TITLE:  Sierra Military Health Services, Inc.; Aetna Government Health Plans, B-292780; B-292780.2; B-292780.3; B-292780.4; B-292780.5; B-292780.6, December 5, 2003
BNUMBER:  B-292780; B-292780.2; B-292780.3; B-292780.4; B-292780.5; B-292780.6
DATE:  December 5, 2003
**********************************************************************
Sierra Military Health Services, Inc.; Aetna Government Health Plans, B-292780;
B-292780.2; B-292780.3; B-292780.4; B-292780.5; B-292780.6, December 5, 2003

   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:   Sierra Military Health Services, Inc.; Aetna Government
Health Plans
    
File:            B-292780; B-292780.2; B-292780.3; B-292780.4; B-292780.5;
B-292780.6
    
Date:              December 5, 2003
    
Thomas Wheeler, Esq., Kevin P. Mullen, Esq., Eliza P. Nagle, Esq., David
E. Fletcher, Esq., and Cathy A. Hinger, Esq., Piper Rudnick, and Paul F.
Khoury, Esq., Dorthula Powell-Woodson, Esq., Phillip H. Harrington, Esq.,
and Janet L. Eichers, Esq., Wiley Rein & Fielding, for Sierra Military
Health Services, Inc., and David R. Hazelton, Esq., Roger S. Goldman,
Esq., C. Thomas Powell, Esq., and Leslie E. Dupuy, Esq., Latham & Watkins,
and Steven A. Tolliver, Esq., for Aetna Government Health Plans, the
protesters.
Thomas P. Humphrey, III, Esq., Robert M. Halperin, Esq., Elizabeth W.
Newsom, Esq., Amy E. Laderberg, Esq., J. Chris Haile, Esq., J. Catherine
Kunz, Esq., and Heather H. Hormel, Esq., Crowell & Moring, for Health Net
Federal Services, Inc., an intervenor.
Kenneth Lieb, Esq., and Rhonda Bershok, Esq., TRICARE Management Activity,
for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Agency's communications with awardee during oral presentation did not
constitute discussions, and agency thus was not required to conduct
discussions with and request revised proposals from all offerors in the
competitive range, where information furnished by awardee (with respect to
staffing of effort to develop health care network) in response to agency
questions after oral presentation was merely a clarification of
information previously furnished by awardee in the presentation slides and
accompanying oral presentation of slides.
DECISION
    
Sierra Military Health Services, Inc. and Aetna Government Health Plans
(AGHP) protest the TRICARE Management Activity's (TMA) award of a contract
(No. MDA906-03‑C‑0011) to Health Net Federal Services, Inc.
(HNFS), under request for proposals (RFP)
No. MDA906‑02‑R-0006, for the purpose of obtaining managed
care support services for the North Region of the United States.  The
protesters assert that TMA improperly made award without conducting
discussions with them, and also challenge various aspects of the technical
and past performance evaluations.
    
We deny the protests.
    
The RFP, issued on August 1, 2002, provided for award of three contracts,
one for each of three geographic regions in the United States (North,
South and West), to provide Managed Care Support (MCS) for a base or
transition period, with 5 option years, to the Department of Defense
TRICARE program.  These protests concern the award to HNFS for the new
North Region, which is comprised of the current Region 1, for which Sierra
is the incumbent MCS contractor, and Regions 2/5, for which Humana, a
proposed subcontractor to AGHP for this procurement, is the incumbent MCS
contractor.  The North Region includes Connecticut, the District of
Columbia, Delaware, Illinois, Indiana, Kentucky, Massachusetts, Maryland,
Maine, Michigan, New Hampshire, New Jersey, New York, North Carolina,
Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia and
Wisconsin.
    
The MCS contractor is to assist the Regional TRICARE Directors and
Military Treatment Facility (MTF) Commanders in operating an integrated
health care delivery system combining the resources of the military's
direct medical care system and the contractor's managed care support to
provide health, medical, and administrative support services to eligible
beneficiaries.  The TRICARE beneficiaries, who include, primarily, active
duty services members and their families, military service retirees and
their families, and family member survivors, have three options for health
care:  (1) providers of their own choosing on a fee-for-service basis (the
TRICARE Standard program); (2) members of the contractor's preferred
provider organization (the TRICARE Extra program); or (3) a
contractor‑established health maintenance organization (the TRICARE
Prime program).  The contractor is required to collaborate with the
TRICARE Regional Director and the MTF Commanders to ensure the most
efficient mix of health care delivery between the military health system
(MHS) and the contractor's system.  The solicitation's statement of work
(SOW) generally set forth five objectives under the contract: 
optimization of the MHS, beneficiary satisfaction, best value health care,
fully operational services and systems at the start of health care
delivery, and ready government access to contractor TRICARE data.  RFP S:
C-2.1.    
    
The RFP provided for the submission of proposals generally consisting of: 
(1) a technical proposal, essentially limited to those slides addressed,
discussed or presented in a 6‑hour oral presentation, and written
performance standards (without narrative explanation); (2) past
performance information; (3) financial information; (4) a price and cost
proposal; (5) a performance guaranty; (6) a corporate guaranty; (7) a
small business subcontracting plan; and (8) certain required
representations and certifications.  The RFP provided that *[t]he
Government intends to evaluate proposals and award a contract without
discussions,* and cautioned offerors that *[p]roposals (written and oral)
should contain the offeror's best terms from a cost or price and technical
standpoint.*  RFP P: L.12.h, i. 
    
Award was to be made to the offeror whose proposal represented the *best
value*   based on evaluation under factors:  (1) technical approach,
including optimization of the MHS, beneficiary satisfaction, best value
health care, transition in, and access to data; (2) past
performance/performance risk; (3) total evaluated price, including the
price for administrative support services and the contractor's health care
cost underwriting fees for all contract periods other than the first
option period; and (4) probable cost, including only the underwriting fee
and the underwritten health care cost for the first option period. 
Technical approach was more important than past performance, which was
more important than price and cost combined, while price was more
important than cost.  Within the technical approach factor, MHS
optimization, beneficiary satisfaction and best value health care were of
equal importance, and each was more important than transition and access
to data, while transition was more important than access to data.
    
