TITLE: B-296307; B-296307.2, Delta Dental of California, July 28, 2005
BNUMBER: B-296307; B-296307.2
DATE: July 28, 2005
***************************************************************
B-296307; B-296307.2, Delta Dental of California, July 28, 2005
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: Delta Dental of California
File: B-296307; B-296307.2
Date: July 28, 2005
Patricia A. Meagher, Esq., Neil H. O'Donnell, Esq., Thomas D. Blanford,
Esq., Mark A. Kahn, Esq., and David F. Innes, Esq., Rogers Joseph
O'Donnell & Phillips, and Robert S. Ryland, Esq., and Nicole E. Goldstein,
Esq., Kirkland & Ellis, for the protester.
David P. Metzger, Esq., Michele Mintz Brown, Esq., Anand V. Ramana, Esq.,
and Stuart Turner, Esq., Holland & Knight, for United Concordia Companies,
Inc., an intervenor.
Rhonda L. Bershok, Esq., and Kenneth Lieb, Esq., TRICARE Management
Activity, Department of Defense, 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
Protester's allegation that the agency's evaluation of its proposal was
unreasonable, unfair, and inconsistent with the stated evaluation criteria
is denied where the record shows that the agency's evaluation was
reasonable, and that the solicitation's evaluation criteria were fairly
and consistently applied in the agency's assessment of both the
protester's and the awardee's proposals.
DECISION
Delta Dental of California protests the award of a contract to United
Concordia Companies, Inc. (UCCI), by the Department of Defense's (DOD)
TRICARE Management Activity, pursuant to request for proposals (RFP) No.
H94002-04-R-0002, issued to procure dental insurance services for eligible
beneficiaries who volunteer to enroll in TRICARE's dental plan. Delta
argues that the agency conducted a flawed evaluation of technical
proposals, and failed to perform a reasonable price realism evaluation.
We deny the protest.
BACKGROUND
Under 10 U.S.C. sect. 1076(a) (Supp. II 2002) the Secretary of Defense is
authorized to establish a voluntary enrollment dental plan (hereinafter,
the TRICARE dental program) for eligible family members of active duty
uniformed services personnel, members of the Selected Reserve and the
Individual Ready Reserve (IRR), their eligible family members, and certain
eligible survivors. Agency Report (AR) at 1. For some program participants
the government pays a share of the premiums assessed for enrollment in the
program; for others, the government does not pay a share. Specifically,
the government pays 60 percent of the premium for family members of active
duty personnel, Selected Reserve members and mobilized members of the IRR,
and 100 percent of the premiums for eligible survivor beneficiaries, but
pays no share of the premium charged to non-mobilized IRR members and
eligible family members of Reservists. Contracting Officer's (CO)
Statement at 2-3.
The RFP for a contractor to operate the TRICARE dental program was issued
on September 15, 2004. The contractor will be required to provide dental
insurance services, establish a network of participating dental providers,
and provide claims processing and customer service functions. The RFP
anticipated the award of a fixed-price plus award fee requirements
contract for a base period followed by up to five 1-year options.[1] RFP
at 2-8, 53, 72. The price for this contract, in essence, is the sum of the
government's share of premiums charged by the contractor to enrolled
beneficiaries.
The range of dental benefits to be provided to eligible beneficiaries who
elect to enroll in the TRICARE dental program are not only set forth in
the solicitation, but are prescribed by the statute and by the
implementing regulation, which were incorporated by reference into section
C of the RFP. RFP at 9. In addition, section C included a statement of
objectives representing "the desired outcomes of this contract." Id. The
introduction to the statement of objectives explained that "[t]he
objectives are supported by technical requirements throughout section C."
The objectives of this contract are described as follows:
Increase [TRICARE dental program] enrollment and increase utilization of
diagnostic and preventive services by enrolled members.
Increase enrollment of Selected Reserve and Individual Ready Reserve (IRR)
personnel in pay grades E-1 through E-4. The Government desires to
increase access to dental care and to improve dental readiness of Selected
Reserve and IRR members in pay grades E-1 to E-4.
Establish and maintain enrollee and provider satisfaction at the highest
level possible throughout the period of performance through the delivery
of a world-class dental care program.
Use a cost-effective management approach to provide the necessary
services, incorporating commercial practices, when practicable.
Provide ready access to data to support DOD's financial planning, health
systems planning, medical resources management, clinical management,
clinical research, and contract administration.
Id.
The solicitation advised that award would be made "to the offeror whose
proposal represents the best overall value to the Government considering
the evaluation criteria." Id. at 86. The evaluation criteria were:
technical, performance risk/past performance, and price; the solicitation
advised that the technical factor would be the most important, with the
performance risk/past performance factor second, and the price factor
third. Id. at 85.
The technical evaluation factor was divided into four equally-weighted
subfactors: (1) participating provider network access, (2) claims
processing, (3) quality management/quality improvement program, and (4)
customer service. Id. The basis for assessing each of these subfactors was
set forth in detail in the solicitation, and will be described, as needed,
within this decision. The RFP also provided that the technical factor, and
its subfactors, would be evaluated for proposal risk, which the
solicitation defined in detail. Id. at 87.
