United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: TriWest Healthcare Alliance Corporation

File: B-401652.12; B-401652.13

Date: July 2, 2012

Robert S. Ryland, Esq., Edward H. Meyers, Esq., and H. Boyd Greene, IV, Esq., 

Kirkland & Ellis LLP, and Kathleen C. Little, Esq., Michael R. Charness, Esq., 

Suzanne D. Reifman, Esq., Robert J. Rothwell, Esq., Amanda J. Dietrick, Esq., 

Elizabeth A. Krabill, Esq., Jenny Yang, Esq., and Erin N. Rankin, Esq., Vinson & 

Elkins LLP, for the protester.

Thomas P. Humphrey, Esq., David Z. Bodenheimer, Esq., Peter J. Eyre, Esq., 

Jonathan M. Baker, Esq., Sarah B. Gleich, Esq., James G. Peyster, Esq., Jacinta 

Alves, Esq., Stephan Daniel Rice, Esq., and Derek R. Mullins, Esq., Crowell & 

Moring LLP, and Paul F. Khoury, Esq., Brian G. Walsh, Esq., and Rachel A. 

Alexander, Esq., Wiley Rein LLP, for the intervenor.

Michael E. Jonasson, Esq., Roger Corman, Esq., Dennis Dyke, Esq., Jim Douglas, 

Esq., Whitney Michak, Esq., and Ken Lieb, Esq., Office of TRICARE Management 

Activity, 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. Protest that agency misevaluated proposals and made an unreasonable source 

selection decision is denied where record shows that agency’s evaluation and 

source selection were reasonable and consistent with the terms of the solicitation 

and applicable procurement laws and regulations.

2. Agency evaluators’ decision not to credit protester’s proposal with approximately 

$200 million in cost savings for the firm’s additional network discount guarantee 

related to active duty service member beneficiaries was reasonable where agency 

analyzed all of the information regarding the discount and concluded that the 

additional guarantee would not result in quantifiable cost savings above those 

already obtained by operation of law as a result of the offeror’s primary discount.

3. Protest alleging that, in its evaluation of the protester’s proposal, the agency 

unreasonably ignored information that was “too close at hand” is denied where the 

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-401652.12, B-401652.13 

protester fails to demonstrate that the information in question was relevant, or that 

the agency evaluators knew or should have known of the information.

4. Protester’s assertions challenging the agency’s past performance evaluation 

reflect mere disagreement with the agency’s reasonable judgments where the 

record establishes that the agency comprehensively considered relevant past 

performance information for both offerors, recognized positive and negative aspects 

of both offerors’ past performance, and reasonably determined that the proposals 

were essentially equal.

5. In making a best value source selection decision, an agency may properly rely on 

a single evaluation factor--even a lower-weighted factor--if it is determined to be a 

key discriminator.

6. A patent ambiguity must be protested prior to the next closing time for the 

submission of proposals in order to be considered timely.

DECISION

TriWest Healthcare Alliance Corporation, of Phoenix, Arizona, protests the 

Department of Defense TRICARE Management Activity’s (TMA) award of a contract 

to UnitedHealth Military & Veterans Services (United), of Minnetonka, Minnesota, 

under request for proposals (RFP) No. H94002-07-R-0007 to provide T-3 TRICARE 

managed health care support services for the West Region of the United States. 

TriWest, the incumbent contractor, challenges TMA’s technical, past performance, 

and price evaluations, along with the source selection decision, and argues that 

United should be excluded from the competition based on common ownership of its 

stock and the stock of other TRICARE contractors.

We deny the protests.

BACKGROUND

TRICARE is a managed health care program implemented by the Department of 

Defense (DOD) for active-duty and retired members of the uniformed services, their 

dependents, and survivors. TRICARE is an integrated network, which combines 

resources of the Military Health System’s direct medical care services, largely 

through government-operated military treatment facilities (MTF), and a network of 

civilian health care providers operating under managed care support (MCS) 

contracts. TMA is the DOD field activity responsible for awarding and managing 

these contracts.

Currently, there are approximately 9.7 million TRICARE-eligible beneficiaries, and 

the program is divided into three regions (North, South, and West). The West 
Page 3 B-401652.12, B-401652.13 

Region, which is the subject of this protest,1 covers approximately 2.9 million

TRICARE beneficiaries.2

 Contracting Officer’s Statement at 2. Under TRICARE, 

eligible beneficiaries have three health care options: TRICARE Standard (a 

standard fee-for-service plan), TRICARE Extra (a network of preferred providers for 

Standard plan beneficiaries), and TRICARE Prime (a health maintenance 

organization (HMO)-type plan, in which enrollees are required to use MTFs or 

network providers, or pay higher out-of-network co-payments).

History of this Procurement

On March 24, 2008, TMA issued an RFP for the third generation of MCS contracts,

referred to as T-3. On July 13, 2009, Aetna Government Health Plans was awarded 

the contract for the North Region, United was awarded the contract for the South 

Region, and TriWest was awarded the contract for the West Region. All three 

awards were challenged by the respective disappointed bidders. In the North 

Region, the award to Aetna was ultimately terminated following a GAO bid protest, 

and the contract was awarded to Health Net, Inc. In the South Region, the award to 

United was successfully challenged by Humana Military Healthcare Services, Inc.

In the West Region, United filed an agency-level protest on July 22, 2009, 

challenging TriWest’s award. The agency held United’s protest in abeyance while 

the protests concerning the South Region were pending, as United’s West Region 

protest would have become moot if it had prevailed in the South. 

In response to GAO’s decision sustaining Humana’s protest, the agency amended 

the solicitation, reevaluated proposals, and awarded the South Region contract to 

Humana. After the South region contract was awarded to Humana, United’s 

agency-level protest in the West Region was revived. On April 6, 2011, the agency 

partially sustained United’s agency-level protest and took corrective action by 

reopening the procurement and issuing RFP Amendment 0014. The RFP 

amendment permitted offerors to submit proposed guaranteed network provider 

discounts and to revise all other parts of their proposals, with the exception of past 

performance. 

 1 Contracts for the North and South Regions were recently awarded. 

2 The West Region covers care for beneficiaries residing in the following areas: 

Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa (except Rock Island 

Arsenal area), Kansas, Minnesota, Missouri (except St. Louis area), Montana, 

Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Texas (area 

of West Texas only), Utah, Washington, and Wyoming.
Page 4 B-401652.12, B-401652.13 

Terms of the RFP

The RFP contemplated the award of contracts (one for each Region--North, South, 

and West) with a base transition-in period, plus five 1-year option periods of actual 

health care delivery, and a 1-year transition-out option period. RFP at 26. In 

describing the requirements, the T-3 solicitation set forth five objectives: 

(1) optimization of the delivery of health care services in the direct military-provided 

health care system for all military health system beneficiaries; (2) beneficiary 

satisfaction at the highest level possible throughout the period of performance 

through delivery of world-class health care and customer friendly program services; 

(3) attainment of “best value health care” as defined in the TRICARE Operations 

Manual; (4) provision of fully operational services and systems at the start of health 

care delivery and minimal disruption to beneficiaries and MTFs; and (5) full and real 

time access to contractor maintained data to support the DOD’s financial planning, 

health systems planning, medical resource management, clinical management, 

clinical research, and contract administration activities. RFP at 15. 

According to the RFP, a prime contractor could not receive an award for more than 

one of the three contract regions. Id. at 97. The agency was to select “the proposal 

representing the best value (which will include the risk associated with the proposal) 

to the Government . . . consistent with furnishing high quality health care in a 

manner that protects the fiscal and other interests of the United States.” Id. at 111. 

In this regard, the RFP set forth three evaluation factors: (1) technical approach,

(2) past performance, and (3) price/cost. Technical approach was the most 

important factor, past performance was second, and price/cost was the least 

important factor. The technical approach and past performance factors, when 

combined, were significantly more important than the price/cost factor. Id. at 112.

Under the technical approach factor, the RFP identified the following evaluation 

subfactors, which were equal in terms of importance: (1) network development and 

maintenance; (2) referral management; (3) medical management; (4) enrollment; 

(5) beneficiary satisfaction/customer service; (6) claims processing; and 

(7) management functions. Id. at 111-12.

Regarding the evaluation of technical approach, the RFP provided that “[p]roposals 

will be evaluated on the basis of how well an offeror’s proposed approach 

adequately describes their procedures, methods, and delivery of services that meet 

or exceed the Government’s minimum requirements. . . . The Government will 

consider offers that commit to higher performance standard(s) or requirements, if 

the offeror clearly describes the added benefit to the Government.” Id. at 112. As 
Page 5 B-401652.12, B-401652.13 

part of the evaluation, the seven technical subfactors were to be assigned individual 

merit ratings, as well as risk ratings.

3

 Id. 

In connection with each offeror’s technical approach, the RFP contemplated the 

proposal of guaranteed network discounts applicable to the two underwritten 

populations of beneficiaries.

4

 With regard to such discounts, the RFP provided that:

A guaranteed network provider discount shall consist of an overall 

average percentage discount for care by civilian network providers 

for each of the two underwritten populations [“Contractor Prime

network enrollees” and “MTF Prime plus non-enrolled beneficiaries”] 

even if the percentage explicitly proposed for each of the two 

populations is the same value. A network provider discount 

guarantee proposed by the offeror will be measured as an overall 

average percentage discount for care by civilian network providers, 

using the same measurement methodology and data specifications 

 3 TMA employed the following rating scheme for the purpose of evaluating technical 

merit:

Blue (Exceptional) – Exceeds minimum requirements in a manner 

beneficial to the Government; has no weaknesses. The offer has 

exceeded some requirements and is at least acceptable in all other 

requirements. Where exceeded, it must be documented by a 

strength(s) that is of clear benefit to the Government.

Green (Acceptable) – Meets minimum requirements. Any 

requirements exceeded in the offer are offset by one or more 

weaknesses. Weaknesses are readily correctable.

Yellow (Marginal) – Fails to meet minimum requirements and contains 

significant weaknesses. The offer is correctable without a major 

proposal revision.

Red (Unacceptable) – Fails to meet minimum requirements and 

contains significant weaknesses that are not correctable without a 

major proposal revision.

Agency Report (AR), Tab 5, Source Selection Evaluation Guide (SSEG), at 12-13.

4 The solicitation defined the underwritten populations--that is, the populations for 

which the contractor bears risk--as “Contractor Prime network enrollees” and “MTF 

Prime enrollees plus non-enrolled beneficiaries.” RFP at 49-50, 101. 
Page 6 B-401652.12, B-401652.13 

described for the discount incentive provision in [RFP] Section 

H.2.3.1[5

].

