TITLE:  DataTrak Consulting, Inc., B-292502; B-292502.2; B-292503; B-292503.2, September  26, 2003
BNUMBER:  B-292502; B-292502.2; B-292503; B-292503.2
DATE:  September  26, 2003
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DataTrak Consulting, Inc., B-292502; B-292502.2; B-292503; B-292503.2, September
26, 2003

   Decision
    
    
Matter of:   DataTrak Consulting, Inc.
    
File:            B-292502; B-292502.2; B-292503; B-292503.2
    
Date:              September 26, 2003
    
Terry L. Pechota, Esq., Pechota Leach & Dewell LLP, and Karen D. Powell,
Esq., Petrillo & Powell, PLLC, for the protester.
Michael Colvin, Department of Health and Human Services, for the agency.
Paula A. Williams, Esq., Paul I. Lieberman, Esq., and Michael R. Golden,
Esq., Office of the General Counsel, GAO, participated in the preparation
of the decision.
DIGEST
    
Contracting agency had a reasonable basis to cancel request for quotations
and recompete requirement for third party billing support services where
the only quote that was received in response to the initial solicitation
was evaluated as unacceptable and the record shows that during the course
of evaluation the agency reasonably concluded that initial solicitation no
longer meets the agency*s needs.
DECISION
    
DataTrak Consulting, Inc. protests the evaluation of its quotation as
unacceptable and the subsequent cancellation of request for quotations
(RFQ) No. 03-085, issued by the Indian Health Service (IHS), Department of
Health and Human Services (HHS) as a Buy-Indian set aside for third party
billing support services at the Ft. Berthold Service Unit/Minnetohe IHS
clinic in North Dakota.  DataTrak also protests the terms of the revised
solicitation, RFQ No. 03-099, issued after cancellation of the initial
solicitation.  DataTrak challenges the agency*s decision on numerous
grounds primarily alleging that the agency*s evaluation of its quotation
was inconsistent with the RFQ evaluation factors and was inadequately
documented, and that the agency acted in bad faith in order to avoid
issuing a purchase order to DataTrak.The protester also contends that the
revised RFQ is unduly restrictive of competition.
    

   We deny the protests.
    
The initial RFQ was issued on May 16, 2003 under the simplified
acquisition procedures set forth in Federal Acquisition Regulation (FAR)
subpart 13.3 for the acquisition of other than commercial items.[1]  As
amended, the initial RFQ calls for the contractor to provide all
personnel, supplies, materials and equipment necessary to provide third
party claim processing services for the Ft. Berthold Service
Unit/Minnetohe IHS clinic.  RFQ statement of work (SOW) at 3.  Vendors
were instructed to provide unit and extended prices on the RFQ schedule
for four line items:  (1) third party claim processing and filing (paper
and/or electronic filing for an estimated 5,000 claims); (2) accounts
receivable posting of the estimated 5,000 claims billed by the contractor;
(3) revenue generation consultative services (which requires two on-site
visits by a consultant to evaluate and recommend improvement of the
billing processes at the clinic); and (4) software for electronic claim
filing using a clearinghouse compatible with the agency*s Resource Patient
Management System (RPMS).  RFQ schedule at 1; RFQ SOW at 1-2.
    
Quotations were to be evaluated on the basis of price and the following
factors:
(1) ability to meet performance schedule, (2) reasonableness of price,
(3) responsiveness to requirement, and (4) technical qualifications.  RFQ
Notice to Quoters (Notice) at 1.  Under technical qualifications, the RFQ
instructed vendors to furnish full and complete information in its
proposal that *need not be more than five pages.*  Id.  According to the
RFQ, this information was to address the following criteria:  technical
capability, past performance, revenue generation consultative services,
and personnel and management capability.[2]  RFQ Notice at 1-3.  In
addition, the RFQ identified numerous separate elements under the
technical qualification criteria.  For example, with respect to technical
capability, the RFQ stated:
    
Each offeror shall specifically outline their third party billing,
clearinghouse capability with Indian Health Services, accounts receivable
and follow-up, and consultative services in terms of knowledge and
experience as it relates to:
.        RPMS Third Party Billing software
.        RPMS Accounts receivable program
.        RPMS Patient Registration program
.        Electronic claim filing processing for similar IHS facilities
.        IHS coding, data entry, and reimbursement issues
.        Privacy Act
.        HIPAA [Health Insurance Portability and Accountability Act]
requirements
    
The process to log and track the receipt and return of all applicable
forms to the Service Unit will be evaluated also.
    
RFQ Notice at 1.
    
The solicitation further stated that all required information must be
provided in order for quotations to be considered responsive and eligible
for award and that the agency reserved the right to make award to *other
than the low estimated offer* based on technical qualifications.  Id. at
3.
    
