Filed: May 01, 2013
Latest Update: Mar. 28, 2017
Summary: In the United States Court of Federal Claims No. 12-907C (Originally Filed: April 9, 2013) (Reissued: May 1, 2013)1 ********************** QUEST DIAGNOSTICS, INC., Plaintiff, v. Bid Protest; Agency Corrective Action; Limit THE UNITED STATES, on Proposal Revisions after Solicitation Defendant, Amendment; Incumbency LABORATORY CORPORATION OF AMERICA, Intervenor. ********************** Merle M. DeLancey, Washington, D.C., and Justin A. Chiarodo, Erin Wilcox Burns, Adele H. Lack, and Matthew W. Ture
Summary: In the United States Court of Federal Claims No. 12-907C (Originally Filed: April 9, 2013) (Reissued: May 1, 2013)1 ********************** QUEST DIAGNOSTICS, INC., Plaintiff, v. Bid Protest; Agency Corrective Action; Limit THE UNITED STATES, on Proposal Revisions after Solicitation Defendant, Amendment; Incumbency LABORATORY CORPORATION OF AMERICA, Intervenor. ********************** Merle M. DeLancey, Washington, D.C., and Justin A. Chiarodo, Erin Wilcox Burns, Adele H. Lack, and Matthew W. Turet..
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In the United States Court of Federal Claims
No. 12-907C
(Originally Filed: April 9, 2013)
(Reissued: May 1, 2013)1
**********************
QUEST DIAGNOSTICS, INC.,
Plaintiff,
v.
Bid Protest; Agency
Corrective Action; Limit
THE UNITED STATES,
on Proposal Revisions
after Solicitation
Defendant,
Amendment; Incumbency
LABORATORY CORPORATION OF
AMERICA,
Intervenor.
**********************
Merle M. DeLancey, Washington, D.C., and Justin A. Chiarodo,
Erin Wilcox Burns, Adele H. Lack, and Matthew W. Turetzky, Washington,
D.C., of counsel, for plaintiff.
Joseph E. Ashman, Civil Division, Department of Justice,
Washington, D.C., with whom were Stuart F. Delery, Principal Deputy
Assistant Attorney General, Jeanne E. Davidson, Director, and Kenneth G.
Dintzer, Assistant Director, for defendant. Maj. John C. Dohn, III, United
States Army Legal Services Agency, of counsel.
David E. Fulla, Washington, D.C., and Robert I. Steiner, New York,
N.Y., for intervenor.
1
This opinion was originally filed under seal. Publication was deferred
pending the parties’ review for redaction of protected material. Redactions are
indicated by brackets.
OPINION
BRUGGINK, Judge.
Plaintiff, Quest Diagnostics, Inc. (“Quest”), protests the Army’s award
of a contract for laboratory testing services to the intervenor, Laboratory
Corporation of America (“LabCorp”). The parties filed cross-motions for
judgment on the administrative record. Plaintiff asks the court to permanently
enjoin the award of the contract to intervenor. Oral argument was heard on
March 5, 2013. As we announced, and for the reasons stated below, we deny
plaintiff’s motion and grant defendant’s and intervenor’s motions for summary
judgment.
BACKGROUND
The United States Department of the Army Medical Command, Center
for Health Care Contracting (“MEDCOM”) issued Request for Proposal No.
W81k04-10-R-0005 (“RFP” or “solicitation”) on August 20, 2010, seeking
bids for a contract to provide clinical reference laboratory services for various
treatment facilities supporting the Armed Forces both home and abroad. The
contract is a follow-on to the then-expiring contract held by plaintiff. The
solicitation was for a fixed price contract of an indefinite-delivery, indefinite
quantity of laboratory services with a six-month transition period, a one-year
base period, and four one-year option periods. MEDCOM estimated a total
contract performance price of $250,000,000.
In the Basis of Award section, the solicitation laid out the four
evaluation factors upon which the offerors would be evaluated: Technical
Capability, Past and Present Performance, Small and Disadvantaged Business
Participation, and Price. AR 98. Of the evaluation factors, “Technical
Capability is significantly more important than Past and Present Performance
and Small and Disadvantaged Business Participation.” Id. Likewise, “Past
and Present Performance is significantly more important than small and
Disadvantaged Business Participation.” Id. Those factors, when combined,
“are significantly more important than price.” Id. The solicitation warned,
however, that “the award may not necessarily be made to the lowest price
offered.” Id. MEDCOM explained that it would make the award “based on
the best overall proposal that is determined to be the most beneficial to the
Government.” Id. In other words, it would be a best value procurement.
2
The first factor, Technical Capability, was subdivided into five
subfactors, which were separately rated by MEDCOM: Technical Approach,
Laboratory Information System and Interface, Transition Plan, Quality Control
Plan, and Management Capability and Experience. AR 98-99. Technical
Capability and its subfactors were assigned adjectival ratings as a reflection of
the agency’s assessment of how well the offeror’s technical proposal met the
predetermined definitions of the adjectival ratings:
Rating Definition
Excellent The proposal demonstrates a superior understanding of
the requirements and a new or proven approach that
significantly exceeds performance or capability
standards. The proposal has several exceptional
strengths that will significantly benefit the government.
The proposal has no weaknesses or deficiencies. Normal
contractor effort and normal government monitoring will
be sufficient to minimize risk. The proposal is extensive,
detailed, and exceeds all requirements and objectives;
therefore, has a high probability of meeting the
requirements with little or no risk to the government.
