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Matter of: Novartis Pharmaceuticals
Corporation
File: B-285038.4; B-285038.5
Date: February 1, 2002
Ronald K. Henry, Esq., Kaye, Scholer, Fierman, Hays &
Handler, for the protester.
Donald A. Tobin, Esq., and Lori Ann Lange, Esq.,
Bastianelli, Brown & Kelley, for the intervenor.
Maura C. Brown, Esq., and Phillipa L. Anderson, Esq.,
Department of Veterans Affairs, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq.,
Office of the General Counsel, GAO, participated in the preparation of
the decision. DIGEST
The protester was not prejudiced by the agency's alleged
defective evaluation of the offerors' proposed implementation and small
disadvantaged business plans submitted in response to a solicitation,
where the record reflects that, even if the protester had been aware of
the manner in which the agency evaluated proposals, it would not have
submitted a different proposal that would have had a reasonable
possibility for award, particularly given its significantly high price.
DECISION
Novartis Pharmaceuticals Corporation protests the award of a contract
to Mylan Pharmaceuticals Inc. under request for proposals (RFP) No.
797-NC-00-0043, issued by the Department of Veterans Affairs (VA), for the
drug clozapine. [1] Novartis
argues that the agency's evaluation of proposals and selection of Mylan's
proposal as representing the best value to the government was unreasonable
and not in accordance with the evaluation factors set forth in the
solicitation.
We deny the protest.
BACKGROUND
The RFP provided for the award of a fixed-price contract for a base
period of 1 year with four 1-year options. The RFP, as amended,
contemplated establishing a source to provide an estimated 20,040 bottles
of clozapine tablets per year for purchase through VA's Pharmaceutical
Prime Vendor (PPV) program. [2] RFP at
3; amend. 4 at 2. The solicitation stated that award would be made to the
offeror submitting the proposal determined to be most advantageous to the
agency. The RFP provided that price was the most important factor; less
important were the past performance and implementation plan evaluation
factors, which were equal in importance; and the small disadvantaged
business (SDB) factor, which was significantly less important than the
other factors; price was said to be more important than the combined
weight of the other factors. [3] RFP at
32.
The solicitation requested that offerors submit technical proposals
that included completed past performance forms and an implementation plan.
RFP at 31. The RFP stated that the implementation plan was to detail how
the offeror would satisfy the RFP's requirements regarding the operation
and maintenance of a clozapine registry, such that each issue addressed
would be complete and detailed enough to assure the agency of the
offeror's understanding and capability to perform the cited requirements,
and to "substantiate that the contract will be fully operational on the
contract start date." [4] RFP at
4, 31. The RFP included a detailed six-page specification of the registry
requirements, and stated that "by signing this solicitation and providing
a proposal the offeror assures the VA that their registry meets the
[listed registry] requirements." RFP at 5-10.
Proposals were received from five firms by March 31, 2000. The agency
evaluated the proposals received, conducted discussions with the three
offerors whose proposals were found in the competitive range (including
Novartis and Mylan), and requested and evaluated final revised proposals.
Before an award selection was made, the agency became aware of various
medical studies that caused it to review its requirements and obtain
additional information from the offerors and the Food and Drug
Administration. Based on the results of this review, VA amended the RFP on
March 30, 2001 to provide that while "[a]ll new patient starts will be
prescribed the awardee's product," the "VA has made the medical decision
not to make it mandatory that physicians switch patients to the awarded
drug due to the highly sensitive nature of this drug," and that "the
decision to switch patients must be physician driven." This amendment
changed the estimated quantity of clozapine to be purchased by the agency
from 33,401 to 20,040 bottles per year, and provided revised price
schedules to be completed by the offerors. Additionally, the amendment
made a number of changes to the "registry requirements" section of the RFP
by deleting or revising some provisions and adding new ones. Offerors were
requested to acknowledge the amendment by April 20, 2001, in
order to remain in the competition. RFP amend. 4.