Three proposals were received by the November 15 due date, one from Delta,
one from UCCI, and one from a third offeror that is not a party to this
protest. Each proposal was evaluated by three evaluation teams--the Source
Selection Evaluation Team (SSET), the Performance Risk Assessment Group
(PRAG), and the Price Evaluation Team (PET)--which, collectively, form the
Source Selection Evaluation Board (SSEB). The SSET and the PRAG evaluated
each offeror's proposal independent of the others and documented their
findings in a separate report for each offeror. The PET analyzed the price
proposals of all three offerors in a single report. AR at 2.
After holding discussions with each offeror, the agency asked for and
received final proposal revisions (FPR) on February 7, 2005. Again, the
SSET, PRAG, and PET evaluated the proposals and prepared reports to
document their findings. In assessing technical merit, the SSET assigned
color ratings with the following meanings: blue, exceptional; green,
acceptable; yellow, marginal; and red, unacceptable. These one-word
adjectival ratings were supplemented with more detailed definitions, see
CO's Statement at 8, which will be set forth as needed within the
decision. The proposal risk ratings used by the SSET were high risk,
moderate risk, and low risk. Id. at 8-9. Again, the more detailed
definitions associated with the proposal risk ratings will be set forth
below as needed.
With respect to the PRAG review, a series of different ratings were used.
First, referenced contracts were rated as very relevant, relevant,
semi-relevant, or not relevant. In addition, performance ratings were
given for each referenced contract. The performance ratings were
exceptional, satisfactory, marginal, or unsatisfactory. Finally,
performance risk ratings of high confidence, confidence, little
confidence, no confidence, or neutral, were assigned. Source Selection
Decision Memorandum at 5-6.
With respect to the PET review, the total evaluated price was reviewed for
reasonableness and for unbalanced pricing. In addition, the premiums
charged for single and family enrollments in the dental plan were reviewed
for price realism to determine whether the premium rates and assumptions
used were realistic. CO's Statement at 10.
At the conclusion of the reviews of the FPR by the SSET, PRAG, and PET, an
SSEB report was prepared for the source selection authority (SSA) that
consolidated all of the reviews. This report included a recommendation to
the SSA from the SSEB Chairman. The final assessments of the SSEB, which
reflect input from the SSEB Chairman (who made certain changes to the
ratings assigned by the underlying panels in certain areas), are as
follows:
+------------------------------------------------------------------------+
| | DELTA | UCCI | OFFEROR A |
|-------------------------+---------------+---------------+--------------|
|TECHNICAL (Merit / Risk) | BLUE / LOW | BLUE / LOW | GREEN / LOW |
|-------------------------+---------------+---------------+--------------|
|-- Network Access | Blue/Low | Blue/Low | Blue/Low |
|-------------------------+---------------+---------------+--------------|
|-- Claims Processing | Green/Low | Green/Low |Green/Moderate|
|-------------------------+---------------+---------------+--------------|
|-- Quality Management | Blue/Low | Blue/Low | Green/Low |
|-------------------------+---------------+---------------+--------------|
|-- Customer Service | Blue/Low | Blue/Low | Green/Low |
|-------------------------+---------------+---------------+--------------|
|PERFORMANCE RISK |HIGH CONFIDENCE|HIGH CONFIDENCE| CONFIDENCE |
|-------------------------+---------------+---------------+--------------|
|TOTAL | [DELETED] |$1.423 BILLION | [DELETED] |
| | | | |
|EVALUATED PRICE | | | |
+------------------------------------------------------------------------+
AR, Tab 20, SSEB Report, at 10, 12, 32, 57, 83; Source Selection Decision
Memorandum at 26.
In his detailed review of the strengths of each of the offers under the
technical subfactors, the SSEB Chairman decided that both Delta and UCCI
had submitted exceptional technical proposals, but concluded that Delta's
proposal was superior to UCCI's under the technical evaluation factor, the
most important factor in this evaluation scheme. Id. at 84-88, 90
(conclusion at 88). After recognizing that Delta and UCCI were equal under
the performance risk factor, id. at 89, the SSEB Chairman decided that the
ways in which the Delta proposal was superior to the UCCI proposal offered
"significant additional benefits to the government over UCCI's proposal"
and recommended award to Delta on the basis that the additional benefits
were worth the relatively small ([deleted] percent) price differential.
Id. at 90.
In a similarly detailed decision document, the SSA elected not to adopt
the view of the SSEB Chairman that the Delta proposal offered additional
benefits that were worth the price differential. Source Selection Decision
Memorandum at 1, 42-43. Specifically, the SSA did not agree with the SSEB
Chair's view that Delta's proposal was superior to UCCI's proposal under
the first technical subfactor, network access; he instead concluded that
the proposals were essentially equal under this subfactor. Id. at 27-28.
While the SSA agreed with the SSEB Chairman's view that Delta's proposal
had an advantage under the third technical subfactor, quality management,
he did not agree with the SSEB Chairman's view that the advantage was
significant. Id. at 41. As a result, the SSA concluded as follows:
As stated above, I do not find the technical advantage of Delta's quality
proposal (Subfactor 3), specifically ISO certification, to warrant the
additional $[deleted] million and recognize that this is contrary to the
recommendation made by the SSEB. . . . Given the relative small
differences in technical merit and proposal risk between Delta and UCCI,
and the $[deleted] million higher overall price for Delta, UCCI's proposal
represents the best value to the Government.
