Sterling Medical Associates, Inc.

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:  Sterling Medical Associates, Inc.  

File:  B-419910.3

Date:  January 10, 2022

DIGEST

GAO does not recommend reimbursement of protest costs where, based on the circumstances of the case, we conclude that although the agency delayed taking corrective action, the protest was not clearly meritorious.

DECISION

Sterling Medical Associates, Inc., of Cincinnati, Ohio, requests that our Office recommend the Department of Veterans Affairs (VA) reimburse Sterling’s costs of filing and pursuing its protest against the award of a contract to STG International, Inc. (STGi) under request for proposals (RFP) No. 36C24219R0090, for a community based outpatient clinic (CBOC) in Watertown, New York, which is located in the agency’s Veteran Integrated Service Network 2 (VISN 2) region. 

We deny the request.

BACKGROUND

The solicitation, issued on January 13, 2021, provided that the contract would be awarded on a best-value tradeoff basis considering the following factors:  (1) technical capability (with subfactors for quality; management, experience, and staffing; transition, start-up plan; and geographic location), (2) past performance, (3) service-disabled veteran-owned small business (SDVOSB) or veteran-owned small business (VOSB) status, and (4) cost/price.  Agency Report (AR), B-419910.1, B-419910.2, Exh. 3, RFP at 140-144.  The factors were listed in descending order of importance.  The technical capability subfactors were equal in importance.

Three offerors, including Sterling and STGi, each submitted two proposals, designated here as option A and option B.[1]  Sterling and STGi submitted proposals for two locations.  The third offeror submitted two proposals for the same location, each with a different staffing model.  The technical proposals were evaluated by a source selection evaluation board (SSEB) which assigned an adjectival rating based on evaluated strengths, weaknesses, and deficiencies, and a confidence rating based on past performance.  Following the evaluation of initial proposals, discussions, and the submission and evaluation of final proposal revisions, the offerors were rated and ranked as follows:[2]

	Sterling	STGi	Offeror 3
Technical Capability Overall	Satisfactory	Good	Good
Quality	Satisfactory	Excellent	Good
Management/   Experience/    Staffing	Good	Good	Good
Transition	Satisfactory	Good	Good
Geographic     Location	Good	Good	Good
Past Performance	Confidence	High Confidence	Confidence
SDVOSB/VOSB Status	Satisfactory	Satisfactory	Satisfactory
Price	Option A $36,958,278 Option B $40,830,471	Option A $39,532,800 Option B $39,532,800	Option A $39,946,419 Option B $40,265,868
Technical Rank (out of 6 proposals)	Option A-6th Option B-5th	Option A-2nd Option B-1st	Option A-3rd Option B-4th

 

AR, Exh. 19, SSEB Consensus Report, at 1; AR, Exh. 20, Source Selection Decision Document (SSDD) at 27.[3]

Based on the SSEB’s evaluation, as well as the Source Selection Authority’s (SSA’s) own price-technical tradeoff analysis, the SSA concluded that STGi’s option B proposal presented the best overall value under the terms of the RFP.  SSDD at 23-26.  The contract was awarded to STGi on June 3.  AR, Exh. 2 Contracting Officer’s Statement (COS) at 9.

On June 14, following a debriefing, Sterling filed a protest with our Office challenging the award to STGi.  Sterling protested that the debriefing provided it with inaccurate information.  Sterling also challenged the agency’s evaluation of its proposal under each technical approach subfactor, arguing that the agency failed to assign its proposal numerous strengths, and treated it disparately.  In addition, Sterling asserted that the agency unreasonably evaluated its past performance because the agency did not accurately assess the three references that Sterling provided.  Finally, Sterling protested that the agency conducted an unreasonable best-value tradeoff.  

The VA submitted its report in response to the protest on July 14.  On July 26, Sterling filed a supplemental protest and comments on the agency report.  In this filing, Sterling identified one supplemental protest ground, asserting that STGi misrepresented the availability of its option B property, for which the contract was awarded.  In its comments on the agency report, Sterling addressed some of its initial protest grounds but also challenged strengths awarded to STGi as either unwarranted or evidencing disparate treatment, and raised new assertions regarding past performance; these allegations were not included in the initial protest and were in fact new bases of protest.