TMA received written proposals for the North Region from three
offerors‑‑HNFS, Sierra and AGHP.  All three offerors then made
oral presentations, which were followed by oral clarification sessions
(OCS).  Based upon its evaluation of the proposals, TMA determined that
HNFS's offered the best value.
    
As an initial matter, TMA determined Sierra's proposal to be technically
unacceptable, finding that it failed to meet the material requirements of
the RFP and could not be made acceptable without a major proposal
revision, and that it indicated a failure on the part of Sierra to
understand the RFP requirements.  Sierra, the incumbent TRICARE MCS
contractor, received unacceptable (red) ratings with high proposal risk
under the technical subfactors for MHS optimization, beneficiary
satisfaction, best value health care, and transition, and a marginal
(yellow) rating with moderate proposal risk for access to data.  Source
Selection Decision (SSD) at 2, 9-17; Source Selection Advisory Council
(SSAC), Technical Considerations Regarding Discussions, at 12, 25-39;
Source Selection Evaluation Board (SSEB) Report at 2-5; Source Selection
Evaluation Team (SSET) Report on Sierra at 17-18, 70-71,138-39, 171-72. 
    
Sierra's unacceptable ratings were assigned based on a number of
significant evaluated weaknesses, several of which resulted from its
statement during the oral clarification session that it had terminated its
relationship with WellPoint Health Networks, Inc.  Sierra had proposed to
have WellPoint provide consultative services to improve medical management
decision support, and to utilize WellPoint's current operations for
provider relations in the 11 states of Regions 2/5 to facilitate network
development.  The SSA concurred with the determination of the SSAC, SSEB,
and SSET to assign a significant weakness to Sierra's proposal under the
MHS optimization subfactor based on concerns as to Sierra's ability to
accomplish network development and maintenance in Regions 2/5 without a
definite alternative plan to compensate for the termination of the
WellPoint arrangement.  In this regard, the SSA noted that, while Sierra
stated in its presentation that it would assume the duties of network
development in Regions 2/5, its plan lacked substance.  Likewise, while
Sierra mentioned the alternative of possibly purchasing the Humana network
in Region 2/5, Sierra furnished no details in this regard, and the agency
discounted the likelihood of this happening, since Humana was a competitor
of Sierra's.  Hearing Transcript (Tr.) at 558, 582, 1,002-03, 1,180,
1,214.[1]  While Sierra had an extensive network in the current Region 1
(the Northeast) and specified in its proposal that [DELETED] network
development personnel would service that area, its proposal (after the
loss of WellPoint) identified no personnel for development and maintenance
of provider networks in Regions 2/5.  The SSAC concluded that it would
take a major proposal revision for Sierra to adequately describe how it
would provide network development in Regions 2/5 without WellPoint.  SSAC,
Technical Considerations Regarding Discussions, at 26. 
    
In addition to contributing to the determination that its proposal was
unacceptable with respect to MHS optimization, Sierra's failure to
demonstrate an ability to develop and maintain an adequate provider
network contributed to a determination that its proposal also was
unacceptable with respect to beneficiary satisfaction, best value health
care, and (insofar as it concerned initial network development)
transition.  As the SSA noted with respect to beneficiary satisfaction,
the impact of a deficient network occurs when beneficiaries cannot get
necessary medical care at a convenient location or time due to a lack of
network providers.  SSD at 12.
    
The SSA and the evaluators also found other significant weaknesses in
Sierra's proposal.  Thus, while the proposal was evaluated as offering
good technology to support Sierra's overall medical management program,
the agency found that it did not adequately describe how Sierra's staff
would use the technology in interacting with providers and beneficiaries,
and that it did not include adequate staff with the required skills for
such elements of Sierra's medical management program as health care
coordination and mental health case management.  TMA also found that
Sierra had proposed a confusing referral management process, with respect
to beneficiaries referred for specialty care by a civilian provider, which
(1) was not user friendly because the beneficiaries would have to contact
Sierra to determine if a referral had been approved, and (2) did not
appear to enforce the MTF's *right of first refusal* because it appeared
that providers could refer patients to even non-network providers.  Oral
Presentation, Slide 219.
    
In addition, TMA questioned Sierra's proposal of a new claims processing
system, [DELETED].  The agency determined that Sierra had failed to
furnish sufficient details to demonstrate [DELETED]'s ability to
accurately adjudicate TRICARE claims, the critical feature of any claims
system, including the ability to distinguish non-network providers from
network providers, apply different TRICARE payment methodologies,
calculate patient liability/out-of-pocket expenses, and apply catastrophic
caps and deductibles.  Tr. at 1434-36.  While Sierra proposed licensing a
claims processing system from Wisconsin Physician
System‑‑which provides claims processing services for several
MCS contracts‑‑should [DELETED] fail to be operational in
time, the agency expressed concern that there would be insufficient time
before the contractor was required to commence delivery of health care
services to train Sierra's claims processing staff on the use of the WPS
system.  Because of this concern, the SSEB determined that there was
*extreme risk* associated with Sierra's claims processing ability.  SSEB
Report at 4.  The agency also found that Sierra had proposed an Internet
Based Claims Processing (IBCP) system that failed to meet the RFP
requirement for an interactive IBCP; while an interactive system edits
information as critical fields are entered on the screen by a provider,
thus allowing for the correction of errors throughout the claim submission
process, Sierra's system as described in its proposal apparently required
providers to complete submission of a claim before editing would begin.
    
Given the finding that Sierra's technical proposal was unacceptable, the
SSA's final source selection focused on HNFS's and AGHP's proposals, which
it found were relatively equal.  In this regard, HNFS's technical proposal
was rated acceptable (green) with moderate risk for MHS optimization,
beneficiary satisfaction, best value health care, and transition, and
exceptional (blue) with low proposal risk for access to data, while AGHP's
proposal was rated acceptable with low risk for all five technical
subfactors. 
    