Good The proposal demonstrates a considerable understanding
of the requirements and the approach exceeds
performance or capability standards. The proposal has
one or more strengths that will benefit the government.
The proposal has no deficiencies and any proposal
weakness has little potential to cause disruption of
schedule, increase in cost, or degradation of
performance. Normal contractor efforts and normal
government monitoring will probably be able to
overcome difficulties. The proposal generally exceeds
requirements in minor areas; therefore, has a strong
probability of meeting the requirements with little risk to
the government.
3
Satisfactory The proposal demonstrates an adequate understanding of
the requirements and the approach meets all performance
or capability standards. The proposal has no strengths
that exceed the requirement. The proposal has no
material weaknesses and no deficiencies. The proposal
has some weaknesses that can potentially cause
disruption of schedule, increase in cost, or degradation of
performance. Special contractor emphasis and close
government monitoring will minimize any risk. The
proposal meets the minimum requirements; therefore,
has a Satisfactory probability of successfully meeting the
requirements.
Marginal ...
Unsatisfactory ...
AR 99-100.
MEDCOM similarly evaluated the second factor, Past and Present
Performance, on the basis of risk of performance problems and assigned a
corresponding adjectival rating: Exceptional (Risk Level: Very Low); Very
Good (Risk Level: Low); Satisfactory (Risk Level: Moderate): Marginal (Risk
Level: High); Unsatisfactory (Risk Level: Very High); Unknown (Risk Level:
Unknown). AR 101. Small and Disadvantaged Business Participation, the
third factor, was rated either “satisfactory” or “unsatisfactory.”
MEDCOM received three proposals, from which it established a
competitive range consisting only of Quest and LabCorp. AR 2468.
MEDCOM then held three rounds of discussions with both offerors in which
it received clarifications and additional information from each. The agency
then evaluated Quest’s and LabCorp’s proposals for the Technical Capacity
factor and its subfactors. MEDCOM rated the proposals as follows:
T e chnic a l LIS and T r a n s itio n Q uality M anagement Overall
Approach Interface Plan C o ntrol Capability and
Plan Experience
Quest [ ] [ ] [ ] [ ] [ ] [ ]
LabCorp [ ] [ ] [ ] [ ] [ ] [ ]
4
AR 2381-82. “LIS” refers to Laboratory Interface System.
For Past and Present Performance, Quest was rated as [ ] and
LabCorp as [ ]. AR 2384. MEDCOM scored both offerors [ ]
for Small Business and Disadvantaged Business Participation. Id. Quest had
the lowest evaluated price, which was determined to be “fair and reasonable”
by the Contracting Officer (“CO”). Based on these assessments, he awarded
the contract to Quest on April 14, 2011. AR 2385.
On May 5, 2011, LabCorp protested the award to Quest at the
Government Accountability Office (“GAO”). When GAO advised the agency
that it would likely sustain the protest, AR 3779, MEDCOM informed GAO
that it would take corrective action by amending the solicitation “to include
estimated quantities of usage . . . to approximate the amount the Agency
expects to spend.” AR 2739. MEDCOM would also then request
“resubmission of price proposals from Quest and LabCorp, and reevaluate the
price factor.” Id. GAO dismissed the protest as academic.
MEDCOM revised the price estimate and issued several amendments
in conformity with its intent to take corrective action. It added estimated usage
for certain contract items and informed the offerors of its new methodology for
evaluating price. AR 4067. Amendment 12 further instructed offerors that
“[i]f any changes identified by this amendment cause a revision to other than
the pricing of your proposal, please submit same in number of copies and
format as your original submission.” AR 3971. This was followed by another
round of discussions between MEDCOM and the offerors.
In February and March 2012, LabCorp and Quest updated their
technical proposals and submitted final revised proposals with their new price
volumes. Shortly thereafter, MEDCOM issued an amended source selection
decision and awarded the contract to LabCorp on April 2, 2012. AR 3786.
In reaching that result, MEDCOM re-evaluated both proposals in their
entirety. Non-price factors remained the same, except that LabCorp’s rating
for subfactor 1B, LIS was upgraded to [ ] from [ ] based on the
updates to LabCorp’s proposal regarding its progress in implementing and
testing its LIS.2 The revised evaluated prices for the base year plus four
options were [ ] for Quest and [ ] for LabCorp.
2
Both offeror’s ratings for Factor 1, Technical Capacity, remained [ ].
5
AR 3784. This represented a [ ] difference in price. The Source
Selection Authority (“SSA”), in this case the CO, found that, although Quest
was rated higher than LabCorp in Past and Present Performance, that
difference was not worth the price differential, given that LabCorp’s Past and
Present Performance score of [ ] still represented a low risk to the
agency. AR 3785.
