ACS State Healthcare, LLC; PharmaCare Government
Services, Inc.; PGBA, LLC; and Humana Military Healthcare Services, Inc.
protest the award of a contract to Express Scripts, Inc. (ESI), under
request for proposals (RFP) No. MDA906-03-R-0002, issued by the TRICARE
Management Activity, Department of the Defense (DoD), for support of the
TRICARE Retail Pharmacy (TRRx) program.
We deny the protests.
The TRICARE program is a managed health care program implemented by DoD for
active duty and retired members of the uniformed services, their families,
and survivors. 32 C.F.R. § 199.17 (2003). TRICARE is a blend of the
military’s direct care system of hospitals and clinics (known as Military
Treatment Facilities) and the Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS). The TRICARE program includes pharmacy
benefits, which were being provided as part of TRICARE’s Managed Care
Support (MCS) contracts until the award under this RFP was implemented.
This RFP was to obtain a contractor to support the TRRx program, which
provides for the acquisition, delivery and distribution of prescriptions to
beneficiaries. The contractor will be the Pharmacy Benefits Manager (PBM)
for the TRRx program and will use its own retail pharmacy network to support
the TRRx program nationwide (including Puerto Rico, Guam, and the U.S.
Virgin Islands). The RFP contemplated the award of a fixed-unit price,
incentive contract for a 6‑month base period with 5 option years. The
contractor will use DoD funds to pay for each prescription after receiving
government verification of an individual beneficiary’s eligibility and
authorization for payment, and provide other services to support the
program. The contractor will operate a pharmacy help desk, verify
beneficiary eligibility, process claims, provide clinical services
(processing prior authorization and medical necessity determination
requests), provide information technology services, perform marketing and
education services, process appeals, and perform record management services.
The RFP provided for award on the basis of a cost/technical tradeoff, and
stated that the agency intended to evaluate proposals and make award without
conducting discussions. The RFP identified the following six evaluation
factors and associated subfactors:
- Claims Processing
- Quality Assurance Plan
- Disaster Recovery Plan
- Phase-in Plan
- Pharmacy Help Desk
- Prior Authorization
- Medical Necessity Determination
- Beneficiary Services
Offerors were informed that factors (1) and (2)
were of equal weight and individually were the most important non-price
evaluation factors. Factor (5) was stated to be next in importance and
equal in weight to the combination of factors (3) and (4), which were of
equal importance. Offerors were also informed that factors (1) through
(5) combined were significantly more important than price. Proposals were to
be evaluated under each factor and subfactor to determine the extent to
which they exhibited a clear understanding of the work requirements and the
means required to fulfill the requirements, and the extent to which they
demonstrated an ability to meet or exceed the RFP requirements. RFP amend.
4, § M.2.2.
The RFP also provided for an assessment of proposal risk associated with an
offeror’s technical approach and ability to meet the RFP requirements. The
assessment of proposal risk could be affected by the amount of the offeror’s
experience in performing PBM-related services. Proposal risk was to be
evaluated at the factor and subfactor level. Id. § M.5.
With respect to factor (1), Network Access, offerors were informed that “the
offeror must have an established network in place, at the time of submission
of the technical proposal, sufficient to meet the minimum access standards”
stated in the RFP. Id. § L.8.2. These minimum access standards required for
an urban setting a pharmacy within 2 miles estimated driving distance of 90
percent of the beneficiaries; for a suburban setting a pharmacy within 5
miles estimated driving distance of 90 percent of the beneficiaries; and for
a rural setting a pharmacy within 15 miles estimated driving distance of 70
percent of the beneficiaries. Id. § C.7. The RFP also required that offerors
provide a plan to minimize the impact of any disruption or inconvenience to
beneficiaries caused by changes to the network structure.
With respect to factor (2), Network Reimbursement, offerors were informed
that a written proposal was not necessary. Under this evaluation factor, the
agency was to assess an offeror’s projected program pharmaceutical costs
based upon the offeror’s proposed guaranteed network reimbursement rates and
the total expected government cost (TEGC) for reimbursement of network
retail pharmacy costs. The proposal risk associated with the offeror’s
ability to obtain and maintain the proposed TRRx network at the offeror’s
guaranteed average discount percentage and guaranteed average dispensing fee
was also to be assessed under this factor.
Under this factor, offerors were directed to complete the solicitation’s
Table L-1, which would detail the offeror’s pricing structure for
pharmaceutical items. Specifically, this table, for each option year,
identified estimated quantities of brand name and generic pharmaceuticals,
and for each group an associated “average wholesale price” (AWP) was
identified. Offerors were required to provide their “guaranteed average
discount percentage” (the offeror’s reimbursement discount factor) and
“guaranteed average dispensing fee” (the offeror’s fee for each prescription
filled). The table then required each offeror to use algebraic formulae to
derive the offeror’s “average drug cost” and “estimated total drug costs”
for each option period. The TEGC was the sum of the offeror’s estimated
total drug costs for the 5 option years.
