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.