BNUMBER:  B-281484.2 
DATE:  March 29, 1999
TITLE: Medical Development International, B-281484.2, March 29, 1999
**********************************************************************

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:Medical Development International

File:     B-281484.2

Date:March 29, 1999

Timothy E. Heffernan, Esq., and Peter L. Vanderloo, Esq., Watt, 
Tieder, Hoffar & Fitzgerald, for the protester.
Thomas C. Papson, Esq., and Richard P. Castiglia, Jr., Esq., McKenna & 
Cuneo, for University of North Texas Health Science Center, an 
intervenor.
Katherine A. Day, Esq., Department of Justice, for the agency.
Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protester's contention that agency wrongly gave additional 
evaluation credit to a feature of the awardee's proposal that exceeded 
the solicitation's minimum requirements is denied where detailed 
technical proposals were sought, technical evaluation criteria were 
used to make comparative judgments about the relative merits of 
competing proposals, and the judgments made and credit given were 
consistent with the stated evaluation factors.

2.   Protest that awardee obtained an unfair competitive advantage by 
employing a former government employee who had input into developing 
the solicitation is denied where the employee's input was limited to 
participating in changes to an existing boilerplate solicitation; the 
employee left government service almost a full year before the 
solicitation was issued; and there is no showing that the employee 
ever received access to the content of proposals, or other inside 
information sufficient to establish an unfair competitive advantage.

3.  Contention that a price/technical tradeoff in a best value 
procurement improperly abandoned a predetermined tradeoff formula is 
denied where--although the solicitation did call for scoring price 
proposals--there was no indication in the solicitation that award 
would be made to the offeror receiving the highest overall point 
score, and where the contracting officer reasonably determined that 
despite the higher overall score given the protester's technically 
lower-rated, lowest-priced proposal, the awardee's technically 
higher-rated, higher-priced proposal presented the best value to the 
government.

4.  Protester's contention that the agency failed to properly score 
price proposals by awarding proportionally fewer points to 
higher-priced offers, as it stated it intended to do in the 
solicitation--a contention shown by the record to be correct--will not 
be sustained without a concurrent showing that, but for the agency's 
actions, the protester would have had a substantial chance of 
receiving the award. 

DECISION

Medical Development International (MDI) protests the award of a 
contract to the University of North Texas Health Science Center (UNT) 
by the Department of Justice, Federal Bureau of Prisons, pursuant to 
request for proposals (RFP) No. 178-0418, seeking medical and health 
care services for inmates at the Federal Medical Center in Fort Worth, 
Texas.  MDI argues that the evaluation of proposals was unreasonable; 
that the awardee received an unfair competitive advantage by employing 
a former agency official; and that the price/technical tradeoff 
improperly abandoned the solicitation's stated evaluation scheme, and 
was based on a flawed understanding of the relative difference between 
proposed prices. 

We deny the protest.

BACKGROUND

The Federal Medical Center in Fort Worth, Texas, is one of six medical 
referral centers operated by the Federal Bureau of Prisons.  The 
center has an all-male population of approximately 500 inmates 
requiring chronic care, and a general population of approximately 800 
inmates, together with a 100-bed jail unit reserved primarily for 
short-term, pre-sentenced inmates.  RFP  sec.  A.1.1.1.  The RFP, issued 
March 19, 1998, sought proposals for a fixed-price, requirements 
contract for several types of medical and health care services to 
supplement those already provided by the center.  Id.  sec.  D.2.4.  
Specifically, the RFP covers on-site institution services, inpatient 
and outpatient physician services, and inpatient and outpatient 
hospital services, with managed care oversight, for a 1-year base 
period and 4 option years.  Id.  sec.  A.2.1.

The RFP anticipated that award would be made to the offeror whose 
proposal is considered most advantageous to the government, price and 
other factors considered.  Id.  sec.  D.3(a).  The RFP identified three 
evaluation factors:  technical merit, worth 40 percent of available 
points; past performance, worth 30 percent of available points; and 
price, worth 30 percent of available points.  Id.  sec.  D.2.3.3.  Within 
the technical and past performance factors were five subfactors 
each.[1]  

The RFP requested prices for the three categories of services covered 
by the solicitation, which were, in descending order of importance, 
institutional, hospital, and physician services.  Id.  sec.  A.2.4, 
D.2.3.3.  The line items for physician and hospital services contain 
separate subline items according to whether the service is provided on 
an inpatient or outpatient basis.  Id.  sec.  A.2.4. 

