TITLE:	United Payors & United Providers Health Services, Inc.
BNUMBER:	   B-282075.4
DATE:		   June 26,2002
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United Payors & United Providers Health Services, Inc., B-282075.4, June 26,
2002

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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.
Decision

Matter of:   United Payors & United Providers Health Services, Inc.

File:            B-282075.4

Date:              June 26, 2002

Kenneth B. Weckstein, Esq., and Raymond Fioravanti, Esq., Epstein Becker &
Green, for the protester.
Devon E. Hewitt, Esq., Shaw Pittman, for CRAssociates, Inc., an intervenor.
Mike Colvin, Department of Health & Human Services, for the agency.
Mary G. Curcio, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that agency improperly rated proposals under a tiebreaker evaluation
factor--business management competence--on a pass/fail, rather than a
comparative, basis is denied; solicitation did not provide that the factor
would be evaluated in a particular way, and there was nothing inherently
unreasonable in the agency's assessing only whether offerors' business
management competence was at an acceptable level.

DECISION

United Payors & United Providers Health Services, Inc. (UP/UP) protests the
award of a contract to CRAssociates, Inc. under request for proposals (RFP)
No. 282-99-0001, issued by the Department of Health and Human Services for
health care services for alien detainees.  UP/UP protests that the agency
did not award the contract in accordance with the solicitation provisions.

We deny the protest.

The RFP, which contemplated the award of a cost-plus-fixed-fee contract for
a period of 5 years, required the contractor, among other things, to review
and pay claims for medical services rendered to alien detainees.  The RFP
provided for a ?best value? award, with paramount consideration to be given
to technical merit, rather than to cost.  The techncial evaluation factors
were as follows:  Technical Approach, Understanding the Problem, Key
Personnel, Organizational Experience, and Adequacy of Program Management.
Proposals initially evaluated as technically acceptable under these factors
would be evaluated for business management and cost, and proposals that were
included in the competitive range would also be evaluated for past
performance.  Where two or more proposals were technically equal, business
management competence and total cost would become the determinative award
considerations.  RFP ï¿½ M.2.  With respect to business management competence,
contract performance required the awardee to have significant cash reserves
to accomplish task four, the review and payment of medical claims.  RFP
ï¿½ M.4.  Offerors thus were required to indicate if they had the necessary
financial capacity, working capital and other resources to perform the
contract, without assistance from any outside source.  RFP ï¿½ L.9.

UP/UP's and CRA's proposals were included in the competitive range.[1]
After two rounds of discussions and the submission and evaluation of final
proposal revisions, UP/UP's and CRA's proposals were considered technically
equal, with 97 and 97.5 points, respectively, and both offerors were rated
good for past performance.  Since the proposals were technically equal, the
agency considered business management competence and cost, the tiebreaking
factors.  The agency initially looked at cost, and determined that CRA would
be in line for award based on its lower cost-[DELETED] compared to UP/UP's
[DELETED] (both offerors' proposed costs were determined to be realistic).
With respect to business management competence, the contracting officer
found that both offerors had sufficient financial capacity and management
competence to perform.  Contracting Officer's Statement (COS) at 7;
Supplemental Contracting Officer's Statement (SCOS).  Accordingly, the
agency made award to CRA based on its lower cost.

UP/UP protests the award decision, arguing that it is inconsistent with the
evaluation criteria established in the solicitation.[2]  Specifically, UP/UP
maintains that the agency improperly rated proposals on a pass/fail, rather
than a comparative, basis under the business management competence factor.
It is UP/UP's view that, in doing so, the agency rendered the factor
meaningless as a tiebreaker.  According to UP/UP, since it had sufficient
financial capacity to perform the contract and was in excellent financial
condition, it should have received a higher business management competence
rating than CRA, which the Defense Contract Audit Agency (DCAA) found was in
an unfavorable financial condition.  UP/UP concludes that it would have
received the award had proposals been evaluated properly under this factor.
[3]

