Matter of: Management HealthCare Products and Services File: B-251503.2 Date: December 15, 1993

B-251503.2: Dec 15, 1993

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PROCUREMENT Competitive Negotiation Discussion Adequacy Criteria Protester was not afforded meaningful discussions where the agency heavily downgraded the protester's technical proposal for various weaknesses. The protester's proposal offered the lowest price by a significant margin and could have had a reasonable chance for award had the protester revised its proposal to correct the weaknesses perceived by the agency. The solicitation was issued on June 10. Proposals were to be evaluated on the basis of the following factors (listed in descending order of importance): (1) technical ability. The proposal with the lowest aggregate price was to receive the maximum number of points. While each other proposal was to receive a percentage of the maximum points based on the difference in price between it and the lowest cost proposal.

Matter of: Management HealthCare Products and Services File: B-251503.2 Date: December 15, 1993

PROCUREMENT Competitive Negotiation Discussion Adequacy Criteria Protester was not afforded meaningful discussions where the agency heavily downgraded the protester's technical proposal for various weaknesses, but did not inform the protester of any of the agency's concerns regarding those weaknesses, and the protester's proposal offered the lowest price by a significant margin and could have had a reasonable chance for award had the protester revised its proposal to correct the weaknesses perceived by the agency.

Attorneys

DECISION

We sustain the protest.

The solicitation was issued on June 10, 1992, and contemplated the award of a firm, fixed-price supply contract for a 1-year base period with four 1-year options. The RFP required each offeror to submit with its proposal a minimum of one sample of its open-heart pack, and one sample of its vascular pack. Proposals were to be evaluated on the basis of the following factors (listed in descending order of importance): (1) technical ability; (2) production of custom packs; and (3) cost.

For price evaluation, the proposal with the lowest aggregate price was to receive the maximum number of points, while each other proposal was to receive a percentage of the maximum points based on the difference in price between it and the lowest cost proposal. Award was to be made to the responsible offeror whose offer, conforming to the solicitation, was the most advantageous to the government, price and other factors considered.

The original closing date for receipt of proposals was July 10, 1992, and award was initially made to Baxter on November 23. As the result of a protest, discussions were reopened on January 22, 1993, with 11 proposals, including MHPS', included in the competitive range. At the conclusion of discussions with the offerors, the agency requested best and final offers (BAFOs). The agency then reevaluated the proposals. Firm A's proposal received the highest technical score (80.94 points). Baxter's proposal received the second highest technical score (74.61). MHPS' proposal had the lowest proposed price and received the sixth lowest technical score (47.25).

The agency determined that award to Baxter would be most advantageous because of its price advantage over Firm A, and award was made to Baxter on June 24. At a debriefing held on July 15, the agency advised MHPS that there were six weaknesses/minor deficiencies in its proposal concerning the production of custom packs. MHPS then filed a protest with the agency asserting that the agency failed to conduct meaningful discussions because the agency did not address the deficiencies mentioned in the debriefing during discussions. MHPS' agency-level protest was denied on July 26, and this protest to our Office followed.[2] In negotiated procurements, contracting officers generally are required to conduct discussions with all offerors whose proposals are within the competitive range. 41 U.S.C. Sec. 253b(d)(2) (1988); Federal Acquisition Regulation (FAR) Sec. 15.610. FAR Sec. 15.609(a) provides that the competitive range must include all proposals that have a reasonable chance of being selected for award. National Sys. Mgmt. Corp., 70 Comp.Gen. 443 (1991), 91-1 CPD Para. 408. Although discussions need not be all-encompassing, discussions must be meaningful; that is, an agency is required to point out weaknesses, excesses, or deficiencies in proposals unless doing so would result in technical transfusion or technical leveling. FAR Sec. 15.610(c) and (d); Mikalix & Co., 70 Comp. Gen. 545 (1991), 91-1 CPD Para. 527; URS Int'l, Inc. et al., B-232500; B-232500.2, Jan. 10, 1989, 89-1 CPD Para. 21. In general, agencies must lead offerors into areas of their proposals which require amplification or correction, Son's Quality Food Co., B-244528.2, Nov. 4, 1991, 91-2 CPD Para. 424, and discussions should be as specific as practicable considerations will permit. Data Preparation, Inc., B-233569, Mar. 24, 1989, 89-1 CPD Para. 300. Discussions cannot be meaningful if an offeror is not advised, in some way, of the weaknesses, excesses, or deficiencies in its proposal that must be addressed in order for the offeror to be in line for award. See Mikalix & Co., supra; Price Waterhouse, 65 Comp.Gen. 205 (1986), 86-1 CPD Para. 54, aff'd, B-220049.2, Apr. 7, 1986, 86-1 CPD Para. 333.

The agency noted the following weaknesses in MHPS' proposal concerning evaluation factor No. 2, the production of custom packs: the quality of gowns, drapes, and gauze; the substitution of specified medium sized gowns for small sized gowns; the inconvenience of the dual plastic wrapping; the "top-heavy" nature of the surgical packs; and the fact that the back table covers were not wide enough and exposed the sterile components inside the pack. The only matter raised by the agency in its discussions with MHPS was that MHPS had failed to acknowledge a material RFP amendment and to make certain certifications.

