TITLE: B-298293; B-298293.2, Air Products Healthcare, August 11, 2006
BNUMBER: B-298293; B-298293.2
DATE: August 11, 2006
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B-298293; B-298293.2, Air Products Healthcare, August 11, 2006

   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: Air Products Healthcare

   File: B-298293; B-298293.2

   Date: August 11, 2006

   Douglas L. Patin, Esq., Robert J. Symon, Esq., and Katherine L. Ruff,
   Esq., Bradley Arant Rose & White, for the protester.

   Dennis Foley, Esq., and Philip Kaufman, Esq., Department of Veterans
   Affairs, 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

   Protest that agency improperly determined that protester's proposal was
   technically unacceptable is denied where the record shows that the
   agency's conclusion was reasonable, and where the agency clearly advised
   the protester of its concerns during discussions.

   DECISION

   American Homecare Supply, LLC, dba Air Products Healthcare protests the
   award of a contract to Rotech Healthcare Inc. by the Department of
   Veterans Affairs (VA), pursuant to request for proposals (RFP) No.
   00241-05-00106, issued to procure home oxygen delivery and support
   services for veteran patients located in the VA's Veterans Integrated
   Service Network (VISN) 1, which includes the New England states of
   Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire, and
   Maine. Air Products argues that the VA unreasonably concluded that its
   proposal was technically unacceptable, failed to hold meaningful
   discussions, and conducted an unreasonable evaluation of past performance.

   We deny the protest.

   BACKGROUND

   The RFP here, issued on August 10, 2005, advised potential offerors that
   the VA has an ongoing requirement for home oxygen services for
   approximately 5,220 veteran patients served by eight VA medical centers
   (VAMC) and associated outpatient clinics in the New England area. RFP at
   27. In addition, the RFP provided a breakdown of the estimated number of
   home oxygen patients served by each of the major facilities within VISN 1.
   Specifically, the estimated number of patients for each location is as
   follows:

     VAMC Bedford, MA                            104 
     VA Boston, MA Healthcare System (HCS)     1,257 
     VA Connecticut HCS                        1,126 
     VAMC Manchester, NH                         442 
     VAMC Northampton, MA                        160 
     VAMC Providence, RI                         570 
     VAMC Togus, ME                            1,300 
     VAMC White River Junction, VT               261 

   Id. at 75 (Attach. B).

   In addition to the routine patient visits and replenishment of supplies
   associated with providing home oxygen services, the RFP required that
   offerors be able to provide emergency services at a beneficiary's home
   within 6 hours of a call for help, and advised that most emergency
   services should be provided within 2 hours of a call. Id. at 28. The RFP
   also identified a transition period of 45 days during which the incumbent
   contractor would continue to provide these services while the incoming
   contractor is taking over. Id. at 31.

   The RFP anticipated the award of a fixed-price requirements contract for
   these services for 1 base year, followed by up to four 1-year options. The
   solicitation advised that proposals would be assessed under each of three
   evaluation factors--technical capability, past performance, and price--and
   that technical capability and past performance combined would be
   "significantly more important than price." Id. at 64. The solicitation
   also advised that price would become more important as technical
   evaluations became more equal. Id. at 65. Under the technical capability
   evaluation factor, the solicitation also identified four subfactors, in
   descending order of importance. These were: technical approach, key
   management team, financial statement, and curriculum vitae for the project
   manager. Id. at 66.

   By the September 1, 2005, closing date, the VA received three
   proposals--one from Rotech, one from Air Products, and one from a third
   offeror. The VA evaluators rated each proposal under the technical
   evaluation factors and subfactors, and under the past performance
   evaluation factor, using the ratings of A, B, C, or D. The ratings of A
   and B were reserved for proposals viewed as outstanding or good,
   respectively, while the ratings of C and D were defined as follows:
  
      C -- Fair-Proposal marginally meets the minimum standard requirements of
      the rating factor.

      D -- Poor-Proposal fails to meet the minimum requirements of the rating
      factor.

   AR, Tab 17, at 5. The price factor was not rated.

   In its proposal, Air Products identified three facilities it would use to
   provide the services required here--one in Auburndale, Massachusetts; one
   in Warwick, Rhode Island; and one in Stratford, Connecticut. Agency Report
   (AR), Tab 7, Air Products Technical Proposal at 1, 3-7. For each of these
   facilities, Air Products provided a detailed roster of the employees it
   was offering, including the employee's name, position, and years of
   experience. Id. at 3-7. The proposal advised that Air Products' Rhode
   Island and Connecticut facilities would service patients in those two
   states, respectively, while the facility in Auburndale, Massachusetts,
   would service patients in Massachusetts, Vermont and New Hampshire. Id. at
   8.

