Weak Records Results in Re-Evaluation

By: Paul Emanuelli

This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

In its November 2019 decision in Ohio KePRO, Inc., the U.S. Government Accountability Office (GAO) issued a re-evaluation order after finding that government evaluators failed to maintain proper evaluation records. The dispute dealt with a procurement process conducted by the Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS), for the acquisition of beneficiary oversight and claim review services. The complainant challenged the agency’s cost realism analysis, technical evaluation, and source selection decision.

The GAO found that the agency failed to maintain evaluation records to show that it conducted a proper costs assessment:

Here, there is nothing in the contemporaneous evaluation record to show that the agency evaluated the realism of Livanta’s proposed direct labor rates. As relevant here, the agency cites a cost analysis conducted by the CS to argue that the agency reasonably performed a cost realism analysis. Memorandum of Law citing AR, Tab 9a, CS Cost Analysis. While the cost analysis begins by referencing the solicitation’s requirement that the agency conduct a cost realism analysis, the subsequent analysis does not evidence an evaluation of whether Livanta’s proposed labor rates were too low. Rather, as the protester contends, the agency’s analysis only focuses on the reasonableness of Livanta’s direct labor rates. See e.g., AR, Tab 9a, CS Cost Analysis, at 1 (“Based upon the results of the sampling, the proposed direct labor rates are determined to be reasonable as they all fall within the average range established.”). Thus, the contemporaneous record does not demonstrate that the agency performed a realism assessment of Livanta’s direct labor rates.

The GAO sustained the protest after finding no records to support the agency’s post-complaint rationalizations for its evaluation results:

Because the record includes no analysis or findings regarding the realism of Livanta’s direct labor rates and because we cannot find support for the agency’s post-protest rationalizations in the contemporaneous record, we conclude that the agency failed to meaningfully consider the realism of Livanta’s proposed direct labor rates. TriCenturion, Inc.; SafeGuard Servs., LLC, B-406032 et al., Jan. 25, 2012, 2012 CPD ¶ 52 at 13 (sustaining protest because the record was inadequate to conclude that the agency’s cost realism analysis was reasonable). We therefore sustain this aspect of KEPRO’s protest.

The GAO also sustained the protest against the technical evaluation after also finding a lack of evaluation records in support of those evaluation results:

Here, the record reflects no meaningful consideration of whether Livanta’s proposed costs for the non-review work were realistic. To the contrary, the agency’s evaluation of Livanta’s proposed level of effort–and hence Livanta’s proposed costs–was limited to its proposed level of effort for claim reviews. First, the record indicates that the technical evaluators concluded in a summary manner that Livanta’s staffing approach and level of effort were sufficient. AR, Tab 8b, Final Technical Evaluation (Livanta), at 31, 33. Upon examination of the agency’s technical evaluation, the only substantive discussion of whether Livanta proposed sufficient manpower focuses on Livanta’s proposed level of effort for claim reviews. Id. at 33 (“An explanation on how the Offeror arrived at the FTE [full-time equivalent] calculations was also provided. [Livanta] uses efficiencies to propose fewer hours per claim review than projected by the government.”).

Second, the record confirms that the agency’s cost evaluation also failed to evaluate the realism of Livanta’s proposed costs for non-review work. In response to the protest, the agency claims that the cost analysis performed by the TEP Chair analyzed the adequacy of Livanta’s proposed labor hours. Memorandum of Law at 2 citing AR, Tab 9b, TEP Chair Cost Analysis. The TEP Chair’s cost analysis concludes that Livanta’s level of effort is reasonable. AR, Tab 9b, TEP Chair Cost Analysis, at 3, 6. However, similar to the agency’s technical evaluation, the TEP Chair’s evaluation of Livanta’s level of effort was limited to claim review work as there is no substantive discussion of Livanta’s non-review work. Id. Further, neither of the statements from the TEP Chair explain how Livanta’s non-review work was considered when finding Livanta’s level of effort to be reasonable. AR, Tab 2, TEP Chair Statement; AR, Tab 14, Supp. TEP Chair Statement.

The GAO therefore granted a re-evaluation order, directing the agency to reassess the original winner’s proposed pricing and technical approach and maintain proper records of that reassessment. As this case illustrates, the failure to properly conduct and document an evaluation process can result in the inability to defend the results of that evaluation if challenged.