The RFP required offerors to provide supporting documentation evidencing
their ability to deliver at the guaranteed average discount percentages and
average dispensing fees. Offerors were informed that such supporting
information might include identifying the average discount percentage and
dispensing fee by brand and generic drug categories “for its currently
existing network that is closest in size and scope to the network required
under this RFP.” RFP amend. 4, § L.188.8.131.52.1.
The RFP provided that the offerors’ guaranteed average discount percentage
and guaranteed average dispensing fee for brand name and generic drugs for
each of the 5 option years would be included in the contract for the purpose
of determining incentive payments or deductions from the contract price.
That is, the contractor could earn an “incentive” up to 5 percent of the
difference between the actual costs and expected costs (applying the
contractor’s guaranteed discount percentage and dispensing fee to the
prescriptions filled during that contract period), up to a stated maximum
amount for each contract period (from $1.5 million in the first option year
to $2.5 million in the fifth option year). RFP amend. 1, § H.2.2.
Conversely, the RFP provided that
the Government will assess a Negative Incentive if the total actual network
reimbursement cost in a contract option period exceeds the [TEGC] for
Reimbursement of Network Pharmacy Costs that would have resulted from
applying the Guaranteed Average Discount Percentage and the Guaranteed
Average Dispensing Fee Per Prescription to the prescriptions filled in the
network during the contract option period. The difference between the actual
costs and Government calculated costs will be deducted from future payments
to the contractor.
RFP amend. 1, § H.2.3.
With respect to factor (3), PBM Services, offerors were informed that, among
other things, the agency would assess whether each offeror’s proposed claims
processing met or exceeded the minimum processing standards stated in the
RFP’s statement of work for electronic and beneficiary submitted claims.
The RFP also provided for the evaluation of the offerors’ proposed quality
assurance plan, disaster recovery plan, and phase-in plan under this
The RFP provided that offerors were to address factor (4), PBM Operations,
only in an oral presentation. Among other things, offerors were required
to address their proposed hours of operation for their pharmacy help desk
and to provide data demonstrating call access standards (e.g., average wait
times and call abandonment rates) for their existing pharmacy help desks.
The RFP also required under this factor that offerors detail their plans to
process prior authorization and medical necessity determination
requests to completion, including identifying the frequency and number of
follow-up attempts with a prescriber. Under this factor, offerors were also
required to describe their proposed management structure and to “describe
[their] systems of management controls for internal and external business
processes.” RFP amend. 4, § L.8.5.4. Offerors were also required to describe
under this factor their current beneficiary services operations, their plans
to accommodate increased beneficiary inquiry volume resulting from the TRRx
contract, and their guaranteed performance standards relating to telephone
inquiries and written correspondence. RFP amend. 4, § L.8.5.5.
With respect to factor (5), Past Performance, offerors were required to
submit performance data from each of their five largest current customers to
whom the offeror or its first-tier subcontractor was providing PBM or PBM-related
services, and to identify all federal, state, and local government contracts
for the provision of PBM services. Offerors were informed that the agency
would assess the past performance data to determine performance confidence.
Evaluation of Proposals
Proposals were received from seven offerors, including ESI, ACS, Humana,
PGBA, and PharmaCare. The proposals were evaluated by the agency’s
source selection evaluation board (SSEB), which was comprised of a technical
evaluation team (TET), performance risk assessment group (PRAG), and price
evaluation team (PET). All of the offerors’ technical proposals received a
“pass” grade under the network access evaluation factor. The awardee’s and
protesters’ proposals were evaluated as follows:
Agency Report, Book 15, Tab 37, SSEB Evaluation
Report, at 10.
The other two offerors’ proposals were assessed as having significant
deficiencies or weaknesses that could not be corrected without proposal
revisions and unreasonable proposed prices; these proposals were not
considered for award.
Under factor (1), Network Access, ESI proposed a network of 55,402 retail
pharmacies and was determined to offer the lowest disruption rate of the
five proposals under consideration for award. Although the TET found that
ESI’s proposal exceeded the solicitation’s “blue level” access standards for
two of the three categories, the proposal was rated green with low risk
under the factor. Id. at 54.
Under factor (2), Network Reimbursement, ESI offered the second lowest TEGC.
The TET compared ESI’s guaranteed discount percentages and dispensing fees
to industry norms (as identified by the Pharmacy Benefit Management
Institute (PBMI), the agency’s consultant), and to the rates and fees that
ESI was currently achieving in a commercial pharmacy network of similar size
and scope; the TET concluded that there was little doubt that ESI would be
able to enroll and retain pharmacies in its proposed network at its proposed
guaranteed average discount rates and dispensing fees. Id. at 55-56.