   With respect to the estimated 1,300 home oxygen patients located in Maine,
   the proposal stated that Air Products would "open a fourth facility in
   Maine to service the patients of the Togus [ME] VAMC." Id. at 3. The
   proposal did not identify any employees for the Maine facility, but
   represented that the Maine facility would be "well staffed with
   experienced and competent personnel." Id. at 7. The proposal also advised
   that Air Products expected to locate its Maine facility in either
   Portland, Bangor, or Augusta. (The Togus VAMC is located in Augusta.) Air
   Products' initial proposal does not identify any facility, or branch
   office, in the states of Vermont or New Hampshire. Id. at 8-10.

   In assessing Air Products' initial proposal, three of the five VA
   evaluators assigned the proposal a rating of D under the technical
   approach subfactor (the most-heavily weighted subfactor), while the
   remaining two evaluators assigned a rating of C. AR, Tab 6. These ratings
   were averaged to a rating of C- under the technical approach subfactor.
   Under the other three technical subfactors, Air Products received average
   ratings of C+, C+, and B-/C+. Under the past performance evaluation factor
   Air Products received a rating of C/B-.[1] AR, Tab 6. In addition, the
   record reflects that all five of the evaluators added narrative comments
   to their scoresheets expressing concern about whether Air Products'
   approach would provide adequate coverage throughout the geographical
   region covered by the contract.[2] Id.

   By letter dated October 21, 2005, the VA provided nine discussion
   questions to Air Products, and requested that the company submit a "best
   and final offer" by November 4. AR, Tab 10. Two of these questions are
   relevant here:

      1.      How do you intend to provide home oxygen services for an entire
      VISN, when your previous contracts are with individual VA Medical Centers?
 
      * * * * *

      8.      Based on your technical proposal, it appears that your company
      lacks the staff to provide adequate coverage for Vermont, New Hampshire
      and Maine. How do you intend on providing coverage for these areas?

   Id.

   In its response, Air Products provided a one-paragraph general answer to
   the first question, advising the VA that "with the establishment of two
   new facilities and the hiring of additional personnel, we are positive we
   will have more than sufficient resources available to meet the needs of
   the entire VISN." AR, Tab 12, at 2. Air Products' answer to question No. 8
   states:

   It is our intention to open new depots in White River Junction, VT and
   Biddeford, ME or alternate locations that would best fit the needs of the
   VA beneficiaries to be serviced. We currently cover all of New Hampshire
   out of our Manchester, NH facility. We believe we can open the two new
   facilities and have an interim JCAHO [Joint Commission on Accreditation of
   Hospital Organizations] Accreditation for both within [deleted] days of
   notice of award. Until these two new facilities are opened and accredited,
   we have adequate inventory on our vehicles and in short-term storage
   facilities to meet the needs of the VA.

   Id. at 5. In an additional five sentences provided in answer to question
   No. 8, Air Products indicated that it will hire additional personnel to
   meet the needs of the VA, and explains that the company has successfully
   opened more than 20 new locations over the last 2 years.

   In assessing Air Products' final proposal, four of the five VA evaluators
   assigned a rating of D under the technical approach subfactor of the
   technical evaluation factor. AR, Tab 11, at 1. The remaining evaluator
   assigned a rating of B, although he wrote a narrative comment indicating
   that, in his view, Air Products lacks the capacity to perform this
   contract, and that "their [Air Products'] responses do not warrant any
   changes in my score."[3] Id. at 1, 3. Averaging the four ratings of D,
   with one rating of B, the technical evaluators assigned an average rating
   of C- to Air Products under the technical approach subfactor. The
   remaining technical subfactor ratings were C+, C+, and B-. The ratings
   assigned for past performance were C/B-, with an average overall rating
   for Air Products of C.

   In addition to the letter ratings assigned to Air Products' final
   proposal, the evaluators expressed on-going concerns in contemporaneous
   narrative comments prepared for the record. With respect to the issue of
   Air Products' ability to cover the entire geographical area, the Price
   Negotiation Memorandum notes:

     In Air Products' original proposal they stated they had facilities in
     MA, CT and RI. They planned on covering NH and VT out of the MA office
     and they planned on opening an office in ME. In the BAFO response they
     revised their proposal by saying they would open a facility in VT too.
     They also mention in their BAFO that they have a facility in NH but no
     information on the facility's size was given. Because no information on
     this facility is given and it was not mentioned in the original proposal
     the question arises does it exist? And even if it does, how big is the
     facility? How many staff is there?