The initial RFQ was issued on a limited competition basis to three
certified Buy-Indian vendors.  Agency Report (AR), Contracting Officer*s
Statement at 1.  DataTrak*s quotation was the only quote received by the
May 23 response date and was evaluated by a three-member evaluation panel
as technically unacceptable.  Among other things, the evaluation panel was
not satisfied that DataTrak had sufficient relevant experience in billing
and accounts receivable, noting that DataTrak*s primary strength was in
coding and data entry.  The evaluators found that while DataTrak specified
training in the RPMS billing module, the firm did not describe how its
employees were trained, and that DataTrak did not identify training in
accounts receivable which is a separate RPMS application.  In addition,
the evaluators considered DataTrak*s proposal too vague because the firm
did not address its past experience using the RPMS Accounts Receivable
application or in the RPMS Patient Registration process.  The evaluators
were concerned that DataTrak did not propose an adequate staffing plan,
and that DataTrak had identified only one employee with experience in
third party billing and accounts receivable, in light of the volume of
claims and accounts receivable identified in the SOW.  In sum, the
evaluation panel concluded that DataTrak*s quotation was unacceptable
because the firm*s quotation failed to satisfactorily demonstrate the
ability to provide the billing, accounts receivable, and revenue
generation consultative services required by the solicitation.  AR exh. 3,
Technical Evaluation Report, at 3.
    
At approximately this same time, the project manager, who was a member of
the evaluation panel noted that two SOW requirements--the accounts
receivable follow-up and rebilling requirement and the requirement for
vendors employees* past performance in billing and accounts
receivable--were not included in the technical evaluation criteria. 
Consequently, in a June 2 e-mail to the contracting officer, the project
manager requested that the *contract bid process* be re-opened.  AR exh.
9, E-mail from Project Manager to Acting Senior Contracting Officer.  In a
subsequent meeting, the procurement officials discussed the *changes that
needed to be made in the [SOW],* that the software for electronic claim
filing using a clearinghouse compatible with the agency*s RPMS was no
longer needed, and that an acceptable quote had not been received in
response to the initial RFQ.  Thereupon the contracting officer decided to
cancel the initial RFQ and resolicit under a revised solicitation.  AR
Contracting Officer*s Statement at 2.  By letter dated June 10, the agency
informed DataTrak that the RFQ was canceled because *no responsive bids
[had] been received from a responsible bidder in accordance with FAR Part
14.404-1(c)(8).*  AR exh. 4, Agency Letter to DataTrak.  On June 18, HHS
issued the revised RFQ as a Buy-Indian set aside, and the agency received
three quotations, including one from DataTrak, by the June 27 response
date. 
    
On June 26, DataTrak protested the agency*s actions to our Office. 
Specifically, DataTrak protests the agency*s evaluation of its quotation
and its conclusion that its proposal was technically unacceptable based on
DataTrak*s failure to submit sufficient detailed information to
demonstrate that the firm could successfully accomplish the SOW
requirements.  DataTrak asserts that the solicitation recommended
submission of a five-page proposal, and that it accordingly submitted
technical information within the length of time it was given to respond
(5 business days) at a level of detail commensurate with the recommended
length of the proposal.  Protester*s Comments at 3.  DataTrak*s protest
focuses on its belief that HHS deviated from the evaluation scheme set
forth in the RFQ by evaluating its quotation on a best value basis, rather
than on the *responsiveness to requirements* standard for evaluation set
forth in the solicitation.  Supplemental Protest
(B-292502.2) at 5-6.  Citing our decision in SKJ & Assocs., Inc.,
B-291533, Jan. 13, 2003, 2003 CPD P: 3, DataTrak maintains that while the
RFQ explicitly reserved the right to make award to other than the low
priced vendor based on technical qualifications, it failed to disclose how
the technical proposal would be weighted against the other evaluation
factors.  Accordingly, DataTrak concludes that the agency had no
reasonable basis for finding the protester*s quotation unacceptable solely
on the basis of the technical evaluation.[3]  Protester*s Comments at
6-8.  The agency defends its evaluation of the protester*s quotation as
technically unacceptable.  It argues that DataTrak*s quotation would never
have been selected for award of the purchase order in any event because
the agency determined that its needs had changed, as a result of which
cancellation was necessary.
    
As discussed below, we see no basis to object to the agency*s decision to
cancel the initial RFQ and resolicit using a revised RFQ that reflects the
agency*s actual needs.  Accordingly, we need not address the agency*s
evaluation of DataTrak*s quotation.
    
A contracting agency need only establish a reasonable basis to support a
decision to cancel an RFQ.  Surgi-Textile, B-289370, Feb. 7, 2002, 2002
CPD P: 38 at 2.  So long as there is a reasonable basis for doing so, an
agency may cancel a solicitation no matter when the information
precipitating the cancellation first arises, even if it is not until
offers (or, as here, quotations) have been submitted and evaluated. 
A-Tek, Inc., B-286967, March 22, 2001, 2001 CPD P: 57 at 2-3;
Peterson-Nunez Joint Venture, B-258788, Feb. 13, 1995, 95-1 CPD P: 73 at
4.  Cancellation is warranted where a reassessment of the agency*s minimum
needs results in an agency no longer having a requirement for an item or
service.  USA Elecs., B-283269.2, Oct. 5, 1999, 99-2 CPD
P: 67 at 3.
    
