United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Philips Healthcare Informatics

File: B-405382.2; B-405382.3; B-405382.4

Date: May 14, 2012

Kevin J. Maynard, Esq., Tracye Winfrey Howard, Esq., and Samantha M. Shinsato, 

Esq., Wiley Rein LLP, for the protester.

John W. Chierichella, Esq., Anne B. Perry, Esq., Marko W. Kipa, Esq., and Franklin C. 

Turner, Esq., Sheppard Mullin Richter & Hampton LLP, for McKesson Technologies, 

the intervenor.

Kevin L. Pearson, Esq., Department of Veterans Affairs, for the agency.

Cherie J. Owen, Esq., Glenn G. Wolcott, Esq., and Sharon L. Larkin, Esq., Office of 

the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. Final proposal revision is late where it was received by the agency after the time 

set for submission.

2. Protest that agency’s evaluation of past performance was unreasonable is 

sustained where the record does not contain any evidence that the agency performed 

a substantive review of past performance or considered the strengths and 

weaknesses associated with the past performance of the offerors. 

3. Protest is sustained where agency improperly waived a material solicitation 

requirement for awardee, and protester has shown a reasonable possibility that it 

was prejudiced.

DECISION

Philips Healthcare Informatics of Foster City, California, protests the award of a 

contract to McKesson Technologies of Richmond, British Columbia, by the 

Department of Veterans Affairs (VA) under request for proposals (RFP) VA-246-10-

RP-0136 for a picture archiving and communications system for the veterans 

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This redacted version has 

been approved for public release.
Page 2 B-405382.2 et al.

integrated service network 6 (VISN 6).

1

 Philips contends that the agency’s evaluation 

and source selection decision were unreasonable in several respects.

We sustain the protest.

BACKGROUND

The solicitation was issued by the VA on April 20, 2011, seeking proposals to provide 

an enterprise-wide picture archiving and communications system (PACS) under a 

fixed price requirements contract for a base year and four option years.2

 RFP at 8-

17, 60. PACS is an image management system designed to acquire, store, distribute, 

process, and display digital radiological images and associated data. The solicitation 

stated that the purpose of this procurement was to implement and maintain VISNwide PACS so that any image obtained at any VISN 6 site will be easily accessible 

from any other VISN 6 site and can be sent to private sector radiologists and 

academic institutions. Id. at 18. For each patient, the PACS will list prior imaging 

exams performed at any VISN 6 site. Id. To deliver this capability, the successful 

offeror will be responsible for providing PACS hardware, software, installation, 

training, maintenance, and support, including storage of the PACS images. Id. 

The RFP informed offerors that evaluation would be conducted on a best value 

basis, considering the following evaluation factors in descending order of 

importance: technical qualifications/management approach; past performance; 

experience; and price. RFP at 64. The three non-price factors, when combined,

were considered to be significantly more important than price. Id. 

With regard to the past performance evaluation factor, the RFP directed offerors to 

“list and describe in detail at least two (2) examples of successfully completed 

interconnected multi-site installation[s] with the suggested product.” Id. at 60. With 

regard to price, offerors were instructed to submit a unit price per study for the base 

year and each option year, based on the estimated number of studies provided in the 

RFP. Id. at 8. Offerors were also required to propose, as an option, a one-time fee 

for start-up and a price to cover the migration of approximately 40 to 45 terabytes of 

existing image data, which the RFP stated must occur with a period of 6 months to 5 

years after award, depending on the option selected by the agency. RFP at 16, 19-20.

 1

The VA is divided into 21 VISNs, or regional authorities. VISN 6 is the VA regional 

authority responsible for certain medical facilities in North Carolina, Virginia, and 

West Virginia. RFP at 17.

2 The RFP specified that the contractor would be paid a fixed price for each PACS 

study; once completed, the agency may view the studies an unlimited number of 

times. RFP at 8. 
Page 3 B-405382.2 et al.

In response to the RFP, the agency received ten proposals, including those submitted 

by Philips and McKesson.3 After receiving the proposals, the agency convened a 

technical evaluation panel (TEP) to evaluate the technical ability/management 

approach and the experience factor. CO Statement at 1-2. In evaluating the 

technical ability/management approach and experience factors, evaluators assigned 

ratings of exceptional, acceptable, marginal, and unsatisfactory. See AR, Tab 2, 

Source Selection Decision Document (SSDD), at 2.