RFP at 101. 

Offerors were also permitted to propose additional discounts, beyond the primary 

discounts discussed above, subject to the following RFP provisions: 

An offeror who offers any discounts as described above may offer 

additional guaranteed network provider discounts beyond those set 

forth in the format above. If an offeror chooses to offer such additional 

network discounts, the offeror must provide adequate language that 

may be incorporated into the contract as an enforceable provision, 

which must describe measurement methodology, post award 

administration, and any impact/connection to existing incentives.

Id. at 102.

Network discount guarantees were to be evaluated under technical subfactor 1, 

network development and maintenance, and would be considered only if the offeror 

committed to incorporating the guaranteed discounts into the awarded contract, and 

the guarantee was otherwise determined to be a strength by the agency. Id. at 101, 

113. Additionally, the RFP provided that, in considering such additional discounts, 

the agency would consider information submitted by the offeror, including 

enforceable contract language regarding any “impact/connection to existing 

incentives,” as well as the agency’s “own historical and relevant information.” RFP 

section L at 102; RFP section M at 113. Finally, the RFP stated that network 

provider discounts would be considered as part of the best value decision, which 

would consider projected healthcare cost savings associated with proposed network 

provider discounts; however, the cost savings would not be considered as an 

adjustment within the price/cost evaluation factor. RFP at 113.

With regard to past performance, the amended RFP informed offerors that the 

agency planned to rely on its previous past performance evaluations unless it 

discovered information that would cause the evaluators to question the initial 2009 

evaluation. Id. at 115. With regard to the initial past performance submissions, the 

offerors were required to provide narratives describing their relevant past 

 5 Section H.2.3.1 of the RFP states: “Network Discount Incentive. The purpose of 

this incentive is to encourage Contractors to proactively negotiate discounts with 

network providers and thereby reduce underwritten health care costs. The incentive 

will be calculated separately for two different categories of beneficiaries. The first 

category includes all Contractor Prime network enrollees and the second category 

consists of all MTF Prime enrollees and non-enrolled beneficiaries.” RFP at 51. 
Page 7 B-401652.12, B-401652.13 

performance, and to submit their five largest relevant contracts performed during 

the past 3 years. Id. at 104-05. These requirements also applied to first tier 

subcontractors.6 Offerors were further required to submit completed past 

performance questionnaires for each of the five contracts. For offerors and any first 

tier subcontractors without any relevant past performance information, the RFP 

indicated that the agency would consider relevant information of a parent 

organization or consortium member, considering the amount of involvement the 

parent organization or consortium member would have in the daily operations of the 

offeror. Id. at 105.

The RFP specified that the agency would “determine how well an offeror has 

performed in the past on similar relevant work and then assess a performance 

confidence rating relative to the offeror’s ability to successfully perform the 

requirements of this solicitation.” RFP at 115. In evaluating the past performance 

information, TMA contemplated examining the “degree to which the work performed 

is relevant to the T-3 contract, and . . . how well the work was done.” AR, Tab 5, 

Source Selection Evaluation Guide (SSEG), at 14. In considering the degree of 

relevance, the SSEG indicated that TMA would consider how closely related an 

offeror’s performance history was to the proposed functions and complexities under 

this solicitation, whether the work was recent, and the magnitude of the effort in 

terms of size. According to the SSEG, relevance would “increase as the size of the 

historical efforts increase.” Id. at 16. In addition, the relevance of first tier 

subcontractors’ past performance was to be based on those tasks/functions the 

subcontractor was proposed to perform under the RFP.7

 6

 The RFP defined a first tier subcontractor as a company with a direct contractual 

relationship with the offeror and whose total contract price exceeds $100 million, 

or a subcontractor who has direct responsibility for providing/authorizing health 

care, managing or directing the health care of TRICARE beneficiaries, or who 

provides claims processing services regardless of the price. RFP at 104.

 The SSEG provided that, 

7 TMA used the following rating scale in assessing relevance:

Relevant--Past/present performance effort is similar in 

functions/complexities, involves much of the same scope/magnitude of 

effort, is recent and includes performance in critical areas that this 

solicitation requires.

Somewhat Relevant--Past/present performance effort involves some 

of the key relevance factors, but not all, that this solicitation requires. 

For example, the past performance effort is similar in functions, but 

not at the same scope/magnitude.

(continued...)
Page 8 B-401652.12, B-401652.13 

after assessing the degree to which the past performance information was relevant, 

TMA would perform a qualitative assessment of the offeror’s past performance 

information, identifying any positive or negative findings and assign a performance 

rating of exceptional, satisfactory, marginal, or unsatisfactory.8 Finally, each offeror 

would be assigned an overall past performance confidence rating of high 

confidence, confidence, little confidence, no confidence, or “not favorable and not 

unfavorable.” AR, Tab 5, SSEG, at 20.

The RFP stated that, in updating its past performance evaluation pursuant to the 

amended solicitation, the agency would seek information from the offerors’ points of 

contact for the past performance information used in the initial evaluation to 

determine whether there had been a change in performance. RFP at 115. If the 

agency found that there had been a change in performance since the prior 

evaluation, TMA would evaluate the new information in accordance with the RFP’s 

evaluation criteria, and update the performance confidence rating accordingly. Id.

 

(...continued)

Not Relevant--Past/present performance effort involves little or none 

of the key relevance factors that this solicitation requires.

AR, Tab 5, SSEG, at 16.

8 The SSEG provided the following definitions for the adjectival ratings: 

Exceptional--Performance met contract requirements and exceeded some. 

Where requirements were exceeded, the result was a significant benefit to 

the other contracting party. Contractual performance was accomplished with 

few, if any, minor problems. Any corrective actions taken by the contractor 

were prompt and effective.

Satisfactory--Performance met contract requirements. Contractual 

performance was accomplished with few, if any, minor problems. Any 

corrective actions taken by the contractor were prompt and effective. 

Marginal--Performance met most contractual requirements. Contractual 

performance reflects problem(s) for which the contractor did not perform (or 

has not yet performed) corrective actions, or corrective actions were only 

marginally effective, or not fully implemented.

Unsatisfactory--Performance failed to meet most contractual requirements. 

Contractual performance contains serious problems for which the 

contractor’s corrective actions, if any, were incorrect or ineffective.

AR, Tab 5, SSEG, at 17.
Page 9 B-401652.12, B-401652.13 

With regard to the price/cost evaluation factor, the RFP stated that the agency 

would evaluate the following cost-reimbursement and fixed-price contract line item

numbers (CLINs):

CLIN 0001 Transition In 

CLIN X001 & X002 Underwritten Health Care Cost 

CLIN X003 & X004 Underwritten Health Care Fixed Fee 

CLIN X005 Disease Management Cost 

CLIN X006 Disease Management Fixed Fee 

CLIN X007 Electronic Claims Processing 

CLIN X008 Paper Claims Processing 

CLIN X009 Per Member Per Month (PMPM)9

CLIN X010 TRICARE Service Centers (TSC)10

CLIN 9001 Transition Out

CLIN 9002 Transition Out Fixed Fee

AR, Tab 29, Final Cost Evaluation Report, at 7.11

The CLINs were to be used as the basis for calculating the total evaluated price for 

each offeror.12 AR, Tab 5, SSEG, at 21. With the exception of CLINs X001, X002, 

and X005, which concerned costs for underwritten health care and disease 

management, the RFP provided that TMA would evaluate the CLINs for price and 

cost reasonableness and perform realism analyses in accordance with the Federal 

Acquisition Regulation (FAR). With regard to the fixed price CLINs, the RFP 

provided that “in accordance with FAR 15.404-1(d)(3), cost realism analysis may 

be used on competitive fixed price contracts.” RFP at 116. For the underwritten 

health care and disease management CLINs, which were cost-reimbursable items, 

TMA provided cost estimates that offerors were required to use as “plug numbers” 

that were not comparatively evaluated. 

 9 The PMPM CLIN X009 was in essence a catch-all fixed-price line item, designed 

to include any proposed costs not otherwise identified under a separate CLIN. RFP 

at 106.

10 TRICARE Service Centers are facilities operated by the MSC contractor which 

allow beneficiaries to obtain walk-in customer service support in connection with 

their benefits under the TRICARE health program.

11 CLINs X001, X002, and X005 were cost reimbursement CLINs; X003, X004, 

X006, and 9002 were fixed fee; 9001 was cost plus fixed fee; the remainder of the 

CLINs were fixed price. AR, Tab 29, Final Cost Evaluation Report, at 7.

12 The total evaluated price did not include any of the award fee CLINs. AR, Tab 5, 

SSEG, at 21. 
Page 10 B-401652.12, B-401652.13 

For the purpose of evaluating the price/cost factor, offerors were instructed to 

submit price and cost information, to include: forward pricing rate agreements or 

proposals; total cost summaries with cost element build-ups by CLIN; proposal 

estimating assumptions and pricing considerations; and a consolidated project 

manning summary segregating, by direct labor category, the direct labor hours with 

a display of hours by CLIN, and direct and indirect labor rates. RFP at 106-07. 

Results of the Evaluation

United and TriWest both participated in the earlier round of competition in the West 

Region, and both submitted the required updates to their proposals in response to 

the amended RFP. The proposals were evaluated by a Source Selection 

Evaluation Board (SSEB) comprised of three teams: the technical evaluation team 

(TET), which evaluated technical proposals; the performance assessment group 

(PAG), which evaluated offerors’ past performance information; and the price/cost 

team, which analyzed the price/cost proposals. The teams’ findings were then 

compiled and summarized in the SSEB chair’s report, which made a best value 

award recommendation for consideration by the source selection authority (SSA). 

The SSA, with advice from a source selection advisory council (SSAC), made the 

final best value award decision.

TriWest’s and United’s final technical ratings, after a round of discussions, were as 

follows:

Technical Approach

TriWest United

Subfactor Technical 

Merit

Proposal 

Risk

Strengths Technical 

Merit

Proposal 

Risk

Strengths

Network 

Development & 

Maintenance

Blue Low 4 Blue Low 4

Referral Mgmt. Blue Low 3 Blue Low 4

Medical Mgmt. Blue Low 3 Blue Low 7

Enrollment Blue Low 1 Green Low 0

Beneficiary 

Satisfaction/Customer 

Service

Blue Low 3 Blue Low 3

Claims Processing Blue Low 3 Blue Low 3

Management 

Functions Blue Low 3 Blue Low 2

AR, Tab 7, Source Selection Decision Document (SSDD), at 3-4. 

