BNUMBER: B-279176.2
DATE: July 21, 1998
TITLE: Southwest Anesthesia Services, B-279176.2, July 21, 1998
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Matter of:Southwest Anesthesia Services
File:B-279176.2
Date:July 21, 1998
Lee D. Lantz for the protester.
Michael Colvin, Department of Health and Human Services, for the
agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Record does not support allegation that contracting agency improperly
canceled solicitation for hospital anesthesia services to avoid
awarding a contract to the protester and responding to an earlier
protest of the award of the contract to another firm, where the agency
reasonably concluded that solicitation no longer meets the agency's
needs and that services should be performed in-house, based on
findings and recommendations of an agency medical reviewer concerning
the anesthesia program at the hospital.
DECISION
Southwest Anesthesia Services protests the cancellation of request for
proposals (RFP) No. 97-10-VZ, issued by the Indian Health Service,
Department of Health and Human Services, for anesthesia services at
the Santa Fe Indian Hospital, and the agency's determination to
perform the services in-house. Southwest contends that the
cancellation lacked a reasonable basis and was motivated by the
contracting agency's desire to avoid making an award to Southwest and
having our Office render a decision on Southwest's previous protest.
We deny the protest.
The president and co-owner of Southwest has provided anesthesia
services to the Santa Fe Indian Hospital since 1981 as a Certified
Registered Nurse Anesthetist. His previous long-term contract with
the hospital expired on October 31, 1996, and thereafter the agency
ordered anesthesia services from Southwest by purchase order on a
month-to-month basis. During 1997, the agency decided to solicit the
services on a long-term basis, issued the RFP at issue here, and
requested proposals by October 1, 1997. Southwest submitted a
proposal by the due date, participated in discussions, and submitted a
best and final offer (BAFO) at the request of the agency, but was not
selected for award. Instead, the agency awarded the contract to
Anestat, Inc., which commenced performance on February 1, 1998.
Southwest filed a protest with our Office on February 3, contending
that the agency acted improperly in not awarding the contract to
Southwest. Specifically, Southwest asserted that agency personnel
exhibited animosity and retaliated against Southwest for revealing
alleged contracting and fiscal improprieties, such as the delayed
issuance of purchase orders and subsequent late payments for services
ordered, which occurred during Southwest's continued performance of
the anesthesia services after the expiration of its previous long-term
contract.
On February 13, the agency authorized continued performance of the
contract by Anestat, notwithstanding Southwest's protest, because of
the critical nature of the services to the patients at the hospital.
The agency informed our Office on March 3 that in reviewing
Southwest's protest it discovered inadequacies in the evaluation and
award selection process. The agency proposed to take corrective
action by reevaluating BAFOs, performing a new source selection, and,
if a different awardee was selected, terminating the contract with
Anestat for the convenience of the government. Since these proposed
actions rendered the protest academic, our Office dismissed
Southwest's protest on March 6.
Southwest filed a new protest on May 11 because, instead of taking the
promised corrective action, the agency had decided to cancel the RFP
and perform the anesthesia services in-house following what the agency
advises was the March 26 anesthesia-related death of a pediatric
patient at the Santa Fe Indian Hospital while Anestat was providing
anesthesia services.[1] Southwest argues that, based on its long
affiliation with the hospital, it can provide better quality services
at a lower cost than the agency will obtain in-house, and that the
agency's stated reasons for the cancellation of the solicitation and
determination to perform the services in-house were pretexts to avoid
our review of Southwest's initial protest to our Office (and as
additional retaliation for having filed the protest) and to avoid
awarding Southwest the contract.
The agency responds that it canceled the solicitation and made the
decision to obtain the anesthesia services in-house due to a
reassessment of its needs resulting from the findings and
recommendations in the report prepared by an agency medical reviewer
investigating the March 26 patient death. As part of the
investigation, the reviewer performed an overall examination of the
anesthesia program at the Santa Fe Indian Hospital and concluded,
among other things, that the hospital's current staffing plan of one
nurse-anesthetist under contract was inadequate.
As a general rule, our Office does not review agency decisions to
cancel procurements and instead perform the work in-house, since such
decisions are a matter of executive branch policy. Mastery Learning
Sys., B-258277.2, Jan. 27, 1995, 95-1 CPD para. 54 at 2; Miller, Davis,
Marter & Opper, P.C., B-242933.2, Aug. 8, 1991, 91-2 CPD para. 176 at 4.