Id. at 42.
On April 6, the contract was awarded to UCCI. This protest followed.
DISCUSSION
Delta challenges the evaluation of proposals in three areas--two regarding
the technical evaluation and one regarding the price realism review.[2]
First, Delta argues that the agency did not consider in its evaluation of
proposal risk the extent to which an offeror's proposed approach would
further the agency's objectives in awarding this contract. Second, Delta
argues that it should have received a rating of blue, not green, under the
second technical subfactor, claims processing. Finally, Delta argues that
the agency failed to determine, as part of its price realism review, that
each offeror's administrative costs were consistent with its stated
approach.
Our standard in reviewing such challenges is to examine the record to
determine whether the agency's judgment was reasonable and consistent with
stated evaluation criteria, and with applicable statutes and regulations.
ESCO, Inc., B-225565, Apr. 29, 1987, 87-1 CPD para. 450 at 7. For the
reasons set forth below, we deny each of these bases for protest.
Evaluation of Proposal Risk
In its challenge to the evaluation of proposal risk, Delta argues that the
evaluators failed to consider whether, and the extent to which, each
offeror's proposed approach would help the agency meet the goals set forth
in the solicitation's statement of objectives. In Delta's view, the
evaluation criteria here advised offerors that the agency would consider
this information in assessing proposal risk for each offeror. Delta argues
that its proposal was prepared with the goal of demonstrating the ways in
which its approach addressed the statement of objectives, and argues that
if this information had been considered, its proposal would have been
viewed as the best value to the government.
In response, TRICARE argues that there was no requirement in the
evaluation scheme that the agency consider--either generally or as part of
its assessment of proposal risk--an offeror's ability to meet the goals
identified in the statement of objectives. Instead, the agency contends
that the statement of objectives was used to develop the contract
requirements identified in the statement of work, and that the evaluation
scheme measured an offeror's plan for meeting, and its ability to meet,
those requirements. In addition, the agency argues that the solicitation
allows evaluators the discretion to consider an offeror's ability to meet
the statement of objectives in assessing proposal risk, but does not
require it.
As indicated above, section C of this solicitation opened with a statement
of objectives representing "the desired outcomes of this contract," and
advised that the objectives are supported by the solicitation's technical
requirements. RFP at 9. As also set forth above (in full), these
objectives included matters such as increasing enrollment in, utilization
of the services of, and user-satisfaction with, the TRICARE dental
program. See id. While there was no separate evaluation factor or
subfactor dedicated to the assessment of proposals against the statement
of objectives, there was a mention of the statement of objectives in the
RFP's guidelines on the review of proposal risk. Here, in its entirety, is
the solicitation's guidance in this area:
M.7.1.5. PROPOSAL RISK EVALUATION -- The Government will evaluate Factor
1, and the sub factors under Factor 1 for proposal risk. Proposal risk is
the evaluation of risk and impact to the Government based on the proposed
method of completing the task and the offeror's demonstrated experience in
performing that task. Proposal risk relates to the identification and
assessment of the risks associated with an offeror's proposed approach to
performing the requirements of this solicitation and applies only to
Factor 1 and each of its subfactors. Proposal risk may be associated with
a particular approach, or proposed process, as it relates to the
successful achievement of the Government's requirements and the ability to
meet the Statement of Objectives, or the degree to which the Government
must expend resources to monitor or manage the risk to avoid unsuccessful
performance. Proposal risk may also be impacted by the amount of
experience in performing dental insurance related services demonstrated by
the offeror. Proposal risk will be considered in making the best-value
analysis for award. Proposal risk will be considered at the factor and sub
factor level in evaluating trade-off possibilities and determining the
best-value proposal.
Id. at 87 (emphasis added).
As the provision indicates, the evaluators made assessments about the risk
of each offeror's proposed approach under each of the technical
subfactors--i.e., network access, claims processing, quality management,
and customer service--and under the technical factor overall. These
assessments are reflected, in detail, in the SSEB Report, AR, Tab 20, at
15-16, 18-19, 22, 26-27 (for UCCI), and at 61-62, 65, 69, 74-75 (for
Delta). As also specified in the evaluation provision, these assessments
were used by the SSA in making his award decision. Source Selection
Decision Memorandum at 38-42. On the other hand, while there are
occasional references in the evaluation materials to the relationship
between the statement of objectives and certain features of the proposals,
there is no evidence in the record that the evaluation of proposal risk
included any consistent consideration of an offeror's ability to meet the
solicitation's statement of objectives.
As a preliminary matter, we think the solicitation's stated requirements
constitute the agency's detailed view of the kinds of services needed to
achieve the contract's objectives. In this regard, and as quoted above,
the introduction to the statement of objectives advised that the
objectives were supported by the technical requirements identified
throughout the statement of work. RFP at 9. In addition, section M of the
solicitation, which contains the evaluation factors for award, explains
that the government is seeking to evaluate the extent to which proposals
demonstrate their ability "to meet or exceed the requirements defined in
the statement of work and the quality of service that is likely to result
from implementation of an offerors' proposed methods." RFP at 85.