On the RFP's price schedule, offerors were required to indicate a 
percentage discount deducted from, or percentage premium added to, one 
of two standard rates, applicable to the three categories of services.  
Id.  The standard rates used for the pricing schedule were the 
applicable Medicare rate, or a similar rate called the RBRVS rate.[2]  
The RFP provided the following guidance regarding the scoring of 
prices: 

     Price proposals will be evaluated to determine which proposal 
     offers the lowest price to the Government.  For each category, 
     price proposals will be ranked in order from the highest discount 
     offered to the highest premium offered.  The Offeror proposing 
     the best overall discount from the Medicare/RBRVS rate will be 
     considered to be proposing the lowest price.  Maximum points for 
     each category will be awarded to the Offeror proposing the lowest 
     price and each Offeror ranked thereafter will be awarded a 
     proportionate number of points.  Once each offer has been scored 
     in each pricing category for each contract period, scores will be 
     combined to arrive at a total score for price.

Id.  sec.  D.2.3.3.

The agency initially received three proposals in response to the RFP, 
but one was incomplete; the remaining two proposals were those 
submitted by MDI and UNT.  After an initial evaluation, discussions, 
submission of revised proposals, and best and final offers, the agency 
awarded final point scores.  UNT received a higher technical score 
(149) than MDI (126), and both proposals received the same score for 
past performance (103).  Summary Results of Technical Evaluation, July 
28, 1998, at 4, 6.  In the area of price, MDI's and UNT's average 
premiums[3]--expressed as requested in the solicitation as a 
percentage above or below the applicable Medicare or RBRVS rate--are 
shown below:

                                     MDI             UNT

     Institution Services     + 15 percent   + 21.69 percent

     Inpatient/Outpatient
        Hospital Services      + 5 percent   + 11 percent

     Inpatient/Outpatient
        Physician Services    + 10 percent   + 21.64 percent

Scoring of Price Proposals, Aug. 27, 1998, at 1-3.  After awarding the 
maximum price score to MDI for its lower premiums, and attempting to 
award a proportionally lower score to UNT for its higher premiums,[4] 
the overall point scores given the two offerors are shown below:

EVALUATION FACTORS   
                               MDI        
                                                    UNT

Technical                      126                  149

Past Performance               103                  103

Price                          120                   82

TOTAL                          349                  334
Revised Proposal, Overall Evaluation, undated, at 1.

In the Source Selection Decision, the contracting officer acknowledged 
that MDI received the highest overall score based on the allocation of 
70 percent of available points to the technical and past performance 
factors, and 30 percent of available points to the price factor.  
Despite the point spread, however, the contracting officer concluded 
that the UNT proposal offered the best value to the government because 
of its [deleted].  Source Selection Decision, Sept. 9, 1998, at 5-6.  
Thus, the contracting officer selected UNT for award, and this protest 
followed.

PROTEST ALLEGATIONS

MDI raises three general challenges to the selection of UNT:  (1) that 
the evaluation of technical proposals was unreasonable; (2) that UNT 
enjoyed an unfair competitive advantage by virtue of having hired a 
former Bureau of Prisons employee who was allegedly involved in this 
procurement; and (3) that the price/technical tradeoff performed by 
the agency was improper because it abandoned the solicitation's stated 
evaluation scheme, and because it was based on a flawed understanding 
of the relative difference between proposed prices.  As discussed 
below, our review shows that the agency's scoring of prices was 
flawed, but that the protester was not prejudiced as a result of the 
agency's errors.  However, we will first address the protester's 
contentions regarding the technical evaluation and unfair competitive 
advantage, which we deny as unsupported by the record.

EVALUATION OF TECHNICAL PROPOSALS

MDI raises only one technical evaluation issue--that the agency 
wrongly accepted, and improperly gave additional credit to, UNT's 
offer of a locked 10-bed inmate inpatient facility.[5]  With respect 
to this feature of the proposal, MDI contends that the agency has 
improperly accepted an unsolicited offer, and has failed to amend the 
solicitation to accurately reflect the agency's underlying needs.  We 
disagree on both counts.