The TET noted no strengths or weaknesses in ESI’s proposal under factor (3),
PBM Services, and rated it green with low risk. Under factor (4), PBM
Operations, ESI’s proposal also received an overall green with low risk
rating. However, the TET noted that ESI’s commitment to processing prior
authorization and medical necessity determination requests in 2 working days
as compared to the minimum requirement of 5 working days warranted blue
ratings under the prior authorization and medical necessity determination
subfactors to factor (4); the TET noted that there was little proposal risk
in this regard, inasmuch as ESI’s proposal demonstrated substantial
experience related to processing prior authorization and medical necessity
determination requests. The TET also found two strengths and a weakness
under the beneficiary services subfactor to factor (4), which was rated
green; the TET noted that ESI’s offer to provide beneficiary services 24
hours per day/365 days per year exceeded in a beneficial way the minimum
requirements and that ESI’s proposal to provide a beneficiary service center
that was exclusively dedicated to the TRRx program also exceeded the minimum
requirement to provide personnel that were primarily responsible for
beneficiary support. The weakness noted under this subfactor was that ESI
failed to propose minimum performance standards for telephone call blockage
and call abandonment rates. Id. at 61-67.
ESI received a “high confidence” rating under factor (5), Past Performance.
This rating reflected the PRAG’s judgment that there was “no doubt in [ESI’s]
ability to successfully perform the required effort in the TRRx
solicitation.” Id. at 67. The PRAG noted that ESI’s past performance data
established strengths in a number of areas, including “meeting the terms and
conditions of the contract” and “performance in a timely manner.” Id. at 69.
Although the PRAG identified no weaknesses, it noted that three of ESI’s
references “indicated that, at one time or another, ESI experienced problems
satisfactorily providing members services,” but that each reference stated
that ESI “had made performance improvements in this area.” Id. at 70. The
PRAG also noted that ESI had served as a PBM, providing retail pharmacy
services “commensurate with the scope of the functions required by the TRRx
solicitation” under a subcontract with the TRICARE managed care contractor
for the central region and that the contractor had provided a “stellar
ESI proposed the second-highest price of the offerors whose proposals were
considered for award.
ACS proposed a network of [Deleted] retail pharmacies and was determined to
offer the third lowest disruption rate of the five proposals under
consideration for award. Like ESI’s proposal, ACS’s proposal was found to
exceed the “blue level” access standards for two categories and it received
a green rating under factor (1), Network Access. Id. at 13-14.
Under factor (2), Network Reimbursement, ACS offered the lowest TEGC,
approximately $75 million lower than the TEGC offered by ESI. The TET
compared ACS’s proposed discount percentages and dispensing fees to the
discounts and dispensing fees that ACS reported for its other pharmacy
networks and found that ACS’s proposed discounts and fees were very similar.
Here too, the TET concluded that there was little doubt that ACS could
enroll and retain pharmacies in the TRRx network at the guaranteed average
discount rates and dispensing fees. Id. at 14-15.
The TET assessed a significant weakness in ACS’s proposal under factor (3),
PBM Services, which resulted in an overall yellow with moderate proposal
risk rating. Specifically, the TET found that ACS’s proposed disaster
recovery plan only partially supported ACS’s ability to resume services
within 24 hours following a catastrophic event; the TET found that ACS’s
inadequate in regard to beneficiary services and pharmacy help-desk
operations because the [Deleted] locations proposed for the TRRx beneficiary
call center and pharmacy help desk call center . . . are not sufficiently
dispersed to minimize the likelihood that a single catastrophic event could
render all [Deleted] proposed sites inoperable. The TET identified this flaw
in the disaster recovery plan as a significant weakness because it
appreciably increases the risk of unsuccessful contract performance.
Id. at 18-19.
ACS’s proposal was rated as green with moderate proposal risk under factor
(4), PBM Operations, with moderate risk being assessed under four of the
five subfactors of this factor. Specifically, under the prior authorization
and medical necessity determination subfactors, the TET found inadequate
ACS’s approach of limiting follow-up on incomplete prior authorization and
medical necessity determination requests to only [Deleted], which the TET
found increased the probability that these requests would be inaccurately or
prematurely denied. Under the management subfactor, the TET assessed as a
moderate risk ACS’s proposed use of [Deleted] because it found that ACS had
not provided information demonstrating that it had experience providing PBM
services in concert with subcontractors in general or these subcontractors
in particular. ACS’s proposal was also assessed as moderate risk under the
beneficiary services subfactor based on two evaluated weaknesses: (1) an
apparent inconsistency between ACS’s proposed guarantee to answer [Deleted]
of beneficiary calls within [Deleted] and its reported less timely
performance for two of ACS’s three current clients; and (2) ACS’s proposed
use of a proprietary call documentation system for the beneficiary services
center. Id. at 21‑29.