With regard to the technical evaluation factor, agency evaluators found that United’s 

proposal was superior under the network development and maintenance subfactor. 

Specifically, the evaluators found that, although both proposals earned four 
Page 11 B-401652.12, B-401652.13 

strengths, the benefits and value to the government provided by United’s strengths 

were “significantly higher” than the benefits and value provided by the strengths 

proposed by TriWest. AR, Tab 9, SSEB Chair Report, at 18. 

The evaluators noted the strengths that United received for its Premium Provider 

Program,13 Convenience Care Clinics,14 Centers of Excellence (COE) transplant 

program,15

With regard to network provider discounts, the agency evaluators found that 

United’s proposal offered higher cost savings in the form of guaranteed network 

discounts than TriWest’s proposal. Specifically, for purposes of comparison, the 

SSEB chair concluded that United’s guaranteed discounts offered cost savings of 

approximately [deleted], while TriWest’s proposal offered lower cost savings of 

approximately [deleted]. Id. The SSEB noted that, in addition to the primary 

discount guarantees for the underwritten populations, TriWest’s proposal offered a 

discount guarantee for active duty service members (ADSM), which TriWest 

claimed carried an additional cost savings of approximately $200 million.

and network provider discounts. AR Tab 9, SSEB Chair Report, at 18. 

16 

However, the agency did not consider TriWest’s ADSM discount to create additional 

quantifiable savings because “the provider discounts automatically extend to 

ADSMs with or without a guarantee in place.” Id. at 22. Therefore, TriWest was 

granted a strength for its ADSM discount guarantee, but the agency did not 

calculate an additional amount of cost savings associated with it.

 13 The agency concluded that the Premium Provider Program identifies civilian 

providers who produce better outcomes and cost efficiency results through [deleted]

cost effective care delivery, which will result in achieving better clinical outcomes 

and reduce overall health care costs. AR, Tab 7, SSDD, at 5.

14 The agency found that these clinics add a significant degree of flexibility with 

regard to the treatment of non-emergency care which will prevent relatively minor 

medical concerns from being treated in more expensive venues, such as, 

emergency room care. Therefore, the SSA believed that the clinics would improve 

access for TRICARE beneficiaries while decreasing beneficiary out-of-pocket 

expenses and government costs. AR, Tab 7, SSDD, at 5.

15 The agency found that United’s COEs exceeded the national transplant survival 

rate by more than [deleted] percent, produced a [deleted] percent reduction in 

inappropriate transplants per every 1 million beneficiaries, and resulted in a 

[deleted] percent decrease in overall hospital length of stay. AR, Tab 9, SSEB

Chair Report, at 23. The agency found that this strength would result in better 

outcomes and provide more cost-effective care, which would provide a benefit to 

TRICARE beneficiaries and cost savings to the government. Id.

16 TriWest’s proposal calculated the additional cost savings to be $199,621,253. 

AR, Tab 33, TriWest FPR, at 290.
Page 12 B-401652.12, B-401652.13 

Under the medical management subfactor, United’s proposal was considered to be 

superior based on the value of its seven strengths, compared to TriWest’s three 

strengths. Id. at 27. TriWest’s proposal was considered to be superior under the 

enrollment subfactor, in which its proposal earned one strength for offering [deleted]

of enrollment transactions.

17 Id. at 31. With regard to the remaining subfactors, the 

agency found that the two proposals were essentially equal. Id. at 39.

With regard to past performance, the agency evaluators determined that the prior 

rating of “high confidence” should be retained for both offerors. In accordance with 

RFP amendment 14, the agency sought information from the offerors’ past 

performance points of contact to determine whether there had been changes in their 

earlier performance assessments. The individual past performance ratings 

remained the same as the initial evaluations with the exception of TriWest’s 

Tidewater, VA, Multi-Service Market, Multiple Award Task Order (MATO) Appointing 

contract.18 The agency changed TriWest’s rating for the Tidewater MATO contract 

from “exceptional” to “satisfactory” based on updated past performance information 

that it received. AR, Tab 27, 2011 Addendum to PAG Report for TriWest at 1.

The agency also noted a qui tam Letter of Agreement (LOA) regarding TriWest’s 

failure to pay LOA negotiated rates to non-network providers for certain health care 

encounters.19 The agency concluded that TriWest’s administrative processes had 

failed to systematically identify LOA discounts but there was no indication that 

TriWest had attempted to profit from this action. The agency also found that 

TriWest failed to notify the government in a timely manner and failed to take 

corrective measures within a reasonable time period. The settlement agreement to 

resolve civil false claims allegations required TriWest to fully account to the TMA 

contacting officer for claims paid under LOAs and to identify recoupment. The 

agency noted that, in response to the qui tam action, TriWest had reimbursed the 

TRICARE program, taken action to recoup any outstanding amounts from paid 

providers, and installed enhanced assurances regarding the quality of its processing 

of claims subject to LOAs. The percentage of claims involved in this situation were 

below the contractual standard for the claims error rate of two percent. Despite the 

qui tam action, the agency determined that the original “exceptional” rating for this 

past performance reference was still applicable. Id. at 14. 

 17 United’s proposal did not earn any strengths under this subfactor.

18 This contract was considered to be “somewhat relevant.”

19 A qui tam action allows for a private individual with knowledge of past or present 

fraud committed against the federal government to bring suit on the government’s 

behalf.
Page 13 B-401652.12, B-401652.13 

Regarding the third evaluation factor, price/cost, the agency stated that, in 

accordance with FAR § 15.404-1(d), it considered the realism of fixed price CLINs 

by reviewing and evaluating specific elements of each offeror’s proposed cost 

estimate and prices to determine whether the estimated proposed cost elements 

were realistic for the work to be performed, reflected a clear understanding of the 

requirements, and were consistent with the unique methods of performance and 

materials described in the offeror’s technical proposal. AR, Tab 29, Final Price-Cost 

Report, at 6, 22.

The agency had conducted a realism analysis of the FPRs initially submitted in this 

procurement; however given the length of time that had elapsed between the initial 

rounds of FPRs (FPR1) and the most recent round (FPR3), and in light of the fact 

that one of United’s teaming partners changed its direct labor rate categories and its 

indirect rate structure for FPR3, the agency performed additional analyses. AR, 

Tab 29, Final Price-Cost Report, at 6. Specifically, the agency requested that 

DCAA perform labor salary verifications of the firm’s payroll records and that DCMA 

perform an indirect rate audit of the firm. Id. at 6. The agency further noted that 

United’s proposed labor salaries had been previously audited by DCAA in the 

context of the FPR1 evaluation. Id. at 20. As a result of its cost realism analysis of 

the fixed price CLINs, the agency concluded that no significant performance risk 

was identified for either offeror’s price proposal. Id. at 1.

TriWest’s final total evaluated price was $20,299,082,750, while United’s final total 

evaluated price was $20,374,671,387, a difference of approximately $75.6 million. 

AR, Tab 9, SSEB Chair Report, at 41. 

The SSEB chair compiled the evaluators’ findings and concluded that United’s 

proposal was significantly technically superior to TriWest’s, that past performance 

was essentially equal between the two proposals, and that United’s price was only 

0.37% higher based on the total evaluated price (or 6.3% higher based solely on the 

administrative price). The SSEB chair also concluded that the technical superiority 

of United’s proposal outweighed the cost difference. AR, Tab 9, SSEB Chair 

Report, at 44. As a result, the SSEB chair recommended to the SSA that award be 

made to United as the best value offeror.

Source Selection Decision

The SSA concurred with the findings of the various evaluation teams. With regard 

to network discounts under the technical evaluation factor, the SSA stated that he 

did not consider TriWest’s additional discount to create additional quantifiable 

savings, as explained below: 

[T]he additional guarantee should not be considered as additive to the 

primary discount dollar amount above since the value of these Active 

Duty discounts are most likely to be obtained under the primary 
Page 14 B-401652.12, B-401652.13 

guarantee already. (The primary discounts apply to the two 

underwritten groups, and while Active Duty beneficiaries are nonunderwritten eligibles, discount rates offered by civilian network 

providers must also apply to care provided to Active Duty beneficiaries. 

Therefore, for either offeror, the Active Duty beneficiaries will receive 

the benefit of the guaranteed discount when they receive care from the 

network provider. Accordingly, since discounts automatically extend to 

Active Duty beneficiaries--with or without a guarantee in place--the 

savings associated with the secondary guarantee does not 

automatically increase the value of the primary guarantee.) The 

secondary guarantee does however limit the Government’s risk in the 

unlikely event of drastic discount erosion over the life of the contract, 

and also provides an additional incentive to TriWest to maintain 

proposed discount levels.

AR, Tab 7, SSDD, at 6.

Overall, with regard to the technical evaluation factor, the SSA found that the two 

proposals each offered different strengths of varying value, but when viewed as a 

whole, the SSA concluded: 

[United’s] substantially higher guaranteed discounts with an 

approximately [deleted] advantage, their emphasis on including 

network providers of high quality that will produce better outcomes and 

greater cost efficiency, and their medical management tools with 

programs that identify and prioritize care for high-risk beneficiaries 

which will positively impact the health and wellness of TRICARE 

beneficiaries in the West Region, provides a technical proposal that is 

substantially superior to TriWest’s proposal. UMVS’ approach 

[deleted] to project high-risk beneficiaries, and their much more robust 

medical management approach, is far and away better than what 

TriWest has proposed.

AR, Tab 7, SSDD, at 12. With regard to past performance, the SSA concurred in 

the evaluators’ determinations that TriWest and United were essentially equal. Id.

at 16. The SSA also considered the $75,588,637 price differential between the 

offerors, noting that TriWest had the lower total evaluated price. Based on these 

considerations, the SSA selected United for award. Id. at 19. After receiving notice 

of the award and a debriefing, TriWest filed this protest. 

DISCUSSION

TriWest challenges various aspects of the agency’s evaluation of technical 

approach, past performance, and price/cost, as well as the source selection 

decision. For example, TriWest protests: (1) the agency’s evaluation of network 
Page 15 B-401652.12, B-401652.13 

discounts; (2) the results of the agency’s past performance evaluation; (3) the 

agency’s price realism analysis of fixed price CLINs; (4) the source selection 

decision trade-off; and (5) the agency’s decision not to exclude United from the 

competition for what TriWest argues is a failure to comply with the RFP’s prohibition 

on any company receiving contracts for more than one of the three regions. As 

discussed below, we deny the protests.20

Network Discounts

As set forth above, the RFP contemplated network provider discount guarantees 

consisting of a percentage discount for care provided by civilian network providers. 