In response to the RFP's requirement to provide inpatient and 
outpatient hospital services, UNT proposed to use the Osteopathic 
Medical Center of Texas (OMCT) as its "primary inpatient facility for 
inmate inpatient and outpatient procedures which cannot be 
accomplished onsite," and explained that OMCT would "establish a 10 
bed secure nursing unit solely for the purpose of housing inmates and 
their accompanying correctional officers."  UNT Technical Proposal, 
May 7, 1998, at 16-17.  As stated above, the solicitation here set 
forth five subfactors under the technical evaluation factor.  The 
first, and most important of these was technical approach.  The RFP 
expanded on this subfactor as follows:

     Technical approach or methodology of accomplishing the objectives 
     of the solicitation.  (To include a description of how offeror 
     intends to meet security needs of off-site facility.)

RFP  sec.  D.2.3.3.  

In evaluating this portion of UNT's proposal, the evaluators accorded 
value to UNT's offer of a secure inpatient facility.  In commenting on 
the feature, the evaluators noted that "[t]he unsolicited offer to 
provide a locked prison ward in the community may provide [an] 
opportunity to cut costs of medical overtime and increase security[,] 
but cannot be quantitatively measured at this time."  Summary of 
Results of Technical Evaluation, July 28, 1998, at 5.  In the Source 
Selection Decision, this feature of UNT's proposal was expressly 
enumerated as one of the reasons UNT's higher-priced proposal offered 
greater value to the government, and was identified as a source of 
potential savings in the area of staff escorts and contracted guard 
services.  Source Selection Decision, supra, at 3.  

MDI argues that since the evaluators described UNT's secure inpatient 
facility as "unsolicited," the agency has improperly selected an 
unsolicited proposal in violation of Federal Acquisition Regulation 
(FAR)  sec.  15.607, which establishes guidelines for handling unsolicited 
proposals.  This contention is wholly unpersuasive.  Both UNT and MDI 
submitted proposals in response to a full and open competition 
conducted under a publicly-available solicitation.  UNT's inclusion in 
its proposal of a feature not expressly requested in the RFP does not 
make its proposal unsolicited--regardless of the wording of the 
evaluation materials quoted above.[6]

We view UNT's decision to offer a secure 10-bed nursing unit, complete 
with space for correctional officers, as logically within the realm of 
possible responses to the RFP's request for inpatient and outpatient 
hospital services--especially given the direction in the first 
technical evaluation subfactor advising offerors to address the 
agency's security concerns about off-site facilities.  Since the RFP 
sought detailed technical proposals, and included technical evaluation 
criteria, offerors here were on notice that qualitative distinctions 
would be made under various evaluation factors.  Doss Aviation, Inc.; 
Dominion Aviation, Inc., B-275419 et al., Feb. 20, 1997, 97-1 CPD  para.  
117 at 8.  In such procurements, evaluation credit properly may be 
given where a proposal includes enhancements or features not expressly 
identified in the solicitation.  Id.

In addition, we note that the concept of a locked hospital ward is not 
new to the industry, or unheard of in the realm of inmate health care 
contracts.  The agency points out that a similar proposal prevailed in 
such a competition in September 1996.  Agency Reply to Protester's 
Comments, Jan. 19, 1999, at 8 n.2.  We also disagree with the 
protester's contention that this approach will place inmates in the 
custody of non-agency officials.  As the offer clearly states, the 
facility includes space for agency correctional officers, who 
presumably will be in charge of the inmates.  In conclusion, we see 
nothing unreasonable about the agency's decision to value UNT's 
approach in this area, and to consider this approach as one of the 
features justifying selection of UNT's higher-priced proposal over 
MDI's proposal.  Doss Aviation, Inc.; Dominion Aviation, Inc., supra, 
at 8-9.

