quality was reasonable and consistent with the
solicitation's evaluation criteria.
The protester also contends that discussions held with it were
inadequate. In this regard, the protester argues that, if its failure
to include the entire JCAHO report for the entire KUMC facility was a
significant weakness, KUMC should have been specifically so notified
during discussions. As noted above, during oral discussions, the
contracting officer read to KUMC the requirement to provide results of
latest JCAHO, including date and recommendations. In response, the
protester included in its BAFO the same JCAHO cover letter contained
in its initial proposal, to which KUMC added a statement that the
JCAHO survey at KUMC was conducted in July 1996, that radiation
therapy was an integral part of that survey, and that there were no
deficiencies cited relating to radiation therapy.
For discussions to be meaningful, an agency must advise an offeror of
the deficiencies, weaknesses, or excesses in its proposal that require
amplification or clarification in order for the offeror to have a
reasonable chance of receiving an award. Gutierrez-Palmenberg, Inc.,
B-255797.3 et al., Aug. 11, 1994, 94-2 CPD para. 158 at 3. Agencies,
however, are not required to conduct all-encompassing discussions or
discuss every element of a proposal receiving less than the maximum
rating. They need only lead an offeror generally into the areas of
its proposal that require amplification. Id.
Here, while the agency, during discussions, could have specifically
requested the JCAHO scores and results for the entire medical
facility, it is clear from the record that the agency did bring to the
protester's attention the concerns the agency had in the quality area,
including the JCAHO results and recommendations. Although the
protester asserts that it did not understand that the JCAHO
recommendations for the entire facility were required, the record
shows that the JCAHO recommendations report (which the protester
provided with its protest submissions) was in the form of an
assessment of the entire facility, not just the radiation therapy
facility; furthermore, it consisted of only nine pages that easily
could have been included with KUMC's proposal. It is incumbent upon
the protester to provide sufficient information in its BAFO for the
agency to evaluate. See Infotec Dev., Inc., B-258198 et al., Dec. 27,
1994, 95-1 CPD para. 52 at 6. In short, the agency reasonably apprised
KUMC during discussions that its proposal lacked the JCAHO
recommendations, which were called for by the RFP and were referenced,
but not provided, by KUMC in its proposal.
KUMC next alleges that the agency did not make a proper determination
that the technical superiority of Health MidWest's proposal warranted
expenditure of an additional $[deleted]. In this regard, KUMC asserts
that there was never any determination of the monetary value of the
differences between the proposals in the nonprice factors and there
was no demonstration that the value of the differences in the nonprice
factors justify the higher price.
In a negotiated procurement, the government is not required to make
award to the firm offering the lowest price unless the RFP in fact
specifies that price will be the determinative factor. Centex Constr.
Co., Inc., supra. Thus, as here, in the absence of such an express
provision the procuring agency retains the discretion to select a
higher-priced but also technically highly rated proposal, if doing so
is in the government's best interest and is consistent with the
solicitation's stated evaluation and source selection scheme. Id.
There is no requirement that the value of technical differences be
quantified in dollar terms. Suddath Van Lines, Inc.; The Pasha Group,
B-274285.2, B-274285.3, May 19, 1997, 97-1 CPD para. 204 at 10.
The record reflects that the VA made a reasonable, documented
cost/technical trade-off decision in awarding a contract to Health
MidWest. The weight actually assigned to price (60 percent) was
significantly greater than the weight for technical (40 percent),
consistent with the amended RFP's statement in this regard. KUMC
offered the lowest price, for which it received the maximum rating of
60 points. As indicated above, Health MidWest's price proposal was
similarly converted to normalized point ratings and, in accordance
with the formula, received 51 points. With respect to final technical
points, KUMC's proposal received [deleted] and Health MidWest's
received the maximum of [deleted]. Consequently, Health MidWest's
proposal received the highest combined score. The contracting officer
explicitly determined that Health MidWest's proposal represented the
best value to the government, because the superior approach to quality
management offered by Health MidWest and the convenience to the
veterans of being able to choose from several sites throughout the
metropolitan area was worth the associated price premium and
outweighed the cost savings associated with KUMC's proposal.
The protest is denied.
Comptroller General
of the United States
1. The JCAHO is an independent organization that monitors and rates
the performance of hospital systems.
2. In its protest, KUMC argues that by using this formula the VA
afforded KUMC's low price too little weight. We have recognized the
propriety of the rather common formula employed here to calculate
price points, consisting of a scoring system under which the
lowest-priced proposal is assigned the maximum available price points
and others are assigned points based on their closeness to the low
offeror. Centex Constr. Co., Inc., B-238777, June 14, 1990, 90-1 CPD para.
566 at 4. While KUMC suggests alternate point formulas, this does not
establish the inaccuracy or unfairness of the formula used by the
agency, which has broad latitude to
determine the particular method of evaluation to be utilized. Brown &
Root, Inc. and Perini Corp., a joint venture, B-270505.2, B-270505.3,
Sept. 12, 1996, 96-2 CPD para. 143 at 9. The only requirement, which the
agency satisfied here, is that the agency methodology must provide a
rational basis for selection and be consistent with the RFP evaluation
criteria. Id.
3. In its comments on the agency report, the protester contends that
the evaluators did not understand the JCAHO evaluation process and
that there are no JCAHO recommendations on a health care facility that
receives a fully acceptable accreditation rating. Again, however, the
evaluators reasonably relied on the JCAHO cover letter included by
KUMC in its proposal, which explicitly states that the report
contained recommendations.