The moderate proposal risk assigned to HNFS's proposal reflected the fact
that HNFS lacked an existing network in the North Region (other than in
four states).  However, the agency viewed this as a manageable risk rather
than as a weakness, since HNFS's proposal was evaluated as offering a good
approach to network development and HNFS had a start on network
development as a result of its presence in four states in the North
Region.  AGHP, in contrast, possessed a commercial network in the North
Region, and Humana, its proposed subcontractor, was the incumbent MCS
contractor for Regions 2/5.  Meanwhile, HNFS's proposal was evaluated as
more advantageous under the past performance factor; HNFS, the incumbent
MCS contractor for Regions 6, 9/10/12 and 11, received a high confidence
rating, while AGHP, which lacked recent corporate MCS experience and
[DELETED], received only a confidence rating.  The SSA concluded that
HNFS's moderate proposal risk was more than offset by its network
development plan and its superior, relevant past performance, which
demonstrated HNFS's ability to accomplish the requirements and meet
challenges similar to those associated with implementing TRICARE in a new
region.  The SSA's determination in this regard was strengthened by
several advantages offered by HNFS's proposal that provided definite
benefits to the government, including, for example, the fact that HNFS was
offering TRICARE Prime coverage to additional, new beneficiaries. 
    
Ultimately, the SSA's best value determination turned on the relative
prices of HNFS's and AGHP's proposals, a consideration that was termed a
*distinguishing factor* in the best value decision.[2]  Source Selection
Decision (SSD) at 31.  In this regard, while the evaluated price of HNFS's
proposal was $[DELETED] billion, the evaluated price of AGHP's proposal
was $[DELETED] billion, approximately $[DELETED], or [DELETED] percent,
higher.[3]  According to the SSA,
    
the essential difference between the [AGHP] and [HNFS] proposal is [AGHP]
offers a network essentially in place throughout the North Region. . . .
Given the small differences in technical merit and [HNFS's] highly
relevant past performance, the [DELETED] price for [HNFS] is significant
in determining the overall best value in the North Region. The technical
strengths and benefits in AGHP's proposal do not merit the [DELETED] price
premium.  [HNFS's] proposal meets the Government's requirements and
provides added strengths that will further enhance the quality of health
care services, beneficiary satisfaction and accountability for health care
costs.
SSD at 31-32.[4]  Upon learning of the SSA's determination that HNFS's
proposal offered the best value, and of the resulting award to HNFS, AGHP
and Sierra filed these protests with our Office.
    
DISCUSSIONS
    
AGHP and Sierra primarily argue that TMA was required to conduct
negotiations with all offerors and provide them an opportunity to submit
revised proposals before making award.[5]  The protesters' argument in
this regard is based to a large extent on their assertions that the agency
engaged in discussions with HNFS during its oral presentation, and thus
was required to conduct discussions with and request revised proposal from
all offerors.  Alternatively, the protesters assert that HNFS's proposal
was unacceptable, and that the agency thus could not make award without
first providing HNFS--and the protesters--an opportunity to correct the
deficiencies in their proposals.
    
The FAR generally anticipates *dialogue among the parties* in the course
of an oral presentation, FAR S: 15.102(a), and we see nothing improper in
agency personnel expressing their view about vendors' quotations or
proposals, in addition to listening to the vendors' presentations, during
those sessions.  Once the agency personnel begin speaking, rather than
merely listening, in those sessions, however, that dialogue may constitute
discussions.  As we have long held, the acid test for deciding whether an
agency has engaged in discussions is whether the agency has provided an
opportunity for quotations or proposals to be revised or modified.  See,
e.g., TDS, Inc., B‑292674, Nov. 12, 2003, 2003 CPD P: __ at 6;
Priority One Servs., Inc., B‑288836, B‑288836.2, Dec. 17,
2001, 2002 CPD P: 79 at 5.  Accordingly, where agency personnel comment
on, or raise substantive questions or concerns about, vendors' quotations
or proposals in the course of an oral presentation, and either
simultaneously or subsequently afford the vendors an opportunity to make
revisions in light of the agency personnel's comments and concerns,
discussions have occurred.  TDS, Inc., supra, at 6; see FAR S: 15.102(g). 
Once an agency opens discussions, the FAR requires, at a minimum, that
(1) contracting officers discuss with each firm being considered for award
*deficiencies, significant weaknesses, and adverse past performance
information to which the offeror has not yet had an opportunity to
respond,* and (2) at the conclusion of discussions, each offeror still in
the competitive range be given an opportunity to submit a final proposal
revision.  FAR S:S: 15.306(d)(3), 15.307.[6]  We find that TMA properly
made award without initiating discussions.
    

                            Communications With HNFS

    
HNFS Network Staffing
    
Sierra and AGHP assert that discussions with HNFS concerning its network
development effort occurred during the oral presentation process. 
According to the protesters, in response to agency questions, HNFS
significantly increased its proposed network development staffing during
the clarification sessions.  This argument is without merit. 
    
The protest in this regard is based on the fact that HNFS's proposal
presentation slides specifically identified only [DELETED] positions
within the initial network development staff that would appear to be
involved in network development, including:  [DELETED] senior executive
who would provide *[l]eadership region‑wide for provider
development*; and [DELETED] directors, [DELETED] negotiators and
[DELETED] clerical staff, who would be *[c]ontracting and network
operations . . . for network development and contracting to develop and
maintain an adequate network.*  HNFS Slides I-69. 
    