Additionally, the CO appointed a sub-group of the TEP to assist with the collection 

of past performance information. Id. In the source selection decision, the CO stated 

that “[a]ll [competitive range] vendors were found to have satisfactory or exceptional 

past performance with the exception of [offeror 3],” for whom the panel discovered 

“some serious problems with maintenance service, quality of service, timeliness and 

lack of company support when needed.”4

 AR, Tab 2, SSDD, at 3. Notwithstanding 

the apparent qualitative difference between “satisfactory” past performance and 

“exceptional” past performance, all of the competitive range proposals (with the 

exception of offeror 3) were assigned past performance ratings of high confidence.5

Id. at 5.

With regard to price, the agency evaluated the prices submitted by the offerors

without making any adjustments. Id. at 3. The four competitive range offerors were 

invited to provide a product demonstration, after which the TEP adjusted the 

offerors’ ratings under the technical evaluation factor. Id.

 3 The agency eliminated four of these proposals from the competition as 

nonresponsive.

 As a result of these 

evaluations, the following ratings were assigned:

4

At the time it evaluated past performance, the agency had established a competitive 

range consisting of four offerors, including Philips and MeKesson. Neither Philips

nor McKesson were “offeror 3.”

5

The RFP did not disclose the adjectival ratings to be used in evaluating past 

performance; however, the two past performance scoring sheets in the record for 

each offeror apparently required evaluators to choose among the following adjectival 

ratings in evaluating the past performance “subfactors”: exceptional, very good, 

satisfactory, neutral, marginal, or unsatisfactory. AR, Past Performance Scoresheet 

for McKesson, at 1. Based on the evaluators’ ratings for each subfactor, evaluators 

were to assign an overall confidence level rating of: high confidence; significant 

confidence; satisfactory confidence; unknown confidence; little or no confidence; or 

no confidence, to each reference evaluated. Id. at 3. 
Page 4 B-405382.2 et al.

Philips McKesson Offeror 3 Offeror 4

Technical Ability/

Management Approach Exceptional Exceptional Acceptable Exceptional

Past Performance

High 

Confidence

High 

Confidence

Little 

Confidence

High 

Confidence

Experience Exceptional Acceptable Exceptional Exceptional

Price $7,737,000.00 $6,742,450.00 $9,952,850.00 $7,486,915.00

AR, Tab 2, SSDD, at 5.

In his source selection decision, the CO stated that, with the exception of Offeror 3, 

“there is no clear-cut choice.” Id. at 7. The source selection decision further stated: 

Normally under a best value decision you would try to trade-off cost 

against the benefits of a higher rated proposal. That is not the case here 

as the most important factor was the Technical Ability/Management 

Approach and there were three vendors with identical ratings for that 

factor. The second most important factor was experience and 

McKesson scored only slightly lower than other offeror[s] because they 

have minimal experience in VA . . . Given this, there was insufficient 

reason to make award to the highest technically rated vendor.

Id. at 7-8. Thereafter, the CO selected McKesson’s proposal for award. This protest 

followed. 

DISCUSSION

Philips challenges the agency’s evaluation of proposals and award to McKesson on 

several bases, and maintains that, because the agency’s evaluation of proposals was 

unreasonable, its best value source selection also is unreasonable. We have carefully 

considered all of the protester’s assertions and sustain its protest for the reasons 

discussed below.6

 6

 In addition, the protester argues that the awardee’s proposal contained materially 

unbalanced pricing because it offered to perform the data migration and start-up 

activities required by the contract at no additional cost. Protest at 12. We deny this 

protest ground. Unbalanced pricing exists where the prices of one or more CLINs 

are significantly overstated, despite an acceptable total evaluated price (typically 

achieved through underpricing of one or more other line items). General Dynamics--

 

(continued...)
Page 5 B-405382.2 et al.

Interested Party

The intervenor contends that Philips is not an interested party to challenge the 

award to McKesson because Philips is not next in line for award.7 Specifically, the 

intervenor argues that even if the protester prevailed on its challenges to the 

evaluation, Philips still would not be eligible for award because another offeror 

received the same adjectival ratings and offered a lower price than Philips. 

Intervenor’s Comments at 2-5.