The agency submitted its report in response to the supplemental protest on July 29.  In that report the agency addressed only the issue that Sterling designated as a supplemental protest issue—i.e., that STGi’s option B location was no longer available--but did not respond to Sterling’s allegations regarding the strengths awarded to STGi, disparate treatment, or past performance.  On July 30, Sterling submitted comments in response to the agency’s supplemental protest.  On August 5, GAO requested the agency clarify how it conducted certain aspects of its past performance evaluation, and address three issues in the technical evaluation.[4]  The agency responded to these requests on August 5, and August 9. 

On August 11, GAO also requested that the agency clarify whether, in evaluating past performance, it relied on its employee’s personal knowledge of Sterling’s performance on certain contracts in the VISN 2 region.  Rather than respond to this request, on August 13, the agency notified our Office that it intended to take corrective action in response to the protest.  Specifically, the agency notified our Office that it would reevaluate proposals under all factors, reach out to past performance references that did not submit responses, and make a new award determination.  Notice of Corrective Action.  The agency noted that it did not plan to amend the solicitation or permit offerors to submit new final proposal revisions (FPRs).  Agency Response to Comments on Corrective Action.  The agency’s proposed corrective action rendered the protest academic, and as a result, on August 30, GAO dismissed the protest.  Sterling Medical Associates, Inc., B‑419910, B-419910.2, Aug. 30, 2021 (unpublished decision). 

On September 8, Sterling submitted its request that our Office recommend reimbursement of its protest costs on the grounds that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest.  For the reasons discussed below, we deny the request because we agree with the VA that the protest arguments were not clearly meritorious.

DICUSSION

When a procuring agency takes corrective action in response to a protest, our Office may recommend reimbursement of protest costs, including reasonable attorneys’ fees.  This occurs where, based on the circumstances of the case, we determine that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest, thereby causing the protester to expend unnecessary time and resources to make further use of the protest process in order to obtain relief.  31 U.S.C. § 3554(c)(1)(A); 4 C.F.R. § 21.8(e); AAR Aircraft Servs.--Costs, B-291670.6, May 12, 2003, 2003 CPD ¶ 100 at 5-6. 

A protest is clearly meritorious where a reasonable agency inquiry into the protester’s allegations would have revealed facts showing the absence of a defensible legal position.  Yardney Technical Prods., Inc.,--Costs, B-297648.3, Mar. 28, 2006, 2006 CPD ¶ 65 at 4.  Additionally, while we consider corrective action to be prompt if it is taken before the due date for the agency report responding to the protest, we generally do not consider it to be prompt where it is taken after that date.  AGFA HealthCare Corp.--Costs, B-400733.6, Apr. 22, 2009, 2009 CPD ¶ 90 at 3-4. 

Here, as discussed below, we find that the issues Sterling raised were not clearly meritorious.  We first discuss the issues raised in Sterling’s initial protest, including some issues that we find Sterling abandoned by not addressing them in its comments filed in reply to the agency’s response.  We then discuss whether the agency unduly delayed taking corrective action in response to the new issues raised in Sterling’s supplemental protest and comments on the agency report.

Initial Protest Grounds

Abandoned Issues

In its initial protest Sterling challenged the evaluation of its technical proposal.[5]  Sterling argued that the agency failed to assign its proposal numerous strengths under each technical subfactor.  The VA asserts that Sterling abandoned a number of the issues it raised, and therefore is not entitled to be reimbursed for these issues.  Response to Request for Entitlement at 5.  We agree. 

In answer to the agency’s argument, Sterling responds that it lacked sufficient information to raise detailed arguments in its initial protest, and it was only in its subsequent Comments filing that it had sufficient details to perfect its arguments.  Comments on Response to Request for Entitlement at 1-2 n.2.  Sterling’s response, however, does not address the abandoned issues.  Simply put, the agency provided arguments in answer to the initially raised contentions that Sterling did not answer.  For example, Sterling did not address the agency’s response to Sterling’s assertions that it should have been awarded strengths:  for its quality improvement plan; [DELETED].[6] 

Where an agency responds to a protest issue in its report, and the protester does not substantively address the agency’s response in its comments on the report, we consider the issue to be abandoned.  Avionic Instruments LLC, B-418604.3, May 5, 2021, 2021 CPD ¶ 196 at 5.  Since Sterling abandoned these issues, we find that they were not clearly meritorious and therefore do not recommend reimbursement of any protest costs associated with them.