RFP at 101. In this regard, the RFP further provided that cost savings associated 

with such network discounts would be considered under the technical approach 

evaluation factor, and in the best value decision, but not under the price/cost 

evaluation factor. RFP at 113. TriWest contends that the agency committed 

various errors in evaluating the offerors’ network discounts, including: (1) the 

agency’s failure to consider $200 million of cost savings associated with TriWest’s 

active duty service member (ADSM) discount; (2) the agency’s improper 

acceptance of United’s assumptions; (3) the agency’s acceptance of United’s 

aggressive approach to network provider discounts; (4) the agency’s failure to 

consider the present value of cost savings associated with network discounts; and 

(5) the agency’s mathematical error in computing the cost savings associated with 

network discounts. We address each of these arguments below. 

TriWest’s Discount for the ADSM Population

First, TriWest contends that the agency acted unreasonably by failing to include in 

the best value tradeoff the approximately $200 million in savings associated with 

TriWest’s discount guarantee for ADSMs.21

 20 TriWest’s protest and supplemental protest raised numerous allegations. While 

our decision here does not specifically discuss each and every argument and/or 

variations of the arguments, we have considered all of TriWest’s assertions and find 

no basis to sustain the protest. 

 TriWest complains that, as a result, the 

21 The agency notes that ADSM health care costs were not a part of the evaluated 

price of the contract. AR at 82. Specifically, the agency notes the following with 

regard to ADSMs: 

The ADSM population is a “non-underwritten” beneficiary population 

markedly different from the underwritten [populations]. Although 

ADSMs, by necessity, use the contractor’s provider network they are 

not “CHAMPUS eligibles” as defined by the TRICARE regulation and 

policy. ADSM health care costs are expressly deemed by the RFP not 

to be part of the contractor’s costs. ADSM health care costs are not “at 

(continued...)
Page 16 B-401652.12, B-401652.13 

agency’s comparison of TriWest’s and United’s network discount cost savings 

overstated the cost savings advantage for United, and improperly contributed to the 

agency’s determination that United’s proposal was superior under the technical 

approach evaluation factor.22 Protest at 18; Comments at 9-11.

The agency responds that each offeror was permitted to propose an additional 

discount only if it first proposed the guaranteed primary discounts applicable to the 

two underwritten populations. 23 See RFP at 98.24 The agency contends that, in 

the context of the primary discount “backdrop,” it reasonably concluded that 

TriWest’s additional guarantee for the ADSM population would not result in 

additional quantifiable cost savings beyond the savings flowing from the guaranteed 

discount for the underwritten populations. Hearing Tr. at 121; AR, Tab 12, TET 

Report for TriWest Subfactor 1, at 38-39 (Kennell & Assoc. Report); Id. at 17, 23; 

AR, Tab 9, SSEB Chair Report, at 21; AR, Tab 7, SSDD, at 19. Specifically, the 

agency notes that, once a healthcare provider in either offeror’s network agrees to 

provide a discount to one beneficiary population, the discount must be provided to 

all TRICARE beneficiary populations by operation of law. See AR, Tab 9, SSEB 

Chair Report, at 21 (citing 32 C.F.R. § 199.17(p)(4)(vi)25

 

(...continued)

risk” for the contractor. ADSM health care costs are funded through the 

Supplemental Healthcare Program, not the TRICARE contract.

and TRICARE Operations 

Agency Post-Hearing Brief, at 26 n.11.

22 In order to specifically address this allegation, our Office conducted a hearing on 

the record, during which testimony was provided by the TET chair; a senior 

consultant with Kennell and Associates, a firm that assisted the agency in its 

evaluation of proposals; and a TriWest employee who serves as an advisor to the 

president and CEO of TriWest.

23 As noted above, the underwritten populations were defined in the solicitation as 

“Contractor Prime network enrollees” and “MTF Prime enrollees plus non-enrolled 

beneficiaries.” RFP at 101. 

24 “L.6.2.1.6.1.2 An offeror who offers any discounts as described above may offer 

additional guaranteed network provider discounts beyond those set forth in the 

format above. If an offeror chooses to offer such additional network discounts, the

offeror must provide adequate language that may be incorporated into the contract 

as an enforceable provision, which must describe measurement methodology, post 

award administration, and any impact/connection to existing incentives.”

25 32 C.F.R. § 199.17(p)(4)(vi) provides that all preferred providers must “agree to 

accept the same payment rates negotiated for Prime enrollees for any person 

whose care is reimbursable by the Department of Defense, including, for example, 

(continued...)
Page 17 B-401652.12, B-401652.13 

Manual, Ch. 5, § 1, ¶ 2.4.1). As a result, the agency concluded that, even without

TriWest’s additional guarantee for the ADSM population, the discount rates 

negotiated by either offeror would automatically extend to care received by ADSMs, 

and the government would realize those cost savings. Hearing Tr. at 120-21. 

Accordingly, the agency concluded that “TriWest’s [additional] guarantee of 

discounts for ADSM care does not automatically increase the value of TriWest’s 

overall discount guarantee (primary and additional combined) as they claim.”26 AR, 

Tab 12, TET Report for TriWest Subfactor 1, at 17.

Essentially, the parties disagree about how the beneficial value of the cost savings 

associated with TriWest’s additional discount guarantee should be measured. 

TriWest argues that the agency should use the same formula that it used to 

compute the cost savings under the primary discount--that is, the difference 

between the amount the government would pay for ADSMs who receive care from 

network providers at the TRICARE Maximum Allowable Charge (in other words, the 

price with no discounts), and the amount the government would pay for ADSMs who 

receive care from network providers with TriWest’s discounted rates.

27 In contrast, 

the agency contends that the value of TriWest’s discount should be the difference 

between what the government would pay without TriWest’s additional discount

guarantee, and what the government would pay with TriWest’s additional discount 

guarantee. The agency states that the additional value of the ADSM discount is not 

quantifiable because the agency will receive the discounted rates for ADSMs by 

operation of law even in the absence of the additional guarantee. AR, Tab 12, TET 

Report for TriWest Subfactor 1, at 38-39 (Kennell & Assoc. Report); Id. at 17, 23; 

AR, Tab 9, SSEB Chair Report, at 21; AR, Tab 7, SSDD, at 19; see also Hearing Tr. 

at 246.

In reviewing a protest against an agency’s evaluation of proposals, our Office will 

not substitute our (or the protester’s) judgment for that of the agency; rather, we will 

 

(...continued)

Extra participants, supplemental care cases, and beneficiaries from outside the 

area.”

26 Although the agency did not quantify the cost savings associated with the ADSM 

population, it nonetheless assigned a strength to TriWest’s proposal for the 

additional guarantee, finding that the guarantee provided additional financial 

protection against the (albeit unlikely) possibility of discount erosion (that is, the 

inability of an offeror to maintain its network discounts), and an additional incentive 

for the contractor to obtain and maintain its discount percentages over the life of the 

contract. AR, Tab 12, TET Report for TriWest Subfactor 1, at 17.

27 The parties agree that the amount of this difference is reasonably calculated to be 

approximately $200 million.
Page 18 B-401652.12, B-401652.13 

examine the record to determine whether the agency’s judgments were reasonable 

and consistent with the stated evaluation criteria and applicable procurement 

statutes and regulations. U.S. Textiles, Inc., B-289685.3, Dec. 19, 2002, 2002 CPD 

¶ 218 at 2. In this regard, the evaluation of an offeror’s proposal is a matter within 

an agency’s broad discretion, since the agency is responsible for defining its needs 

and the best method for accommodating them. Id. A protester’s mere 

disagreement with an agency’s judgment is insufficient to establish that the agency 

acted unreasonably. Fiserv NCSI, Inc., B-293005, Jan. 15, 2004, 2004 CPD ¶ 59 

at 9. 

As set forth above, section M of the RFP provided that the agency would consider 

offerors’ network provider discounts if the offeror committed to a guarantee of such 

discounts, and the offered guarantee was otherwise determined to be a strength by 

the government. Further, in considering such discounts, the agency was to 

“consider its own historical and relevant information.” RFP section L at 102; RFP 

section M at 113. With regard to any additional proposed discounts, the RFP also 

provided that the agency would consider information submitted by the offeror, 

including enforceable contract language regarding “any impact/connection to 

existing incentives.” RFP at 102. Finally, additional guarantees could be proposed 

only if the offeror had first proposed and guaranteed network discounts for the 

underwritten populations. RFP at 102. 

Here, the record shows that the agency fully considered TriWest’s network provider 

discount for the ADSM population, as contemplated by the RFP. Consistent with 

the RFP’s requirements, the agency, in evaluating the ADSM discount guarantee 

“consider[ed] its own historical and relevant information,” RFP at 113, including the 

current state of the law and the TRICARE Operations Manual provisions, and the 

relationship between the ADSM discount and the primary discount. Based on its 

consideration of all such relevant information, the agency found that TriWest’s 

claimed cost savings did not provide any quantifiable cost savings in addition to 

what the agency was already receiving from TriWest without the additional 

guarantee.

28

 28 Although the agency’s analysis focused on the fact that the agency would 

receive the same amount of savings from TriWest with or without the discount, the 

SSEB chair also noted that, because all TRICARE populations will benefit from the 

cost savings automatically produced by the primary network discounts, “this means 

that even though [United] did not propose an additional discount guarantee for . . . 

ADSMs, the [g]overnment will also realize a cost savings associated with their 

negotiated civilian provider discounts when ADSMs receive care in [United’s] 

provider network.” AR, Tab 9, SSEB Chair Report, at 21-22.

 In short, the agency considered TriWest’s additional network discount, 

acknowledged that, when compared to no discounts, the value of the cost savings 

under the additional guarantee was approximately $200 million, but ultimately 

concluded that, as a financial reality, the government would not receive additional 
Page 19 B-401652.12, B-401652.13 

cost savings above what it would receive under either offeror’s primary discount. 

Accordingly, the agency declined to credit TriWest’s proposal with the additional 

cost savings.29 

Based on the record discussed above, we cannot find the agency’s evaluation to be 

unreasonable. As required by the solicitation, the agency considered whether 

TriWest’s additional discount guarantee offered cost savings that were likely to 

accrue. We reject TriWest’s assertion that the ADSM cost savings had to be 

computed in comparison to the non-discounted cost for the same healthcare. 