Proposals with the same adjectival ratings are not necessarily equal. Pemco 

Aeroplex, Inc., B-310372, Dec. 27, 2007, 2008 CPD ¶ 2 at 6-7. Where, as here, the RFP 

provides for a best value evaluation, as opposed to selection of the lowest-priced, 

technically acceptable offer, a proper evaluation is not limited to a consideration of 

the proposals’ adjectival ratings. See Technology Concepts & Design, Inc., 

B-403949.2, Mar. 25, 2011, 2011 CPD ¶ 78 at 7; Johnson Controls World Servs., Inc.; 

Meridian Mgmt. Corp., B-281287.5 et al., June 21, 1999, 2001 CPD ¶ 3 at 4. More 

significantly, and as discussed in more detail below, Philips asserts that the agency 

failed to conduct a proper past performance evaluation with regard to three of the 

competitive range offerors, including the allegedly intervening offeror. If Philips’ 

allegations are meritorious, the agency would need to conduct a new evaluation of 

past performance, potentially resulting in new ratings for all of the competitive range 

offerors. Accordingly, Philips’ protest includes allegations which could result in the

agency properly determining that Philips’ proposal merited higher past performance 

ratings than the other offerors, and that it represents the best value to the 

government. See Northwest EnviroService, Inc., B-247380, B-247380.2, July 22, 1992, 

92-2 CPD ¶ 38 at 5. Accordingly, we reject the assertion that Philips is not an 

interested party. 

 

(...continued)

Ordnance & Tactical Systems, B-401658, B-401658.2, Oct. 26, 2009, 2009 CPD ¶ 217 

at 5; Triple H Servs., B-298248, B-298248.2, Aug. 1, 2006, 2006 CPD ¶ 115 at 2. The 

protester has neither alleged nor shown that McKesson’s prices were overstated. 

Low prices (even below-cost prices) are not improper and do not themselves 

establish (or create the risk inherent in) unbalanced pricing. General Dynamics, 

supra; Diversified Capital, Inc., B-293105.4, B-293105.8, Nov. 12, 2004, 2004 CPD 

¶ 242 at 2 n.1; Islandwide Landscaping, Inc., B-293018, Dec. 24, 2003, 2004 CPD ¶ 9 

at 3.

7

 The agency did not raise the protester’s status as an interested party until GAO 

requested the parties to address the issue. 
Page 6 B-405382.2 et al.

Late Proposal

Philips first protests that McKesson’s proposal was ineligible for award because 

McKesson’s final proposal revision (FPR) was not submitted by the date and time set 

for receipt of FPRs. Supp. Protest at 4-5. We agree. 

The record here establishes that the deadline for submission of FPRs was noon on 

December 2, 2011. Agency Request for McKesson Final Proposal, at 1. The record 

further establishes that the agency did not receive McKesson’s FPR until 1:04 pm on 

December 2. Second Supp. AR at 2. In transmitting its FPR, McKesson stated that it

“struggled . . . to get this attachment [containing a portion of its FPR] to send 

properly.” First Supp. AR, Tab C, Agency E-mail correspondence with McKesson, 

at 2. The agency acknowledges that McKesson did not submit its FPR until after the 

established deadline, stating that “[a] problem with the email address, due to an 

uncommon spelling of the contracting officer’s name resulted in [McKesson’s 

proposal] not being received before Noon.” Second Supp. AR at 2. 

It is an offeror’s responsibility to deliver its proposal to the proper place at the 

proper time and late delivery generally requires rejection of the proposal. FAR 

§ 15.208; PMTech, Inc., B-291082, Oct. 11, 2002, 2002 CPD ¶ 172 at 2. Similarly, it is 

an offeror’s responsibility, when transmitting its proposal electronically, to ensure 

the proposal’s timely delivery by transmitting the proposal sufficiently in advance of 

the time set for receipt of proposals to allow for timely receipt by the agency. 

Associated Fabricators & Constructors, Inc., B-405872, Dec. 14, 2011, 2011 CPD ¶ 279 

at 3. Proposals that are received in the designated government office after the exact 

time specified are late, and generally may not be considered for award. U.S. 

Aerospace, Inc., B-403464, B-403464.2, Oct. 6, 2010, 2010 CPD ¶ 225 at 10. While the 

rule may seem harsh, it alleviates confusion, ensures equal treatment of all offerors, 

and prevents one offeror from obtaining a competitive advantage that may accrue 

where an offeror is permitted to submit a proposal later than the common deadline 

set for all competitors. NCI Information Sys., Inc., B-405745, Dec. 14, 2011, 2011 CPD 

¶ 280 at 5; U.S. Aerospace, Inc., supra; Inland Serv. Corp., Inc., B-252947.4, Nov. 4, 

1993, 93-2 CPD ¶ 266 at 3.