After receiving the amendment, Novartis sent the agency a letter dated
April 12, 2001, stating that Novartis was confused "with respect
to the operation of the registry" as required by the amended RFP, and
posing a number of questions. The three competitive range offerors submitted signed copies of
amendment Subsequently, in response to further protests by Novartis, the agency
issued amendment Nos. 5 and 6 to allow for the submission of revised
technical proposals and prices. Mylan and the third offeror responded by
submitting signed copies of the amendment with completed price schedules
only. AR (Dec. 17, 2001), Tabs 8 and 10, Offerors' Responses to Amend. No.
6. Novartis responded by submitting, in addition to a signed copy of the
amendment and a completed price schedule, a two-page cover letter
providing certain "[n]ew information," such as Novartis's research on
potential additional uses of Clozaril® and copies of certain testimony
before Congress. AR (Nov. 19, 2001), Tabs 15 and 22, Novartis Response to
Amend. No. 6.
The agency reconvened the TEP (which had previously completed its
evaluation of the final revised technical proposals) to evaluate the
information provided by Novartis in response to amendment No. 6. The TEP
concluded that Novartis's response "provided no new insight," and
accordingly, that the proposal's "previous technical rating require[d] no
changes." AR (Nov. 19, 2001), Tab 18, Memo for the Record (Sept. 20,
2001).
The proposals of all three offerors received ratings of "highly
acceptable" under the past performance factor, "acceptable" under the
implementation plan factor, and "acceptable" overall. [5] AR (Nov.
19, 2001), Tab 13, Memo for Record (Oct. 12, 2001), at 2-5. Novartis's
proposed price based upon the estimated quantities set forth in the
solicitation was [DELETED] per year, the third offeror's price was
[DELETED], and Mylan's price was $1,090,365. AR (Nov. 19, 2001), Tab 14,
Price Analysis. The agency determined that Mylan's proposal represented
the best value to the government, and awarded a contract to that firm. AR
(Nov. 19, 2001), Tab 13, Memo for Record (Oct. 12, 2001), at 6.
After requesting and receiving a debriefing, Novartis filed these
protests. Novartis protests that the agency's evaluation of proposals
under the past performance, implementation plan, and SDB factors was
unreasonable.
PAST PERFORMANCE EVALUATION
With regard to the agency's evaluation of proposals under the past
performance factor, Novartis generally complains that Mylan should not
have received the same "highly acceptable" rating as Novartis because
Mylan has "essentially no experience 'under procurements of a same or
similar nature to the proposed procurement,'" which was one of the
considerations in evaluating past performance under the RFP. Protester's
Comments/Supplemental Protest at 15; see RFP at 32.
The evaluation of past performance is a matter within the discretion of
the contracting agency. In reviewing an agency's evaluation of past
performance, we will not reevaluate proposals, but instead will examine an
agency's evaluation to ensure that it was reasonable and consistent with
the solicitation and with applicable procurement statutes and regulations.
Acepex Mgmt. Corp., B-283080 et al.,
Oct. 4, 1999, 99-2 CPD ¶ 77 at 3.
The solicitation provided that proposals would be evaluated under the
past performance factor to "determine whether the offeror has consistently
demonstrated adherence to contract terms and conditions and a commitment
to customer service," and that "the offeror [would] be evaluated on the
depth[,] breadth and relevance of its experience and performance under
procurements of a same or similar nature to the proposed procurement." RFP
at 32.
The record reflects that Mylan has performed a number of contracts
involving the supply of pharmaceuticals, including clozapine, with
estimated values that exceed Mylan's proposed price for this solicitation
by a significant amount. AR (Nov. 19, 2001), Tab 29,
Mylan's Past Performance Questionnaires. The agency noted, in evaluating
Mylan's proposal as "highly acceptable" under the past performance factor
that that firm's references reported that it is "very customer orient[]ed"
and is "willing to make changes [that its] customer required." The agency
added that, according to the references, Mylan's products were
"consistently in good condition, on time, [with] no recalls," and that
Mylan was an "excellent company to do business with." AR (Nov. 19, 2001),
Tab 13, Memo for Record (Oct. 12, 2001), at 5. Based upon the record here,
which reflects that Mylan has performed contracts for the supply of
pharmaceuticals with estimated values that exceed Mylan's proposed price
here, and that the references' responses were quite favorable, the
agency's evaluation of Mylan's proposal as "highly acceptable" under the
past performance factor was reasonable.