ACS was assessed a satisfactory confidence rating under the past performance
factor. This rating was based upon the PRAG’s assessment that strengths
identified by some references for ACS’s “responsiveness to solving problems”
and management were counterbalanced by weaknesses identified by other
references for “performing in a timely manner,” electronic claims
processing, management, disaster recovery, and phase-in. Id. at 30-33. ACS
was provided with an opportunity to address the adverse past performance
information, and ACS provided an explanation, which the PRAG concluded
generally did not refute the existence of the identified weaknesses. See
Contracting Officer’s Statement at 24; Agency Report, Book 28, Tab 83,
Clarification of ACS’s Past Performance, at 38-42. The PRAG concluded that
“ACS’s past performance weaknesses, coupled with its limited prior
authorization and medical necessity determinations and member (beneficiary)
services performance history, create some doubt that ACS will be able to
successfully perform the effort required in the TRRx.” Agency Report, Book
15, Tab 37, SSEB Evaluation Report, at 60.
ACS proposed the lowest price of the offerors whose proposals were
considered for award.
Under factor (1), Network Access, Humana proposed a network of [Deleted]
retail pharmacies and was determined to offer the second lowest disruption
rate of the five proposals under consideration for award. Like ESI’s and
ACS’s proposals, Humana’s proposal was found to exceed the “blue level”
minimum access standards for two categories and it too received a green
rating. Id. at 71-72.
Under factor (2), Network Reimbursement, Humana offered the highest TEGC;
the TET found that Humana’s guaranteed discount rates and average dispensing
fees varied somewhat from industry norms, but were consistent with Humana’s
existing pharmacy network agreements, “though not as aggressive.” The TET
concluded that there was little doubt that Humana would be able to enroll
and retain pharmacies in the TRRx pharmacy network at Humana’s guaranteed
average discount percentages and dispensing fees. Id. at 72-73.
The TET assessed no strengths or weaknesses in Humana’s proposal under
factor (3), PBM Services, which was rated green with low risk. Humana’s
proposal was assessed as blue overall for factor (4), PBM Operations. This
rating reflected the TET’s assignment of blue with low risk ratings for
three of the five subfactors: prior authorization, medical necessity
determination, and beneficiary services. Specifically, the TET found that
Humana’s proposed processing of prior authorization and medical necessity
determination requests exceeded the RFP requirements in a beneficial way,
and that there was low proposal risk for achieving these strengths because,
based upon its experience as a TRICARE managed care support contractor for
five regions, Humana’s plans for processing prior authorization and medical
necessity determination requests were currently functional “to a large
degree.” With respect to the beneficiary services subfactor, the TET noted
that Humana proposed to provide beneficiary services [Deleted], and
guaranteed to [Deleted] required telephonic and written inquiry response
standards. Id. at 79-85.
Humana received a “high confidence” rating under factor (5), Past
Performance. The PRAG noted that there were positive performance comments
and information from references, particularly in the areas of electronic and
paper claims processing, disaster recovery, phase-in, pharmacy and
beneficiary services, and prior authorization and medical necessity
determinations. No weaknesses were noted. Moreover, the PRAG noted that the
performance history provided, especially Humana’s current performance as a
TRICARE managed care support contractor for five TRICARE regions and
specifically its delivery of the TRICARE retail pharmacy benefit in the five
regions, is commensurate to the size, scope, and complexity for all
functions required by the TRRx solicitation.
Id. at 87.
Humana proposed the second lowest price of the offerors whose proposals were
considered for award.
PGBA proposed a network of [Deleted] retail pharmacies and was determined to
offer the highest disruption rate of the five proposals under consideration
for award. The TET found that PGBA’s guaranteed minimum access standards
exceeded the “blue level” minimum access standards for one category and that
its proposal warranted a “green” rating under factor (1), Network Access.
Id. at 106-07.
Under factor (2), Network Reimbursement, the TET found that PGBA offered the
third lowest TEGC. The TET noted that PGBA had proposed [Deleted] than
normal discount rates but [Deleted] than normal dispensing fees; the TET
concluded that PGBA would be able to enroll and retain pharmacies in the
TRRx pharmacy network at PGBA’s guaranteed average discount rates and
dispensing fees. Id. at 107-08.
PGBA’s green low risk rating under factor (3), PBM Services, reflected the
TET’s assessment that there were no strengths or weaknesses in PGBA’s
proposal under this factor. PGBA’s proposal was assessed as having an
overall moderate risk under factor (4), PBM Operations, and under four of
the five subfactors of this factor, primarily because of its lack of
pharmaceutical experience. The TET expressed concern under two of the
subfactors with PGBA’s lack of experience in processing prior authorization
and medical necessity determination requests as a PBM; the TET also
doubted that PGBA had proposed sufficient staff to process these requests.
Id. at 115-19. Moderate risk was also assessed in PGBA’s proposal under the
management subfactor; specifically, the TET noted that it had
some doubt that PGBA [could] effectively manage the TRRx contract based on
the management structure proposed. PGBA demonstrated an existing management
structure with substantial experience related to health care and claims
processing for health care contracts. However, PGBA demonstrated no
management experience related to managing Pharmacy Benefit Management
functions or managing subcontractors performing complex portions of the
Id. at 121. PGBA’s proposal was also assessed as having a moderate risk
under the beneficiary services subfactor due to PGBA’s lack of experience in
providing beneficiary services relative to pharmacy services and based upon
the TET’s judgment that significant modifications would be required in
PGBA’s processes and procedures for its beneficiary services center to
become operational under the contract. Id. at 122-23.