CONFLICT OF INTEREST

Upon MDI's receipt of the agency report, which included a copy of 
UNT's proposal, MDI learned that UNT was offering the services of Mr. 
Stephen Robertson, a former employee of the Bureau of Prisons; Mr. 
Robertson was identified in the proposal as UNT's Associate Director.  
The resume stated that Mr. Robertson was employed by the agency for 
several years, and that immediately prior to his departure in May 1997 
he had served as the agency's Medical Contracting Coordinator.  In 
this regard, Mr. Robertson's resume stated that he had served as a 
program manager to assist in the agency's managed health care 
initiatives.  The resume also claimed that he had been "[r]esponsible 
for developing boilerplate solicitations for the acquisition of 
comprehensive hospital and physician services. . . ."  UNT Technical 
Proposal, Tab C, Robertson Resume.  MDI argues that UNT's inclusion of 
Mr. Robertson's services in its proposal violates several 
post-employment conflict of interest restrictions and afforded UNT an 
unfair competitive advantage.

The agency acknowledges Mr. Robertson's role as a program manager 
involved in policy issues surrounding its procurement of health care 
for the federal inmate population, but denies that Mr. Robertson, or 
the agency, violated either the statutory or regulatory restrictions 
applicable to former government employees.  In addition, the agency 
explains that Mr. Robertson's role was actually less broad than 
claimed by his resume, and that his departure in May 1997--10 months 
prior to the release of the solicitation here, in March 1998--did not 
provide UNT with an improper competitive advantage in this 
procurement.

The interpretation and enforcement of post-employment conflict of 
interest restrictions are primarily matters for the procuring agency 
and the Department of Justice, not our Office.  Physician Corp. of 
Am., B-270698 et al., Apr. 10, 1996, 96-1 CPD  para.  198 at 5 n.1.  Our 
general interest, within the confines of a bid protest, is to 
determine whether any action of the former government employee may 
have resulted in prejudice for, or on behalf of, the awardee during 
the award selection process.  Creative Management. Tech., Inc., 
B-266299, Feb. 9, 1996, 96-1 CPD  para.  61 at 7.  Specifically, we review 
whether an offeror may have prepared its proposal with knowledge of 
insider information sufficient to establish a strong likelihood that 
the offeror gained an unfair competitive advantage in the procurement.  
PRC, Inc., B-274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD  para.  115 at 
17.  In our review, we consider whether the former government employee 
had access to competitively useful information, as well as whether the 
employee's activities with the firm likely resulted in disclosure of 
such information.  Id. 

Here, although Mr. Robertson claims in his resume to have been 
responsible for developing the boilerplate versions of solicitations 
for use in procuring the agency's medical services for inmates, the 
record shows that his proposal claim was somewhat exaggerated.  In 
materials provided by the agency and intervenor (including an 
affidavit from Mr. Robertson)--and not contested by the protester--the 
record shows that the boilerplate solicitation used in these 
procurements was originally developed in 1991, prior to the time Mr. 
Robertson assumed his responsibilities in this area in 1994.  The 
record also shows that in August 1996, the agency set out to revise 
its standardized solicitation, and that Mr. Robertson was responsible 
for reviewing the revised solicitation and suggesting revisions in the 
areas of managed care oversight, credentialing and privileging, and 
quality assurance.  UNT's Response to Conflict of Interest 
Allegations, Mar. 1, 1999, at 2-8.

While the facts above appear to support the agency's claim that Mr. 
Robertson was only peripherally involved in this procurement, even if 
we assume that Mr. Robertson's involvement was precisely that claimed 
in his resume--i.e., that he drafted the boilerplate solicitation for 
the agency's procurements of medical services, including the 
procurement here--nothing about this scenario supports a conclusion 
that UNT received an unfair competitive advantage by hiring him.  The 
mere employment of an individual who is familiar with the type of work 
required and who helped prepare the specifications or statement of 
work, but who is not privy to the contents of proposals or other 
inside information, does not itself establish a conflict of interest 
or confer an unfair competitive advantage.  Physician Corp. of Am., 
supra, at 6-7; Guardian Techs. Intl., B-270213 et al., Feb. 20, 1996, 
96-1 CPD  para.  104 at 6.  Since Mr. Robertson departed the agency almost a 
year before the RFP was issued, there was no chance he was aware of 
the contents of proposals, and there has been no showing that any 
other actions on his part have tainted this procurement.  