Although the [DELETED] HNFS staff positions specifically enumerated above
were significantly fewer than the [DELETED] positions that remained in
Sierra's network development effort even after the removal of the
WellPoint contribution, Agency Report, Declaration of SSET/SSEB Chairman,
at 13, as repeatedly noted in the contemporaneous evaluation documents,
HNFS furnished additional information with respect to its network
development effort during the clarification sessions.  In this regard,
during the initial clarification session, TMA, referring to HNFS's
statement made during the presentation of its slides that it would *deploy
a team and start early,* asked the offeror to explain, and to specify who
and how many were on the team.  Initial OCS, Question No. 24.  When HNFS
answered that it would deploy teams of [DELETED] members in all Prime
Service Areas (PSA), TMA asked in the  follow‑up clarification
session how many areas HNFS had defined as PSAs.  Transcript, OCS I, at 6,
24-25; Transcript, OCS II, at 6.  This led HNFS to respond that *we
believe that we need about [DELETED] provider contracting staff to set up
the network.  And that is our plan at this point.*  Transcript, OCS II, at
6.  This exchange led the SSAC, in its award recommendation, to conclude
that
    
HNFS does not have an established network in the region, but has proposed
a creditable network development plan, with staffing identified for each
market area to develop a fully operational network at the start of health
care delivery. . . .  In addition, during the OCS and the follow-up
session, HNFS stated they would have [DELETED] provider contracting staff
to develop the network in the North Region.  [DELETED] person network
development teams will deploy in 30 to 40 overlapping Prime Service Areas
in the North Region under the leadership of a [DELETED] person central
team immediately after contract award.  The SSEB noted that the
[DELETED] network development staff could not be identified in the
business proposal, but cited a statement by HealthNet in its Cost Proposal
that *[DELETED].*  This suggests that staff will be available to meet
HealthNet's commitment to develop an adequate network.  These details of
HealthNet's approach to network development mitigate the risk associated
with not having an extensive, existing network in the Region.
SSAC Award Recommendation at 11-12; SSEB Report at 28; SSET Report on HNFS
at 33.  Indeed, testimony from HNFS's president during the hearing
conducted by our Office attested to the importance of the information
regarding network development staffing that was furnished during HNFS's
clarification sessions, as follows:
    
Question:  What in the proposal in your view gave the agency confidence
that you could successfully come up with a network on a timely basis for
the north region?
Answer:  . . . In the oral presentation there was discussion
about‑‑in follow-on questions and answers with us,
clarification questions about the number of staff that would be available
to develop the network.  We disclosed to the agency about
[DELETED] individuals working in teams, creating 30 to 40 service areas
with teams of between [DELETED] people.  So it's [DELETED] individuals who
on the ground were doing network development.
Question:  Anything else you can point to?
Answer:  The only other relevant issue, I think, which again is known to
the agency‑‑again, when I talk about experience, we've all
done this within less than six months and all the relevant experience.
Tr. at 1631-32.
We agree with TMA that the references during HNFS's clarification sessions
to [DELETED] network development staff amounted to no more than a
clarification of information already furnished by HNFS during the
preceding oral presentation.  In this regard, HNFS presented during the
MHS optimization portion of its oral presentation several slides
describing how its medical management program *will ensure we support the
MTF's first right of refusal for all care in its Prime Service Area, and
ensure that high quality care is being achieved.*  Transcript, HNFS Oral
Presentation, Subfactor 1 (Subfactor 1 Tr.), at 6-7.  Slide I-13 discussed
clinical quality in terms of *[s]ignificantly enhanc[ing] communication
between direct and purchased care providers,* and included a three-step
flow chart starting with *[d]evelop/foster a preferred network in
proximity to the MTF Prime Service Area,* followed by *[p]urchased care
network providers understand their role in the Defense Health Program,*
and followed by *[m]anagement controls ensure providers provide clearly
legible reports and summaries,* that result in improved patient care
coordination *leading to higher quality care outcomes and a more effective
overall health benefit.*  HNFS Oral Presentation, Slide I-13.  In
presenting Slide I-13, HNFS's representative orally stated as follows:
    
Clinical quality starts with our‑‑with our network design
approach.  In the network development slides to come, you will see that we
focus on developing a tailored network in proximity to the MTF for easier,
more effective communications between MTF and civilian providers.  With
over [DELETED] associates who touch provider contracting and relations
activities, we will be there to provide support and reinforcement of the
message to doctors and hospitals to coordinate care between the two
systems.  Once in place, management controls, built on a foundation of
education, regular communications, and adherence to timely reporting among
MTF and civilian providers in the treatment of patients.
Subfactor 1 Transcript at 10. 
    
Although the protesters question TMA's determination that the reference to
*over [DELETED] associates* was a reference to network development staff,
we note that a review of the contemporaneous notes of the SSET evaluators
who attended the oral presentation reveals that at least 5 of the 11
evaluators specifically indicated that, based on HNFS's presentation of
Slide I-13, HNFS was proposing a network development staff of
[DELETED] associates.  Indeed, the draft evaluation of one evaluator
which, according to TMA, was projected for use by the entire SSET, noted
that *[d]uring the oral presentation, while discussing Slide I.13, HNFS
stated they would have '[DELETED] associates for provider network
development.'*  SSET Notes at 110.  Given Slide I‑13's reference to
developing a preferred network; the oral reference by HNFS's
representative in presenting Slide I-13 to the importance of developing a
tailored network in proximity to the MTF for easier, more effective
communications; and the representative's oral reference to *over [DELETED]
associates who touch provider contracting,* we agree with the agency that
HNFS essentially described its proposed network development staffing of
[DELETED] in its initial oral presentation.  Since this occurred prior to
the agency's speaking during the session, the information could not have
been the result of discussions.  Further, since HNFS's written material
indicated that [DELETED], and a separate headcount of all labor working on
transition was not included in the cost/price proposal, the agency
reasonably concluded that there was no inconsistency between the written
and oral information (which, under the RFP S: L.14.d(4), would have
required the agency to ignore the oral information).[7]  In these
circumstances, we conclude that HNFS was not permitted to revise its
proposal to set forth a materially higher level of network development
staffing so that the exchange did not constitute discussions.  It follows
that the question regarding its network development did not require the
agency to conduct discussions with all offerors and request revised
proposals.
    