Moreover, the solicitation's instructions to potential offerors about how
to structure and present their proposals to address each evaluation factor
and subfactor reflect several of the stated objectives. Compare RFP at 77
(the instructions addressing the first technical subfactor, network
access, which require offerors to describe how their "participating
provider network sizing model is designed to maximize enrollee access")
with RFP at 9 (the first objective identified is increased enrollment in
the TRICARE dental plan).
As a result of our view that requirements in this solicitation are the
agency's tangible definition of the services needed to achieve the
contract objectives set forth at the beginning of the statement of work,
we think the evaluation of each offeror's approach to meeting the
requirements here, as measured by the evaluation factors and subfactors,
implicitly captures an assessment of the way in which each proposal will
achieve, or fail to achieve, the stated objectives. In this way, we read
the solicitation as a whole, rather than as a disparate set of goals and
requirements.
That said, we do not agree with the protester's assertion that the agency
was required to expressly consider an offeror's ability to meet the
statement of objectives as part of its assessment of proposal risk. As
quoted above, the RFP, at section M.7.1.5, advises offerors that the
agency "will" assess proposal risk for each technical subfactor, and for
the technical factor overall. The provision then defines proposal risk as
"the evaluation of risk and impact to the Government based on the proposed
method of completing the task and the offeror's demonstrated experience in
performing that task." Id. at 87. The fourth sentence of section M.7.1.5
contains the language that is the focus of Delta's arguments. This
sentence reads:
Proposal risk may be associated with a particular approach, or proposed
process, as it relates to the successful achievement of the Government's
requirements and the ability to meet the Statement of Objectives, or the
degree to which the Government must expend resources to monitor or manage
the risk to avoid unsuccessful performance.
Id.
Our reading of this complex sentence is that it contains two major clauses
presented as alternative scenarios of risks that may be associated with an
offeror's approach or process; we read these examples as alternatives due
to the separation of the clauses by a comma and the word "or." The
protester argues that the word "and" in the first alternative--i.e., risk
may exist "as it relates to the successful achievement of the Government's
requirements and the ability to meet the Statement of Objectives"--has
been used to set out an additional possibility. Put differently, the
protester argues this clause means that the agency will consider whether
risk exists with respect to successful achievement of the requirements,
and, separately, whether risk exists with regard to the ability to meet
the contract objectives.
We do not agree and do not think the context of this clause supports the
protester's reading of the solicitation. As we indicated above, because
the requirements and objectives are intrinsically related, the evaluation
of each offeror's approach to meeting the requirements implicitly reflects
the degree to which each proposal will achieve, or fail to achieve, the
stated objectives. Thus, we read the language in section M.7.1.5 on which
Delta relies as presenting a single scenario where risk might present
itself--i.e., the agency will consider the risk that an offeror might not
be able to meet the requirements, and in failing to do so, will affect the
agency's ability to achieve its objectives.
Accordingly, we do not think the agency was required by this solicitation
to assess each offeror's ability to meet the statement of objectives in
evaluating proposal risk under each of the technical subfactors.[3] Since
we conclude that there was no such requirement in the evaluation scheme,
we disagree with the protester's assertion that the agency erred in not
making such an assessment as part of the evaluation of proposal risk.[4]
In addition, our review has shown nothing unreasonable, or inconsistent
with the solicitation's stated evaluation scheme, in the agency's
evaluation of proposal risk.
Evaluation of the Claims Processing Technical Subfactor
Delta's second challenge to the evaluation focuses on the technical
subfactor for claims processing, under which both Delta and UCCI received
ratings of green, or acceptable, and low proposal risk. In essence, Delta
argues that its proposal should have received a rating of blue under this
subfactor, and that if it had, its proposal would have been evaluated as
the proposal offering the greatest technical merit. Delta contends that
its proposal was improperly evaluated because of unreasonable conclusions
about the value to the agency of the ways in which Delta exceeded
solicitation requirements, and because of unequal treatment of its and
UCCI's proposals.
In response, TRICARE contends that Delta is merely disagreeing with the
agency's evaluation conclusions, that the agency's evaluation conclusions
have a reasonable basis, and that Delta has failed to show that the
evaluation conclusions were irrational. In addition, TRICARE argues that
the agency has not treated Delta unfairly, or unequally, in its
application of the evaluation criteria. For the reasons set forth below,
we agree with the agency.
Much of Delta's challenge in this area is based on the value agency
evaluators placed on features in both Delta's and UCCI's proposals that
exceeded certain minimum performance standards established in the RFP. Of
relevance to this discussion are the minimum performance standards
applicable to network access and claims processing, and certain
performance guarantees set forth in section H of the solicitation. With
respect to network access, the RFP required that
Ninety-five (95) percent of enrollees shall have access to a general
dentistry participating provider within 35 driving miles of their primary
residence, and be able to obtain an appointment within 21 calendar days of
requesting an appointment.
RFP at 24. With respect to claims processing, the RFP required that
Claims processing standards, measured on a monthly basis, shall be as
follows:
CATEGORY STANDARD
Process Claim to Completion 90% within 14 calendar days of receipt
98% within 30 calendar days of receipt
100% within 60 calendar days of receipt
* * * * *
Payment and coding errors shall be corrected within 10 calendar days of
identification of the error.