PRICE/TECHNICAL TRADEOFF AND THE EVALUATION OF PRICES

MDI argues that the price/technical tradeoff performed here was 
improper because it abandoned the preestablished tradeoff formula MDI 
contends was set forth in the solicitation's stated evaluation scheme.  
Alternatively, MDI claims that even if the agency could abandon the 
alleged preestablished tradeoff, the tradeoff ultimately performed was 
unreasonable because:  (1) the scoring of prices failed to properly 
weigh the differences between MDI's and UNT's proposed prices; (2) the 
agency conducted an unreasonable price analysis; and (3) the 
price/technical tradeoff improperly failed to consider MDI's strengths 
in three areas.

Predetermined Tradeoff

With respect to the first issue, MDI argues that the solicitation 
contained a preestablished tradeoff scheme by advising offerors that 
the technical and past performance evaluation factors were worth 70 
percent of available points and the price evaluation factor was worth 
30 percent of available points.  

As an initial matter, the protester's premise that the solicitation 
here contains a preestablished tradeoff formula is incorrect.  There 
is no statement in the RFP that award will be made to the offeror 
whose proposal receives the highest number of points.  Instead, the 
RFP merely adopts a routine weighting of the evaluation factors, and 
anticipates awarding point scores for price.  The use of predetermined 
formulae to mechanically select awardees is generally disfavored by 
our Office as an unnecessary--and often unwise--restriction of a 
selection authority's discretion.  See Harrison Sys. Ltd., B-212675, 
May 25, 1984, 84-1 CPD  para.  572 at 4-5.  Given our views of such 
formulae, we will not stretch to infer their presence without express 
language in the solicitation adopting a restrictive approach.    

The protester's contentions are also inconsistent with our views of 
the broad discretion given source selection officials to determine the 
manner and extent to which they will make use of evaluation results.  
Grey Adver., Inc., B-184825, May 14, 1976, 76-1 CPD  para.  325 at 11.  Not 
only do we disagree with MDI's argument that source selection 
officials must mechanically award contracts to the offeror whose 
proposal receives the highest number of points merely because the 
solicitation's evaluation approach scores both cost and technical 
factors, Resource Management. Int'l, Inc., B-278108, Dec. 22, 1997, 
98-1 CPD  para.  29 at 4-5, but, as we recently held, we view mechanical 
reliance on a purely mathematical price/technical tradeoff methodology 
as improper.  Opti-Lite Optical, B-281693, Mar. 22, 1999, 99-1 CPD  para.  
___ at 5.  Thus, we disagree with the protester's claim that the 
agency improperly abandoned a preestablished tradeoff scheme.[7]    

Improper Scoring of Price Proposals

MDI next argues that the agency failed to properly weigh the relative 
differences between price proposals by using incorrect prices in its 
calculation of price scores, and by failing to account for UNT's 
higher base rate in some pricing categories.  With respect to the use 
of incorrect prices in scoring proposals, there was an error in the 
scoring, but not the error MDI claimed.  After several rounds of 
pleadings, and a conference call involving the protester, agency, and 
intervenor, all parties agreed that the agency's methodology for 
scoring prices failed to determine the proportional relationship 
between those prices.[8]

The determination that the scoring of prices here was not rational 
does not end our inquiry.  Our Office will not sustain a protest 
unless there is a reasonable possibility of prejudice, that is, unless 
the protester demonstrates that, but for the agency's actions, it 
would have had a substantial chance of receiving the award.  
McDonald-Bradley, B-270126, Feb. 8, 1996, 96-1 CPD  para.  54 at 3; see 
Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996).  
Because our decision here turns on prejudice, we set forth below a 
lengthy analysis of how prices should have been scored to accurately 
reflect the relative cost of these proposals to the government, as 
called for in the RFP.  Based on our review, we conclude that MDI was 
not prejudiced by the agency's improper scoring of the price 
proposals.

Before turning to mathematical calculations, we must address two 
additional issues.  First, in calculating prejudice to MDI, we 
questioned whether the price comparison (and proportional scoring) 
should have been based on the total amount the agency will pay for 
these services, rather than on a review of the percentage premiums 
above, or discounts below, an offeror's Medicare or RBRVS rate.  In 
this regard, MDI appears to argue that the comparison should focus 
only on the percentage premiums (no offerors proposed discounts), for 
those categories where the underlying reimbursement rate was the same 
for all offerors.  