IMPLEMENTATION PLAN EVALUATION
Protest Contentions and Agency Response
Novartis next objects to the agency's evaluation of proposals under the
implementation plan factor. Specifically, the protester argues that the
agency failed to evaluate proposals in accordance with the terms of the
RFP because it did not evaluate whether the proposals met the mandatory
clozapine registry requirements set forth in the solicitation as issued
and modified by amendment No. 4. In support of this argument,
Novartis provides an analysis detailing what, in its view, are each of the
"mandatory minimum requirements" set forth in the six pages of registry
specifications in the RFP with particular reference to those in amendment
No. 4. The protester next provides a detailed review of Mylan's proposal,
pointing out each instance where, in the protester's view, Mylan's
proposal fails to specifically address, or takes exception to, what the
protester has identified as a mandatory minimum requirement. Novartis also
states that its proposal should have received a higher rating under this
factor because of its superior ability to implement the mandatory minimum
requirements, given that Novartis's registry is already in place. The
protester concludes that it was prejudiced by the agency's failure to
conduct a rational evaluation of the implementation plan because Mylan's
proposal should have been rejected as unacceptable, and because in any
case a rational technical evaluation would have demonstrated the
superiority of Novartis's implementation plan over Mylan's, which would
have led to an award to Novartis.
The agency responds that its evaluation of proposals under the
implementation plan factor was reasonable and included an adequate
assessment of whether the proposals met the agency's requirements for the
registry as set forth in the solicitation. The agency asserts that it was
not required to evaluate proposals to determine whether they affirmatively
demonstrated compliance with each and every term in the registry
requirements section of the solicitation that could be construed as
creating a requirement. In this regard, the agency points out that the
section of the solicitation providing the registry requirements began by
stating that "[b]y signing this solicitation and providing a proposal the
offeror assures the VA that their registry meets the following
requirements." See RFP at 5. The agency adds with regard to
amendment No. 4 that "VA added these requirements fully intending them to
be [contract] requirements," and that "[i]t was never VA's intent to
evaluate and rate them." AR (Dec. 17, 2001) at 3. The agency argues that
because Mylan signed both the original solicitation and amendment
No. 4, it was obligated to provide a registry that meets the
solicitation's requirements. AR (Dec. 17, 2001) at 6. The agency
points out here that the offerors' understanding of amendment No. 4 was in
apparent agreement with the agency's, given that none of the offerors,
including Novartis, submitted a revised technical proposal addressing the
amendment's additions and deletions to the registry requirements. Finally,
the agency argues that, despite Novartis's claims to the contrary, Mylan's
proposal did not take exception to any of the solicitation's requirements.
Implementation Plan Evaluation Record
In our view, with regard to the solicitation as issued, Novartis is
correct in asserting that the agency did not perform the type of detailed
evaluation of proposals under the implementation plan factor that would
ensure that the proposals affirmatively demonstrated compliance with each
and every term in the RFP that could be considered as creating a mandatory
requirement. Rather, the record reflects that the TEP engaged in a more
generalized review of proposals. Specifically, the evaluation summaries
included in the record reflect that the TEP evaluated the proposals'
implementation plans by reviewing them to determine how they approached
the transfer of data, report transmission modes, report transmission
requirements, and data security. AR (Nov. 19, 2001), Tabs 20, 25, 30,
Revised TEP Scoring. We note that while Novartis's implementation plan was
considered acceptable, Mylan's initial proposal was found technically
unacceptable under the implementation plan factor, and that Mylan, in
response to the discussion questions posed by the agency, submitted a
lengthy and detailed revised proposal that was ultimately evaluated as
acceptable. AR (Nov. 19, 2001), Tabs 25-28, Mylan's Initial Technical
Proposal, TEP's Evaluation of Mylan's Initial Technical Proposal, Mylan's
Revised Technical Proposal, TEP's Evaluation of Mylan's Revised Proposal.