In our view, the agency failed to conduct meaningful discussions with MHPS because the discussion questions did not point out or even hint at the perceived weaknesses in MHPS' initial proposal concerning the production of custom packs, or to any other element in MHPS' proposal which had caused the proposal to be substantially downgraded (MHPS' technical proposal received only 47.25 of the maximum 85 technical points), denying MHPS any meaningful opportunity to improve its proposal. The protester indicates that it would have improved its submission had it been notified of the weaknesses, and the identified weaknesses appear to be easily remediable in nature--it should have been a relatively simple matter to substitute surgical packs that were not "top-heavy," included the specified gown sizes, were more "conveniently wrapped," contained wider back table covers, and contained better quality gowns, drapes, and gauze.

The VA justifies the content of the discussions with MHPS on the grounds that MHPS' proposal was determined to be acceptable overall. The agency argues that it was only required to discuss issues which make a proposal unacceptable. That position is unfounded. Agencies are required to discuss weaknesses in an offeror's proposal where the weaknesses have a significant adverse impact on the proposal's techni- cal rating, although discussions need not address every area in which a proposal received less than a perfect score, and the need for meaningful discussions may be constrained to avoid technical leveling, technical transfusion, and an auction. American Dev. Corp., B-251876.4, July 12, 1993, 93-2 CPD Para. 49. Dept. of the Navy--Recon., B-250158.4, May 28, 1993, 93-1 CPD Para. 422.[3]

The agency has also argued that the conduct of better discussions would not have changed the outcome. The agency argues that, had it discussed the weaknesses at issue with MHPS, at best the protester could only have received the maximum score for evaluation factor No. 2. Such an addition to MHPS' score would have resulted in a technical score of 62.25, which would be lower than the technical score awarded the top three proposals which were in line for award, and would be more than 12 points lower than Baxter's technical score.[4]

The agency's argument is unpersuasive. To establish prejudice, an offeror is not required to prove that it would have received the award but for the agency's improper action, but rather that it would have had a reasonable chance of receiving the award. Manekin Corp., B-249040, Oct. 19, 1992, 92-2 CPD Para. 250. Based upon the evaluation record before us, including the many perceived weaknesses of MHPS' proposal under evaluation factor No. 2 and the resulting impact on the scoring, it is clear that the source selection decision could have been different had the agency given the protester a meaningful opportunity to improve its proposal.

With an improved score on evaluation factor No. 2, MHPS' technical score could have been less than 10 points lower than Baxter's score. In this regard, the agency conducted a price technical tradeoff between Firm A and Baxter, whose proposals were scored only six points apart. Despite the technical difference, the VA awarded the contract to Baxter, which offered the technically weaker proposal, to realize a savings of less than $600,000. The VA would have realized a savings of more than $1.7 million relative to Baxter's price if it had awarded the contract to MHPS. While MHPS' price might well have increased had it effected the improvements, the VA's failure to provide MHPS an opportunity to make the improvements prevents any accurate assessment of this change. There is no reason to assume that the necessary improvements would have consumed the substantial price difference. Accordingly, we find that the lack of meaningful discussions was prejudicial. Eldyne, Inc., B-250158 et al., Jan. 14, 1993, 93-1 CPD Para. 430.

We conclude that the VA was required to conduct sufficient discussions to lead MHPS to the central area of the VA's concern so that MHPS would have the opportunity to improve its proposal in order to have a reasonable chance for award. E.L. Hamm & Assocs., Inc., B-250932, Feb. 19, 1993, 93-1 CPD Para. 156.

We recommend that the VA reopen negotiations with MHPS and all other competitive range offerors, conduct meaningful discussions, and request a new round of BAFOs. If a firm other than Baxter is selected for award as a result of the agency's evaluation of BAFOs, the VA should terminate Baxter's contract, if practicable, and make award to that other firm. Otherwise, the options in the awarded contract should not be exercised. We also find that MHPS is entitled to recover its costs of filing and pursuing its protest. 4 C.F.R. Sec. 21.6(d)(1). In accordance with 4 C.F.R. Sec. 21.6(f)(1), MHPS' certified claim for such costs, detail- ing the time expended and costs incurred, must be submitted directly to the VA within 60 days after receipt of this decision.

The protest is sustained.

1. A custom surgical pack is a complete ready-to-use tray that contains all items necessary to perform a specific surgical procedure. The solicitation listed 127 different types of surgical packs, such as open-heart, liver transplant, and cardiac catheterization packs.

2. MHPS also argued, for the first time in its comments on the agency report, that the awardee has not yet submitted a subcontracting plan. This protest ground is untimely and will not be considered. Under our Bid Protest Regulations, protests not based upon alleged improprieties in a solicitation must be filed no later than 10 working days after the protester knew, or should have known, of the basis for protest. 4 C.F.R. Sec. 21.2(a)(2) (1993). MHPS admits that it learned of this protest ground at the July 15 debriefing, but did not raise this ground until September 29, more than 10 working days later.

3. Contrary to the agency's assertions, we see no reason why technical leveling should have been an issue here. Technical leveling occurs when successive rounds of discussions are conducted and the need for further improvement is pointed out in each round. Technical leveling would not have occurred if the VA had simply pointed out, during the single round of discussions that it held with MHPS, the weaknesses at issue here. FAR Sec. 15.610(d).

4. Had MHPS' proposal received a perfect score on evaluation factor No. 2, its technical score would have been 65.25, making MHPS third-ranked technically, and approximately 9 points lower than Baxter.