     Of major concern is the time it will take to open any proposed
     facilities in ME and VT and meeting the time requirements, i.e.,
     responding to emergency calls within 6 hours and servicing all of VISN 1
     while these new facilities are being opened.

   AR, Tab 17, at 8-9.

   Reviewing the final evaluation ratings, the contracting officer (CO)
   agreed with the four evaluators who assigned a D rating to Air Product's
   final proposal under the technical approach subfactor, and concluded that
   the B rating assigned by the remaining evaluator was in error. CO's
   Statement at 4. As a result, the CO reduced the average rating for the
   technical approach subfactor from C- to D, and concluded that the proposal
   was unacceptable.[4] Id.

   At the conclusion of the final evaluation, both Air Products' proposal,
   and that of the third offeror, were viewed as technically unacceptable.
   AR, Tab 16, at 3. As a result, the CO recommended award to Rotech on the
   basis that its proposal was technically acceptable, and that its price of
   $45.5 million was reasonable. AR, Tab 17, at 10-11. In contrast, Air
   Products' price was $42.2 million, and the price of the other unacceptable
   offeror was $37.8 million. Id. Since Rotech's proposal was viewed as the
   only acceptable offer, the CO did not make a cost/technical tradeoff.

   By letter dated May 2, Air Products was provided with a debriefing, and
   this protest followed.

   DISCUSSION

   Air Products argues that the agency unreasonably concluded that its
   proposal was technically unacceptable because of an apparent concern about
   how long it would take the company to open new facilities. Air Products
   also argues that the VA failed to provide meaningful discussions because
   the agency did not advise the company of this concern. In addition, Air
   Products contends that the agency improperly abandoned the evaluation
   scheme when it found the proposal unacceptable despite the proposal's
   average rating of C- under the technical approach subfactor, and average
   rating of C overall. As set forth below, we think Air Products has recast
   the VA's concerns about its proposal more narrowly than the evaluation
   record warrants, and we disagree with the protester's contentions that the
   agency acted unreasonably in concluding that the proposal was technically
   unacceptable.

   In reviewing a procuring agency's evaluation of an offeror's technical
   proposal, our Office's role is limited to ensuring that the evaluation was
   reasonable and consistent with the terms of the solicitation and
   applicable statutes and regulations. Urban-Meridian Joint Venture,
   B-287168, B-287168.2, May 7, 2001, 2001 CPD para. 91 at 2. Our Office will
   not question an agency's evaluation judgments absent evidence that those
   judgments were unreasonable or contrary to the stated evaluation criteria.
   Kay & Assocs., Inc., B-291269, Dec. 11, 2002, 2003 CPD para. 12 at 4.

   In support of its argument that the VA was primarily concerned about the
   time it would take to open facilities, and that the VA failed to advise it
   of this concern, Air Products correctly quotes a comment in the final
   evaluation materials stating:

     Of major concern is the time it will take to open any proposed
     facilities in ME and VT and meeting the time requirements, i.e.,
     responding to emergency calls within 6 hours and servicing all of VISN 1
     while these new facilities are being opened.

   AR, Tab 17, at 9. In our view, despite the VA's description of the time
   needed to open facilities as a "major concern," its concern was much
   broader than this more limited matter.

   For example, the evaluation materials in the record note (one page prior
   to the quotation set out above) that Air Products originally stated that
   the company: (1) had facilities in Massachusetts, Connecticut and Rhode
   Island; (2) planned on providing services to patients in New Hampshire and
   Vermont out of the Massachusetts facility; and (3) planned on opening a
   facility at an, as yet, undetermined location in Maine. Id. at 8. This
   approach led the agency to ask Air Products during discussions how the
   company would provide coverage throughout the region, and especially how
   it would provide coverage to patients located in Vermont, New Hampshire
   and Maine. AR, Tab 10.

   In its answer, Air Products did not clear up these matters, but instead,
   further clouded them. Specifically, in its final response, Air Products,
   for the first time: (1) referenced a Manchester, New Hampshire facility
   nowhere mentioned in its initial proposal; (2) promised to open a facility
   in White River Junction, Vermont, to provide services to patients in that
   state; and (3) advised that it expected to be able to open, and obtain
   accreditation for, the new facilities in Vermont and Maine "within
   [deleted] days of notice of award." AR, Tab 12, at 5. Apparently
   recognizing the fact that the stated [deleted] period was [deleted] the
   45-day transition period identified in the solicitation, Air Products also
   advised that "[u]ntil these two new facilities are opened and accredited,
   we have adequate inventory on our vehicles and in short-term storage
   facilities to m." Id.