Quest filed a protest at GAO on June 12, 2012, arguing that MEDCOM
failed to properly evaluate the technical proposals, deviated from the stated
evaluation criteria for price proposals, conducted a flawed best value tradeoff,
engaged in unequal discussions, and failed to amend the solicitation to reflect
new requirements. AR 4102-112. MEDCOM responded by once again
offering to take corrective action by reevaluating proposals in accordance with
the terms of the RFP. See AR 4152. The Source Selection Evaluation Board
(“SSEB”) was tasked to “review [its] previous evaluation and to conduct a
closer look at their application of the Technical Adjectival Ratings and
particularly the definitions set out in the solicitation, against each offeror’s
proposal to ensure that the adjectival ratings were correctly applied.” AR
4188. The result was that the SSEB upgraded both offeror’s ratings in
multiple subfactors under Factor One, Technical Capacity:
Offeror Technical LIS & Transition Quality Management
Approach Interface Plan Control Plan Capability &
Experience
Quest [ ] [ ] [ ] [ ] [ ]
LabCorp [ ] [ ] [ ] [ ] [ ]
AR 4156 (Quest); AR 4163 (LabCorp).3
The SSEB reconvened shortly thereafter and changed one of its
subfactor ratings for Quest. It downgraded Quest’s Transition Plan rating from
[ ] to [ ]. AR 4177. The SSEB noted that this was “no change
to the overall evaluation of this subfactor from the 14 March 2012
3
Although not explicitly stated in the AR, it is clear that the upward change in
the various technical ratings was due to the agency’s literal application of the
description of a “good” rating from the solicitation. If an offeror had at least
one strength identified and no weaknesses, it was rated as “good” rather than
the earlier rating of “satisfactory.” See AR 100 (definition of “good”).
6
assessment.” Id. What it removed was one previously identified [ ],
that Quest’s proposal [
]. AR 4159. Compare AR 4159 with AR 4177.
The final result of the second corrective action was that Quest’s and
LabCorp’s overall ratings for Factor 1, Technical Capability, were upgraded
to [ ]. For Factor 2, Past and Present Performance, Quest kept its [
] rating and LabCorp its [ ] rating. For Factor 3, Small and
Disadvantaged Business Participation, both offerors kept their [ ]
ratings. AR 4190. The SSA again awarded the contract to LabCorp, finding
that “Quest did not demonstrate strengths in [its] proposal that are so
significantly superior to LabCorp’s proposal that clearly justifies paying an
award price that is potentially [ ] higher over the life of the
contract than LabCorp.” AR 4191. Recognizing the superior rating for past
performance, the CO found that a [ ] premium was not worth the
improvement from [ ] to [ ] when the [ ] rating
of LabCorp still represented a low risk to the government. AR 4191-92. This
was especially the case, for the CO, “in light of budgetary cuts/limitations
imposed through Congressional mandates.” AR 4192.
Quest was notified of the award to LabCorp on September 12, 2012,
and it requested a debriefing, which it received on September 17, 2012. See
AR 4272-80. Quest then filed a protest at GAO, challenging MEDCOM’s
technical evaluation, alleging that the agency did not properly consider unit
pricing, arguing that its best value decision was flawed, asserting that the
agency engaged in unequal discussions, and arguing that it should have
amended the solicitation to reflect changes in what it sought under the
contract. See, e.g., AR 4293-94. GAO denied the protest on the merits,
holding, inter alia, that there was no basis to question the technical evaluation,
and, where there was, Quest had not shown prejudice. AR 4860-64. As to
Quests other protest grounds, GAO dismissed them each in turn, holding that
there had been no unequal discussions, that the agency had properly priced the
proposals, and that the best value tradeoff was proper. AR 4865-67. Quest
then filed the present action on December 26, 2012.
DISCUSSION
We have jurisdiction to render judgment on an action by an “interested
party objecting to a solicitation by a Federal agency for bids or proposals for
a proposed contract or to a proposed award or the award of a contract or any
7
alleged violation of statute or regulation in connection with a procurement or
a proposed procurement.” 28 U.S.C. § 1491(b)(1) (2006). Quest is an
“interested party” because it was an “actual . . . bidder[] or offeror[] whose
direct economic interest would be affected by the award of the contract.” Am.
Fed’n of Gov’t Emps. v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001).
We review agency action in the bid protest context under the deferential
standards of administrative review borrowed from the Administrative
Procedures Act. See 28 U.S.C. § 1491(b)(4) (2006). MEDCOM”s actions can
only be enjoined if we find them to have been “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with the law.” 5 U.S.C. §
706(2)(A) (2006). In the course of our review, we must not substitute our
judgment for that of the agency’s. See Redland Genstar, Inc. V. United States,
39 Fed. Cl. 231 (1997). All that is required of an agency is that it has a
reasonable basis for its decision. See Honeywell, Inc. V. United States,
570
F.2d 644, 684 (Fed. Cir. 1989).
Plaintiff challenges MEDCOM’s evaluation of three subfactors under
the Technical Capacity factor. It also alleges that LabCorp was allowed
improperly to amend its proposal after the first corrective action by submitting
new technical information. Plaintiff further alleges that LabCorp did not offer
specific laboratory tests required by the solicitation and thus should have been
either ineligible for award or evaluated to be more expensive. Finally, plaintiff
asserts that MEDCOM’s best value tradeoff was insufficient both in substance
and in documentation. We begin with the allegation that LabCorp was
improperly allowed to amend its technical proposal as it bears on certain of
plaintiff’s other arguments as well.
I. MEDCOM Did Not Allow LabCorp to Amend its Proposal Improperly
Quest alleges that LabCorp’s proposal revisions in response to the
agency’s first corrective action were nonconforming because they included
technical revisions outside the scope of the corrective action, which was
directed at the agency’s pricing evaluation methodology. LabCorp took the
opportunity to update other aspects of its technical proposal. Quest argues that
these revisions were outside the scope of the corrective action and thus should
not have been considered by the agency. Quest also argues that MEDCOM
engaged in unequal discussions with the two offerors by telling LabCorp that
it could update its technical proposal while not telling Quest the same thing.