Id. at 25. In addition to these minimum performance standards, the RFP
also required that offerors agree to certain performance guarantees. With
respect to the minimum performance standard for claims processing, the RFP
stated that the government would "withhold a performance guarantee"--in
essence, require payment of a penalty--of $1 per claim for every claim not
processed in accordance with the standards requiring payment of 90 percent
of claims within 10 days, and payment of 100 percent within 60 days. Id.
at 43.
The RFP anticipated that offeror responses in these areas would be
assessed under the first and second technical evaluation subfactors,
network access and claims processing. Although the RFP's section M
evaluation guidance related to network access is not at issue in this
protest, the guidance related to claims processing is relevant here.
Specifically, the solicitation stated:
Proposals will be evaluated to determine the offeror's ability to
accommodate the anticipated [TRICARE dental program] claim volume,
including the offeror's proposed staffing. . . . Proposals will also be
evaluated for supporting accurate and timely claims processing in
accordance with the minimum claims processing standards specified in
Section C. Proposals will also be evaluated to assess the efficacy of the
offeror's plan to identify problems and to implement corrective action.
Plans guaranteeing standards superior to the minimum claims processing
standards specified in Section C, without qualification, may receive
higher merit ratings.
Id. at 87 (emphasis added).
In response to the claims processing requirement, Delta offered to process
[deleted] percent of claims within [deleted] days of receipt, and 100
percent of claims within [deleted] days. Delta offered a $[deleted] per
claim performance guarantee that it would process [deleted] percent of
claims within [deleted] days. AR, Tab 22 at Bates p. 270.[5] In contrast,
UCCI offered to process [deleted] percent of claims within 14 days, and to
meet the solicitation's requirement that it process 98 percent of claims
within 30 days, and 100 percent of claims within 60 days. UCCI offered the
required $1 per claim performance guarantee that it would comply with the
RFP's stated minimums. AR, Tab 24 at Bates p. 336.
Although both Delta and UCCI offered to exceed the minimum performance
requirements for claims processing established in the RFP, both received a
rating of acceptable, or green, under the claims processing subfactor.
Moreover, despite the the SSEB's and the SSA's express recognition of the
fact that both offerors proposed to exceed the minimum performance
requirement in this area, neither proposal was assessed as providing
additional benefit to the government. Source Selection Decision Memorandum
at 10, 22-23; AR, Tab 20, at 17, 63. The basis for this judgment was set
forth in detail in the SSEB's review of Delta's final proposal revision:
The SSET does not consider the proposed standards to be strengths. Given
the fact that 3.3 million claims are processed annually, under the current
standard of 90% within 14 days is [sic] 2.97 million claims. The proposed
[deleted]% within [deleted] days equates to [deleted] million claims. The
[deleted]% increase (from 90% to [deleted]%) would be approximately
[deleted] additional claims processed per year and equates to
approximately 2 additional claims processed per provider location per year
given Delta's proposed number of provider locations.[[6]] Given [that]
many participating providers have 30 day billing cycles, the decrease from
a 14 to [deleted] day timeframe would have minimal effect on the
provider's practice. The SSET does not consider the percentage increase or
the shortened time period to be significant enough to affect provider and
beneficiary satisfaction. The SSET believes that the effect on providers
and beneficiaries will be negligible.
AR, Tab 22 at Bates pp. 270-71. The SSET expressed similar views about
Delta's offer to pay 100 percent of claims within [deleted] days rather
than the 60 day period required by the RFP. Again, the SSET points out
that this offer only involves the remaining 2 percent of claims that the
RFP allowed to be paid between 30 and 60 days after receipt. As a result,
"the SSET does not consider the increase to be significant enough to
enhance provider and beneficiary satisfaction." Id. at 271.
With respect to Delta's first challenge in this area--that the agency's
evaluation conclusions about the value of its offer to exceed the minimum
performance requirements for claims processing established in the RFP are
irrational and unreasonable--we disagree. In support of its arguments,
Delta offers the opinion of its expert that the timeliness of claims
processing is a matter of significant concern for providers, and that
slower payments can have an adverse impact on provider and enrollee
satisfaction. Protester's Comments, June 6, 2005, at 11. While we do not
disagree with this proposition, the agency's judgment is that the facts
here do not support a conclusion that the extent to which Delta proposed
to exceed the required claims processing times is sufficiently significant
to provide a benefit to the government.
We note that this is not a situation where the agency has overlooked the
benefits of an offeror's proposal, or misunderstood them. The agency here
expressly considered the value of these benefits and decided that they did
not significantly enhance the value of the Delta's proposal. In our view,
Delta has offered little more than mere disagreement with the agency's
judgment about the value of the enhancements in its proposal; Delta has
not established that these judgments are unreasonable. A protester's
disagreement with an agency's evaluation does not establish that the
evaluation was unreasonable. The OMO Group, Inc., B-294328, Oct. 19, 2004,
2004 CPD para. 212 at 5, 8.
We also note that this is not a situation where the agency has rated the
proposals inconsistently. As the agency points out, a rating of blue, or
exceptional, was reserved for proposals that exceeded minimum requirements
in a manner beneficial to the government. AR, Tab 20 at Bates p. 127.