The record also evidences that Novartis is correct in contending that the
agency did not perform any evaluation to determine whether the proposals
met the registry requirements added by amendment No. 4; indeed, there
effectively was nothing to evaluate, given that none of the offerors,
including Novartis, submitted a revised technical proposal responding to
the amendment.
Lack of Prejudice
We need not decide whether the agency was obligated to perform the type
of detailed evaluation of proposals under the implementation factor as
argued for by Novartis, or whether the agency was remiss in failing to
evaluate proposals to determine whether they met the registry requirements
added by amendment No. 4. Our Office will not sustain a protest unless the
protester demonstrates a reasonable possibility that it was prejudiced by
the agency's actions, that is, unless the protester demonstrates that, but
for the agency's actions, it would have had a substantial prospect of
receiving award. McDonald-Bradley, B-270126,
Feb. 8, 1996, 96-1 CPD ¶ 54 at 3; see Statistica,
Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996). As
explained below, and as argued by the agency, the record demonstrates that
Novartis was not prejudiced by the manner in which the agency evaluated
proposals under the implementation plan factor.
Alleged Exceptions by Mylan to Registry
Requirements
First, from our review of the record and as illustrated by the
following examples, we agree with the agency that while Mylan's proposal
(and those of the other offerors, including Novartis) did not
affirmatively demonstrate compliance with each and every term in the
registry requirements section of the RFP that could be construed as
creating a requirement, Mylan's proposal did not, despite the protester's
view to the contrary, take exception to any of the RFP's terms.
For example, the protester asserts that Mylan's proposal is
inconsistent with certain of the clozapine registry "data security"
requirements contained in the initial RFP (and not modified by amendment
No. 4). Specifically, the protester points out that Mylan's proposal
included the statement that [DELETED], and argues that this statement
effectively takes exception to the solicitation's provision that "[d]ata
must be secured in a storage system which restricts access to direct
clozapine registry employees and prevents unauthorized alterations,
misuse, or transmissions." Protester's Comments/Supplemental Protest at
13-14; see RFP at 10; AR (Nov. 19, 2001), Tab 26, Mylan's
Revised Technical Proposal, at 4 of 6. However, this section in Mylan's
proposal begins with the statement that Mylan understands [DELETED], and
continues with the explanation that [DELETED]. AR (Dec. 17, 2001) at 17;
AR (Nov. 19, 2001), Tab 26, Mylan's Revised Technical
Proposal, at 3 of 6. Accordingly, we agree with the agency here that
Mylan's proposal can reasonably be read only as making the agency aware of
an [DELETED], rather than as taking exception to the statement in the RFP
providing for restricted access to the registry.
As another example, the protester asserts that Mylan's proposal is
inconsistent with the clozapine registry "data security" provision which
states that "[d]ata supplied to the clozapine
registries . . . is subject to the Privacy Act of
1974." Protester's Comments/Supplemental Protest, at 11-12; see RFP
at 9. The protester, while conceding that Mylan's proposal "described the
capability of its system" with regard to the provisions of the RFP
relating to data security as well as Mylan's "understanding that
disclosure is illegal," nevertheless argues that Mylan's proposal is
unacceptable with regard to this aspect of the data security requirements
solely because it "did not promise protection from disclosure."
Protester's Comments/Supplemental Protest, at 11-12; Protester's Reply to
Supplemental Agency Report (Dec. 21, 2001) at 16.