As a result, plaintiff asserts that LabCorp was either ineligible for award
8
because its proposal was nonconforming or, at a minimum, that the agency
should not have considered LabCorp’s changes to its technical proposal.
Quest’s underlying factual premise is correct; the disputed revisions to
intervenor’s technical proposal dealt mainly with updates to LabCorp’s
implementation and testing of its LIS system, while Amendment 12 was
triggered by questions as to pricing. LabCorp’s updated information in turn
allowed MEDCOM to raise LabCorp’s rating for subfactor 1B from [
] to [ ], which may have influenced the agency’s decision to award to
LabCorp.
GAO’s recommendation in this case states correctly, we believe, the
controlling legal principle: “[u]nless an agency restricts the scope of the
revisions offerors may make to their proposals in responding to solicitation
amendments issued by the agency as part of corrective action, offerors may
revise any aspect of their proposals, including those that were not the subject
of the amendment(s).” AR 4865 (citing Power Connector, Inc., B-404916.2,
2011 CPD ¶ 186 at 3-4 (Comp. Gen. Aug. 15, 2011)). This court accepted
that rule in ManTech Telecommunications. & Information Systems Corp. v.
United States, 49 Fed. Cl. 57, 75 n.29 (2001) (recognizing the general rule that
offerors may “revise any aspect of their proposals they see fit, including
portions that were not the subject of the amendment and discussions”), aff’d,
30 F. App’x 995 (Fed. Cir. 2002). The rationale is that, in negotiated
procurements, an offeror should be able to update its proposal through the
various rounds of negotiations and revisions which typically take long periods
of time. Therefore, when an agency asks, as here, for new or newly formatted
information with respect to a discrete part of a proposal, there is no reason to
assume a limitation on revisions to other parts of the proposal unless one is
explicitly stated.
The decision in Mantech Telecommunications explains that, were this
not the rule,
and the government was instead required to preserve inviolate
all rating advantages enjoyed by a protestor in the initial
selection process, it would be the rare situation, indeed, where
the government could exercise the authority conferred by the
FAR to amend a solicitation or conduct further discussions,
because in most processes a protestor could point to some
ratings advantage on either a factor or a subfactor that might be
9
lost if new or revised proposals were filed.4
49 Fed. Cl. at 57.
That reasoning comports with the FAR’s instruction to offerors that
they “may submit modifications to their proposals at any time before the
solicitation closing date and time, and may submit modifications in response
to an amendment, or to correct a mistake at any time before awards.” 48
C.F.R. § 52.215-1(c)(6) (2012); see also 48 C.F.R. § 52.212-1(f)(1) (“Offerors
are responsible for submitting offers, and any modifications, revisions, or
withdrawals, so as to reach the Government office designated in the
solicitation by the time specified in the solicitation.”). It is no great leap of
logic to extend this rule to the context of agency corrective action prompted by
a recommendation of GAO.5 When agency corrective action invites proposal
revisions by offerors, the solicitation is reopened, and those offerors can
submit modifications until the new closing date. Those modifications are not
limited to the areas addressed by the corrective action unless explicitly stated.
The only question remaining here, then, is whether the agency explicitly
limited the proposal revisions to those things treated by Amendment 12.
Amendment 12 changed the agency’s pricing approach and instructed
offerors to submit pricing information which included all of the testing items
listed in Attachment 7 so that the agency could properly use those prices
against its estimated usage rates to compute a new price. It was a part of the
4
In Mantech Telecommunications, Mantech protested the Army’s proposed
corrective action after Mantech had filed a protest at GAO. Mantech
challenged, among other things, the agency’s ability to amend the technical
portion of the solicitation after plaintiff had only challenged the evaluation of
price proposals. In essence, it sought to protect its existing advantage in
technical ratings. Mantech argued that it was unfair to allow the other offeror
to improve its technical proposal after Mantech had been prejudiced by errors
in the evaluation of price. 49 Fed. Cl. at 74-75.
5
In fact, GAO has extended the rule to mean that an agency cannot limit the
scope of proposal revisions after corrective action unless it can show that “the
amendment could not reasonably have any effect on other aspects of proposals,
or that allowing such revisions would have a detrimental impact on the
competitive process.” Cooperative Muratori Riuniti, B-294980.5, 2005 CPD
¶ 144 at 5 (Comp. Gen. July 27, 2005).
10
corrective action resulting from the first GAO protest. The amendment
established a new date for final proposal revisions, AR 4017-18, and instructed
offerors that, “[i]f any changes identified by this amendment cause a revision
to other than the pricing of your proposal, please submit same in the number
of copies and formats as your original submission.” AR 3971.
Plaintiff reads a limitation on proposal revisions to allow only those
related to pricing. Although it is true that the language quoted above plainly
refers to the possibility that pricing changes might trigger changes to the
technical substance of a proposal, to agree with plaintiff we would have to go
further and rule that the same language, despite the default rule discussed
above, precluded changes to a proposal not triggered by Amendment 12.
There is plainly no explicit limitation in the amendment, and we decline to
insert one. At best, plaintiff should have perceived an ambiguity in the
amendment, which would then trigger an obligation to enquire of the agency
whether a limitation was intended.6 LabCorp’s technical revisions were
therefore proper, and its bid could be accepted by the agency.
