Agency Bungles Proposal Evaluations; GAO Sustains Protest and Awards Costs

Bid protests are an important part of the federal government’s procurement system. Why? Because sometimes agencies really get the evaluation wrong. They read non-existent requirements into the solicitation; give credit where none is due; and adjust an offeror’s price without forewarning. Thankfully, in those cases, we have GAO to make course corrections.

PMSI, LLC, B-417237.2 et al. (Comp. Gen. Jan. 29, 2020) represents one of those cases where an agency (here, the Department of Labor) messed things up royally. It all began with a solicitation for pharmacy benefits management services. As part of these services, the contractor was required to provide clinical drug utilization review (DUR) services including, among other things, screening for drug contraindications, duplicate prescriptions, therapeutic overlap, and utilization of brand name drugs versus generic drugs. Importantly, the solicitation only called for DUR services where patient safety was at issue.

After the evaluation, the protester brought three principal challenges: 1) the solicitation did not require the provision of full-scale clinical DUR services and only required DUR services where patient safety is at issue; 2) the agency wrongly credited both the awardee and protester with offering full-scale DUR services; and 3) the agency erred in upwardly adjusting the protester’s price. GAO agreed on all three grounds.

First, the agency argued that the the provision of full-scale DUR services was reasonably encompassed by the solicitation’s terms. This called for some remedial tutoring by GAO. Although an agency can apply “evaluation considerations that are not expressly articulated in the solicitation,” this rule does not extend to the “solicitation’s specifications of an agency’s requirements.” And in GAO’s view, none of the solicitation’s provisions exhibited an apparent requirement for full-scale DUR services; none of the provisions cited by DOL even used the phrase “clinical DUR services.”

Second, the agency credited both the awardee and the protester with offering full-scale DUR services, even though neither did (which GAO showed through an examination of both proposals). And on top of that, GAO found that the agency disparately evaluated these wrongly credited features. Specifically, the agency gave the awardee a significant strength for allegedly offering full-scale DUR services while only giving a strength to the protester. So, in essence, the agency made an error inside of another error. (I don’t know about you, but that makes me think of the movie Inception.)

Third, even though the solicitation did not require full-scale DUR services–and the protester didn’t offer them–the agency adjusted protester’s proposed price upwards to account for those services. GAO held that this adjustment not only conflicted with the solicitation’s terms (which dictated how the agency would arrive at total evaluated prices), it also violated the FAR. Indeed FAR 15.404-1(d)(3) “expressly prohibits agencies from making such adjustments in the context of a fixed price contract.”

To correct these errors, GAO recommended several actions: amend the solicitation to clarify the agency’s requirements for DUR-related services; solicit, obtain, evaluate revised proposals; and make a new source selection decision. GAO also recommended that agency reimburse the protester for its costs associated with filing and pursuing the protest, including attorneys’ fees.