Rather, we find that, in making its best value determination, the agency reasonably 

considered all of the relevant information before it concluded that the relative value 

provided by TriWest’s additional guarantee was not $200 million. Accordingly, this 

protest ground is denied.30

 29 TriWest also contends that the agency acted inconsistently by evaluating both 

portions of the primary discount by calculating the difference between the amount 

the government would pay for beneficiaries who receive care from network 

providers at the TRICARE Maximum Allowable Charge (the price with no 

discounts). TriWest notes that once an offeror negotiated a discount for one portion 

of the underwritten population (Contractor Prime Enrollees), the other portion of the 

underwritten population (MTF Prime Enrollees and Other Beneficiaries) would 

automatically receive the same discount by operation of law, just as the agency 

recognized would occur for the ADSM population. Accordingly, the protester 

contends that the agency acted unreasonably in evaluating the discount applicable 

to the MTF Prime Enrollees and Other Beneficiary population by comparing it to no 

discounts, but evaluating the cost savings associated with the ADSM discount only 

with regard to savings offered above what would be achieved by operation of law. 

Comments at 10. We do not find the agency’s differing evaluation methods to be 

unreasonable. The RFP provided, and the agency evaluators used, a specific 

formula for computation of the primary discounts for the underwritten populations. 

RFP at 101. Further, the RFP provided that a primary discount, if proposed, must 

be proposed for both underwritten populations. Id. In contrast, the RFP provided 

simply that any additional discounts “beyond” the primary discounts would be 

considered if certain conditions were met. Id. at 102. We find that the agency 

reasonably distinguished between the calculation method applicable to the 

underwritten populations and to the ADSM population. 

30 TriWest also argued that the agency engaged in misleading discussions with 

regard to its ADSM discount. Protest at 21. During discussions, the agency 

informed the protester that its additional discount of [deleted] for ADSMs was not 

considered to be a strength because it was “not at a level that is significant or 

meaningful” and because “the Government will benefit from any cost savings 

associated with care provided by discounted network providers to [ADSMs] and this 

will occur with or without the TriWest additional guarantee in place.” AR, Tab 69, 

(continued...)
Page 20 B-401652.12, B-401652.13 

Assumptions Upon Which United’s Network Discounts Were Based

The protester also contends that TMA’s evaluation of the network provider 

discounts was fatally flawed because the agency failed to recognize alleged flaws in 

the assumptions upon which United’s proposal was based. For example, TriWest 

contends that the calculation of United’s discount improperly relied on United’s 

estimate that [deleted] percent of its claims dollars would be in-network during 

option year 1, and that this percentage would [deleted] each year over the life of the 

contract. Supp. Protest at 7. The protester contends that the agency should have 

realized that this number was unrealistic because, elsewhere in United’s proposal, 

the firm only committed to achieving a [deleted] percent rate regarding the number 

of in-network claims. Id. at 7-8. Thus, the protester argues that the agency should 

have made a downward adjustment to United’s estimated discount savings to 

account for the firm’s lower anticipated network usage. Id. at 9.

In response, the agency notes that, although United’s proposal only committed to 

[deleted], the proposal demonstrated that United would likely achieve a 

considerably higher percentage. Specifically, following United’s [deleted] percent 

commitment, the proposal stated, “our network is already greater than [deleted].” 

AR, Tab 38, United FPR3, at 105. In this regard, the proposal presented the 

following table comparing the RFP’s requirement, United’s current percentage of innetwork claims, and the amount by which United exceeded the RFP’s requirement: 

% of TRICARE 

Total Claims 

Volume From 

Network 

Providers During 

Option Year 1 

(Requirement)

% of Total Claims 

Volume Paid to 

UnitedHealth 

Group Network 

Providers 

(Current Overlap)

% UnitedHealth 

Group Network is 

Greater than 

TRICARE 

Requirement

West Region 

Prime Service 

Area

[deleted] [deleted] [deleted]

AR, Tab 38, United FPR3, at 105.

 

(...continued)

TriWest Discussions at 756. Thereafter, TriWest [deleted] its ADSM discount 

guarantee to [deleted], and in response the agency informed the protester that it 

now considered the additional guarantee to be a strength. Id. at 475. Not only do 

we find nothing misleading in the foregoing exchange, but the exchange clearly 

indicated the agency’s ultimate view that it would receive the claimed savings for 

the ADSM population “with or without the TriWest additional guarantee.” 
Page 21 B-401652.12, B-401652.13 

The agency states that its evaluators found United’s estimates of in-network dollars 

to be reasonable based on the level of in-network usage currently being achieved, 

the high degree of overlap between UnitedHealth Group providers and providers in 

TriWest’s network, and United’s plans for network expansion.31 AR at 56; AR, 

Tab 19, Final TET Report for United, Subfactor 1, at 36.

As a general matter, in evaluating proposals an agency may reasonably rely on 

information provided by an offeror in its proposal, especially where it has no reason 

to question that information. Applied Bus. Mgmt. Solutions, Inc., LLC, B-405724, 

Dec. 15, 2011, 2012 CPD ¶ 14 at 5; see Able Bus. Techs., Inc., B-299383, Apr. 19, 

2007, 2007 CPD ¶ 75 at 5; NCR Gov’t Sys. LLC, B-297959, B-297959.2, May 12, 

2006, 2006 CPD ¶ 82 at 8-9. On the other hand, an agency may not accept 

representations in a proposal at face value where there is significant countervailing 

evidence reasonably known to the agency evaluators that should or did create 

doubt as to whether the representations are accurate. Applied Bus. Mgmt. 

Solutions, Inc., LLC, supra (citing Alpha Marine Servs., LLC, B-292511.4, 

B-292511.5, Mar. 22, 2004, 2004 CPD ¶ 88 at 4; Maritime Berthing, Inc., 

B-284123.3, Apr. 27, 2000, 2000 CPD ¶ 89 at 9.

Here, we find that the agency acted reasonably in evaluating and accepting United’s 

estimates regarding the percentage of the dollar value of its claims that would come 

from in-network providers. The record reflects that the agency did not simply accept 

United’s estimates, but analyzed the estimates and ultimately concluded that they 

were reasonable. AR, Tab 19, Final TET Report for United, Subfactor 1, at 36. 

Although it is true that United’s proposal stated that it would [deleted], the proposal 

also stated that the firm’s network was already greater than [deleted]. AR, Tab 38,

United FPR3, at 105. After reviewing United’s statements in this regard, in addition 

to United’s representations regarding the amount of network provider overlap and 

the firm’s plans for network expansion, the agency determined that United’s 

estimate that it could achieve [deleted] percent of claims dollars from within the 

network was reasonable. We find no basis to question the agency’s judgment in 

this regard. 32

 31 The agency further maintains that it would have been inappropriate and illogical 

to use United’s [deleted] percent commitment regarding the number of in-network 

claims as the basis for determining United’s in-network dollar percentages, because 

United’s commitment regarding number of claims related only to [deleted], whereas 

the in-network dollar percentages were for health care dollars from [deleted]. AR at 

56.

 This protest ground is denied.

32 The protester also contends that TMA unreasonably relied on United’s allegedly 

incorrect assumptions regarding overlap of in-network hospitals, assumptions that 

United could obtain higher discounts than are currently being achieved, and 

estimates of TriWest’s current discounts. Supp. Protest at 22-28. As with the issue 

(continued...)
Page 22 B-401652.12, B-401652.13 

United’s “Aggressive” Discounts

Similarly, TriWest challenges the agency’s decision to award strengths based on 

United’s “aggressive” discounts because, the protester claims, the agency “took no 

heed of the fact that, just months prior,” United had argued before GAO and the 

Court of Federal Claims that aggressive discounts were unattainable without 

compromising provider networks and contract performance. Protest at 22 (referring 

to United’s protests of the award of the TRICARE contract for the South region; see

UnitedHealth Military & Veterans Servs., LLC v. United States, Case No. 11-405C, 

2011 U.S. Claims LEXIS 2128 (Fed. Cl. Oct. 25, 2011); UnitedHealth Military & 

Veterans Servs., LLC, B-401652.8 et al., June 14, 2011, 2012 CPD ¶ 83). TriWest 

quotes extensively from the two prior UnitedHealth decisions. TriWest points out 

that the awardee previously argued that there was substantial risk of future 

Medicare rate reductions and other factors that will make it increasingly difficult for 

contractors to achieve their discounts. Protest at 23. In the prior litigation, United 

argued that contractors’ efforts to maintain unrealistic discount levels will drive 

providers out of the provider network and adversely impact network quality and 

compliance with network access standards, and that aggressive network provider 

discounts harm the quality of, and threaten the long-term viability of, the TRICARE 

provider network. Id. TriWest contends that TMA should have considered these 

risks when evaluating United’s aggressive network provider discounts, and 

downgraded United’s proposal accordingly. Id. at 24.

As the intervenor notes, both GAO and the Court of Federal Claims rejected 

United’s arguments in the prior litigation. UnitedHealth Military & Veterans Servs., 

LLC, supra at 16 (denying protest and stating that, while the protester believed that 

its proposed business strategy was the most appropriate in light of all the 

circumstances, the protester’s arguments amounted to a disagreement as to 

business judgment, and holding that “disagreement of one offeror with the business 

strategy proposed by another, in the face of a reasonable evaluation by the agency, 

and without an objective showing that the questioned strategy is inherently 

unreasonable, does not provide a basis for our Office to object to the agency’s 

evaluation”). Here, as in UnitedHealth Military & Veterans Servs., LLC, supra the 

record shows that United’s proposal provided an explanation of how it had 

calculated its proposed discounts. The agency, in turn, reviewed United’s 

assumptions and calculations, and concluded that United’s proposed discounts 

were reasonable in light of the totality of circumstances. On this record, we do not 

question the agency’s judgment, and this protest ground is denied.

 

(...continued)

discussed above, TriWest has not shown that the agency’s reliance on the 

awardee’s assumptions was unreasonable. 
Page 23 B-401652.12, B-401652.13 

Present Value of Cost Savings

TriWest also complains that the agency improperly failed to take into account the 

“present value” of the cost savings associated with the offerors’ network discount 

proposals. The protester contends that this error favored United, which used a 

[deleted] to calculate its network discounts, over TriWest, which used a [deleted]. 

Supp. Protest at 9-11; Comments at 28. 

It is up to the agency to decide upon the appropriate method for evaluation of cost 

or price in a given procurement, although the agency must use an evaluation 

method that provides a basis for a reasonable assessment of the cost of 

performance under the competing proposals. QinetiQ North America, Inc., 

B-405163.2 et al., Jan. 25, 2012, 2012 CPD ¶ 53 at 17. 

Here, we find nothing in the RFP, nor has TriWest identified any such RFP 

provision, that required the agency to evaluate the offerors’ network discounts on 

the basis of present value. Accordingly, we find nothing objectionable in the 

agency’s evaluation method in assessing the value of network discounts without 

performing a present value calculation. The mere fact that the protester disagrees 

with agency’s chosen evaluation method does not provide a basis on which to 

sustain the protest. This protest ground is denied.