Plaintiff’s allegation that the agency engaged in unequal discussions are
based on MEDCOM’s answers to discussion questions after it decided to take
corrective action. Quest believes it was misled by the agency when it asked,
“[i]n the event that a change is made to our Technical Volume, is a full
resubmission of the bid . . . required or should we only resubmit the volumes
of their [sic] proposal that required updates.” AR 4557. The CO discussed
this inquiry with Quest over the telephone and answered by reiterating the
language of Amendment 12, that offerors were to submit new volumes in the
same format and number of copies as the original if changes to them were
made. AR 4557. The CO thus obviously interpreted the inquiry as one going
to procedure and not substance.
LabCorp, on the other hand, asked the agency whether offerors would
“be able to resubmit portion[s] of the solicitation for further committee review
and evaluation, particularly if the vendor’s capabilities have changed or been
enhanced since its original response to the RFP? . . . If we do submit such
information, please confirm [that] any sections submitted will be re-evaluated
by the lab committee.” AR 3817.2. The CO answered this question by
6
See Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313-15 (Fed.
Cir. 2007) (holding that patent ambiguities or errors must be raised before
bidding on a solicitation).
11
telephone and explained that MEDCOM “could not restrict [LabCorp] from
submitting information other than pricing, and yes it would be looked at by the
evacuation team.” AR 3822 (Memo for Record, Jan. 11, 2012).
In short, Quest and LabCorp received different answers because they
asked different questions. LabCorp asked whether it could submit updates to
its proposal to account for changes in its capabilities and the passage of time.
Quest asked only whether it should submit a new proposal in whole or only the
technical volume, if changes were made changes to it. The agency was under
no duty to answer a question not asked of it, nor was it under a duty to restate
the general rule that proposal revisions of any kind could be made up until the
deadline for final offers. MEDCOM thus did not engage in unequal
discussions or mislead Quest.
II. MEDCOM Properly Evaluated Offeror’s Technical Proposals
A. Quest’s Transition Plan
Plaintiff challenges its final rating of [ ] for Subfactor 1C,
Transition Plan, on the basis that it previously had been rated as [ ] and
that the downgrade to [ ] was without support in the record. The
agency’s second corrective action, during which it reconsidered proposals to
insure that “adjective ratings were correctly applied,” AR 4188, resulted in
rating of [ ] for Quest’s Transition Plan subfactor. The SSEB, meeting
in July 2012, identified as a [ ] that Quest’s proposal [
]. AR 4159. No [ ] were identified. Based on the
application of the solicitation’s description of a “good” rating as having a
strength, Quest was then evaluated as [ ] for subfactor 1C. The SSEB
reconvened in August 2012, and upon direction from the CO, eliminated the
identified [ ], retracted the [ ] rating, and assigned [ ]
as Quest’s rating for its Transition Plan. Plaintiff challenges this change as
unsupported and arbitrary. Defendant and intervenor answer that the SSEB
and CO were correct in downgrading Quest based on the proper application of
the adjectival rating scheme because Quest’s transition plan merely met
requirements and did not exceed them so as to merit a rating of [ ].
We cannot say that the SSEB and CO were irrational or arbitrary in
their final evaluation of Quest as [ ] for Subfactor 1C. Although
the SSEB initially assessed Quest’s plan as being strong because it had
12
demonstrated its then-capability to meet requirements, it was rational for the
SSEB, in concert with the SSA, to downgrade that rating to [ ]
when it considered that meeting solicitation requirements should not be
considered a strength and thus not merit a better rating. The SSA’s (CO’s)
memorandum reflects that, upon his review of the SSEB’s July 2012
evaluation, he “determined that the [[ ] rating] was apparently in error
and did not fall into the definition of [ ] as there were [
]. AR 4189. The SSEB’s August 2012 final evaluation reflects the
SSA’s determination and notes that the August 2012 [ ] rating was
consistent with its earlier March 2012 evaluation. AR 4267.
The definition given by the solicitation for a rating of “good” states, in
part, that the proposal “has one or more strengths that will benefit the
government” and that it does not have any “deficiencies.” AR 100 Any
weakness found in the proposal “has little potential to cause disruption of
schedule, increase of cost, or degradation of performance.” Id. “The proposal
generally exceeds requirements in minor areas . . . .” Id. A subfactor rated
“good” “demonstrates considerable understanding of the requirements and the
approach exceeds performance or capability standards.” Id. A “satisfactory”
proposal is one which “demonstrates adequate understanding of the
requirements and the approach meets all performance or capability standards.
. . . the proposal has no strengths that exceed the requirement” and “no
material weaknesses and no deficiencies. . . . [It] has some weakness that can
potentially cause disruption of schedules, increase in cost, or degradation of
performance.” Id. In sum, it “meets the minimum requirements.” Id.
The [ ] identified by the SSEB in July 2012 was that Quest’s
transition plan showed a [
] and that this would [ ] if Quest
received the award. AR 4159. Meeting the contract requirements, however,
is embraced by the solicitation’s definition of a “satisfactory” rating. A
“good” rating requires that a “proposal generally exceeds requirements in
minor areas.” AR 100. The SSEB did not identify an area in which Quest’s
proposal exceeded the requirements. We recognize that the July 2012 rating
also reflected a view that Quest’s transition plan[
], which would fit under the definition of a “good” rating. We
understand, however, that the likelihood of no delay is also consistent with a
13
“satisfactory” rating.7 “Satisfactory” allowed for the possibility of minor
delay. An estimation that no delay would take place is not a reason, in and of
itself, under these adjectival definitions, to elevate a subfactor from
[ ] to [ ].” A proposal would also have to exceed requirements
in some minor way in order to be rated [ ]. The SSA’s determination
that Quest’s proposal did not exceed requirements for this subfactor was thus
neither arbitrary, capricious, nor unsupported by the record.