                          HNFS Network in Pennsylvania

    
In its comments on the agency report, AGHP cites agency question No. 23 as
an example of TMA's alleged discussions with HNFS.  AGHP Comments, Sept.
25, 2003, at 13.  Question No. 23, after reciting HNFS's statement on a
slide that *[HNFS's] strong commercial presence in Region 1 provides the
foundation for provider network management and rapid acceptance,* asked as
follows:  *(a) Please explain [HNFS's] strong commercial presence in
Region one; (b) Does this include the entire Region or certain states in
Region one.*  In response, HNFS advised the agency that its commercial
network in Region 1 operated in only 4 of the 20 states in that region,
including Pennsylvania.  Tr., OCS I, at 24.[8]  We find that this question
and answer did not amount to discussions.  Rather, we view the question as
simply a request for clarification of a reference in HNFS's proposal,
which did not provide HNFS an opportunity to modify its proposal.[9]
    

                        Acceptability of HNFS's Proposal

    
The protesters assert that HNFS's proposal was unacceptable as submitted,
as evidenced by the evaluation findings of the SSET.  They also point
specifically to HNFS's approach to meeting the RFP's data access
requirements as being unacceptable.
    
In reviewing an agency's technical evaluation, our Office will not
evaluate proposals anew, but will examine the record to ensure that the
evaluation was reasonable and consistent with the stated evaluation
criteria and applicable statutes and regulations.  Advanced Communication
Sys., Inc., B-271040, B-271040.2, June 10, 1996, 96-1 CPD P: 274 at 4. 
The evaluation here was unobjectionable.
    

                                  SSET Report

    
The protesters essentially argue that, given the SSET's ratings and
determinations, it was unreasonable to determine that HNFS's proposal was
acceptable as submitted, such that discussions were not necessary.  In
this regard, the SSET evaluated proposals based on whether and how they
addressed the requirements in the SOW.  Where a proposal did not show
compliance with one of the SOW requirements, the SSET assigned no higher
than a marginal rating under the applicable subfactor.  As a result, the
SSET assigned HNFS's proposal a marginal rating (with moderate proposal
risk) under the technical subfactors for MHS optimization, beneficiary
satisfaction, best value health care, and transition, and an outstanding
rating (with low risk) for access to data; AGHP's proposal a marginal
rating (with low risk) under the technical subfactors for MHS
optimization, beneficiary satisfaction, best value health care, and
transition, and an acceptable rating (with high risk) for access to data;
and Sierra's proposal an unacceptable rating (with moderate risk) under
the technical subfactors for MHS optimization, beneficiary satisfaction,
best value health care, and transition, and a marginal rating (with
moderate risk) for access to data. 
    
We find no basis to question the agency's determination that HNFS's
proposal was acceptable as submitted.  The record establishes that agency
procurement officials conducted a detailed, in-depth review of the SSET's
findings, fully considering the basis for the SSET's evaluation ratings,
and reasonably accounted for them in determining to make award on the
basis of initial proposals.  In this regard, in its review of the
proposals and the SSET's evaluation, the SSEB distinguished between
weaknesses that warranted consideration in the source selection decision
and those that would not have a significant impact on the contractor's
ability to perform.  Applying that standard, the SSEB determined that none
of the evaluated weaknesses of HNFS's proposal were sufficiently
significant as to render HNFS's proposal unacceptable, and it thus
recommended award to HNFS.  SSEB Report at 2‑5, 26‑27, attach.
F.
    
The SSAC likewise reviewed and took into consideration the basis for the
SSET's ratings.  As noted in an SSAC report,
    
the SSET assigned a yellow rating any time a proposal fell short of fully
meeting all requirements, regardless of how easily associated concerns or
weaknesses could be rectified, and regardless of how significant the
weakness.  As a result, sub-factors may receive a yellow rating based on
weaknesses or issues at the requirement level that are not significant and
would have minimal impact on the offeror's capability to successfully
achieve the government's objectives. . . .
In view of this, the SSAC assessed the significance of each weakness
identified by the SSET at the requirement level, and reviewed its
potential impact on performance at the objective level. In addition, the
SSAC examined the weaknesses in the aggregate to determine whether there
was cause for concern about the offeror's capability to be successful. 
The SSAC has determined that the yellow ratings assigned by the SSET do
not mean that the offerors are not capable of successfully meeting the
objectives under the contract; rather, they serve as useful indicators of
where the government should focus its post-award monitoring activities.
SSAC Technical Considerations Regarding Discussions at 12.  Based on its
review, the SSAC determined that the weakness in HNFS's proposal with
respect to fully describing a process regarding referral information was
not significant and was readily correctable during performance.  The SSAC
concluded that HNFS's proposal was in compliance with the material
requirements of the RFP.  Id. at 13-14; SSAC Award Recommendation at 16. 
The SSA concurred with the SSAC's determination, and HNFS's (as well as
AGHP's) evaluation ratings were increased from marginal to acceptable. 
SSD at 6-8. 
    
Adjectival ratings are only guides to assist contracting agencies in
evaluating proposals; they do not mandate automatic selection or rejection
of particular proposals.  Chemical Demilitarization Assocs., B-277700,
Nov. 13, 1997, 98-1 CPD P: 171 at 6.  Source selection officials, as well
as reviewers at an intermediate level, are not bound by the
recommendations or evaluation judgments of lower-level evaluators.  PRC,
Inc., B‑274698.2, B-274698.3, Jan. 23, 1997, 97-1 CPD P: 115 at 7. 
Source selection officials have broad discretion in determining the manner
and extent to which they will make use of the technical and cost
evaluation results, and their judgments are governed only by the tests of
rationality and consistency with the stated evaluation criteria.  Keane
Federal Systems, Inc., B-280595, Oct. 23, 1998, 98-2 CPD P: 132 at 15. 
    
There was nothing unreasonable in the agency's ultimate conclusion.  Given
that the RFP generally provided for the assessment of weaknesses against,
rather than rejection of, a proposal in the event that it failed to comply
with an SOW requirement,[10] and since the agency's procurement officials
specifically considered this issue, the SSA reasonably determined that
HNFS's proposal was acceptable notwithstanding the SSET's marginal
ratings.  The protesters have not shown otherwise.  See Physician Corp. of
America, B-270698 et al., Apr. 10, 1996, 96-1 CPD P: 198 at 9 (a
contracting agency may properly find acceptable a proposal that is in
substantial, although not total, compliance with a solicitation
requirement, where such a determination does not prejudice any other
offeror and the proposal meets the agency's needs). 
    