PGBA received a “satisfactory confidence” rating under factor (5), Past
Performance. Specifically, the PRAG noted that based upon the information
provided by their references, it appeared that PGBA and its subcontractor,
[Deleted], had performed satisfactorily. Furthermore, the PRAG noted
that PGBA had extensive TRICARE and CHAMPUS experience, but that experience
was primarily related to providing medical claims processing and not
providing pharmacy services. Id. at 123-25. The PRAG was concerned that
[l]imited information was provided on PGBA’s performance history on phase-in
and member services and no information was provided for prior
authorization/medical necessity determinations and pharmacy audits. The PRAG
considered PGBA’s past performance history to be of limited relevance due to
the absence of pharmacy/PBM performance history. Limited information was
provided on [Deleted] performance history relative to electronic claims
processing. Given the lack of performance history and the relative
importance of network access, prior authorization/medical necessity
determinations, and pharmacy audits in the evaluation, the PRAG has some
doubt that PGBA and [Deleted] can perform these functions as required in the
Id. at 125.
PGBA proposed the third lowest price of the offerors whose proposals were
considered for award.
PharmaCare proposed a network of [Deleted] retail pharmacies and was
determined to offer the second highest disruption rate of the five proposals
under consideration for award. The TET found that PharmaCare’s proposal also
warranted a green rating under factor (1), Network Access. Id. at 126-27.
Under factor (2), Network Reimbursement, the TET found that PharmaCare
offered the second highest TEGC. The TET noted that PharmaCare’s proposed
guaranteed discount rates and dispensing fees varied somewhat from industry
norms, but concluded that the “[Deleted].” This, combined with PharmaCare’s
evidence of existing networks and contracts in place to support the TRRx
network, led the TET to conclude that there was little doubt that PharmaCare
would be able to enroll and retain pharmacies in the TRRx pharmacy network
at PharmaCare’s guaranteed average discount percentages and dispensing fees.
Id. at 127-28.
The TET assessed no strengths or weaknesses in PharmaCare’s proposal under
factor (3), PBM Services, which was rated green with low risk overall,
although PharmaCare’s proposal was assessed as a moderate risk under the
quality assurance subfactor because PharmaCare did not detail the
experience, credentials and training of its quality assurance staff. Id. at
PharmaCare’s proposal was also rated as green with a low risk under factor
(4), PBM Operations. However, the TET noted a weakness under the beneficiary
services subfactor that warranted a moderate risk rating. Specifically, the
TET was concerned that PharmaCare’s proposed telephone response time of
[Deleted] was less stringent than the RFP requirement that “[w]hen a caller
requests to speak with a beneficiary service representative, the connection
will be made within 30 seconds, 95 [percent] of the time.” Id. at 138-39;
see RFP, amend. 4, § C.19.4. The TET concluded that an “[Deleted] may result
in significant periods of time throughout the year when the contractor is
not compliant with its guaranteed standards, requiring more intensive
Government monitoring.” Agency Report, Book 15, Tab 37, SSEB Evaluation
Report, at 140.
PharmaCare received a “satisfactory confidence” rating under factor (5),
Past Performance. The PRAG noted that information provided by PharmaCare’s
references was generally positive. However, the PRAG was concerned by the
lack of performance history identified for PharmaCare for processing
electronic and paper prescription claims volumes commensurate with the
claims volumes that are projected for the TRRx program and by the lack of
any beneficiary services performance history as reported by PharmaCare’s
largest clients. These concerns led the PRAG to have some doubt about
PharmaCare’s ability to successfully perform the TRRx contract. Id. at
PharmaCare proposed the second highest price of the offerors whose proposals
were considered for award.
Cost/Technical Tradeoff Analysis
Following the completion of the technical and price evaluations, the SSEB
performed a cost/technical tradeoff analysis to make a best-value
recommendation to the source selection authority (SSA). The SSEB first
determined which proposals clearly represented less value to the government
as compared to the other proposals and eliminated those proposals from its
review. The SSEB concluded that only the proposals of ESI, ACS and Humana
should be included in the cost/technical tradeoff analysis. Based upon its
detailed tradeoff analysis, the SSEB recommended to the SSA that ESI’s
proposal be selected as reflecting the best value to the government. Id.