B. LabCorp’s LIS and Interface
1. Testing and Completion
Plaintiff takes exception to MEDCOM’s [ ] rating of LabCorp
for Subfactor 1B, Laboratory Information System and Interface. It argues that
LabCorp was not eligible for a [ ] rating because it did not complete its
LIS interface prior to award. Quest points to MEDCOM’s 2011 rating of
LabCorp’s LIS system, which was a [ ] and identified a [ ]
because the agency determined that [
]. AR 2418. Quest alleges, without
citation, that LabCorp did not thereafter successfully implement its interface
at any government facility. Quest argues that the agency was mistaken in its
subsequent 2012 rating of [ ] because it incorrectly believed that
LabCorp’s interface was developed and tested.
Defendant and intervenor argue that the language cited by plaintiff is
not a current capability requirement but is rather prospective, requiring the
offeror to be able to interface with the LIS system at the time of performance.
7
We also recognize what might be seen as an ambiguity in the rating scheme
because the definition of [ ] includes language that the proposal
“has some weakness.” Plaintiff points out that it did not have any assigned
weaknesses and argues that this meant that it was deserving of a [ ] rating.
By that same logic, however, plaintiff would have been owed an “excellent”
rating because the definition of “excellent” was the only adjectival rating that
was defined as having no weaknesses of any kind. Read together, we
understand the ratings definitions with regard to weaknesses as a level of
tolerance in each rating level for weaknesses. Both “satisfactory” and “good”
could have minor weaknesses. “Good” could not have any deficiencies.
“Excellent” could have neither.
14
They cite the SSEB’s statement that, although a [ ] was recognized
during the first evaluation, [
]. AR 2190. They conclude that plaintiff’s
challenge to the [ ] rating is nothing more than a disagreement with the
agency’s ratings.
Much of plaintiff’s argument is based on the premise that it was
improper for MEDCOM to have considered the updated information provided
by LabCorp in its 2012 proposal revisions. As explained above, we reject that
notion. What remains then is to consider whether it was irrational for
MEDCOM to upgrade LabCorp’s revised proposal to a rating of [ ] for
Subfactor 1B.
For the LIS subfactor, the solicitation explained that the agency would
consider “[t]he offeror’s understanding of the deployment of the LIS and the
resources needed to ensure interface with the government’s system.” AR
3928. In doing so, “[a]ll submitted information that demonstrate[s] the
offeror’s understanding [of] the interface requirements and how they intend to
ensure that this requirement is met in a timely and efficient manner will be
evaluated.” Id. The Performance Work Statement detailed the various tasks
and services required of the offeror. For LIS, the work statement provided:
“[LIS] to include on-line direct interface with the CHCS or current
Government LIS at each SA in order to electronically transmit test results into
CHCS.” 8 AR 3883.
LabCorp represented in its February 2012 technical proposal that
“direct interface with CHCS for electronic ordering and transmitting of results
will be available to each SA. Direct interface with CHCS is in progress and
estimated availability for deployment in late Q1 2012.” AR 2793. Labcorp
explained that it had subcontracted with another company that is an expert in
“DOD Interoperability” and that “[d]evelopment and regression testing” were
completed. Id. It also informed MEDCOM that further interface testing was
ongoing using its subcontractor’s existing “CHCS Lab Development System
to verify appropriate LabCorp changes, ensuring that the interface will be
100% compatible with CHCS orders being sent out and retuning inbound
results.” AR 2795. LabCorp promised that its full LIS and interface would be
deployable in the late first quarter or early second quarter 2012. AR 2793,
8
“CHCS” represents “Composite Health Care System” and “SA” is the
“Submitting Authority.”
15
2795.
That information in hand, the SSEB revised LabCorp’s prior [
] rating upward to [ ] based on the representation that LabCorp’s
[ ].
AR 3814. LabCorp was also assessed as having [ ] that
would benefit MEDCOM, one of which we will discuss in the next section.
We read the solicitation in the same way as defendant and intervenor.
MEDCOM wanted to buy the laboratory testing services from an offeror who
could offer the agency an LIS system that would interface with the existing
system at each location contracted for. Plaintiff, on the other hand, treats the
Performance Work Statement as a certification requirement of a then-existing
capability to interface with the government CHCS or LIS interfaces at each
place where the agency might order testing services. Read that way, only the
incumbent could have met that requirement as it was the only offeror then-able
to interface with the various Submitting Authorities. That is plainly not what
the solicitation required.
LabCorp informed MEDCOM of its progress in testing and developing
its interface, including its subcontract with a company with experience with
these systems. It promised full deployment of an interface-ready LIS in late
second quarter 2012, which is when the SSEB and SSA were evaluating
proposals. Thus it was reasonable for the SSEB to conclude that LabCorp
could offer a fully compliant and operable LIS at the time of performance.
That fact allowed the raters to eliminate the prior-cited weakness and, based
on the several other strengths, upgrade LabCorp’s rating for this subfactor to
[ ].