The agency contends that it was entitled to accept McKesson’s late proposal because 

the language of Federal Acquisition Regulation (FAR) § 52.212-1(f)(2)(i) “allows late 

offers to be considered if they are received before award and would not unduly delay 

award.” Second Supp. AR at 2; Second Supp. CO Statement at 1. The agency also 

argues that its acceptance of McKesson’s late proposal was permissible under FAR 

§ 52.212-1(f)(2)(ii), which allows the agency to accept a late modification of an 
Page 7 B-405382.2 et al.

“otherwise successful proposal” that makes its terms more favorable to the 

government.8

 

The agency is mistaken with regard to both assertions. With regard to the agency’s 

first argument, FAR § 52.212-1(f)(2) states in its entirety: 

(2)(i) Any offer, modification, revision, or withdrawal of an offer 

received at the Government office designated in the solicitation after 

the exact time specified for receipt of offers is “late” and will not be 

considered unless it is received before award is made, the Contracting 

Officer determines that accepting the late offer would not unduly delay 

the acquisition; and—

(A) If it was transmitted through an electronic commerce 

method authorized by the solicitation, it was received at the 

initial point of entry to the Government infrastructure not later 

than 5:00 p.m. one working day prior to the date specified for 

receipt of offers; or 

(B) There is acceptable evidence to establish that it was received 

at the Government installation designated for receipt of offers 

and was under the Government’s control prior to the time set for 

receipt of offers; or 

(C) If this solicitation is a request for proposals, it was the only 

proposal received. 

(ii) However, a late modification of an otherwise successful offer, that 

makes its terms more favorable to the Government, will be considered 

at any time it is received and may be accepted. 

FAR § 52.212-1(f)(2) (emphasis added). 

In short, FAR § 52.212-1(f)(2)(i) provides that, in order for the agency to properly 

accept a late proposal pursuant to this provision, the proposal must be received 

before award, its acceptance will not unduly delay the acquisition, and

 8

 FAR §§ 52.212-1(f)(2)(i) and 52.212-1(f)(2)(ii) are codified in the Code of Federal 

Regulations at 48 C.F.R. § 52.215-1(c)(3)(ii)(A) and 48 C.F.R. § 52.215-1(c)(3)(ii)(B).

one of the

alternatives listed in subsections (A), (B), or (C) must apply. Here, the agency has 

not asserted that any of the alternatives in subsections (A), (B), or (C) apply, and our 

review of the record confirms that none is applicable. Accordingly, the agency’s 

acceptance of McKesson’s late proposal does not fall under the exceptions specified 

in FAR § 52.212-1(f)(2)(i).
Page 8 B-405382.2 et al.

Next, the agency’s assertion that McKesson’s late FPR constituted a late 

modification of an otherwise successful proposal that makes its terms more 

favorable to the government, and is therefore properly acceptable pursuant to FAR 

§ 52.212-1(f)(2)(ii), is equally without merit. This exception applies only to an 

“otherwise successful proposal.” The Sandi Group, Inc., B-401218, June 5, 2009, 2009 

CPD ¶ 123 at 3. It is well-settled that the term “otherwise successful” restricts this 

exception to permit the government’s acceptance of a late modification offering 

more favorable terms only from the offeror already in line for the contract award.

Environmental Tectonics Corp., B-225474, Feb. 17, 1987, 87-1 CPD ¶ 175 at 4; see The 

Sandi Group, Inc., supra; Phyllis M. Chestang, B-298394.3, Nov. 20, 2006, 2006 CPD 

¶ 176 at 5 n.3. Thus, an offeror cannot avail itself of the late proposal submission 

provision where the agency has not already identified an “otherwise successful 

offeror.” Global Analytic Info. Tech. Servs., Inc., B-298840.2, Feb. 6, 2007, 2007 CPD 

¶ 57 at 5-6.

Here, the record establishes that, prior to the agency’s review of FPRs, the agency 

had not identified any offeror as being in line for award. To the contrary, even after

receipt of FPRs, the source selection authority stated that there was “no clear-cut 

choice.” AR, Tab 2, SSDD, at 7. Accordingly, the exception set forth in FAR § 52.212-

1(f)(2)(ii) is inapplicable, and there was no basis for the agency to accept 

McKesson’s late proposal.