The SSA received and reviewed the SSEB’s evaluation report and award
recommendation. In a detailed 25-page decision document, the SSA explained
her review of the evaluation results and independent assessment of the
strengths and weaknesses of the respective proposals under the stated
evaluation factors and subfactors. In performing this review, the SSA did
not agree with the SSEB in all respects. For example, the SSA did not agree
with the SSEB that PGBA’s proposal should not be included in the
cost/technical tradeoff analysis, and she therefore included the proposals
of ESI, ACS, Humana, and PGBA in her best value analysis. See Agency Report,
Book 15, Tab 36, Source Selection Decision, at 16. PharmaCare’s proposal was
not included in the SSA’s cost/technical tradeoff assessment because she
agreed with the SSEB that PharmaCare’s proposal “clearly represents less
value to the Government than ESI[’s] and [Humana’s] because of its lower
ratings in Factors 3, 4, and 5 (including subfactors), and PharmaCare’s
higher Total Evaluated Price.” Id. at 16. The SSA then compared ESI’s
highest priced proposal to ACS’s, Humana’s, and PGBA’s proposals, in turn.
As explained below, the SSA agreed with the SSEB that ESI’s proposal
reflected the best value to the government.
Comparing ESI’s and ACS’s proposals, the SSA noted that under factor (1),
Network Access, although ESI’s proposal reflected a lower beneficiary
disruption rate than did ACS’s, this was not a discriminator between any of
the proposals, given the low number of beneficiaries disrupted in each
proposal. ACS was found to be have a “slight advantage” under factor (2),
Network Reimbursement, based upon its lower proposed TEGC, which was
approximately $75 million (or .48 percent) lower than ESI’s. ACS was also
found to have a “significant advantage” in proposed price (approximately
$107 million lower than ESI’s proposed price). Id. at 19, 21.
ESI’s proposal was found by the SSA to offer significant technical
advantages over ACS’s under factors (3), (4), and (5). Under factor (3), PBM
Services, ESI’s better disaster recovery plan was considered to be a
distinguishing feature between the firms’ proposals; the SSA found that
ACS’s disaster recovery plan, as evaluated by the SSEB, did not ensure that
beneficiary services and the pharmacy help desk would be operational within
24 hours following a catastrophic event, and would have to be modified to
meet the RFP’s minimum requirements. Id. at 20-22. Under factor (4), PBM
Operations, the SSA noted that ACS received moderate risk ratings for four
of the five subfactors, whereas ESI received all low risk ratings; discussed
in detail the significant discriminators between ACS’s and ESI’s approaches
under these subfactors; and concluded that ESI had the better technical
proposal under this factor. Under factor (5), Past Performance, the SSA
noted that ESI had received a higher confidence rating than ACS’s
satisfactory confidence rating, which reflected the PRAG’s judgment that
although ACS had received a number of positive comments from its references,
there were multiple comments reflecting poor performance in functional areas
required for the TRRx program, which were not assuaged by ACS’s comments
regarding this adverse information. Id. at 22-23.
Weighing the two firms’ respective advantages, the SSA concluded that ESI’s
proposal reflected the better overall value to the government, finding that
superior technical approach demonstrated by ESI in Factors 3 and 4 and their
significantly better Past Performance (Factor 5) outweighs the advantage ACS
has in Factor 2 for network reimbursement costs. Except for Factor 2, for
which ACS has a slight advantage, ESI has the best technical approach to
accomplish the objectives of this solicitation. The advantages presented by
ESI in Factors 3 and 4, combined with their outstanding record of past
performance (Factor 5), justify the higher price in ESI’s proposal.
Id. at 25.
Comparing ESI’s and Humana’s proposals, the SSA noted that ESI’s and
Humana’s proposals were essentially equal under factors (1), Network Access;
(3), PBM Services; and (5), Past Performance. However, ESI’s proposal was
found to have a significant advantage under evaluation factor (2), Network
Reimbursement, based upon its nearly $360 million (or 2.3 percent) lower
TEGC. Both firms were found to have “very similar” technical approaches
under evaluation factor (4), PBM Operations; however, Humana’s proposal was
found to have a slight advantage under this factor, as indicated by its five
strengths and no weaknesses as compared to ESI’s proposal, which had four
strengths and no weaknesses. Humana’s proposal’s advantage under this
factor was based upon the SSA’s conclusion that Humana offered better
guaranteed telephone call blockage and call abandonment rates and commitment
to exceeding the minimum requirement for responding to routine written
beneficiary inquiries. The SSA also found that Humana also had an advantage
under the price factor, offering a price that was $59.2 million lower than
that offered by ESI. Weighing ESI’s and Humana’s proposals, the SSA found
that Humana’s slight technical advantage under factor (4) and price
advantage were outweighed by ESI’s substantial network reimbursement
advantage. Id. at 17‑19.
Comparing ESI’s and PGBA’s proposals, the SSA noted that ESI’s proposal was
assessed as more advantageous than PBGA’s proposal under factors (4), PBM
Operations, and (5), Past Performance. In this regard, the SSA accepted the
TET’s assessment of a moderate risk in PGBA’s proposal under factor (4)
related to PGBA’s lack of experience in processing prior authorization and
medical necessity determination requests and proposed low staffing for those
functions, and lack of PBM experience. With respect to the past performance
factor, ESI received a high confidence rating and PGBA received only a
satisfactory confidence rating. ESI was also found to offer a lower TEGC
than PGBA (approximately $58.2 million lower), while PGBA proposed a lower
price than ESI (approximately $34.4 million lower). Id. at 16-17.