                                  Data Access

    
As noted above, the RFP established a pass/fail criterion with respect to
data access.  Section L of the RFP addressed this requirement as follows:
    
Subfactor 5 - Provide ready access to contractor maintained data to
support DOD's financial planning, health systems planning, medical
resource management, clinical management, clinical research, and contract
administration activities.
The offeror shall describe access to and use of its proposed on-line,
real-time data storage system. . . .  The offeror shall describe the
content of the data that will be available to the Government, restrictions
and/or limitations.
RFP S: L.14.e(5).  Section M of the RFP further provided with respect to
data access as follows:  *The ease with which the offeror provides access,
the breadth and depth of information/data available, and the training and
on-going support proposed by the contractor will be evaluated.  Proposals
that do not include on-line, real‑time access to data will be
considered unacceptable.*  RFP S: M.6.e.  When asked during the
procurement what the *government definition of 'real time data storage
system'* was, as used in RFP S: L.13.e(5), the agency responded that
*[t]he Government wants access to the data as it is updated minute by
minute, not access to a storage system that the data could be days or
weeks old.*  Question and Answer No. 778.
    
Sierra, citing the reference in the answer to question No. 778 to *data as
it is updated minute by minute,* argues that, because not all of HNFS's
TRICARE data would be updated minute-by-minute, HNFS's proposal did not
meet the data access requirement, and thus was unacceptable.  TMA responds
that minute-by-minute updating was not required.
    
Where a protester and agency disagree over the meaning of solicitation
language, we will resolve the matter by reading the solicitation as a
whole and in a manner that gives effect to all its provisions; to be
reasonable, and therefore valid, an interpretation must be consistent with
the solicitation when read as a whole and in a reasonable manner.  Fox
Dev. Corp., B-287118.2, Aug. 3, 2001, 2001 CPD P: 140 at 2.
    
We find that offerors were, or should have been, aware that
minute-by-minute updating was not required.  While Sierra reads the answer
to question 778 as referring to data *updated* minute-by-minute, we agree
with the agency that the minute-by-minute language--read in the context of
the data access requirement--referred instead to access to the data; that
is, the agency only wanted to be able to access data on a minute-by-minute
basis.  This interpretation is consistent with the testimony of the
drafter of the section M data access requirement, the SSET/SSEB chairman. 
He stated that the agency sought *online, real-time access to data* in the
contractor's *commercial data warehouses,* not access to data that is
updated minute-by-minute; according to the SSET/SSEB chairman, rather than
having to request a special report from the contractor, as is the practice
under the current contracts, the agency wanted immediate access to the
contractor's TRICARE data warehouse.  Tr. at 1052-66. 
    
This interpretation also is consistent with another question and answer,
where the agency specifically clarified that it was only seeking access to
the contractor's commercial data warehouses as usually maintained. 
Specifically, in response to a question concerning the data to which
access is to be provided, the agency responded that *[w]e have not
specified the full extent of data required.  Rather, we have asked
offerors to provide the Government with access to the information they
maintain in their data warehouse employing their 'best practices.'* 
Question and Answer No. 368.  The reference to data as maintained in
accordance with the contractor's *best practices* is significant, since
consultants for both Sierra and HNFS testified that minute-by-minute
updating of such data is inconsistent with commercial practice.  Tr.
at 1499‑1500, 1941-42.  Likewise, Sierra has acknowledged that,
under its current TRICARE contract, it [DELETED], Sierra Comments, Nov.
26, 2003, at 2, and AGHP likewise acknowledges that [DELETED].  AGHP
Comments, Nov. 26, 2003, at 1.  Consultants for both Sierra and HNFS
testified that minute‑by‑minute access to
contractor-maintained data was not necessary, and that less frequent
updating was sufficient, to support the stated purpose for the access,
that is to *support DOD's financial planning, health systems planning,
medical resource management, clinical management, clinical research, and
contract administration activities.*  RFP S: L.14.e(5).  Sierra's
consultant, when asked whether minute‑by‑minute access was
needed to serve the stated purposes, responded that *in the context of
[the] private sector, I'd say unequivocally the answer is no.* 
Tr. at 1496-98, 1526-28, 1941.  Indeed, according to a consultant
testifying on behalf of HNFS, updating on a minute-by-minute basis
actually would have a *huge* negative impact on a system.  Tr.
at 1499-1500. 
    
We conclude that, in the context of the RFP as a whole, including the
stated purposes for which the access was sought, TMA's statement that it
sought access to data as maintained in accordance with the contractor's
*best practices,* and current commercial practice with respect to
updating, it was unreasonable to interpret the data access requirement as
mandating that all TRICARE data be updated minute‑by-minute.  Thus,
we find no basis to question TMA's determination that HNFS's approach to
furnishing the required data access was acceptable.
    
Conclusion
    
Because we have found that the agency both did not conduct discussions
with HNFS, and was not required to conduct discussions with that
firm--and, thus, also with Sierra and AGHP--we conclude that the agency
properly made award to HNFS based on its initial proposal.  Further,
because it follows that the material deficiencies identified by the agency
remain in Sierra's proposal, and cannot be remedied, we conclude that the
agency reasonably determined that Sierra's proposal was unacceptable in
numerous areas.  In particular, we find reasonable TMA's position that an
offeror with an inadequate approach to network development, such as
Sierra's after the loss of WellPoint, could reasonably be found to be
incapable of meeting the stated procurement objectives, including
optimization of the MHS, beneficiary satisfaction, and best value health
care, from the commencement of services.[11] 
    
ADDITIONAL ARGUMENTS
    
AGHP challenges various other aspects of the evaluation, concluding that
the agency should have found its proposal to be worth its higher cost.  We
have reviewed all of AGHP's arguments, and find that they are without
merit. 
    