We sustain the protest on this basis.

9

 

Past Performance Evaluation

Philips also alleges several flaws in the agency’s evaluation of the second most 

important evaluation factor, past performance. Philips contends that McKesson 

failed to provide the information required by the solicitation and that the CO 

improperly determined that offerors were essentially equal under the past 

performance factor. Protest at 10; Supp. Protest at 23-25. Philips further asserts 

that the agency failed to consider the relevance of the past performance references, 

as required by the RFP and FAR § 15.305(a)(2). Supp. Protest at 24.

 9

 The contracting officer states that McKesson’s late submission is understandable, 

given that the contracting officer’s e-mail address uses an uncommon spelling of a 

common name, and that such mistakes occur “quite often.” Second Supp. CO 

Statement at 1. However, as set forth above, offerors are responsible for submitting 

proposals so as to reach the designated government office by the specified time. 

Further, the correct e-mail address for submission of proposals was set forth in the 

agency’s request for McKesson’s FPR. See Agency Request for McKesson Final 

Proposal, at 1. The uncommon spelling of the CO’s e-mail address does not excuse 

McKesson’s late submission.
Page 9 B-405382.2 et al.

An agency is required to consider, determine, and document the similarity and 

relevance of an offeror’s past performance information as part of its past 

performance evaluation. The Emergence Group, B-404844.5, B-404844.6, Sept. 26, 

2011, 2011 CPD ¶ __ at 6; see FAR §15.305(a)(2). As a general matter, the evaluation 

of an offeror’s past performance, including the agency’s determination of the 

relevance and scope of an offeror’s performance history to be considered, is a matter 

within the discretion of the contracting agency, and we will not substitute our 

judgment for reasonably based past performance ratings. The Emergence Group,

supra, at 5; MFM Lamey Group, LLC, B-402377, Mar. 25, 2010, 2010 CPD ¶ 81 at 10; 

Yang Enters., Inc.; Santa Barbara Applied Research, Inc., B-294605.4 et al., April 1, 

2005, 2005 CPD ¶ 65 at 5. However, we will question an agency’s evaluation 

conclusions where they are unreasonable or undocumented. Clean Harbors Envtl. 

Servs., Inc., B-296176.2, Dec. 9, 2005, 2005 CPD ¶ 222 at 3. The critical question is 

whether the evaluation was conducted fairly, reasonably, and in accordance with the 

solicitation’s evaluation scheme, and whether it was based on relevant information 

sufficient to make a reasonable determination of the offeror’s past performance. 

DRS C3 Sys., LLC, B-310825, B-310825.2, Feb. 26, 2008, 2008 CPD ¶ 103 at 22.

Here, the solicitation required that offerors “list and describe in detail at least two (2)

examples of successfully completed interconnected multi-site installation[s] with the 

suggested product.” RFP at 60. In responding to this requirement, offerors were 

instructed that their proposals should address the following: (1) contract 

compliance; (2) quality of service/work performed; (3) timeliness of performance; 

(4) business relations; (5) customer satisfaction; (6) subcontracting; and (7) provide 

a minimum of five client references for the systems and applications being proposed. 

Id. 

The agency has produced minimal documentation supporting its past performance 

evaluation. More specifically, the record contains only two evaluator scoresheets for 

McKesson--each prepared by a different member of the past performance sub-group,

and each apparently evaluating a different past performance reference. Neither 

scoresheet identifies the reference/source of the information being evaluated. The 

record contains two similar scoresheets for Philips. Each scoresheet lists seven 

subcategories that the evaluators were supposed to assess: (1) demonstration of 

successful installation of interconnected, multi-site projects with the suggested 

product; (2) demonstration of contract compliance; (2) quality of service/work; 

(3) timeliness of performance; (4) business relations; (5) customer satisfaction; and 

(6) subcontracting. See McKesson Past Performance Scoresheets at 1-2. Under the 

various categories, the evaluator placed his or her evaluation notes, which ranged 

from a single word to a few phrases. For example, under the business relations 

subcategory for one of McKesson’s references, the evaluator’s only noted 

observation was “Great company.” Id. at 2. Similarly, under the subcategory of 

contract compliance, the same evaluator noted only “Very little issue.” Id. at 1. 
Page 10 B-405382.2 et al.