   This record as a whole--from the initial evaluations, including the
   narrative comments prepared by all five VA evaluators; to the discussion
   questions ("it appears that your company lacks the staff to provide
   adequate coverage for Vermont, New Hampshire and Maine" AR, Tab 10); to
   the final evaluation conclusion that the proposal is
   unacceptable--evidences a consistent and clearly-stated concern about Air
   Products' capacity to provide home oxygen services to veteran
   beneficiaries located throughout the New England region. In our view, this
   record effectively refutes the protester's contention that the evaluation
   was unreasonable, and refutes any claim that the discussion questions here
   failed to reasonably advise the protester of the nature of the VA's
   concerns. See Poly-Pacific Techs., Inc., B-293925.2, Dec. 20, 2004, 2004
   CPD para. 250 at 4.

   With respect to the protester's contentions that the VA could not
   reasonably conclude that its proposal was unacceptable given its average
   rating of C- under the technical approach subfactor, and average rating of
   C overall, we again disagree.

   In this regard, we note that four of the five VA evaluators assigned a
   rating of D to the proposal under the most heavily-weighted technical
   subfactor, indicating their view that the proposal failed to meet the
   RFP's minimum requirements. In addition, the one remaining evaluator, who
   assigned a B rating--which was averaged with the four ratings of D to
   produce a consensus rating of C- under this subfactor--added a narrative
   comment indicating that he, too, thought Air Products lacked the capacity
   to perform this contract, and that nothing in the company's final response
   provided a basis to change his earlier rating of C under this subfactor.
   AR, Tab 11, at 1, 3. Under these circumstances, we see nothing
   unreasonable about the CO's decision to change Air Products' average
   rating under this subfactor to a rating of D, or his conclusion that the
   proposal was technically unacceptable, and could be excluded from further
   consideration. See Property Analysts, Inc., B-259853.2, B-259853.3, June
   13, 1995, 95-1 CPD para. 270 at 4 (CO reviewed evaluations and proposals,
   noticed inconsistent scoring, and reasonably adjusted the scoring to
   reflect his view of the proposals).

   Finally, to the extent that the VA does express a concern in its final
   evaluation materials about the amount of time Air Products anticipates for
   opening, and gaining accreditation for, new facilities, we note that the
   final proposal's information about timeframes was inconsistent with both
   the initial proposal and the requirements of the RFP. Moreover, by
   providing this new and inconsistent information in its final response, Air
   Products cannot reasonably fault the agency for failing to raise the
   matter during discussions.[5] See Mine Safety Appliances Co., B-242379.5,
   Aug. 6, 1992, 92-2 CPD para. 76 at 6-7 (agency is not required to reopen
   discussions to allow offerors to address problems first introduced in an
   offeror's final offer).

   The protest is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] Under the past performance evaluation factor, an offeror's past
   performance on VA contracts was assessed separately from its past
   performance on other contracts; thus, there are two ratings for each
   offeror's past performance score. RFP at 66; AR, Tab 6. In contrast, the
   B-/C+ rating referenced above for the fourth technical subfactor,
   curriculum vitae for the project manager, is an attempt by the evaluators
   to strike a midpoint between the B and C ratings; it does not reflect two
   separate scores, as with the past performance rating.

   [2] In comparison, Rotech's initial proposal received average ratings of
   A-, A-, B, and A-, under the four technical subfactors, with average
   ratings of C+/Not Applicable, under the past performance evaluation
   factor.

   [3] This evaluator initially assigned a rating of C to Air Product's
   proposal under the technical approach subfactor of the technical
   evaluation factor. Compare AR, Tab 6, at 3 (showing an initial rating of C
   from this evaluator for Air Products under the technical approach
   subfactor) with AR, Tab 11, at 3 (showing a final rating of B, despite the
   narrative comment quoted above).

   [4] This decision uses the average ratings noted on the summary sheet
   contemporaneously prepared by the technical evaluation panel, rather than
   the slightly-lower average ratings reflected in the CO's Statement
   prepared in response to this protest. Compare AR, Tab 11, at 1 (the
   technical evaluation summary sheet showing an average rating of C- for
   this subfactor) with CO's Statement at 4 (claiming the average rating was
   D+/C- for this subfactor).

   [5] Air Products also raises arguments regarding the past performance
   evaluation here. Since we conclude that the agency reasonably decided the
   protester's proposal was technically unacceptable, we need not consider
   these arguments. See ProMar; Urethane Prods. Corp., B-292409 et al., Aug.
   25, 2003, 2003 CPD para. 187 at 8 n.11.