We find nothing improper in the agency's rating of the proposals under the
business management competence factor on a pass/fail basis.  The
solicitation did not provide that the factor would be scored in any
particular way, and we find nothing inherent in the factor that suggests
that it could not meaningfully be applied on a pass/fail basis.  In this
regard, as a general proposition, an agency properly may convert a
responsibility consideration (such as financial capacity and condition) into
an evaluation factor and, provided that a small business is not involved,
may evaluate that factor on a pass/fail basis.  See McLaughlin Research
Corp., B-247118, May 5, 1992, 92-1 CPD ï¿½ 422 at 4.  The protester has cited
no authority for its contrary view.  We conclude that HHS reasonably
evaluated the proposals on a pass/fail basis under the business management
competence factor.

We also see nothing unreasonable in the agency's finding that CRA's proposal
was acceptable under the business management competence factor.  In this
regard, HHS evaluated CRA for business management competence after
concluding that CRA was otherwise in line for award after applying the other
tiebreaker, price.  The HHS Contract Support and Review Branch (CSRB)
requested the Defense Contract Audit Agency (DCAA) to perform a preaward
audit of CRA and to comment on CRA's financial condition.  Initially, on
February 13, DCAA reported that CRA was in an unfavorable financial
condition and, more specifically, that CRA might have difficulty meeting its
near-term financial obligations and be unable to perform on government
contracts without extraordinary management actions, such as an expanded line
of credit.  DCAA Audit Report at 1.  On February 14, CRA provided HHS with a
letter from its bank stating that the bank would pursue approval to increase
CRA's letter of credit by $6 million, and that such approval was primarily
contingent on CRA's receiving the HHS contract award.[4]  The CSRB then
requested DCAA to clarify its opinion of CRA given this information
regarding an expanded line of credit.  DCAA responded on February 14 that,
with the additional line of credit, CRA may not have trouble meeting its
near term obligations, and therefore should be able to perform current and
additional government contracts.  The CSRB reviewed this updated opinion and
obtained additional information from CRA, including its expected profit for
2002, the fact that CRA's assets exceeded liabilities, and the fact  that
CRA was in compliance with their current letter of credit.  CSRB Memorandum
at 1, 2.  The information provided by CRA clearly addressed DCAA's concerns
and, therefore, provided a reasonable basis for HHS's finding CRA acceptable
under the business management competence factor.

The protest is denied.

Anthony H. Gamboa
General Counsel


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[1] This procurement was the subject of three earlier protests.  Initially,
CRA filed a protest against its exclusion from the competitive range.  The
agency took corrective action as a result of that protest (B-282075, March
16, 1999) and included CRA in the competitive range.  After the competition
was completed, UP/UP was awarded the contract.  CRA protested that award,
and our Office sustained it (CRAssociates, Inc., B-282075.2, B-282075.3,
Mar. 15, 2000 CPD ï¿½ 63), recommending that HHS reopen discussions, obtain
best and final offers and make a new award decision.  HHS followed our
recommendation and CRA was awarded the contract.  This protest followed that
award.
[2] UP/UP has filed a supplemental protest (B-282075.5) that is pending, and
which we intend to address in a separate decision.
[3] In its protest, UP/UP raised a number of additional issues to which the
agency responded in its report, which responses UP/UP failed to address in
its comments on the report.  These issues included, for example, UP/UP's
assertion that HHS unreasonably assigned CRA's technical proposal a score of
97.5 points.  We consider these issues abandoned and have not addressed them
in this decision.  Westinghouse Gov't and Envtl. Servs. Co., Inc., B-280928
et al., Dec. 4, 1998, 99-1 CPD ï¿½ 3 at 7 n.6.
[4]To the extent the facts suggest that the agency may have reopened
discussions only with CRA to resolve this issue, UP/UP does not protest on
this basis.