In our view, this approach will not yield a rational result and is 
inconsistent with the RFP.  All parties agree that the agency here 
will pay the underlying reimbursement rate plus the premium for the 
services covered by this contract.  Since there is no dispute about 
this fact, ignoring the underlying base rate ignores all but a small 
portion of the cost to the government.  

For example, by comparing only the percentage premiums, as the 
protester urges, a proposal offering a premium of 10 percent above the 
reimbursement rate is viewed as twice as expensive as a proposal 
offering a premium of 5 percent above the reimbursement rate.  
Applying the proportional scoring method to this approach, the 
proposal with the 10 percent premium will receive only half as many 
points as the proposal with the 5 percent premium.  Simply put, this 
approach does not provide an accurate comparison, and it does not 
result in an accurate proportional award of points.  Thus, we conclude 
that, for those categories where the reimbursement rates do not vary, 
the only comparison that accurately reflects the relative prices of 
these proposals is a comparison using a base of 100 adjusted by the 
proposed premium--or, as in the example above, a comparison of 110 to 
105.[9]

The second issue to be considered before turning to the actual 
calculations is MDI's argument that the agency's approach to comparing 
only percentage premiums above Medicare reimbursement rates fails to 
capture differences in the underlying rates--an argument inconsistent 
with MDI's opposition to the approach described above.  In essence, 
MDI argues that the agency's evaluation overlooks the difference in 
the Medicare Part A rates applicable to the inpatient hospital 
services portion of the pricing scheme.  As MDI explains, and as the 
parties generally agree, UNT's status as a teaching hospital results 
in higher Medicare Part A reimbursement rates because of the greater 
expenses associated with running a teaching hospital.  These higher 
reimbursement rates apply only to the pricing of inpatient hospital 
services; the remaining rates in the price schedule are constant from 
one offeror to the next.

Using a detailed price list for 503 standard Medicare medical 
procedures (included in both MDI's and UNT's proposals), MDI 
calculates that UNT's Medicare base rate for inpatient hospital 
services will be as much as 40.81 percent higher than MDI's rate.  MDI 
Comments on the Supp. Agency Report at 8.  Given the fact that MDI is 
apparently correct in its contention that UNT's underlying inpatient 
hospital rate is higher than MDI's rate, we are prepared to adopt--for 
purposes of assessing prejudice--the assumption that UNT's Medicare 
Part A rate will be 40 percent higher than MDI's rate. 

We now turn to the actual calculation of the proportional price 
differences between the proposals--the calculations required by the 
RFP.  We conclude that while MDI would receive the maximum number of 
available points (120) for proposing the lowest price, the calculation 
of the proportionate number of points for UNT's proposal leads to the 
assignment of 101.8 points.  These figures were obtained using the 
steps below.[10]

     (A)  The maximum points available for institution services, 
     inpatient/outpatient hospital services, and inpatient/outpatient 
     physician services are 60, 40, and 20, respectively, as set forth 
     in the evaluation materials.  As the lowest priced offeror in all 
     three categories, MDI receives all available points.

     (B)  For institution services, UNT receives 56.7 points, 
     calculated as follows:  115 (base of 100 plus MDI's premium) 
     divided by 121.69 (base of 100 plus UNT's premium) multiplied by 
     60 (total points for this category).

     (C)  For inpatient/outpatient hospital services, UNT receives 27 
     points, calculated as follows:  105 (base of 100 plus MDI's 
     premium) divided by 155.4 (UNT's base of 140[11] plus 11 percent 
     [UNT's premium] of 140) multiplied by 40 (total points for this 
     category).

     (D)  For inpatient/outpatient physician services, UNT receives 
     18.1 points calculated as follows:  110 (base of 100 plus MDI's 
     premium) divided by 121.64 (base of 100 plus UNT's premium) 
     multiplied by 20 (total points for this category).

Inserting these revised price scores into the overall evaluation 
yields the following results:  

EVALUATION FACTORS   
                               MDI        
                                                    UNT

Technical                      126                  149

Past Performance               103                  103

Price                          120                 101.8

TOTAL                          349                 353.8
Since a proper calculation of the proportional differences between 
MDI's and UNT's prices shows that UNT should have been the overall 
highest-rated offeror, we conclude that MDI was not prejudiced by the 
agency's errors in scoring the price proposal.

