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.