Mathematical Error in Cost Savings Computation

Finally, TriWest challenges a $5.4 million mathematical error in the agency’s 

computation of the protester’s network discounts. Supp. Protest at 11. The 

protester contends that this error resulted in an undervaluation of the cost savings

associated with TriWest’s network provider discounts. Id. In response, the agency 

concedes that its evaluator made a $5.4 million error in calculations. AR at 60. 

Nonetheless, the agency maintains, and we agree, that this error was de minimis. 

The amount of the error constitutes less than [deleted] of United’s approximately 

[deleted] advantage with regard to evaluated network discount savings and less 

than one-tenth of one percent of the total evaluated price. Our Office will not 

sustain a protest where an agency’s error has a de minimis impact on an evaluation 

factor. See Giberson Plumbing & Excavating, Inc., B-245798, Dec. 27, 1991, 91-2 

CPD ¶ 589 at 3 (finding a difference of 5 percent of the protester’s total cost to be 

de minimis where the addition of it would not have affected the parties’ competitive 

standing); TECOM, Inc., B-236929.2, May 11, 1990, 90-1 CPD ¶ 463 at 4 (finding 

amount to be de minimis where it represented 5.8 percent of the difference between 

the protester’s and awardee’s prices and did not adversely affect the relative 

competitive standing of the parties). Based on the size and relative insignificance of 

the agency’s error, we decline to sustain the protest on this basis. 
Page 24 B-401652.12, B-401652.13 

Past Performance

The protester raises several challenges to the agency’s evaluation of past 

performance. Among other things, the protester argues that: (1) United’s contract 

with AARP is not a “contract” for purposes of the past performance evaluation; 

(2) the agency improperly considered Health Net to be a first tier subcontractor and 

improperly evaluated Health Net’s past performance; (3) the agency’s evaluation of 

United’s performance of two contracts with the Centers for Medicare and Medicaid 

Services was unreasonable; (4) the agency failed to consider negative information 

about United’s past performance; and (5) TMA improperly downgraded TriWest’s 

past performance. We address each of these topics below and find no merit in 

TriWest’s assertions. 

Where a solicitation requires the evaluation of offerors’ past performance, we will 

examine an agency’s evaluation to ensure that it was reasonable and consistent 

with the solicitation’s evaluation criteria. The MIL Corp., B-297508, B-297508.2, 

Jan. 26, 2006, 2006 CPD ¶ 34 at 10; Hanley Indus., Inc., B-295318, Feb. 2, 2005, 

2005 CPD ¶ 20 at 4. An agency’s evaluation of past performance, which includes 

its consideration of the relevance, scope, and significance of an offeror’s 

performance history, as well as consideration of actions taken to resolve prior 

problems, is a matter of agency discretion which we will not disturb unless the 

agency’s assessments are unreasonable, inconsistent with the solicitation criteria, 

or undocumented. USIS Worldwide, Inc., B-404671, B-404671.3, Apr. 6, 2011, 

2011 CPD ¶ 92 at 6; Smiths Detection, Inc.; Am. Sci. & Eng’g, Inc., B-402168.4 et 

al., Feb. 9, 2011, 2011 CPD ¶ 39 at 9.

AARP Contract

TriWest contends that United’s AARP contract is not a “contract” for purposes of the 

past performance evaluation.33

 33 In accordance with the solicitation, because the awardee, United Military and 

Veterans Services, is a newly formed company and did not have any past 

performance, the agency evaluated the past performance of its parent organization, 

UnitedHealth Group, and its consortium member partner, Public and Seniors Market 

Group (PSMG). See RFP at 115.

 Specifically, the protester alleges that United’s 

contract with AARP is nothing more than a licensing agreement under which United 

pays fees to AARP in exchange for the exclusive opportunity to market its 

healthcare services to AARP members. Protest at 45; Protester’s Comments at 

36-37. TriWest argues that such a relationship could not properly be considered a 

contract under the solicitation’s past performance evaluation criteria, and that even
Page 25 B-401652.12, B-401652.13 

if United’s relationship with AARP is considered to be a contract, the contract is not 

relevant to the procurement here. Id. at 36-52.34

With regard to the substantive evaluation of past performance, the RFP stated that 

the agency would evaluate past performance information to determine how well an 

offeror has performed in the past on similar, relevant work. RFP at 115. Further, 

the RFP provided that “[p]ast performance history not specifically related to 

providing any of the services in this solicitation will not be considered relevant. . .” 

Id.

Initially, we note that, while TriWest argues that the agreement with the AARP could 

not properly be considered a contract under the RFP’s criteria for the evaluation of 

past performance, the only RFP provision cited in the protest to support this position 

is § L.7.3, which requires that for each contract, the offeror must identify a 

“customer, a verified point of contact for the customer . . . who will be able to 

discuss the offeror’s performance with the Government.” Protest at 45 (quoting 

RFP at 105). United’s contract with AARP clearly satisfied this requirement, as 

evidenced by the questionnaire completed by the AARP point of contact who 

discussed United’s performance. See AR, Tab 82, PAG Report for United, at 

24-27.

In evaluating United’s AARP past performance reference, TMA noted that the 

contract involved roughly 4 million beneficiaries, substantially more than the 

2.9 million beneficiaries under the TRICARE West contract. AR, Tab 7, SSDD, at 

15. The agency also concluded that the AARP contract involved similar functions to 

the functions described in the TRICARE solicitation. In its response to the past 

performance questionnaire, the past performance point of contact noted that United 

had performed medical management, claims processing, and enrollment functions. 

AR, Tab 82, Performance Assessment Group (PAG) Report for United, at 25-26. 

The questionnaire also addressed United’s performance under several other areas 

that comprise the RFP’s technical subfactors, such as beneficiary satisfaction, 

 34 The agency contends that the protester’s challenges to the agency’s past 

performance evaluations are untimely because RFP amendment 14 stated that all 

prior performance ratings would be relied upon unless new information was 

discovered. Therefore, the agency contends that, for all past performance ratings 

that remained unchanged from the 2009 evaluation, if the protester wished to 

challenge the ratings, it was required to do so prior to the due date for receipt of 

proposals because the ratings were effectively incorporated into the ground rules of 

the competition. Agency Dismissal Request at 6-9; AR at 12. We decline to 

dismiss the challenges to the ratings of United as untimely since the protester did 

not know the basis of United’s past performance ratings until after the contract was 

awarded.
Page 26 B-401652.12, B-401652.13 

claims processing, and management. Id. at 24-26. For example, with regard to 

subfactor 3, medical management, the AARP questionnaire response stated: 

For its care management programs, United utilizes a fully integrated 

care model that is being leveraged to improve the health of AARP 

members who are insured through United. UHG has exhibited truly 

innovative thinking in working with ASI to develop new programs for 

AARP members in a market space for supplemental insurance 

products that did not previously offer health improvement programs. 

United brings best practices to medical care management through 

programs that are developed via access to an industry leading data 

warehouse that creates treatment algorithms that are evidence based. 

The programs jointly developed by United and ASI are new and reflect

innovation and value.

AR, Tab 82, Performance Assessment Group (PAG) Report for United, at 25.

When given the chance to provide additional comments regarding United’s 

performance, AARP stated “United has achieved strong member satisfaction, low 

administrative costs and continued growth in a flat industry . . . The retention rate 

and new sales are good indicators of the quality and performance of the product.” 

Id. at 26. After reviewing the questionnaire responses as well as United’s own 

description of the contract, TMA found the AARP contract to be similar in both 

scope and magnitude to the TRICARE solicitation. Id. at 3. 

We find no basis to question the agency’s judgment. As set forth above, the agency 

found that United had performed many of the same functions under the AARP 

contract that will be required under the TRICARE contract. The past performance 

questionnaire discussed United’s performance of at least five of the seven technical 

subfactors. See AR at 166. For some of these subfactors, the past performance 

reference provided specific examples of United’s performance of these tasks. For 

example, the questionnaire response stated that, with regard to the task of claims 

processing, United had, in response to rising claims volume, invested in system 

upgrades to ensure processing accuracy thereby exceeding established metrics. 

AR, Tab 82, PAG Report for United, at 25-26. On this record, we cannot find the 

agency’s judgments to be unreasonable. 

Finally, we reject the protester’s argument that the AARP questionnaire cannot be 

relied upon because it is the product of a biased evaluation. Supp. Protest at 34; 

Comments at 50-53. Specifically, the protester contends that AARP derives 

substantial monetary benefit from its dealings with United, and therefore, “[b]ecause 
Page 27 B-401652.12, B-401652.13 

of its obvious conflict of interest, AARP could not be expected to provide reliable, 

objective information about its contract.”35 Supp. Protest at 34.

The agency argues, and we agree, that the fact that an organization benefits 

financially from its contractual dealings with the offeror does not require such 

organization’s views to be disregarded with regard to the quality of the offeror’s 

contract performance.36 See AR at 171 (comparing the situation here to one in 

which an agency provides past performance information on concession contract 

procurements where the agency receives fees from the offeror). Further, several of 

the exceptional ratings assigned to United’s performance rested upon objective 

contract performance measures. Id. For example, the AARP reference cited to the 

fact that United met its service level agreements related to enrollment and claims 

processing and maintained low administrative costs and continued sales growth in a 

flat economy. AR, Tab 82, PAG Report for United, at 25-26. The reference also 

stated that nearly [deleted] percent of members reported being highly satisfied, 

while only [deleted] percent reported being dissatisfied, and noted that United had 

been willing to stake its performance assessment to annual measures and metrics. 

Id. at 25-26. Based on this record, we find that the agency reasonably determined 

that AARP’s observations should be considered in the agency’s evaluation of past 

performance. 

Health Net

Next, TriWest argues that the agency improperly considered Health Net to be a 

first tier subcontractor of United, and unreasonably evaluated Health Net’s past 

performance. Comments at 36-42. More specifically, the protester claims that 

TMA’s decision to consider Health Net as a first tier subcontractor was 

unreasonable, given the firm’s limited involvement in performance of the contract. 

Id. at 36-39. The protester also contends that TMA’s assignment of a rating of 

exceptional to Health Net’s past performance was unreasonable because the 

agency failed to consider negative information in its possession regarding the firm’s 

past performance. Id. at 39-42.

The RFP required that each offeror submit past performance information for the 

prime contractor and its first tier subcontractors. RFP at 104-09; see also RFP at 

115 (stating that the agency would evaluate such past performance information). 