Given that the agency had a rational basis for its evaluation conclusion
that neither of these proposals exceeded minimum requirements in a manner
beneficial to the government, and, given that the agency consistently
applied its evaluation methodology to both proposals, we think TRICARE
reasonably evaluated both Delta and UCCI as acceptable under this
subfactor. Interlog, Inc., B-282139, Apr. 27, 1999, 99-1 CPD para. 87 at
3.
Delta also argues that its rating under the claims processing subfactor
was otherwise unfair for two reasons. First, Delta argues that it was
treated unfairly because, under a different subfactor, UCCI received a
strength for exceeding the minimum performance requirements by [deleted]
percentage points. Delta contends that it was unreasonable for the agency
to value a [deleted]-percent increase in network access in UCCI's proposal
under the first technical subfactor, network access, and not to similarly
value Delta's [deleted]-percent increase in claims processing.
On this issue, the record shows that UCCI did, in fact, receive a
strength--and subsequently, a rating of exceptional--for its proposal's
representation that [deleted] percent of enrollees would have access to a
participating provider within 35 driving miles of their primary residence,
and would be able to obtain an appointment within 21 days of requesting an
appointment. AR, Tab 24 at Bates pp. 333-34. As indicated above, the RFP
required that offerors propose a network providing such access to at least
95 percent of enrollees. RFP at 24. Delta's proposal represented that
[deleted] percent of enrollees would have such access; and Delta, too,
received a strength for this enhancement, and a rating of exceptional. AR,
Tab 22 at Bates p. 254.
In Delta's view, the fact that UCCI received a strength for exceeding
Delta's proposed network access by [deleted] percentage points--and
exceeding the RFP network access requirement by [deleted] percentage
points--means that it was unreasonable for the agency not to accord Delta
a strength for exceeding the RFP's claims processing performance
requirement by [deleted] percentage points. We find this argument
unpersuasive.
In analyzing the UCCI proposal under the network access technical
subfactor, the SSET observed that:
With 1.7 million enrollees, a [deleted]% increase in the standard means
that [deleted] additional enrollees shall have access to a participating
provider within 35 driving miles. By proposing a higher access standard, a
greater number of enrollees should have a greater choice of providers.
This should increase the probability that a provider will be closer to the
enrollee and therefore, should increase beneficiary satisfaction.
AR, Tab 24 at Bates p. 328. While Delta is correct that the difference
between its proposed level of network access and UCCI's is only [deleted]
percentage points--the same relative difference as existed between the
proposals in the area of claims processing--we know of no reason why a
[deleted] percentage point difference in two entirely different areas must
be valued in the same way. Moreover, we find reasonable the agency's view
that a slight increase in the speed with which a small number of claims
gets paid is not equivalent to an increase in the number of enrollees who
have easy access to a participating dental provider. Given this reasonable
basis for treating the proposals differently in these two areas, we do not
agree that Delta has been treated unfairly.
Delta's second contention that it was treated unfairly under the claims
processing technical subfactor arises from its view that TRICARE
considered quality aspects of UCCI's proposal under the claims processing
subfactor, while it restricted consideration of Delta's favorable quality
approach under the quality management subfactor. In this regard, Delta
argues that the agency unfairly and unreasonably evaluated its
certification as a high-quality contractor under the third subfactor,
quality management, rather than under the claims processing subfactor.
Supp. Protest at 33-37.
The record here shows that Delta received a strength, and a rating of
exceptional under the third technical subfactor, quality
management/quality improvement program, because of the certification of
its subcontractor, Delta Dental of Michigan, as an ISO 9001 contractor--a
rigorous certification program for contractors with state-of-the-art
quality programs. AR, Tab 22 at Bates p. 275. Delta contends that this
strength should have been reflected under the claims processing technical
subfactor, rather than the quality management technical subfactor, and
that if the agency had done so, its strength in this area would have
merited an exceptional rating under the second technical subfactor. Under
this scenario, Delta argues it would have been the highest-rated offerer
under the technical evaluation factor.
A necessary component of Delta's argument is its claim that the agency
assessed UCCI's quality approach under the second technical subfactor,
claims processing. Thus, Delta contends that the agency's failure to
assess its quality approach under the second technical subfactor as
well--and in so doing, accord it the same evaluation strength (resulting
in an exceptional rating) it received for its ISO 9001 certification under
the quality management subfactor--means that the agency has engaged in
unequal treatment. We are, again, unpersuaded.
In our view, the record does not support Delta's contention that the
agency treated UCCI and Delta unequally in evaluating the claims
processing subfactor. The RFP here advised offerors that its evaluation of
the second technical subfactor, claims processing, would include an
assessment of "the efficacy of the offeror's plan to identify problems and
implement corrective action" associated with processing claims. RFP at 87.
As announced, the evaluation of both UCCI's and Delta's proposals included
precisely this kind of review for both offers. Compare AR, Tab 24 at Bates
p. 338 (the SSET assessed UCCI's approach to identifying problems and
correcting them) with AR, Tab 22 at Bates pp. 266-67 (same for Delta's
approach). We also agree with the agency's assessment that Delta's ISO
9001 certification is a company-wide quality program, and is not tied only
to the smaller subset of activities that constitutes claims processing.