Other Challenges to the Price/Technical Tradeoff Decision

MDI's final two challenges are that the price analysis conducted here 
failed to capture the relative difference between the proposed prices 
(and thus infected the underlying tradeoff decision), and that the 
tradeoff decision unreasonably ignored MDI's evaluated strengths.  We 
disagree on both counts.

With respect to MDI's challenge to the price analysis, the depth of an 
agency's price analysis is a matter within the sound exercise of the 
agency's discretion.  Management Tech. Servs., B-251612.3, June 4, 
1993, 93-1 CPD  para.  432 at 8.  The purpose of a price analysis is to 
"ensure a fair and reasonable price, given the circumstances 
surrounding the acquisition."  FAR  sec.  15.404-1(b)(2).  In our view, the 
price analysis here had a different purpose than the evaluation of 
prices, discussed above, which sought to determine the relative 
difference between the offered prices and to award proportionally 
fewer points to higher-priced proposals.

The price analysis conducted here examines the proposed prices in four 
different ways:  (1) it compares the proposed premiums offered by the 
two offerors; (2) it compares the proposed premiums with other 
premiums offered under previous contracts; (3) it compares the 
proposed premiums with market or regulated prices; and (4) it 
considers the relationship between the proposed premiums and the 
independent government estimate.[12]  The analysis notes that the use 
of Medicare rates should save the agency money compared to using 
unrestricted fee schedule rates, and notes that Medicare rates are 
regulated by the Health Care Finance Administration, providing 
additional assurance that the prices charged will be in line with 
appropriate and reasonable fees for such services.  Price Analysis, 
Sept. 11, 1998, at 4.

Based on our review of this record, we conclude that the agency has 
generally ensured that prices will be reasonable by importing standard 
Medicare and RBRVS reimbursement rates to price its contract.  In 
addition, because we view the purpose of the price analysis as 
distinct from the price evaluation, we disagree with the protester's 
contention that the price analysis here should have shed light on the 
underlying differences between the offerors' inpatient hospital 
services rates.  Although the protester was able to find at least one 
error in the agency's analysis (as mentioned earlier, the analysis 
wrongly identified one of the protester's premiums), and makes much of 
the lack of a conclusion with regard to comparing prices with the 
government estimate, we consider the price analysis thoughtful, 
detailed, and an appropriate assessment of the reasonability of the 
offered prices.

Finally, in three different areas MDI argues that the price/technical 
tradeoff overlooked strengths in MDI's proposal in accepting UNT's 
proposal.  In this regard, we have reviewed each of MDI's claims and 
the record shows that MDI received credit for its strengths during the 
evaluation.  We are aware of no requirement that an agency restate 
each of an offeror's strengths when comparing proposals, and we have 
seen nothing unreasonable about the decision not to elevate any of 
these strengths to the tradeoff discussion.

In conclusion, our review of the record here, and the specific 
challenges raised by MDI, compels us to note that the source selection 
decision prepared by the contracting officer in this case was not a 
mechanical determination based only on point scores or prices.  
Rather, it was a detailed attempt by the contracting officer to weigh 
the features that led him to conclude that the proposal of UNT offered 
the best value to the government.  As a result, the selection 
decision--despite the miscalculated price scores in the underlying 
evaluation--appears an appropriate exercise of agency discretion.  

The protest is denied.

Comptroller General 
     of the United States 

1. The five technical subfactors, in descending order of importance, 
were:  technical approach, ability to provide diversity of services, 
centralized billing, managed care oversight, and professional staff 
credentials and qualifications.  The five past performance subfactors, 
of equal importance, were:  quality of service, timeliness of 
performance, cost control, business relations, and customer 
satisfaction.  RFP  sec.  D.2.3.3.

2. The RBRVS rate is a standard rate schedule called the Resource 
Based Relative Value Scale.  It applies to outpatient physician 
services and on-site institution services only.  Id.  sec.  A.2.3.1, 
A.2.3.2.  Inpatient/outpatient hospital services and inpatient 
physician services were priced using the Medicare rate.  Id.