2. LabCorp’s [ ] Assigned for a Feature Removed from
its Proposal
Plaintiff also highlights the fact that one of the features evaluated in
intervenor’s original 2010 proposal under the LIS subfactor was removed from
its revised proposals but continued to be cited by MEDCOM as deserving of
a [ ]. This was based on a Laboratory Communications Manager
(“LCM”) position, which LabCorp initially offered and the agency found to
merit a strength because it would “back-up bidirectional interface to ensure
continuity of operations.” AR 4183. That position was lined out of
intervenor’s subsequent proposals, and should not have continued to receive
a[ ] from the agency. Plaintiff does not allege how the absence of this
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[ ] would have impacted intervenor’s score for Subfactor 1B, but it
cites this as an example of disparate treatment.
We agree with defendant and intervenor that, though the continued
citation of the LCM as a [ ] in LabCorp’s proposal was in error, plaintiff
cannot show that it was prejudiced. LabCorp still was assigned [ ] other
evaluated [ ], none of which is challenged by plaintiff, and it received
no [ ]. This put LabCorp well within the description
of a [ ] rating. Plaintiff has not alleged how this indicates any disparate
treatment in its own ratings, and thus we disregard the error as harmless.
MEDCOM’s rating of LabCorp as a [ ] for its LIS subfactor was not
arbitrary or capricious.
C. Quest’s Management Capability and Experience
For technical Subfactor 1E, Management Capability and Experience,
LabCorp was rated [ ] and Quest was rated [ ]. Plaintiff
believes these ratings were in error because LabCorp was assigned a [ ]
for its DOD Contract Director while Quest was not given a [ ] for an
equivalent position and because MEDCOM double counted the experience
cited by LabCorp under this subfactor. Plaintiff also argues more generally
that its experience as the incumbent was ignored for this subfactor, which
artificially deflated its rating.
1. Quest and LabCorp Did Not Propose The Same DOD
Contract Director
[paragraph omitted]
17
[paragraph omitted]
[
]. Although these differences
are not dramatic, we agree with defendant and intervenor that they form a
basis upon which a distinction could be drawn. Though the overall goals of
the two management teams may have been similar, given that additional detail,
it was not irrational or arbitrary for the agency to assign greater value to
LabCorp’s proposal in this regard.
2. LabCorp’s Alleged Inflated Corporate Experience Did Not
Prejudice Quest
The agency cited as a [ ] for Subfactor 1E that LabCorp possessed
management experience for two large contracts, it’s Federal Supply Schedule
(“FFS”) contract and its contract through the FFS with the Department of
Veterans Affairs (“VA”). Quest asserts that these are not properly considered
as relevant management experience because neither was truly a large contract
and neither was listed by LabCorp in its past performance volume.
While intervenor largely ignores the issue, defendant argues that, even
if it is assumed that the agency was wrong in assigning a [ ] for the FFS
and VA contracts, plaintiff cannot show that it was prejudiced because
LabCorp still had [ ] and [ ],
making it rational for the agency to award LabCorp an [ ] rating for
Management Experience and Capability. We agree.
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Plaintiff has not alleged that LabCorp would have been downgraded
absent the [ ] for large contract management experience. Instead, it
argues vaguely that “any Strength could make a difference” in a best value
procurement. Pl.’s Resp. Br. 24. That is insufficient. Even without this
challenged [ ], LabCorp’s proposal for Subfactor 1E had [ ]
and no [ ]. Plaintiff has not shown how the rating would
have changed, and this is presumably why it has not tried to, arguing more
broadly that it was prejudiced because the CO might have based his best value
tradeoff decision on this analysis of the subfactor rating. This now-missing
[ ] is not cited in that tradeoff decision, making plaintiff’s prejudice
argument attenuated and completely speculative.
3. Quest’s Experience as the Incumbent Did Not Entitle it to a
Higher Rating Under This Subfactor
Although Quest abandoned the argument in its response brief that its
incumbency was ignored by the agency in evaluating this subfactor, we
mention it briefly because it appears that plaintiff reasserted the argument in
its reply brief in a somewhat different form. In its reply brief, plaintiff argues
that the CO refused to allow the SSEB to consider the advantages offered by
Quest’s incumbency despite the fact that the CO relied on his personal
knowledge about work LabCorp had performed through its FFS contract.
Piggybacking this argument on plaintiff’s prior challenge to LabCorp’s
large contract management experience merely masks the fact that Quest wishes
to be credited independently for its experience as the incumbent contractor.
As defendant points out, however, Subfactor 1E was not merely a test or a
comparison of each offeror’s previous contract management experiences. The
solicitation asked offerors to “[d]escribe [their] company’s overall managment
ability and [their] understanding of the management techniques required to
perform services under this solicitation.” AR 3921. Bidders were asked to
furnish detail as to key positions they would offer and the qualifications
required of those positions. Id. If the offeror intended to partner with another
contractor, they were asked to explain what the roles and responsibilities of
that partner would be. Id. The solicitation explained that offerors would be
evaluated to “determine [their] understanding of the organization and logistics
of the management services, qualifications of key personnel and experience
required to perform under this solicitation.” AR 3928. It also stated that
“[m]anagement techniques employed to ensure quality services throughout the
life of the contract will also be evaluated.” Id.