Joint Commission Accreditation

In its initial protest, Sterling challenged the agency’s failure to assess a strength to Sterling’s proposal for its knowledge of the Joint Commission regulations and ability to meet those requirements.[7]  Under the quality subfactor, the solicitation required an offeror to submit a response that included the results of the latest Joint Commission accreditation survey.  Alternatively, if not accredited by the Joint Commission, the offeror was required to provide a detailed description of its working knowledge of applicable Joint Commission regulations and its ability to meet the requirements.  RFP at 141.

STGi was assigned a strength because it had Joint Commission accreditation.  Sterling protested that it also should have been assigned a strength because, while it did not have Joint Commission accreditation, it provided a detailed description of its working knowledge of applicable Joint Commission regulations and its ability to meet those requirements.  Thus, according to Sterling, it also exceeded the solicitation requirements and should have been assigned a strength.  In the alternative, Sterling argued that STGi only met the requirements and should not have been assigned a strength. 

In response, the agency explained that Sterling’s description of its knowledge of the regulations, and its ability to meet them, simply demonstrated compliance with the solicitation requirements and therefore did not merit a strength.  In contrast, the agency explained that STGi having Joint Commission accreditation demonstrates strengths beyond those of Sterling’s proposal.  The agency concluded therefore that STGi’s accreditation represents strengths above the minimum requirement.  We see no basis to find unreasonable the agency’s rationale for assessing the proposals differently in this area.  Accordingly, we cannot conclude this issue was clearly meritorious. 

Supplemental Protest Grounds Adequately Addressed by the Agency

As noted above, the protester filed a supplemental protest and raised several new arguments for the first time in its comments on the agency report.  In its supplemental agency report and in response to GAO’s subsequent requests for more information about these arguments, the agency adequately addressed the following protest grounds and demonstrated that the protester either could not show prejudice or that the agency had a defensible legal position.  Accordingly, these grounds were not clearly meritorious and as such, we will not recommend that the agency reimburse Sterling for the costs associated with these grounds.

Misrepresentation

Sterling specifically identified as a supplemental protest ground its allegation that STGi misrepresented the availability of the option B property, for which STGi was awarded the contract.  Sterling asserts that this supplemental allegation was clearly meritorious and therefore Sterling should be reimbursed the costs associated with this protest ground.  As explained below, we disagree and find that this allegation was not clearly meritorious. 

STGi submitted its proposal on March 11, and its FPR on May 3.  The VA awarded the contract to STGI for its option B location on June 4.  In its supplemental protest, Sterling asserted that the owner of the building at the option B location filed an application to subdivide the lot with the planning board for the City of Watertown on May 12.  Sterling also asserted that the application indicated that the building STGi proposed for the CBOC would be torn down.  Sterling contended that STGi engaged in a material misrepresentation because it knew that the property identified in its option B proposal would be unavailable and failed to inform the agency of this fact.

The agency countered that the protester did not demonstrate either that STGi knew that the property would potentially be unavailable, or that the property is in fact unavailable.  Supp. AR at 4, 5.  The agency further asserted that even if the property was unavailable, STGi would still be awarded the contract for its option A proposal, which was ranked as the 2nd best proposal.

The record is unclear as to whether STGi’s proposed option B location is unavailable, or whether STGi knew that it would be unavailable.  However, even if the property were no longer available, this allegation is not clearlymeritorious because the record demonstrates that Sterling would not be in line for award if we sustained this issue.  Competitive prejudice is an essential element of any successful protest; our Office will not sustain a protest absent a showing of competitive prejudice, that is, unless the protester demonstrates that, but for the agency’s actions, it would have a substantial chance of receiving the award.  Waterfront Technologies, Inc.--Protest and Costs, B‑401948.16, B-401948.18, June 24, 2011, 2011 CPD ¶ 123 at 13. 