In evaluating Mylan's proposal, the agency found it "very detailed"
with respect to these data security provisions. AR (Nov. 19, 2001), Tab
25, TEP's Evaluation of Mylan's Revised Proposal. Specifically, the agency
points out that Mylan's proposal states with regard to data security that
[DELETED]. AR (Nov. 19, 2001), Tab 26, Mylan's Revised Proposal, at 9
of 10. The agency also points out that Mylan's proposal "included an
overview of the Privacy Act," and stated that it would provide appropriate
National Clozapine Coordinating Center personnel, who are authorized to
access the data, [DELETED]. Id.; AR (Nov. 19, 2001), Tab
25, TEP's Evaluation of Mylan's Revised Proposal at 4; AR (Dec. 17,
2001) at 14. Despite the protester's view to the contrary, we cannot find
the agency's evaluation of Mylan's proposal as "acceptable" with regard to
these data security provisions objectionable, given that, as reflected
above, the agency reasonably determined that the proposal reflected an
adequate understanding of, and approach to, accomplishing the agency's
data security needs.
Mylan's Failure to Address Registry
Requirements
Novartis also points to a number of separate registry provisions,
contained in either amendment No. 4 or in the initial clozapine registry
specifications unchanged by amendment No. 4, and asserts that Mylan's
proposal should be considered unacceptable because it did not specifically
address these provisions in its proposal. For example, Novartis claims
that Mylan did not show in its proposal that it complies with registry
provision in amendment No. 4 providing that "[t]he clozapine registry
of the offeror . . . [m]ust be able to issue authorization numbers via
telephone and facsimile at a minimum." The protester claims that "[n]one
of the materials provided in the Agency Report indicate[] that . . . Mylan
. . . has complied with this mandatory minimum requirement, or is willing
and able to comply with this requirement in the future." Protester's
Comments/Supplemental Protest at 5.
Although the RFP may have contemplated more detailed responses to the
registry provisions, we cannot find unreasonable the agency's effective
determination that Mylan's proposal would meet VA's clozapine registry
needs as reflected in the RFP. As discussed previously, Mylan's proposal
included a relatively detailed implementation plan that did not take
exception to any of the terms of the solicitation. It also included a
signed copy of the solicitation that, according to the RFP (at 5), assured
that Mylan's registry met the solicitation's registry requirements. As
such, the fact that Mylan's proposal did not specifically address each and
every term in the registry requirements section of the solicitation that
could be construed as creating a requirement (just as Novartis's proposal
did not address each and every one of these provisions) does not render
unreasonable the agency's judgment that Mylan's proposal offers a registry
that will satisfy the agency's needs.
Protester Not Prejudiced
There is nothing in the record that suggests that Novartis would have
submitted a different offer that would have had a reasonable possibility
of award, even if it had known that the agency would not perform the type
of detailed evaluation of proposals under the implementation factor as
argued for by Novartis, or perform any evaluation to determine whether the
proposals met the registry requirements added by amendment No. 4. In this
regard, none of the offerors, including Novartis, submitted a revised
technical proposal that addressed the revised "registry requirements" set
forth in amendment No. 4. See Hollingsead Int'l, B-227853,
Oct. 19, 1987, 87-2 CPD ¶ 372 at 7 (protester was not prejudiced by
the agency's failure to evaluate certain information required by the
solicitation where each of the offerors, including the protester,
submitted proposals that were deficient in this regard).
Moreover, Novartis did not submit the kind of detailed response to the
registry requirements that it claims was required, but admits that there
were "gaps" in its proposal. Specifically, Novartis concedes that it
"would have been wise for Novartis to submit more technical information
about its existing registry," instead of assuming the agency was fully
aware of the registry's details, and that this lack of detail resulted in
its proposal receiving only an "acceptable" rating for its implementation
plan. Protester's Reply to Supplemental Agency Report (Dec. 21, 2001) at
10. Thus, it is not at all clear that Novartis's proposal should have been
rated superior to Mylan's under the implementation plan factor, even if
the detailed evaluation argued for by Novartis had been performed.