Under the first subcategory, demonstration of successful installation of 

interconnected, multi-site projects, one of McKesson’s scoresheets states “3.5 years 

of install. Install went quite well. Single site though.” Id. at 1 (emphasis added). 

Similarly, in discussing the same subcategory, the scoresheet for McKesson’s other 

past performance reference contains the following: “2/3 months for install of 

system[;] On demand retrieval of image data[;] 160 workstation[;] Single site facility.” 

Id. at 4 (emphasis added). These scoresheets establish that both of McKesson’s 

evaluated references failed to satisfy the RFP’s clearly stated requirement for “multisite installation,” see RFP at 60, noting that both references were for “single site” 

facilities. Id. at 1, 4. Beyond that observation, little else of substance is recorded, 

and the scoresheets are the only past performance evaluation documentation in the 

record. Nevertheless, the agency assigned both references the highest possible past 

performance rating. 

Further, in discussing the past performance evaluation, the source selection decision 

stated that, except for “offeror 3” (an offeror other than Philips or McKesson), “[a]ll 

vendors were found to have SATISFACTORY or EXCEPTIONAL Past Performance.” 

AR, Tab 2, SSDD, at 3 (capitalization in original). This statement was followed by a 

two-sentence discussion of Offeror 3’s past performance problems, but included no 

further detail regarding any of the other offerors’ past performance. Id. The SSDD 

did not identify which offerors were found to have satisfactory past performance or 

which offerors were rated exceptional. Nor did the document discuss the relative 

strengths of the offerors’ past performance or provide any explanation or support for 

concluding that the proposals were essentially equal. Similarly, nothing in the record 

indicates that the agency gave any consideration to the relevance of the past 

performance references.

Under the heading “best value determination,” the CO referred to the past 

performance adjectival ratings assigned to some of the proposals, but did not discuss 

past performance in any way beyond that passing reference.10 AR, Tab 2, SSDD at 

6-7. Similarly, under the heading “decision,” the CO appears to have effectively 

eliminated any consideration of the past performance evaluation factor.11

 10 Indeed, McKesson’s past performance was not mentioned at all in this section of 

the SSDD.

 The 

decision moves from the statement that all offerors received identical 

technical/management ratings, to a consideration of the offerors’ experience, which 

11

 In response to the protester’s argument that McKesson’s proposal failed to provide 

the past performance information requested by the solicitation, the agency states 

that such information was inconsequential because “the technical evaluation panel 

felt past performance information provided by the offeror is generally not very useful 

as you tend to get the positive information only.” Supp. CO Statement at 3.
Page 11 B-405382.2 et al.

the CO inaccurately characterized as the second most important evaluation factor.

12

 

Id. at 7-8. Missing from the decision is any evidence of any substantive evaluation or 

comparative assessment of the offerors’ past performance.

It is fundamental that contracting officials may not announce in the solicitation that 

they will use one evaluation scheme, and then follow another without informing 

offerors of the changed plan and providing them an opportunity to submit proposals 

on that basis. Fintrac, Inc., B-311462.2, B-311462.3, Oct. 14, 2008, 2008 CPD ¶ 191 

at 6. 

Here, we find the record to be devoid of any justification for the agency’s 

determination that the offerors were essentially equal under the past performance 

factor. More specifically, there is no documentation for the agency’s determination 

that McKesson’s two past performance references warranted the highest past 

performance rating--despite the fact that neither satisfied the RFP’s basic 

requirement that they demonstrate successful multi-site installations. Finally, it 

appears that the past performance factor was eliminated from consideration or, at 

best, was converted to a pass/fail assessment. This is evidenced by the CO’s 

statement in the SSDD that all offerors (with the exception of Offeror 3) were either 

satisfactory or exceptional, followed by the conclusion that these proposals all

merited a past performance rating of high confidence.13

 AR, Tab 2, SSDD, at 3, 5. On 

this record, we conclude that the agency’s evaluation of past performance was 

unreasonable, inconsistent with the RFP, and insufficiently documented. 

Accordingly, we sustain the protest on this basis.

Waiver of Uptime Requirement

Next, Philips protests that the agency improperly waived several material solicitation 

requirements with regard to McKesson’s proposal. Specifically, Philips asserts that 

the agency improperly waived the solicitation’s clearly stated requirement that 

“[v]endors shall guarantee 99.99 percent uptime of the system.”