See Supp. Report, June 15, 2005, at 39. Finally, the agency points out
that Delta's own proposal trumpets its ISO 9001 certification as part of
its response to the quality management technical subfactor. Id. at 39-40.
Under these circumstances, since the record shows that the agency did not
evaluate UCCI's and Delta's proposals differently under the claims
processing subfactor, we see nothing unfair or unreasonable about the fact
that Delta's state-of-the-art quality management plan was evaluated under
the quality management subfactor.
Evaluation of Price Realism
In its third, and last, challenge to the evaluation here, Delta argues
that the agency failed to determine, as part of its price realism review,
that each offeror's administrative costs were consistent with its stated
approach. TRICARE answers that no such review was required by the RFP.
The third evaluation factor under the evaluation scheme set forth in this
RFP was total evaluated price. An offeror's evaluated price was calculated
by multiplying each of the priced contract line items (CLIN) by the
estimated quantities and adding all of the costs for each option period,
including certain phase-in costs. RFP at 88. Among the CLINs were four
requests for offerors to identify, as a unit price, the premium that would
be charged for each enrollment in the TRICARE dental program. RFP at 2.
These four premiums were for single enrollments, family enrollments,
single survivor benefit enrollments, and family survivor benefit
enrollments. Id.
The RFP's evaluation scheme advised that all priced CLINs would be
reviewed for reasonableness and unbalanced pricing, and that there would
be a limited review of price realism. In explaining the intended review of
price realism, the RFP stated:
The premium build-up for the Single and Family enrollments (CLINs X001 and
X002) provided by the offeror will be reviewed for price realism. This
review will ascertain whether the proposed premium rates and the
assumptions used in their build-ups are realistic. From an actuarial
standpoint, the term "realistic," as it applies to an overall premium
rate, means that the premium rate proposed is adequate to sustain the
dental and administrative costs for the benefits proposed, given the
offeror's approach. If the offeror's overall premium is determined to be
unrealistic, the evaluator will calculate the net impact (dollar value) of
the unrealistic assumption(s). The results of the price realism review
will not be used to adjust the offeror's Total Evaluated Price. If the
offeror's overall premium is determined to be unrealistic, the Government
will assess price risk based on the net impact of unrealistic
assumption(s), the financial strength of the offeror (and its parent or
partner company(s) if applicable), and the source of the unrealistic
pricing, i.e., network maintenance, claims processing, etc.
RFP at 88 (emphasis added). To assist in this review, the RFP's
instructions to offerors required a description of the build-up of the
monthly premium rates and of the assumptions underlying the development of
those rates.[7] Id. at 81.
Upon receipt of the proposals, the PET reviewed the proposed premium
prices of all three offerors under 10 criteria to determine if the
proposed premium rates and the assumptions used in their build-ups were
realistic. First Declaration of the Chairman of the PET, May 24, 2005, at
2. These criteria (which closely track the categories of information
requested from offerors in the RFP) were identified in the agency's
internal Source Selection Evaluation Guide, AR, Tab 38 at Bates pp. 33-35;
these criteria were not identified in the solicitation. Some of these
criteria were:
Does the premium build-up method conform to the solicitation
specifications?
Are the utilization rate assumptions realistic?
Are the unit cost assumptions realistic?
Are the proportion of participating and non-participating provider
assumptions realistic?
Are administrative cost assumptions realistic?
Are the profit assumptions realistic?
Id. The consensus views of the PET about how Delta's and UCCI's proposed
premium rates fared under each of these ten criteria, and whether the team
viewed the premium rates as realistic overall, were memorialized and
provided with the agency record in this protest. AR, Tab 30 at Bates pp.
220-27 (Delta's premium rates), 235-41 (UCCI's premium rates).
Of relevance to this dispute are the views of the PET about UCCI's
proposal under one of the criteria identified above, specifically, the
PET's consideration of whether an offeror's administrative cost
assumptions were realistic. On this issue, the PET's final consensus
views, in their entirety, are set forth below:
UCCI presents a great deal of data on administrative costs. A limited
narrative is provided to describe the basis for these calculations.
However, as the incumbent, the proposed administrative costs are based on
actual costs under comparable circumstances. The premium load of about
[deleted] percent is essentially the same as the IGCE load.
UCCI's phase-in costs are somewhat lower than the IGCE estimate. However,
this is realistic and expected, as the incumbent should have lower
start-up costs than a new contractor.
UCCI's administrative cost assumptions are realistic.
AR, Tab 34 at Bates pp. 330-31.
Delta contends that the agency cannot claim to have performed a reasonable
evaluation of price realism because the analysis quoted above does not
include evidence that the agency evaluated whether UCCI's "proposed
administrative costs were consistent with the offeror's approach." Supp.
Protest at 42. Delta argues that if the agency had performed this review
properly, it would have realized that UCCI was "prepared to do far less
than Delta Dental in attempting to meet the Government Objectives for this
contract," and would have realized that Delta's higher administrative
costs are tied to its effort to increase enrollment by reservists in the
TRICARE dental program. Supp. Comments at 43.