The record reflects that the agency canceled the initial RFQ and made the
decision to resolicit its requirements under a revised solicitation after
the project manager*s review of the acquisition and her conclusion that
the Ft. Berthold Service Unit/Minnetohe IHS clinic*s needs had changed. 
Specifically, the agency reports that its primary reason for canceling and
resoliciting this requirement was the agency*s determination that the
requirement for electronic claim filing using a clearinghouse for billing
third parties was no longer needed because these services would be
performed in-house.  Agency Dismissal Request at 2.  In response, DataTrak
asserts that the agency *did not have a justifiable change in its needs
that would support this action.*  Supplemental Protest (B-292503.2) at
14.  Rather, the protester alleges, the revised RFQ is for the same effort
and scope of work as the initial RFQ and DataTrak insists that the agency
simply issued the revised RFQ to change the evaluation criteria and thus
avoid making award to DataTrak whose quotation in response to the initial
RFQ was fully responsive.  Id. at 14-16; Protester*s Comments at 9-13.
    
Our review of the record provides no basis for us to question the
reasonableness of the agency*s cancellation of the initial RFQ.  HHS has
demonstrated that the cancellation reasonably resulted from the change in
the agency*s actual needs, which no longer require electronic claim filing
services using a clearinghouse for billing third parties.  The protester*s
disagreement with the agency*s decision neither shows that the agency*s
determination of its needs is unreasonable, nor provides a basis for
requiring the agency to issue a purchase order for services that the
agency does not require.  Moreover, the record does not support the
allegation that the proffered rationale for cancellation of the initial
solicitation is merely a pretext by the agency to avoid awarding a
purchase order to DataTrak.  We will not attribute bias to an agency on
the basis of inference and supposition and, without strong evidence to
support such a conclusion, we will not find that agency employees acted in
bad faith.  Chenega Mgmt., LLC, B-290598, Aug. 8, 2002, 2002 CPD P: 143 at
4.
    
As a final matter, DataTrak challenges several aspects of revised
RFQ-03-099.  Specifically, the protester contends that the requirements
are excessive for an acquisition of this size and duration; for example,
the revised solicitation includes additional experience requirements for
coders/billers, a detailed staffing plan and requires vendors to have four
years of accounts receivable entry and follow-up services.  Protest
(B-292503) at 11-12.  In its consolidated report on the protests, HHS
responded to each of these allegations.  In its comments on the agency*s
consolidated report, DataTrak simply states that it *incorporates herein
those arguments* and grounds of protest asserted in its initial and
supplemental protests.  Protester*s Comments at 1.  Since DataTrak has
failed to substantively rebut the agency*s position on these issues, we
have no basis to consider these allegations.  See LSS Leasing Corp.,
B-259551, Apr. 3, 1995, 95-1 CPD P: 179 at 5 n.6.
    
The protests are denied.[4]
    
Anthony H. Gamboa
General Counsel
    

   ------------------------

   [1]While an RFQ was used as the solicitation vehicle, the record otherwise
reflects the application of terminology usually associated with a
negotiated procurement.
[2]Notwithstanding the requirements of FAR S:S: 13.106-1(a)(2) and
13.106-2(a)(2), the RFQ was silent as to how proposals would be evaluated
under these factors.
[3]In its initial and supplemental protests, DataTrak goes into great
detail to show that the procurement was conducted under the sealed bid
procedures of FAR Part 14 rather than the negotiated procedures in FAR
Part 15 and that the sealed bid standards for evaluation and cancellation
are therefore applicable.  For instance, the protester points out that the
contracting officer *justified the cancellation by referring to the
standards of FAR Part 14 for a cancellation after bid opening.* 
Supplemental Protest (B-292502.2) at 2-3.  Moreover, DataTrak asserts that
the solicitation made no references to best value or any of the procedures
required in a negotiated procurement and insists that the RFQ lacked terms
which would have given vendors notice that this acquisition was a best
value procurement.  Id.; Protester*s Comments at 6-8.  DataTrak does not
specifically challenge the RFQ in this regard; in fact, any protest on
this ground after the evaluation was completed would have been untimely. 
4 C.F.R. S: 21.2(a)(1) (2003).
In any event, while the solicitation did not make clear what the basis for
the evaluation and selection would be, the record reflects that the agency
did not use the RFQ simply to obtain price quotations for these services. 
Rather, the RFQ provisions indicate that the agency intended to use the
vendors* responses as the basis for a detailed technical evaluation and
tradeoff that is akin to a negotiated procurement, and not to sealed
bidding. 
[4]DataTrak has raised various other complaints regarding this procurement
each of which we have considered and find without merit.