For example, AGHP challenges the past performance evaluation, where HNFS
was rated superior to AGHP.  In this regard, the RFP provided for
evaluation of *past performance relevant to this solicitation,* to
determine *a confidence level in an offeror's ability to successfully
perform all requirements.*  RFP S: M.7.  Offerors were instructed to
describe *the relevant past performance that the prime contractor and
first tier subcontractor(s) has in performing work that is relevant to
this solicitation,* and also to submit information on the qualifications
and demonstrated performance relevant to their proposed positions for the
key personnel of the prime contractor and first tier subcontractors.  RFP
S: L.14.f(2).  The RFP cautioned, however, that only relevant past
performance gained within the last 3 years would be considered.  Id. 
    
HNFS was credited with satisfactory performance on three current TRICARE
MCS contracts (Regions 6, 9/10/12 and 11), which were viewed as highly
relevant, and exceptional or satisfactory performance on other relevant
contracts (with the exception of one subcontractor whose clients generally
were satisfied with its performance but who received a marginal rating
from one of its clients (Sierra)).  In addition, most of HNFS's
management/supervisory staff had extensive TRICARE (and
TRICARE-predecessor) experience.  TMA concluded that, given HNFS's highly
relevant past performance and numerous documented records of satisfactory
or exceptional performance in executing essentially similar contractual
expectations, no doubt existed that HNFS  could successfully perform the
contemplated contract; it therefore assigned HNFS a high confidence
rating.
    
In contrast, AGHP had no TRICARE experience since the termination of its
contract for the former Regions 9/10/12 in 1996, and had no active
accounts since that time.  AGHP did receive credit for the satisfactory
performance of its parent (Aetna, Inc.) on Medicare/Medicaid and Federal
Employees Health Benefits Program contracts, and of a proposed first-tier
subcontractor, Humana, who was the current MCS contractor for old Regions
2/5.  Overall, AGHP was credited with satisfactory or exceptional
experience, except for one marginal rating.  However, TMA noted that
[DELETED].  Therefore, TMA determined that *little doubt* (as compared to
*no doubt* regarding HNFS's proposal) existed that AGHP could successfully
perform the contemplated contract, and the agency assigned it a confidence
rating.
    
AGHP essentially asserts that TMA failed to account for the fact that
HNFS's three current TRICARE MCS contracts were for regions outside of the
North Region, while AGHP's subcontractor had a current MCS contract for
part of the North Region and AGHP has commercial experience in the North
Region. 
    
While we agree that geographic location is a proper consideration in
determining the relevance of past performance, there is no basis for
questioning the agency's position that consideration of geographic
location would not have altered the evaluation here.  First, it is
undisputed that TRICARE is a statutorily-created health care benefit that
is uniform across the United States, except for Alaska, such that, while
contractors may have different approaches, each contractor is required to
comply with extensive and detailed requirements set forth in applicable
statutes, regulations and agency manuals.  Moreover, AGHP's position
simply does not adequately account for HNFS's three current TRICARE MCS
contracts.  We find reasonable TMA's determination that a prime contractor
with extensive current, satisfactory performance of  essentially the same
services as solicited was more likely to satisfactorily perform the
contemplated contract than a prime contractor without such experience.
    
The protests are denied.
    
Anthony H. Gamboa
General Counsel
    
    
    
    

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

   [1] Our Office conducted a hearing in connection with this matter.
[2] The evaluated most probable cost of the offers‑‑which was
based on only the underwriting fee and underwritten health care cost for
the first option period‑‑was not a discriminator; the
evaluated cost of HNFS's proposal (approximately $[DELETED] million) was
[DELETED] lower than AGHP's (approximately $[DELETED] million). 
[3] The difference in prices between AGHP and HNFS resulted from a number
of factors, including:  (1) the impact of subcontracting a significant
part of the proposed effort to Humana, whose profit rates exceeded
[DELETED] percent, and to whose subcontract price was added [DELETED]; and
(2) a difference in approach to [DELETED].  Initial Price Evaluation
Report‑‑North Region, at 11‑13, 20; SSAC Award
Recommendation at 12-13. 
[4] The evaluated price of Sierra's proposal was approximately $[DELETED]
billion.
[5] The protesters also assert that the agency's decision to make award
without discussions was unreasonable, given the complexity of the
procurement and the service being procured.  In addition, AGHP asserts
that the agency acted improperly in refusing to open discussions so as to
provide it with an opportunity to offer a lower, more competitive price,
while Sierra complains that the contracting officer improperly refused to
permit it to revise its proposal to account for the termination of
WellPoint's participation in its team, thereby preventing the firm from
explaining how it would undertake the network development and other
responsibilities that WellPoint had been proposed to perform.  These
arguments are untimely, in view of the express statement in the
solicitation that the agency intended to make award without discussions. 
To the extent that the protesters believed the provisions for award
without discussions were inappropriate for this type of procurement, the
protest concerns an alleged impropriety that was apparent from the face of
the solicitation and thus should have been protested prior to the time set
for receipt of initial proposals.  4 C.F.R. S: 21.2(a)(1) (2003); see
Norden Sys., Inc., B‑255343, B‑255343.3, Apr. 14, 1994, 94-1
CPD P: 257 at 3.   In any case, there generally is no requirement that a
contracting agency conduct discussions to permit offerors to improve their
proposals where, as here, the RFP specifically informs offerors of the
agency's intent to award a contract on the basis of initial proposals. 
Federal Acquisition Regulation (FAR) S: 15.306(a)(3); Robotic Sys. Tech.,
B-278195.2, Jan. 7, 1998, 98-1 CPD P: 20 at 8; Infotec Dev., Inc.,
B‑258198 et al., Dec. 27, 1994, 95-1 CPD P: 52 at 6-7.  The
protesters also argue that our prior decision in The Jonathan Corp.; Metro
Machine Corp., B-251698.3, B-251698.4, May 17, 1993, 93-2 CPD P: 174,
recon. den., Moon Eng'g Co., Inc., B-251698.6, Oct. 19, 1993, 93-2 CPD P:
233, mandates overturning the agency's decision not to hold discussions in
this case.  We disagree.  In Jonathan, discussions were necessary where
the agency could not reasonably determine which proposal represented the
best value to the government, given that the cost realism review was
flawed and the competition was close.  The Jonathan Corp.; Metro Machine
Corp., supra, at 13-15; see Henry A. Stroh Assocs., Inc., B‑274335,
Dec. 4, 1996, 97-1 CPD P: 18 at 3; Southwest Marine, Inc.; American Sys.
Eng'g Corp., B-265865, et al., Jan. 23, 1996, 96-1 CPD P: 56 at 15.  Here,
in contrast, the evaluation was not fundamentally flawed and the
information available to the agency was sufficient to enable it to
differentiate between the proposals in its selection decision.  See Island
Serv. Corp., B‑282272, June 21, 1999, 99-1 CPD P: 113 at 3.  In
these circumstances, we find that the protesters have not shown that the
agency abused its discretion in determining to make award on the basis of
initial proposals.
[6] Here, as envisioned by FAR S: 15.102(d), the solicitation set forth
the particular allowable scope and content of exchanges that were to occur
as part of the oral presentations.  In this regard, the RFP, after
indicating that oral presentations would not constitute discussions,
stated that communications would be conducted by presenting the offeror,
after the oral presentation, with written clarification questions that
*serve to enhance the Government's understanding of the proposal, allow
reasonable interpretation of the proposal, and/or facilitate the
Government's evaluation process.*  RFP S: L.14.d(8).  The RFP cautioned,
however, that such communications would *not be used to cure proposal
weaknesses or material omissions, materially alter the technical or cost
elements of the proposal, and/or otherwise revise the proposal. 
Communications shall not provide an opportunity for an offeror to revise
their proposal, but may address ambiguities in the proposal or other
concerns such as minor errors or mistakes.*  Id.
    