3. Offerors could propose multiple percentage premiums for use of 
different facilities and approaches.  Price scores were calculated 
using the average of the premiums. 

4. As discussed in greater detail below, the agency's calculation of 
price scores failed to award a proportionally lower score to the 
higher-priced offeror; however, for purposes of this discussion, we 
display the scores as calculated at the time.

5. In three other technical areas, MDI argues that the price/technical 
tradeoff failed to adequately consider identified strengths in its 
proposal.  These issues will be considered as part of MDI's challenge 
to the price/technical tradeoff.

6. Similarly unpersuasive is MDI's attempt to shoehorn the facts here 
into our line of cases where an agency's requirements change after a 
solicitation has been issued, but offerors are not given notice of the 
changed requirements and an opportunity to respond.  See Symetrics 
Indus., Inc., B-274246.3 et al., Aug. 20, 1997, 97-2 CPD  para.  59 at 5-6 
(and cases cited therein).  Simply put, there is no evidence in this 
record of any change in the agency's need for medical services.

7. While we will not foreclose the possibility that an agency could 
structure a mathematical tradeoff formula in such a manner which 
encompasses a reasoned cost/technical tradeoff, id. at 5 n.4, we 
generally consider unwise such restrictions on the discretion of 
source selection officials to make tradeoff decisions.  See Harrison 
Sys. Ltd., supra, at 5.  In any event, there is no evidence of any 
such formula in the solicitation here. 

8. MDI, by focusing on one price category only, assumed that the 
agency had imported a mistake from the price analysis into the 
scoresheets.  Specifically, MDI noted that at one point in the price 
analysis, the documents reflect MDI's average price for hospital 
services as "Medicare plus 10 %."  Price Analysis, Sept. 11, 1998, at 
2.  In fact, MDI had an average hospital services rate of Medicare 
plus 5 percent--and this rate was properly used in the price scoring.  
Scoring of Price Proposals, Aug. 27, 1998, at 3.  The error in the 
price scoring did not result from the use of an incorrect price, as 
MDI alleged, but from the use of a flawed calculation methodology, 
which was expressly stated on the first page of the Scoring of Price 
Proposals document (released to the protester's counsel under a 
protective order).

9. With respect to the protester's complaint that this approach is 
inconsistent with the solicitation's stated evaluation scheme for 
scoring prices, we disagree.  As quoted above, the solicitation stated 
that

            price proposals will be ranked in order from the highest 
            discount offered to the highest premium offered.  The 
            Offeror proposing the best overall discount from the 
            Medicare/RBRVS rate will be considered to be proposing the 
            lowest price.  Maximum points for each category will be 
            awarded to the Offeror proposing the lowest price and each 
            Offeror ranked thereafter will be awarded a proportionate 
            number of points.

RFP  sec.  D.2.3.3.  Nothing in this scheme says that the comparison of 
prices will be based solely on a comparison of the discount rate; in 
fact, the provision states that the comparison will be of prices.  
Since the prices here clearly include the underlying base to which the 
premium is applied, we think the protester's criticism that this 
approach abandons the RFP's evaluation scheme is invalid.  We also 
note that the protester's criticism of this approach is inconsistent 
with its contention, discussed below, that the agency failed to 
consider the greater underlying cost associated with UNT's higher 
Medicare Part A reimbursement rate.

10. These calculations use the average of the premiums entered by MDI 
and UNT on the solicitation's price schedule, as shown earlier.  To 
recap, MDI's average premiums for institution services, 
inpatient/outpatient hospital services, and inpatient/outpatient 
physician services, are 15 percent, 5 percent, and 10 percent, 
respectively.  UNT's average premiums for these categories are 21.69 
percent, 11 percent, and 21.64 percent, respectively.

11. This portion of the calculation assumes, based on MDI's claim, 
that UNT's reimbursement rate for in-patient hospital services will be 
40 percent higher than MDI's rate.  Thus, UNT's base is therefore 
stated as 140, and its 11 percent premium in this area is multiplied 
by this base.

12. In this fourth area, the analysis concludes that the comparison is 
not meaningful because the government's total estimate of costs cannot 
be compared with the premium over reimbursement rates used to price 
this contract.