However, where, as here, a protester argues that the agency's
rationale for cancellation is but a pretext--that the agency's actual
motivation is to avoid awarding a contract or is in response to the
filing of a protest--we will examine the reasonableness of the
agency's actions in canceling the procurement. Mastery Learning Sys.,
supra, at 2-3; Griffin Servs. Inc., B-237268.2 et al., June 14, 1990,
90-1 CPD para. 558 at 3, recon. denied, General Servs. Admin.--Recon.,
B-237268.3 et al., Nov. 7, 1990, 90-2 CPD para. 369 at 2.
We think the agency's reassessment of its anesthesia needs at the
Santa Fe Indian Hospital resulting from the medical reviewer's
investigation of the March 26 patient death provides a reasonable
basis for the cancellation of the solicitation because, as a result of
the reviewer's report, the solicitation for the contract sought by
Southwest no longer meets the needs of the agency, given the
deficiencies reported by the reviewer and his recommended steps to
address these deficiencies, which would require material changes to
the solicitation. For example, the reviewer recommended that the
agency increase anesthesia staffing above the level of one
nurse-anesthetist; require that any anesthesia contractor operate as
an independent practitioner; add coverage to ensure that caesarian
section cases are handled within 30 minutes and that pediatric cases
be referred elsewhere or receive the requisite level of specialized
expertise; and establish policies and procedures for the hospital's
anesthesia program rather than relying on the contractor's policies
and procedures. Although performing the services in-house may not be
the only way the agency could have addressed the reported
deficiencies, it is consistent with the reviewer's recommended "long
term" solution of providing for the services in-house with contractor
back-up. To the extent the protester is challenging the agency's
reliance on the reviewer's recommendations, including that the
anesthesia services be performed in-house, we view this as a challenge
to the agency's medical policies and judgments, which we will not
consider under our bid protest function. See Bristol-Myers Squibb
Co., B-275277, Feb. 5, 1997, 97-1 CPD para. 60 at 9-10 (and cases cited
therein).[2]
We recognize that, but for the allegedly improper award of the
contract to Anestat and the subsequent patient death and resulting
reassessment of the hospital's anesthesia program, Southwest, which
apparently has a long track record of providing safe anesthesia
services at the hospital, may have been awarded the contract.
However, once the agency received the recommendations of the medical
reviewer that brought to light the deficiencies in the anesthesia
program at the hospital, we believe the agency had a reasonable basis
to cancel the existing solicitation. Accordingly, we do not view the
proffered rationale for the cancellation of the solicitation as merely
a pretext by the agency to avoid awarding the contract to Southwest or
to avoid responding to Southwest's earlier protest. Further, even if
we assume, arguendo, that there may have been some personal animus
towards Southwest on the part of some agency personnel, this does not
provide a basis to conclude that the cancellation was improper, where,
as here, the cancellation was otherwise reasonably justified. See
Mastery Learning Sys., supra, at 3; Dr. Robert J. Telepak, B-247681,
June 29, 1992, 92-2 CPD para. 4 at 4.
Finally, to the extent the protester argues that the agency's decision
to perform the services in-house is unreasonable because the agency
failed to conduct a cost comparison to measure the relative costs of
in-house versus contractor performance of the services, we will not
review an agency's decision to perform services in-house, absent an
allegation of a statutory violation (which is not present here),
because we consider such decisions to be a matter of executive branch
policy, except where the challenged agency had used the procurement
system by issuing a solicitation for the purpose of conducting a cost
comparison under Office of Management and Budget Circular A-76 (which
did not occur here). Pemco Aeroplex, Inc., Aero Corp., B-275587.9 et
al., June 29, 1998, 98-2 CPD para. ___ at 8 n.3.
The protest is denied.
Comptroller General
of the United States
1. The agency then terminated Anestat's contract and requested that
Southwest resume providing anesthesia services at the hospital.
Southwest has since been performing these services under purchase
orders on a month-to-month basis. The agency plans to continue
issuing purchase orders to Southwest pending the recruitment and
hiring of a nurse-anesthetist for the hospital. The agency states
that until it decided to perform the anesthesia services in-house, it
was expecting to make award to Southwest, and that once the services
are brought in-house it is likely that the agency will turn to
Southwest in the future for back-up support.
2. Southwest contends that the medical reviewer's report, which it
provided to our Office, demonstrates an extension of the prejudice and
retaliation towards Southwest alleged in its earlier protest. This
contention is baseless. Rather, it is evident from the report that
the medical reviewer, who was an agency employee from another medical
facility, performed a comprehensive review of the hospital's
anesthesia program, including the acquisition of the services, which
is the type of thorough and comprehensive investigation of the March
26 tragedy that would be expected under the circumstances.