Additionally, the solicitation specified that price would be more
important than all other factors combined in determining which proposal
represented the best value to the agency. Indeed, as compared to the 60
percent weight attributed to price, the implementation plan was worth only
17 percent. Novartis's proposed price of [DELETED] for each year's
estimated quantity was more than [DELETED] Mylan's proposed price of
$1,090,365, and there is no indication in the record or reason to believe
that Novartis would have priced its offer differently, had it been aware
of how the agency would evaluate proposals under the implementation plan
factor. [6]
Moreover, as discussed above, the protester has not shown the two
offerors' equal
"highly acceptable" ratings for past performance (worth 17 percent)
were unwarranted. Thus, given that the agency reasonably determined that
Mylan's proposal did not take exception to the RFP's requirements and thus
met its needs as reflected in the solicitation, the tremendous difference
in the prices proposed by Novartis and Mylan, and the absence of any
evidence of how Novartis could have improved its competitive posture if
the implementation plan had been evaluated in the detail argued by
Novartis, we fail to see any reasonable possibility that Novartis was
prejudiced by the agency's actions here. See SOS Interpreting,
Ltd., B-287477.2, May 16, 2001, 2001 CPD ¶ 84 at 4; Instrument
Control Serv., Inc., B-285776, Sept. 6, 2000, 2000 CPD ¶ 186
at 4.
SDB FACTOR EVALUATION
The protester also contends that the record does not evidence any
meaningful evaluation of proposals under the SDB factor. As mentioned
previously, the RFP stated that the SDB factor was significantly less
important than the past performance or implementation plan factors. RFP at
32. Consistent with this, the source selection plan provided that the SDB
factor was to receive a weight of only 6 percent. AR (Nov. 19, 2001),
Tab 17, Source Selection Plan, at 1. In evaluating proposals, the agency
found that Novartis proposed to subcontract [DELETED] worth of work, or
[DELETED] percent of the total contract value, to an SDB. Again, given the relatively low weight the SDB factor was accorded in
the evaluation, the fact that Novartis's proposed SDB plan provided for a
total of only [DELETED] worth of work to be subcontracted to an SDB
concern, and the significant overall price difference between Mylan's and
Novartis's proposal, we fail to see how Novartis was prejudiced by the
apparent lack of attention to this factor paid by the agency in
determining that Mylan's proposal represented the best value to the agency
(even considering this problem in conjunction with the implementation plan
evaluation).
The protest is denied.
Anthony H. Gamboa
General Counsel
Notes
1. Clozapine, originally manufactured only by
Novartis under their trademark Clozaril®, is used for the treatment of
schizophrenia. Novartis currently supplies virtually all of the clozapine
required by the VA for its patients. Agency Report (AR) (Nov. 19, 2001) at
2 n.1.
2. Under the PPV Program the VA awards separate
contracts for the product distribution and for the product itself. Once a
supply source is obtained for a product, it is distributed for use
nationwide. RFP at 3.
3. Although not disclosed in the RFP, the record
reflects that the evaluation factors, consistent with the source selection
plan, were accorded the following weights in the source evaluation: price
(60 percent); past performance (17 percent); implementation plan (17
percent); SDB (6 percent). AR (Nov. 19, 2001), Tab 17,
Source Selection Plan, at 1.
4. We denied Novartis's protest of an alleged
ambiguity in the solicitation regarding the submission of the
implementation plan. Novartis Pharm. Corp., B-285038, July 6, 2000, 2000
CPD ¶ 116.
5. The possible ratings were outstanding, highly
acceptable, acceptable, poor, and unsatisfactory. AR (Nov. 19, 2001), Tab
13, Memo for Record (Oct. 12, 2001), at 2.
6. For example, we do not see how Novartis could
credibly claim that its proposed price would have been less had it known
that the agency would not evaluate proposals to ensure that they
specifically complied with the registry requirements as amended by
amendment No. 4, given that Novartis did not revise its technical proposal
to address these amended requirements.
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