Weighing ESI’s and PGBA’s proposals, the SSA concluded that ESI’s proposal
offered a significant technical advantage based upon the firm’s experience
in processing prior authorization and medical necessity determination
requests and having sufficient staff to process these requests, its higher
past performance rating, and lower TEGC. Noting that technical factors were
more important than price, the SSA determined that ESI’s significant
technical advantage outweighed PGBA’s price advantage. Id. at 17.
In sum, the SSA concluded that ESI’s proposal offered the best value to the
government. ESI was awarded the contract, and these protests followed.
The protesters raise numerous objections to TRICARE’s evaluation of
proposals and source selection decision. In reviewing protests against
allegedly improper evaluations and source selection decisions, it is not our
role to reevaluate proposals. Rather, our Office examines the record to
determine whether the agency’s judgment was reasonable and in accord with
the RFP criteria. Abt Assocs., Inc., B-237060.2, Feb. 26, 1990, 90-1 CPD ¶
223 at 4. A protester’s mere disagreement with the agency’s judgment does
not establish that an evaluation was unreasonable. UNICCO Gov’t Servs.,
Inc., B- 277658, Nov. 7, 1997, 97-2 CPD ¶ 134 at 7.
ACS, Humana and PGBA challenge the specific color ratings assigned by the
agency to various factors and subfactors based on asserted strengths and
weaknesses in the proposals. More specifically, the protesters assert that
the agency failed to award blue and yellow ratings in a manner consistent
with the RFP. Citing section M.2.2.2 of the RFP, the protesters assert that
even though the RFP required the agency to evaluate whether a proposal
exceeded the RFP requirements, the agency, in determining what color rating
to assign under a particular factor or subfactor, evaluated only those
requirements that identified numeric performance standards and ignored all
other requirements, and that under a proper evaluation, their proposals
would have received a greater number of strengths and blue ratings under the
various factors and subfactors. The protesters also argue that ESI’s
proposal did not receive yellow ratings for subfactors, where it failed to
satisfy the subfactor’s minimum requirements.
It is well established that ratings, be they numerical, adjectival or color,
are merely guides for intelligent decision-making in the procurement
process. Citywide Managing Servs. of Port Washington, Inc., B‑281287.12,
B‑281287.13, Nov. 15, 2000, 2001 CPD ¶ 6 at 11. Where the evaluators and the
source selection decision reasonably consider the underlying bases for the
ratings, including advantages and disadvantages associated with the specific
content of competing proposals, in a manner that is fair and equitable and
consistent with the terms of the solicitation, the protesters’ disagreement
over the actual adjectival or color ratings is essentially inconsequential,
in that it does not affect the reasonableness of the judgments made in the
source selection decision. See id.; National Steel and Shipbuilding Co.,
B‑281142, B‑281142.2, Jan. 4, 1999, 99-2 CPD ¶ 95 at 15.
In response to the protests, TRICARE provided a voluminous and detailed
record of its evaluation and source selection decision. This extensive
analysis shows that the agency evaluated the relative merits of each aspect
of the proposals, including essentially all of the examples cited by the
protesters, and assessed ratings in a fair and equitable manner, consistent
with both the RFP and the color definitions. That is, consistent with
section M.2.2.2, the record confirms that the agency evaluated the extent to
which the proposals met or exceeded the solicitation requirements. Although
not every advantageous feature of each proposal was formally labeled a
strength and the source selection decision may not have discussed each and
every asserted strength and weakness, as the protesters would have liked,
the record demonstrates that the SSEB and SSA considered all of the
information available, and issued a well-reasoned and rational SSEB report
and source selection decision that highlighted the key discriminators among
offerors’ proposals. Based on this reasonable discussion and assessment of
relative advantages and disadvantages associated with the specific content
of proposals, we find that the protesters’ disagreements with the actual
color ratings to be inconsequential, given that they do not affect the
reasonableness of the judgments made in the source selection decision.
See Citywide Managing Servs. of Port Washington, Inc., supra, at 11.
Factor (1) Network Access
PGBA and ACS complain that TRICARE did not credit their proposals for
exceeding the minimum access standards stated in the solicitation, arguing
that they should have received blue ratings for proposing to exceed the
RFP’s minimum access requirements.
As indicated above, although it was not disclosed in the RFP, the record
shows that to warrant a blue rating the evaluators required that an offeror
exceed each of the minimum access standards for the urban, suburban, and
rural categories by a particular specified amount. Agency Report, Book 15,
Tab 37, SSEB Evaluation Report, at 106. The RFP did state, however, that the
agency would evaluate the extent to which an offeror’s proposal demonstrated
the ability to meet or exceed the RFP requirements. RFP amend. 4, § M.2.2.2.