[7] HNFS's Price and Cost Narrative stated with respect to the transition
as follows:
    
[DELETED] 
HNFS Price and Cost Narrative at 19.
[8] AGHP also essentially argues that HNFS's reference during the June 5
clarification sessions to a commercial network in Pennsylvania constituted
a misrepresentation, because HNFS had issued a press release, dated March
18, indicating that it would withdraw from the commercial market in
Pennsylvania effective September 30, 2003, and that coverage under the
Federal Employee Health Benefit Plan would continue only until December
31, 2003.  An offeror's material misrepresentation in its proposal can
provide a basis for disqualification of the proposal and cancellation of a
contract award based upon the proposal.  A misrepresentation is material
where the agency relied upon it and it likely had a significant impact
upon the evaluation.  Integration Techs. Group, Inc., B-291657, Feb. 13,
2003, 2003 CPD P: 55 at 2; Sprint Communications Co. LP; Global Crossing
Telecomms., Inc.--Protests and Recon., B‑288413.11,
B‑288413.12, Oct. 8, 2002, 2002 CPD P: 171 at 4.  Even if we agreed
with AGHP, there is no basis for concluding that the reference to
commercial operations in Pennsylvania, only one of the 20 states (plus the
District of Columbia) in the North Region, had a significant impact upon
the evaluation.
[9] AGHP asserts that TMA asked HNFS other questions during the
clarification sessions that afforded HNFS an opportunity to revise its
proposal.  However, when AGHP first raised the argument that TMA had
conducted discussions with offerors, it only cited questions addressed to
AGHP, Sierra and an offeror in another region.  AGHP Comments, Sept. 15,
2003, at 8-15.  Since it did not assert that questions had been posed to
HNFS, such questions did not provide a basis for protest.  See BE, Inc.;
PAI Corp., B‑277978, B-277978.2, Dec. 16, 1997, 98-1 CPD P: 80 at 4
n.4; General Physics Fed. Sys., Inc., B‑275934, Apr. 21, 1997, 97-1
CPD P: 171 at 4‑6.  In its second supplemental protest, which
followed its receipt of the core evaluation documents, including a record
of HNFS's oral presentation and clarification sessions, AGHP generally
asserted that TMA had posed a series of discussion questions to HNFS, but
did not cite any specific questions.  AGHP Comments, Sept. 25, 2005,
at 2.  AGHP first cited specific questions as constituting discussions in
its comments filed on October 25.  Since these specifics were filed more
than 10 days after its receipt of the record of HNFS's oral presentation
and clarification sessions, they are untimely.  4 C.F.R. S: 21.2(a)(2). 
Presenting a general allegation in an initial protest does not render
timely subsequently submitted specific examples of the alleged general
flaws in a procurement.  See LeBoeuf, Lamb, Greene & MacRae, B-283825,
B-283825.3, Feb. 3, 2000, 2000 CPD P: 35 at 7-8; Advanced Communication
Sys., Inc. B‑283650 et al., Dec.16, 1999, 2000 CPD P: 3 at 8; GE
Gov't Servs., B-235101, Aug. 11, 1989, 89-2 CPD P: 128 at 3-4. 
    
[10] The RFP's evaluation approach focused on the offeror's overall
approach to performing the contract and meeting the five objectives
established by the SOW, and rather than establishing a pass/fail scheme,
the RFP provided that the government would evaluate *the extent to which*
or *likelihood* that the offeror's approach would be successful.  RFP S:
M.3.b.  According to the RFP, *[f]ailure to address any of the specified
technical subfactor requirements will be considered a significant
weakness.  Proposals will be evaluated on the basis of how well an
offeror's proposed procedures, methods, and delivery of services meet or
exceed the Government's minimum requirement.*  RFP S: M.6.  Where the
agency sought to establish a specific pass/fail requirement, it did so
expressly.  Thus, for example, with respect to data access, Section M of
the RFP provided that *[p]roposals that do not include on-line, real-time
access to data will be considered unacceptable.*  RFP S: M.6.e.
    
[11] Sierra also challenges other aspects of the evaluation.  However,
given our conclusion that the agency reasonably rejected Sierra's proposal
as unacceptable, its arguments in this regard are academic and will not be
addressed.