As a preliminary matter, we note that the purpose of the limited price
realism review anticipated here was not to make assessments about which of
these offerors plans to expend greater effort increasing the enrollment of
reservists in this program.[8] Instead, the purpose of the review was to
determine whether an offeror's premiums are adequate "to sustain the
dental and administrative costs for the benefits proposed, given the
offeror's approach." RFP at 88.
In our view, the agency's price realism review was adequate for this
purpose, and consistent with the stated evaluation criteria. As set forth
in the analysis quoted above, the agency reviewed UCCI's administrative
cost data, and the limited narrative provided with that data. In addition,
the agency noted that UCCI based its proposed administrative costs on the
actual costs it has been experiencing as the incumbent, and noted that the
level of administrative costs anticipated is essentially the same as those
in the government's estimate. Given that UCCI has been able to perform
these services in the past at these costs, and given that the protester
has offered nothing about UCCI's proposed future performance that suggests
that the company's future administrative costs will be higher, we think
the price realism review was reasonably performed.[9]
Finally, to the extent that Delta is arguing that the analysis under the
above-quoted criterion used by the PET to assess the price realism of each
offeror's premium build-up was inadequate, we note that these criteria
were never set forth in the evaluation scheme. Instead, they were internal
guidelines used by the PET to structure its detailed review of each
offeror's premium build-up. As a result, Delta's contention that the
agency failed to perform an adequate analysis under one of these 10
internal guidelines does not translate to an unreasonable evaluation, or
to unfair treatment of Delta. It is the RFP, not internal evaluation
materials, that forms the compact between the agency and offerors about
how proposals will be evaluated. Lear Siegler Servs., Inc., B-280834,
B-280834.2, Nov. 25, 1998, 98-2 CPD para. 136 at 6; Loral Aeronutronic,
B-259857.2, B-259858.2, July 5, 1995, 95-2 CPD para. 213 at 9. Internal
agency evaluation guidelines do not provide rights to outside parties.
Mandex, Inc.; Tero Tek Int'l, Inc., B-241759 et al., Mar. 5, 1991, 91-1
CPD para. 244 at 7.
The protest is denied.
Anthony H. Gamboa
General Counsel
------------------------
[1] The RFP also included a small number of cost reimbursement contract
line items that were neither priced nor evaluated; rather, the costs were
estimated by the government and added to each offeror's proposed price.
RFP at 3, 72.
[2] In its initial and supplemental protest filings Delta raised
additional issues that have since been expressly withdrawn. Protester's
Comments, June 6, 2005, at 27; Protester's Supplemental Comments, June 22,
2005, at 37, n.11.
[3] In contrast to the clause here, in cases where agencies anticipate the
evaluation of an offer's ability to meet a solicitation's statement of
objectives, the evaluation schemes have clearly indicated the agency's
intent. See, e.g., Science Applications Int'l Corp., B-293601 et al., May
3, 2004, 2004 CPD para. 96 at 3; Raytheon Co., B-291449, Jan. 7, 2003,
2003 CPD para. 54 at 3.
[4] Given our conclusion, we also disagree with the protester's assertion
that its interpretation of the solicitation clause addressing the
evaluation of proposal risk is buttressed by language it finds in the
Acquisition Plan (AR, Tab 37, at 13) that is omitted from the Source
Selection Evaluation Guide (AR, Tab 38, at 39). The protester's consultant
points out that the language of the Acquisition Plan very nearly mirrors
the solicitation language quoted above, while the language of the Source
Selection Evaluation Guide omits the phrase "and the ability to meet the
Statement of Objectives." This omission leads the consultant to opine that
the evaluators may have relied upon the Source Selection Evaluation Guide,
thus failing to recognize that the evaluation scheme in the solicitation
called for a review of an offeror's ability to meet the statement of
objectives. Declaration of Protester's Consultant at 6. Since the agency
has consistently argued that it had no such obligation, and since we
agree, we think these arguments suggesting how the evaluators might have
been misled into failing to follow the solicitation's evaluation scheme
need no further consideration.
[5] For ease of reference, the citation here is to the sequential "Bates"
numbers stamped on pages in the record.
[6] Delta proposed a participating provider network of [deleted] general
and specialty dentist locations. AR, Tab 22 at Bates p. 254.
[7] Among other things, this provision required offerors to provide
detailed information on: enrollee assumptions, by type of enrollee;
utilization rates by type of service or procedure by participating
providers and non-participating providers; unit costs by type of service
or procedure by participating providers and non-participating providers;
the impact of differences in assumption by region; the impact of benefit
changes on the premium; administrative loading; and profit. RFP at 81.
[8] In fact, this argument suggests that Delta, in essence, is asking for
a review of the technical merit of its proposal as part of the price
realism review--a matter limited by the terms of the RFP to determining
whether the proposed premium rates appear realistic. Moreover, Delta is
again seeking credit for the ways in which it proposed to meet the
objectives of this contract. As set forth above, we think the evaluation
of Delta's proposal was properly limited to an assessment of whether and
how well Delta proposed to perform the requirements of the contract.
[9] Delta's concern is that its higher administrative costs will result in
its greater ability to achieve the solicitation's objectives, and that the
agency failed to recognize this fact. This concern does not translate to a
conclusion that UCCI's lower administrative costs will be inadequate to
sustain the dental and administrative costs for the benefits proposed.