The SSEB’s evaluation report provided to the SSA reflects that ACS’s and
ESI’s proposals offered “blue level” access standards for the suburban and
rural categories, but did not meet the “blue level” standard for the urban
category, and that PGBA’s proposal offered “blue level” access standard only
for the suburban category. Thus, under the evaluation plan employed by
the SSEB (which was not disclosed to the offerors), these proposals were
rated only green overall under this factor because they did not meet or
exceed the “blue levels” for all three categories. Agency Report, Book 15,
Tab 37, SSEB Evaluation Report, at 13, 54, 106.
Although PGBA and ACS assert that their proposals should have received blue
ratings under this factor for exceeding some of the minimum and “blue level”
standards, the protesters’ disagreement with their assigned color ratings
under this factor is essentially inconsequential. This is so because these
aspects of the protesters’ proposals were accurately described in the
evaluation narrative provided to the SSA and did not affect the
reasonableness of her source selection decision. See Citywide Managing Servs.
of Port Washington, Inc., supra, at 11. In any case, we see nothing in the
RFP that required the agency to assign the highest rating whenever a firm
offered to exceed the minimum access standards by any amount. Moreover,
since ESI’s proposal exceeded the “blue level” for two of the three access
standards and only received a green rating, the record shows that the
offerors were treated equally, and does not evidence that either ACS’s or
PGBA’s proposal was superior to ESI’s under this factor.
Factor (2) Network Reimbursement
Humana and PGBA challenge the evaluation of factor (2), Network
Reimbursement, on several grounds, including that the agency evaluated this
factor as a price factor in a manner inconsistent with the RFP, failed to
perform a cost realism analysis, and failed to properly evaluate risk.
The assertion that the agency improperly evaluated factor (2) as a price
factor, rather than solely as a technical factor as required by the RFP,
stems from the fact that the agency compared the offerors’ TEGCs in
performing its best value analysis. However, this approach was entirely
consistent with the RFP’s evaluation scheme. Although the RFP did provide
that factor (2) would be evaluated as a technical factor and not as a price
factor, it also instructed that the agency would consider the “projected
program pharmaceutical costs” (i.e., the TEGC) under this factor in the
agency’s best-value analysis and in its tradeoff analysis “against other
technical factors, past performance, and price.” RFP amend. 4, § M.6.2. As
described elsewhere in this decision, the TEGC was consistently treated as a
non-price factor in the source selection decision’s weighing of the
technical and price factors.
We also find that a cost realism analysis of the offerors’ proposed TEGCs
was not required. Where, as here, an RFP contemplates the award of a
fixed-price contract, a cost realism analysis is not required, absent a
solicitation provision requiring such an analysis. FAR § 15.404-1(d)(3);
WorldTravelService, B‑284155.3, Mar. 26, 2001, 2001 CPD ¶ 68 at 3. Here, not
only does the RFP not provide for a cost realism analysis, but it
specifically precluded factor (2) from being evaluated as a price factor.
Humana nevertheless argues that factor (2) is inherently a cost‑reimbursable
item that required the agency to perform a cost realism analysis, even in
the absence of a solicitation provision requiring such analysis. That
is, Humana argues that because the RFP calls for the evaluation of
“projected program pharmaceutical costs,” the evaluation must necessarily
include a cost realism analysis in order to ascertain the probable cost to
the government of the pharmaceuticals. However, the RFP stated precisely how
these pharmaceutical costs would be evaluated--using a formula based on
offerors’ fixed, guaranteed average discount rates and dispensing fees--and
this approach did not contemplate the performance of a cost realism
analysis. Moreover, we fail to see how a detailed cost realism analysis
could have been performed (or how offerors could have reasonably expected
one to be performed), given that the RFP did not require the submission of
detailed cost information to enable the agency to perform such an analysis.
Humana also complains that the agency failed to adequately evaluate the risk
of whether ESI could maintain its proposed pharmacy network at the proposed
guaranteed average discount rates and dispensing fees. Judging an offeror’s
performance risk is a matter committed to the contracting agency’s
discretion, subject to the tests of reasonableness and conformance with the
RFP’s evaluation criteria; a protester’s mere disagreement with the agency’s
judgment does not establish that the judgment was unreasonable or
inconsistent with the evaluation criteria. GTE Gov’t Sys. Corp., B-260022,
B-260022.2, May 16, 1995, 95-1 CPD ¶ 245 at 6-7.
As described above, in evaluating risk, the TET compared each offeror’s
proposed guaranteed average discount rates and dispensing fees with those of
its existing pharmacy network closest in size and scope to that of the RFP
(i.e., comparable network), as well as to industry norms identified by PBMI.
For its comparable network, ESI identified in its proposal discount rates
and dispensing fees for a commercial network slightly larger than its
proposed network under the TRRx solicitation; in contrast, Humana
identified rates and fees from its existing TRICARE retail pharmacy network,
which is significantly smaller in size than that proposed under the TRRx
solicitation. The comparable rates and fees of these offerors were as