14 RFP at 18. 

As noted above, contracting officials may not evaluate proposals in a different 

manner, or against a different set of requirements, than stated in the solicitation. See

 12

 The RFP established past performance as the second most important evaluation 

factor. 

13

 See also, AR, Tab 3, Philips Debriefing Letter, at 2 (under the heading of past 

performance information on the debriefed offeror, the letter stated only that there 

was no adverse past performance information for the protester).

14 Immediately following this statement, the solicitation further provided, “Uptime is 

defined as imaged reports being available to users and users being able to generate 

VISN-wide reports.” RFP at 18-19. 
Page 12 B-405382.2 et al.

Fintrac, Inc., supra. Further, it is a fundamental principle that competitions must be 

conducted on an equal basis, that is, offerors must be treated equally and be 

provided with a common basis for the preparation of their proposals. The S.M. 

Stoller Corp., B-400937 et al., Mar. 25, 2009, 2009 CPD ¶ 193 at 5; Continental RPVs, 

B-292768.2, B-292768.3, Dec. 11, 2003, 2004 CPD ¶ 56 at 8. Finally, our Office will 

sustain a protest that an agency improperly waived or relaxed its requirements for 

the awardee where the protester establishes a reasonable possibility that it was 

prejudiced by the agency’s actions. Datastream Sys., Inc., B-291653, Jan. 24, 2003, 

2003 CPD ¶ 30 at 6.

Here, the RFP discussed uptime percentages in two different sections. First, as 

noted above, the solicitation unambiguously stated that vendors were required to 

“guarantee 99.99% up-time of the system,” immediately following that requirement 

with a definition of system uptime. RFP at 18. Additionally, RFP section 

B--Schedule of Supplies and Services, established monetary penalties for failing to 

comply with this requirement. Specifically, RFP section B provided that the agency 

would pay the base price for all new studies, unless service fell below the

99.99 percent uptime requirement--in which case the agency would subtract 

20 percent from the price paid. RFP at 7. The RFP further specified that, for any 

month in which the system was down greater than 4.32 minutes (meaning the system 

failed to achieve 99.99 percent uptime for that month), all studies for that month 

would suffer the 20 percent financial penalty for failure to meet the requirement. Id. 

In responding to this requirement, McKesson’s proposal offered to comply--

contingent upon several conditions. McKesson Tech. Proposal at 1,14. Specifically, 

McKesson’s proposal states that it will comply with the 99.99 percent uptime 

requirement “contingent upon subsequent negotiations/discussions on agreeable 

commercially reasonable remedies and service level agreements and appropriate 

equipment configurations,” further limiting its commitment by stating, “[t]his applies 

to the monthly Fee per Exam pricing proposal, assuming the exclusions outlined.”15 

Id. McKesson’s proposal further provided that each period of downtime would be 

calculated starting 15 minutes after notification of an incident is provided by the 

customer to the McKesson call center. Id.

 15 Elsewhere in its proposal, McKesson expressly acknowledges that its proposal 

does not comply with all of the solicitation requirements, stating: “McKesson is able 

to comply with most requirements outlined in the SOW.” McKesson Tech. Proposal 

at 29. 

at 14. Finally, McKesson’s proposal 

completely changed the solicitation’s stated 20 percent financial penalty for noncompliance, providing instead that, if McKesson failed to meet the uptime 

requirement during a measurement period, the agency would be entitled to a credit 

of [deleted] percent of the software maintenance services fees applicable for that 

measurement period for each [deleted] percent or part thereof that the uptime fell
Page 13 B-405382.2 et al.

below the standard, which cumulatively could not exceed the total fees for software 

maintenance services applicable for that period. Id. at 15.16

Philips contends that McKesson’s conditional offer to meet the 99.99 percent uptime 

requirement did not satisfy the RFP’s requirement. Philips further notes that 

McKesson’s insertion of a 15-minute grace period in calculating each instance of

downtime conflicts with the RFP’s statement that 99.99 percent uptime equates to 

4.32 minutes of downtime per month. Thus, in just one occurrence of downtime in 

which McKesson was allowed a 15 minute grace period, the monthly 4.32-minute 

allowance for downtime would have been exceeded several times over before 

McKesson would even begin to count the minutes of downtime. Supp. Protest at 7.

Philips also contends that the awardee’s proposal failed to adhere to the RFP’s 

20 percent financial penalty for noncompliance with the uptime requirement. Id. 