The solicitation expressly defined first tier subcontractors as follows: 

 35 The protester also contends that it is unclear whether AARP’s performance 

standards and measures are similar to the requirements under the TRICARE 

contract. Comments at 52.

36 Indeed, it seems self-evident that, as a general rule, ongoing contractual 

relationships are likely to be mutually beneficial. 
Page 28 B-401652.12, B-401652.13 

[A] first tier subcontractor is a company with a direct contractual 

relationship with the offeror and whose total contract price exceeds 

$100,000,000 or a subcontractor who has direct responsibility for 

providing/authorizing health care, managing or directing health care 

of TRICARE beneficiaries, or who provides claims processing 

services regardless of the price. 

RFP at 104 (emphasis added). 

The agency determined that Health Net satisfied the second part of this definition 

because it bears responsibility for “providing/authorizing . . . managing or directing” 

health care for TRICARE beneficiaries. Specifically, United’s proposal stated that 

Health Net would be “directly responsible for directing health care and coordinating 

beneficiary activities” at [deleted], in addition to providing advice, consultation and 

operational resources, generally. AR, Tab 38, United FPR3, at 285. The agency 

expressly identified Health Net’s role in directing the health care of TRICARE 

beneficiaries in making the determination that Health Net qualified as a first tier 

subcontractor: “[Health Net] will support UMVS through the provision of . . . ongoing 

beneficiary TRICARE [deleted] services.” AR, Tab 28, 2011 Addendum to PAG 

Report for United, at 3. 

The agency’s decision to consider Health Net to be a first tier subcontractor was 

consistent with the solicitation. Specifically, the RFP’s definition of first tier 

subcontractors included firms that bear direct responsibility for providing, 

authorizing, managing, or directing health care of TRICARE beneficiaries. United’s 

proposal stated that Health Net would be directly responsible for directing health 

care, and TriWest has not provided any basis to question that assertion. 

Accordingly, we find the agency reasonably concluded that Health Net’s activities 

qualified the firm as a first tier subcontractor.

TriWest also complains that, even if Health Net qualifies as a first tier subcontractor, 

it should not have received a rating of exceptional for its performance of the 

TRICARE North contract. Supp. Protest at 39-42. The protester bases its 

complaint on the fact that Health Net received very few ratings of exceptional in its 

CPARS evaluations, and received interim feedback for the most recent option 

period stating that the firm’s current performance was [deleted]. Id. 

The definition of an exceptional rating used by the PAG was as follows: 

Performance met contract requirements and exceeded some. Where 

requirements were exceeded, the result was a significant benefit to 

the other contracting party. Contractual performance was
Page 29 B-401652.12, B-401652.13 

accomplished with few, if any, minor problems. Any corrective 

actions taken by the contractor were prompt and effective.

AR, Tab 26, PAG Addendum Introductory Memorandum, at 3.37

The record contains nine single-spaced pages of the PAG’s analysis of Health Net’s 

performance under the TRICARE North contract. AR, Tab 82, 2009 PAG Report for 

United, at 44-53. The agency’s analysis reflects that it delved beyond the singleword adjectives assigned to Health Net in CPARS and analyzed all of the 

information available regarding Health Net’s past performance. For example, the 

PAG conducted a detailed analysis of the references’ answers to questionnaires 

and narratives. The PAG noted that, with regard to provider networks, the point of 

contact stated that Health Net had been very proactive in recruitment of network 

providers and had increased the size of the prime network by [deleted] percent 

during the most recent option period alone. Id. at 44. Health Net also exceeded the 

contract’s requirement that at least [deleted] percent of qualifying referrals be to 

military treatment facilities or network providers. Id. at 45. With regard to referral 

management, the point of contact stated that Health Net’s process met or exceeded 

overall contract requirements for timeliness and accuracy and the contractor 

provides a highly successful right of first refusal process. Id. For the last 38 

consecutive months, Health Net’s performance exceeded the contract requirement 

that the firm issue a referral authorization or denial on at least [deleted] of requests 

within [deleted] working days, with Health Net achieving an overall contract 

percentage of [deleted]. Id. at 46.38 

 37 The ratings used by the PAG differed in some respects from the ratings used 

under the CPARS system. For example, the CPARS rating system defines an 

exceptional rating to mean “meets contractual requirements and exceeds many”; 

under the definitions used by the PAG, exceptional was defined as “met contract 

requirements and exceeded some.” AR, Tab 26, PAG Addendum Introductory 

Memorandum, at 2-3. Also, the CPARS system includes a rating of “very good” that 

is not included in the PAG rating scale. Therefore, for each rating of very good 

under CPARS, the PAG had to determine whether the performance should be 

categorized as satisfactory or exceptional under the PAG’s rating system. Id. at 3.

38 The agency noted that Health Net met or exceeded three of five performance 

metrics. The two exceptions were: (1) the requirement that the contractor issue 

determinations on [deleted] percent of all requests within [deleted] working days of 

the request (Health Net’s average performance over the last 28 months was 

[deleted] percent); and (2) the requirement that the contractor issue a referral 

authorization or denial on [deleted] of all requests within [deleted] working days 

(Health Net’s average performance over the last 29 months was [deleted] percent). 

AR, Tab 82, 2009 PAG Report for United, at 45-46.
Page 30 B-401652.12, B-401652.13 

With regard to medical management, the PAG quoted the point of contact: “[Health 

Net]’s medical management processes deliver high level services . . . performance 

overall optimizes use of the direct care system . . . initiated a Warrior Care Support 

program in conjunction with and in response to the problems identified at Walter 

Reed Army Medical Center in 2007.” Id. at 46. The PAG also noted that in 41 of 46 

months, Health Net had ensured that [deleted] of case management treatment 

plans were established within [deleted] working days from the date of receipt of the 

request.39 Id. With regard to enrollment, the PAG noted that the reference stated 

that Health Net’s performance on the TRICARE North contract in this area was 

quite strong, and that Health Net had remained customer focused, ensuring 

enrollment processing was completed in a timely manner and striving to optimize 

enrollments within the military treatment facilities. Id. at 47. Similarly, with regard to 

beneficiary satisfaction/customer service, the PAG noted that the past performance 

reference stated that Health Net’s customer satisfaction program was solid and that 

the firm continually improved its processes to pinpoint and correct problems with 

minimal disruption. Id. The PAG further noted that Health Net had exceeded all 

performance metrics under this category. Id. With regard to claims processing, the 

PAG noted that Health Net’s reference stated that Health Net performed 

consistently above contract standards for claims timeliness and accuracy, and was 

quick to respond to and correct any issues. Id. at 48. With regard to management 

functions, the PAG quoted the point of contact’s statement that the firm’s internal 

quality management system is extensive, visible, and effective, and that the firm 

had met or exceeded all overall contract standards. Id. 

In addition to its in-depth analysis of the agency representative’s responses, the 

PAG also considered the CPARS ratings for Health Net. Id. at 49-53. The PAG 

noted that during the most recent option period, the contracting officer had provided 

interim feedback to Health Net regarding its cost control and business relations 

elements of the CPARS. The PAG noted that the assessments of unsatisfactory 

and marginal performance for the cost control and business relations categories, 

respectively, are not final ratings for option period 5, but rather an interim review 

designed to allow Health Net the opportunity to correct the issues before ratings for 

the option period are finalized. Id. at 50; see id. at 82-85. In response to the interim 

feedback, Health Net submitted an 18-page letter explaining why it believed the 

ratings were not warranted, but also detailing the many steps Health Net planned to 

take to remedy the perceived problems with its performance. Id. at 86-104. 

 39 In the other 5 of 46 months, Health Net allowed no more than [deleted] cases 

each month to exceed this timeframe. AR, Tab 82, 2009 PAG Report for United, 

at 46. The PAG also found that in 40 of 46 months, Health Net had ensured that 

[deleted] of all case management requests were evaluated for case management 

intervention within [deleted] working days, missing only [deleted] cases out of 

[deleted]. Id. 
Page 31 B-401652.12, B-401652.13 

Our review of the record reflects that the agency performed an extensive 

substantive analysis of Health Net’s performance of the TRICARE North contract 

which included a consideration of the negative interim feedback for option year 5 as 

well as the final CPARS ratings for each year of contract performance and the 

narrative descriptions of Health Net’s performance under the contract. The record 

shows that ultimately, the agency determined that Health Net’s extensive multi-year 

record, as evidenced in particular by the narrative descriptions of Health Net’s 

performance, merited a past performance rating of exceptional for this past 

performance reference. We find no basis to question the reasonableness of the 

agency’s judgment. Therefore, this protest ground is denied.

CMS Contracts

TriWest next challenges the agency’s assignment of a rating of satisfactory to 

United’s performance of two contracts with the Centers for Medicare and Medicaid 

Services (CMS).40 Supp. Protest at 35-36; Comments at 53-54. In its initial 

evaluation of this past performance reference in 2009, the PAG determined that the 

CMS contracts were somewhat relevant and assigned a performance rating of 

satisfactory to each. AR, Tab 82, 2009 PAG Report for United, at 2. With regard to 

the Medicare Advantage contract, the PAG noted that the point of contact for this 

contract stated that the offeror was in good standing in response to all questions 

and did not mention any failures that would contribute to a rating of less than 

satisfactory. Id. at 3. With regard to the Medicare Part D contract, the PAG found 

that, while the offeror had received several high ratings, the reference identified 

some deficiencies in performance that had been corrected after a corrective action 

plan was requested. Id. at 3-4. Based on this information, the PAG assigned 

ratings of satisfactory to both past performance references.

As explained above, RFP amendment 14 stated that in performing its reevaluation 

of proposals, the agency would rely on the previous past performance evaluations 

as long as the agency did not discover information that would cause the evaluator to 

question the initial evaluations. RFP at 115. When TMA contacted CMS regarding 

these contracts, the point of contact stated that the agency had “taken steps to 

curtail expansion of the program until certain performance standards are improved.” 

AR, Tab 28, Addendum to PAG Report, at 2. However, the point of contact stated 

that she still considers the firm’s performance of both contracts from 2008 to the 

present to be satisfactory. Id. The reference also noted that no sanctions had been 

imposed and there had been no attempt to remove the contractor. Id. Based on 

these statements, the PAG determined that the ratings for the CMS contracts 

should remain satisfactory. Id. at 1. 

 40 One contract was under the Medicare Advantage and Medicare Advantage 

Special Needs Plan; the other contract was under Medicare Part D.
Page 32 B-401652.12, B-401652.13 

The record reflects that the agency considered both the positive and negative 

information provided by the point of contact and, based upon the totality of the 

information, determined that a rating of satisfactory was appropriate. We do not find 

these judgments to be unreasonable. Therefore, this protest ground is denied.