Here, the agency received six proposals.  The SSEB ranked the proposals, with STGi’s option B location ranked first, its option A location ranked second, the third offeror’s option A and B proposals ranked third and fourth respectively, and Sterling’s options B and A proposals ranked fifth and sixth respectively.  SSEB Report at 2, 3.  The SSA also concluded that STGi’s proposal for the option A and B locations provided the best value, followed by the third offeror’s two proposals, and then Sterling’s proposals.  SSDD at 27.  Since Sterling was not in line for award even if STGi’s option B proposal was not available, it was not prejudiced by the alleged misrepresentation.  Accordingly, this issue was not clearly meritorious.  See Waterfront Technologies, Inc., Protest and Costs, supra.

Incumbent Personnel

Sterling protested that under the transition subfactor it should have been assigned a strength because as the incumbent provider it employs the personnel required to staff the contract on day 1, making it the only offeror capable of providing a seamless phase- in plan within the specified 120-day timeframe. 

In its report, the agency explained that Sterling was awarded a strength for its incumbent staff under the staffing subfactor.  The agency asserted that Sterling was not entitled to a strength under the transition subfactor simply as a result of its incumbent status.  In response to GAO’s request for further clarification, the agency also explained that the new contract is substantially different from the previous contract due to required updates to the PACT design.  Response to Request for Additional Response, Aug. 9, at 3.  The agency concluded that proposing incumbent staff was not sufficient to eliminate the transition risk given the new requirements.  Id. at 4.  In this regard, the agency noted that Sterling also proposed significant build out and renovations to accommodate the new requirements.  Id.  We conclude that the agency’s explanation presented a defensible legal position.  Accordingly, this issue is not clearly meritorious. 

Recruitment Efforts

In its comments on the agency report, Sterling protested that under the transition subfactor the agency assigned STGi a strength because it planned to hold a job fair in the local community to help fill vacancies.  Sterling asserted that it also proposed a job fair for recruitment efforts, but was not similarly awarded a strength.  Comments and Supp. Protest at 18. 

In response, the agency explained that it was not clear from Sterling’s proposal that it was offering to recruit at a job fair.  Specifically, in its proposal Sterling stated that it utilized numerous recruitment efforts including job fairs, but then stated, “. . . due to the fact that we possess extensive numbers of staff members already recruited by us, . . . and in place at the clinic location, these recruiting and pre-credentialing actions described above will not be necessary.”  Response to Request for Clarification, Aug. 9, 2021 at 5, quoting protester’s proposal.  Thus, according to the agency it was reasonable not to assign Sterling a strength for the use of job fairs, since Sterling did not commit to recruiting at them.  The agency’s explanation provides a defensible legal position.  Accordingly, this issue was not clearly meritorious. 

Geographic Location

Under the geographic location subfactor, Sterling asserted that its proposal should have been awarded a strength because the building location in its option A proposal was the incumbent CBOC site, which offered continuity of services, and because both of its proposed locations were located near major highways and bus stops.  In its comments on the agency report, Sterling challenged the agency’s decision to downgrade Sterling’s proposal based on its location “farther from highways” and argued that the agency’s interpretation of what constituted a major highway was unreasonable.  Comments & Supp. Protest at 19. 

In response, the agency explained that while the incumbent site would be familiar to veterans, this benefit was mitigated by the fact that it was located a notable distance from major highways and the main business district.  Response to Request for Clarification, Aug. 9, 2021 at 8-9.  In this regard, the agency disagreed with Sterling that the state roads located near the proposed property were major highways.  Rather, the agency considered nearby interstate highways to be major highways because they are well maintained and generally remain available during inclement weather conditions.  Id. at 10.  In our view, the agency’s explanation provided a defensible legal position for its evaluation.  Accordingly, we cannot conclude that this issue was clearly meritorious.  Further, Sterling’s disagreement with the agency’s interpretation of a major highway does not make the agency’s interpretation unreasonable. 

Sterling also protested that in evaluating proposals under the geographic location subfactor, the agency used an unstated evaluation criterion--standalone facility--to award STGi a strength.  In response, the agency explained that the strength was not awarded because STGi proposed a standalone facility; rather, it was awarded due to certain features of the facility, such as its own parking lot and proximity to a major interstate highway.  Response to Request for Clarification, Aug. 9, 2021 at 10-11.  As the solicitation required offerors to address both parking facilities and the relative location of the facility to major highways, the agency provided a defensible legal position.  RFP at 142.  As a result, this issue also was not clearly meritorious. 