19
Quest has not explained how, given the aim of this subfactor, mere
incumbency entitled it to any additional strengths. Quest was rated as [ ]
and the agency found a strength in its demonstrated ability to meet contract
requirements. AR 4179. It then listed the other items that were responsive to
the solicitation from Quest’s proposal. By contrast, [ ] of LabCorp’s [
] were because of its more thorough description of management structures
and key personnel and their qualifications. See AR 4186. It was not irrational
for the agency to have assessed additional value to LabCorp’s proposal under
these circumstances.
III. LabCorp’s Proposed Clinical Tests Met Agency Requirements
Plaintiff alleges that LabCorp did not meet the requirements of the
solicitation because certain of it proposed testing methodologies were not
based on the required methodologies for those tests. Therefore, according to
plaintiff, its solicitation should have been considered nonconforming or, at a
minimum, rated lower than it was. Plaintiff avers that LC/MS tests are
generally more expensive, and, by [ ] of them, LabCorp
was able to lower its price. Quest then compares its prices for the LC/MS tests
with LabCorp’s prices for LC/MS tests and alleges them to be 134 percent
higher. See id. at 34. Defendant and intervenor answer that offerors were
afforded discretion in providing equivalent testing methodologies to those
listed in the solicitation.
Attachment 7 to the solicitation listed tests for which offerors were
instructed to “populate each list . . . with their equivalent test Unique Service
Code.” AR 3927. Certain of these tests were based on liquid
chromotagraphy–mass spectrometry (“LC/MS”). Plaintiff alleges that with
respect to [
]. Quest lists these tests and informs the
court, without citation, that these methodologies are not equivalents because
they do not use LC/MS methodology. See Pl.’s Mot. for J. on the AR 33.
The agency knew what tests had to be performed. It listed them in
Attachment 7 and instructed offerors to list their own corresponding tests.
MEDCOM realized the discrepancy in price between various methodologies
and instructed offerors that it “was incumbent upon [them] to determine the
test methodology which they consider will provide the best price for each test.”
AR 3924. Offerors thus were vested with the discretion to offer
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methodologies they considered equivalent. MEDCOM did not identify any
methodologies offered by LabCorp as nonconforming, and we are not in a
position to second guess that evaluation. Quest’s bald assertion that
LabCorp’s offered testing methodologies were insufficient provides no basis
for us to evaluate what LabCorp offered. Given the discretion afforded each
offeror to offer equivalent methodologies, the issue of whether a particular test
met the agency’s requirements becomes a matter of contract performance, not
the basis for a bid protest.
IV. MEDCOM’s Best Value Analysis Was Neither Irrational Nor
Undocumented
Quest’s final argument essentially is that the agency transformed the
procurement from a best value procurement to a lowest priced, technically
acceptable one. The offerors were rated similarly for each factor and
subfactor, although Quest had a slight advantage in non-price factors, and
LabCorp was the lowest priced offeror. From this, Quest concludes that the
CO did not perform a true best value tradeoff. Quest also alleges that any best
value tradeoff he might have performed was not adequately documented.
Defendant and intervenor argue that the SSA’s decision was sufficiently
documented and that it reflects consideration of the relevant factors. They also
remind the court that agencies are vested with “substantial discretion to
determine which proposal represents the best value to the government.” E.W.
Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir. 1996). Intervenor cites
multiple precedents in which awards to lower priced, lower rated offerors have
been upheld by this court and GAO. See Blackwater Lodge & Training Ctr.
v. United States,
86 Fed. Cl. 488, 514 (2009); LEADS Corp., B-311002,
2008
WL 1990954, at *2 (Comp. Gen. Mar. 26, 2008).
Although the best value determination here was brief, it was not devoid
of substance. The CO recognized plaintiff’s edge in Past and Present
Performance, but concluded that this edge was not that significant, given that
LabCorp’s [ ] rating still assured a relatively low risk to the agency. See
AR 4191. He further stated that the offerors’ technical proposals, although
differing slightly between subfactors, were basically equivalent, in view of the
fact that both had been rated as [ ] for Technical Capability. The offerors
had an identical number of [ ], [ ], and [ ] ratings
for the technical subfactors. That being the case, the CO concluded that
Quest’s proposal was not “so significantly superior to LabCorp’s proposal that
21
[it] clearly justifies paying an award price that is potentially [ ]
higher over the life of the contract.” AR 4191.
Quest argues that the CO should have performed a further weighing of
each subfactor and the proposals’ associated strengths to determine which
offeror’s [ ] was more important than the other offeror’s [ ]. We
decline to impose such a requirement. The CO explained that he did not find
the technical differences to warrant assigning either offer an advantage and not
illogically concluded that Quest’s higher price diminished its slight advantage
in Past and Present Performance. In the CO’s judgment, the balance weighed
in favor of price as the discriminating factor in this case. That balancing of
price against advantage was documented sufficiently by the CO. His exercise
of judgment was not shown to be arbitrary, capricious, or in violation of law.
CONCLUSION
Because plaintiff has not shown the agency’s conduct to be arbitrary,
capricious, or unlawful, defendant and intervenor are entitled to judgment on
the administrative record. We deny plaintiff’s motion for judgment on the
administrative record and grant defendant’s and intervenor’s motions.
Accordingly, the clerk of court is directed to enter judgment for defendant and
dismiss the complaint. No costs.
s/Eric G. Bruggink
ERIC G. BRUGGINK
Judge
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