The protester states that, using McKesson’s alternate financial penalty, uptime would 

have to fall to 95.99 percent before McKesson’s financial penalty equaled the 

financial penalty imposed by the RFP’s requirements. Id. Finally, Philips notes that 

it was clearly competitively prejudiced by the agency’s waiver of the requirement 

because, had the agency provided Philips the opportunity to offer the same reduced 

services for lower prices, it would have done so. Second Supp. Protest at 9. 

The agency’s response to this allegation was addressed in a single paragraph of its 

four-page supplemental agency report, wherein the agency asserts that “the 99.99% 

uptime ‘requirement’ . . . was not included in the Statement of Work, but rather was 

stated in the preface to the Schedule of Supplies, as a goal.” Supplemental AR at 2. 

The agency contends that McKesson’s proposal offered to meet the requirement, if 

the agency takes certain steps to “make that possible.” Id. Accordingly, the VA 

asserts that McKesson’s conditional offer to meet the agency’s “goal” was “a 

reasonable alternative to this requirement that resulted in a cost saving.” 

Supplemental CO Statement at 2.17

We reject the agency’s assertion that the solicitation’s requirement for 99.99 percent

uptime was merely a “goal.” The requirement was stated in two different sections of 

the RFP, was described as something with which vendors must “guarantee”

 16 In contrast, the protester’s proposal stated that Philips provides a 99.99 percent 

warranted system uptime, and acknowledged the RFP’s stated financial penalties for 

failure to meet this requirement. Philips FPR at 3.

17 In its second supplemental agency report, the agency acknowledges that 

“McKesson proposed an alternative to the uptime requirement as stated in the 

solicitation,” but asserts that this alternative was “both reasonable and offered cost 

savings.” Second Supp. AR at 3. The agency further asserts that McKesson’s 

proposed alternative was not a “material” departure from the RFP’s terms. Second 

Supp. AR at 3.
Page 14 B-405382.2 et al.

compliance, and to which a financial penalty for failure to comply was attached. See

RFP at 7, 18-19. We find it difficult to imagine how the agency could have more 

clearly identified this as a requirement. Additionally, the protester has established 

prejudice, noting that it would have offered a lower price for reduced service had it 

been afforded such an opportunity. Accordingly, the agency’s acceptance of 

McKesson’s conditional offer to meet the RFP’s 99.99 percent uptime requirement 

clearly constituted an improper waiver of the RFP’s uptime requirement, and we 

sustain the protest on this basis.18

The protest is sustained.

RECOMMENDATION

Based on our review of the record, it appears the agency may believe the 

solicitation’s requirements do not reflect its minimum needs. Accordingly, we 

recommend that the agency consider its needs and, if appropriate, amend the 

solicitation. In the event the solicitation is amended, the procurement should be 

re-opened to permit all offerors to compete against the agency’s actual requirements.

Alternatively, if the agency concludes that the terms of the solicitation accurately 

reflect its minimum needs, the agency should conduct a new evaluation of proposals 

and award the contract on the basis of the proposal offering the best value to the 

government, consistent with the solicitation. In making the new source selection 

decision, the agency may consider all of the materials submitted by offerors prior to 

the deadline at noon on Friday, December 2, 2011, or take such other actions 

consistent with our decision. 

We further recommend that the agency reimburse the protester the costs of filing 

and pursuing its protest, including reasonable attorneys’ fees. 4 C.F.R. § 21.8(d)(1) 

 18 The protester also contends that the agency improperly waived several other RFP 

requirements, such as: (1) the RFP’s availability of funds clause; (2) the RFP’s 

improper termination penalty; (3) the requirement to confirm compatibility with 

agency’s 3-D and voice recognition software; (4) the requirement that offerors’ 

products be clinical context object workgroup (CCOW) compliant; and (5) the 

requirement that the offered system allow for the retrieval of exams from teaching 

folders. Supp. Protest at 2-3, 10-13, 16-17; Second Supp. Protest at 11-12, 14-18; see

also McKesson Tech. Proposal at 29-30 (“McKesson is able to comply with most

requirements outlined in the SOW”) (emphasis added). In light of the other multiple 

flaws in this procurement, we do not address each of these arguments. 
Page 15 B-405382.2 et al.

(2011). The protester’s certified claim for costs, detailing the time spent and the cost 

incurred, must be filed to the agency within 60 days after receiving this decision.

Lynn H. Gibson

General Counsel