Supplemental Protest Grounds Requiring Further Record Development

In its comments on the agency report, Sterling raised new arguments regarding the evaluation of past performance and the assessment of strengths to its own and STGi’s proposals.  These allegations were not specifically identified as supplemental protest grounds and as a result, the agency did not address them in its supplemental agency report.  As discussed further below, these issues were not clearly meritorious as alleged, and required further development of the record to determine if Sterling’s allegations had merit.

For example, Sterling challenged the evaluation of its past performance in its initial protest and then raised additional, more specific challenges to the evaluation in its comments on the agency report.  In this regard, in its initial protest Sterling asserted that the agency did not reasonably evaluate the references it provided.  In its comments, Sterling raised additional complaints about the past performance evaluation beyond assessments of its references.  These included that the agency:  (1) relied more heavily on Contractor Performance Assessment Reporting System (CPARS) reports for Sterling than it did for STGi; (2) considered only CPARS reports with negative ratings; and (3) considered certain CPARS reports that fell outside the three year relevancy period established by the solicitation. 

In its comments, Sterling also raised a number of supplemental challenges to the evaluation of its own and STGi’s proposal.  Sterling asserted that STGi’s proposal was assigned unwarranted strengths and that STGi, but not Sterling, was assigned strengths for certain aspects of its proposal that Sterling had also proposed. 

Where a protester raises a new challenge to the evaluation in its comments, the new challenge is a new protest.  See Medical Staffing Solutions USA, B-415571,
B-415571.2, Dec. 13, 2017, 2017 CPD ¶ 384 at 3.  Similarly, where a protester raises general allegations in its protest, but more specific issues in its comments, the specific challenges are new grounds of protest.  Criterion Systems, Inc., B-416553, B-416553.2, Oct. 2, 2018, 2018 CPD ¶ 345 at 8.  Thus, to the extent Sterling raised new evaluation issues, or more specific arguments in its comments, the issues are new bases of protest. 

In reviewing the protester’s past performance arguments, the GAO attorney assigned to the protest found that the record did not clearly explain how the agency conducted its evaluation, particularly in light of the new (and much more specific) contentions raised in Sterling’s comments on the agency report.  As a result, the attorney twice requested the agency to further explain its past performance evaluation.  Before fully explaining the past performance evaluation, however, the agency filed a notice of corrective action.  Since the record before GAO did not indicate that the challenge to the past performance evaluation was clearly meritorious on its face, and since GAO could not determine whether the issue was clearly meritorious without further input from the agency, we decline to recommend the agency reimburse Sterling for the protest costs associated with this issue.[8]

As to Sterling’s other challenges to the agency’s evaluation, these issues also were not clearly meritorious as alleged, and therefore GAO required a response and explanation from the agency to determine whether the agency assigned STGi unwarranted strengths, or treated Sterling disparately in assigning strengths.  In this regard, Sterling’s contention’s raised questions about whether the agency reasonably exercised its discretion in assessing strengths, and it was not otherwise clear from the arguments that the agency’s evaluation had violated the terms of the solicitation or any regulation.  Thus, based on the record at that time, and without the agency’s explanation of the evaluation results, GAO cannot conclude that these issues were clearly meritorious.  Accordingly, we decline to recommend the agency reimburse Sterling for the costs associated with these protest grounds.  See Alaska Structures, Inc.-Costs, B-298575.4, Jan. 22, 2007, 2007 CPD ¶ 15 at 6 (requesting additional record development by the agency in response to protester’s comments demonstrates that a protest issue is a “close question,” that is, not clearly meritorious).

Best-Value Tradeoff

Lastly, we note that Sterling’s challenge to the agency’s best-value tradeoff decision was based on its challenge to the evaluation, and its assertion that STGi misrepresented the availability of its proposed location.  Since we have concluded that none of these bases of protest were clearly meritorious, we likewise conclude that Sterling’s challenge to the tradeoff determination also was not clearly meritorious.

The request is denied. 

Edda Emmanuelli Perez
General Counsel

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