Publicly Available Information about United

TriWest also contends that TMA’s evaluation of United’s past performance was 

flawed because the agency did not consider negative information regarding United’s 

past performance that was too “close at hand” to be ignored. Protest at 51-54; 

Comments at 56-61. Specifically, TriWest maintains that there existed a “vast array 

of publicly-available publications, articles, and reports [that] disclose numerous 

United performance problems, fines, and other legal problems.” Protest at 52. For 

example, TriWest lists the following: United’s 2009 settlement of an investigation by 

the New York Attorney General;41 its 2009 settlement of class action lawsuits 

brought by the American Medical Association, policy holders, and providers;42 fines 

levied against a subsidiary of UnitedHealth Group in Texas for failure to provide 

contract performance;43 fines levied against PacifiCare, a company acquired by 

UnitedHealth, for violations of California insurance laws;44 a Consumer Reports 

publication addressing insurance plans nationwide; an article in The Atlantic stating 

that United is the eleventh most-hated company in America and the most-hated 

insurance company in America;45 and information contained in United’s 10-Q and 

10-K reports.46 Protest at 51-54; Supp. Protest at 43-47. 

The agency argues that the RFP limited the evaluation of past performance to 

“similar relevant” work being performed by entities that would actually do TRICARE 

work, and that the protester has made no showing that these settlements, fines, and 

news articles satisfied this requirement. AR at 184. The agency also contends that 

the information identified by TriWest involved dissimilar work and entities unrelated 

 41 Protest at 52 (citing to news article in the Wall Street Journal and an online video 

from www.videowired.com).

42 Id. (citing to a UnitedHealth Group Annual Report and a news report from the 

Reuters website).

43 Id. at 53 (citing to a news report from the CBS News website).

44 Id. (citing a UnitedHealth Group Annual Report and a news report from the 

website for NBC Los Angeles).

45 Id. at 54.

46 Reports required by the Securities and Exchange Commission to be filed by 

public companies. 
Page 33 B-401652.12, B-401652.13 

to the performance of the TRICARE contract. Id. TMA also notes that, contrary to 

the protester’s assertions, there was no legal duty for the agency to “track down and 

investigate every negative story or allegation about unrelated work and entities.” Id.

at 185.

Our Office has recognized that in certain limited circumstances an agency 

evaluating an offeror’s past performance has an obligation (as opposed to the 

discretion) to consider outside information bearing on an offeror’s past performance.

New Orleans Support Services LLC, B-404914, June 21, 2011, 2011 CPD ¶ 146 at 

5. Where we have charged an agency with responsibility for considering such 

outside information, the record has demonstrated that the information in question 

was simply too close at hand to require offerors to shoulder the inequities that 

spring from an agency’s failure to obtain, and consider, the information. Id.; 

International Bus. Sys., Inc., B-275554, Mar. 3, 1997, 97-1 CPD ¶ 114 at 5; see

GTS Duratek, Inc., B-280511.2, B-280511.3, Oct. 19, 1998, 98-2 CPD ¶ 130 at 14 

(agency should have considered offeror’s performance of a prior contract where the 

contract was discussed in the offeror’s past performance proposal, the contract was 

so similar that it served as the basis for the government estimate for the work, and 

the contracting officer’s technical representative for the contract was a member of 

the technical evaluation team for the subject solicitation); G. Marine Diesel, 

B-232619.3, Aug. 3, 1989, 89-2 CPD ¶ 101 at 4-6 (contracting officer who was 

personally aware of the awardee’s continuing difficulties in performing a contract for 

services related to the subject solicitation, and who considered the performance 

difficulties in deciding not to exercise the remaining options, erred in not considering 

the awardee’s performance difficulties when determining whether the contract under 

the subject solicitation had been properly awarded); G. Marine Diesel; Phillyship, 

B-232619, B-232619.2, Jan. 27, 1989, 89-1 CPD ¶ 90 at 4-5 (agency should have 

considered awardee’s prior experience under a directly relevant contract where the 

contract was referenced in the awardee’s proposal and agency personnel were 

familiar with the awardee’s performance). However, the “close at hand” information 

in these cases generally concerned contracts for the same services with the same 

procuring activity, or at least information personally known to the evaluators. New 

Orleans Support Services LLC, supra, at 6.

In order to succeed on this claim, the protester must show that the agency was 

aware (or should have been aware) of the information, and that the agency acted 

unreasonably in failing to consider it. With regard to the majority of the outside 

information identified by the protester, TriWest has made no showing that the TMA 

evaluators were aware or should have been aware of the information cited in its 

protests. For example, with regard to the Consumer Reports article, the protester 

merely states that, “[s]urely, one or more of the dozens of TMA personnel involved 

in the evaluations and award process must subscribe to Consumer Report[s].” 

Protest at 53 n.24. With regard to the information contained in United’s 10-Q and 

10-K reports, the protester has shown that the agency had the information in its 

possession (it was submitted as part of Volume VI, Financial), but has not shown 
Page 34 B-401652.12, B-401652.13 

that the information was sufficiently relevant to the agency’s consideration of past 

performance to be considered in that evaluation.47 With regard to the fines levied 

against a subsidiary of UnitedHealth Group for failure to provide contract 

performance, the protester contends that the information is relevant to the agency’s 

past performance evaluation because United included a summary of the contract 

under its “referral management section.” Protester’s Comments at 58. However, 

the protester has made no showing that the agency was aware of, or should have 

been aware of, the information TriWest cites regarding fines for nonperformance of 

the contract. Accordingly, we find no basis to conclude that the agency improperly 

disregarded relevant close-at-hand information during its past performance 

evaluation.

TriWest’s Past Performance Rating

TriWest also contends that TMA improperly downgraded the protester’s past 

performance rating. The protester contends that its rating was lowered from “solidly 

superior” to United’s past performance (as a result of the FPR1 evaluations) to 

essentially equal in the reevaluation. Supp. Protest at 31-32.48 The protester 

contends that “the record is devoid of any discussion that explains why the agency 

concluded TriWest was suddenly now equal to [United] when TriWest was found to 

be ‘solidly superior’ during the prior evaluation.” Id. at 32. 

As set forth above, the RFP here said that the agency would sustain its previous 

past performance evaluations unless it discovered information that would cause the 

evaluators to question the initial evaluation. RFP at 115. We initially note that both 

offerors’ adjectival ratings remained the same from FPR1 to FPR3. Further, to the 

extent that the evaluators determined that TriWest’s past performance was no 

longer solidly superior to United’s past performance, we find that determination to 

be reasonable. 

 47 We also note that, with regard to the SEC filings, this protest ground is likely 

untimely, since the allegation was raised in the protester’s supplemental protest and 

is based on publicly-available SEC filings which were available to the protester at 

the time of its initial protest. See Sunrise Med. HHG, Inc., B-310230, Dec. 12, 

2007, 2008 CPD ¶ 7.

48 In support of its contention that its past performance was previously considered 

to be “solidly superior” to United’s, the protester cites to an agency-level protest 

decision attached as an exhibit to TMA’s dismissal request. The agency-level 

protest decision simply stated that, while United had claimed in its agency-level 

protest that TriWest had improperly been considered to be solidly superior to United 

with regard to past performance, the agency found no merit to this protest ground. 

Protester’s Opp. to Request for Dismissal, at 3 (citing only to Agency’s Request for 

Dismissal, Exh. 1, Decision on Agency-Level Protest of United).
Page 35 B-401652.12, B-401652.13 

As set forth above, in accordance with RFP amendment 14, the agency contacted

the offerors’ past performance points of contact to determine whether there had 

been a change in performance. The ratings for TriWest’s past performance 

references remained unchanged, with the exception of the Tidewater, VA, MultiService Market, Multiple Award Task Order (MATO) Appointing contract. The rating 

for this contract changed from “exceptional” to “satisfactory” based on a CPARS 

narrative indicating that communication with the contractor was not always optimal 

and that corrective action was sometimes slow. AR, Tab 7, SSDD, at 13-14. The 

agency evaluators also acknowledged a qui tam Letter of Agreement (LOA) 

regarding TriWest’s failure to pay LOA negotiated rates for certain health care 

encounters to non-network providers under the predecessor TRICARE contract. In 

this regard, the evaluators noted that TriWest’s administrative processes had failed 

to systematically identify LOA discounts and that TriWest had failed to notify the 

government in a timely manner and failed to take corrective measures within a 

reasonable time period. Although the agency ultimately determined that the 

adjectival rating for the TRICARE contract should remain exceptional, and that 

TriWest’s overall past performance rating should also remain exceptional. AR, 

Tab 7, SSDD, at 14, we find that these changes in TriWest’s performance provide 

ample justification for a determination that TriWest’s past performance was no 

longer “solidly superior” to United’s past performance. This protest ground is 

denied.49

Cost/Price Evaluation

The protester contends that the agency failed to perform a sufficient price realism 

analysis of United’s fixed price CLINS to evaluate labor rates. Supp. Protest at 

57-59. Specifically, TriWest argues that TMA improperly relied on an outdated 

three-year-old DCAA audit to conclude that United’s labor rates were realistic. Id. at 

57. The protester also contends that United drastically lowered its rates in its final 

FPR, and that the agency failed to compare the awardee’s labor rates in FPR3 to 

the rates in FPR1. Id. at 58. Therefore, the protester contends that the agency 

 49 TriWest also raised several other challenges to the agency’s past performance 

evaluations; for example, that the agency irrationally rated United’s partner, PGBA 

as essentially equal to WPS (Supp. Protest at 42-43) and that the agency treated 

offerors unequally by considering TriWest’s settlement for improper conduct during 

its incumbent performance of the TRICARE contract (despite the fact that the 

agency did not lower the protester’s ratings because of this issue), while not 

considering settlements and lawsuits in which UnitedHealth Group or UnitedHealth 

subsidiaries have been involved (Supp. Protest at 47). We have considered all of 

the protester’s arguments and find that the record here does not provide a basis to 

sustain any of the protest grounds.
Page 36 B-401652.12, B-401652.13 

ignored the risk presented by what the protester characterizes as United’s drastic 

salary reductions. Id. 

The RFP here stated that, in accordance with FAR § 15.404-1(d)(3), “cost realism 

analysis may be used on competitive fixed price contracts. The results of this 

realism analysis . . . may be used in the performance risk assessments and the 

responsibility determination.” RFP at 116.

First, TriWest’s assertion that United drastically lowered its rates in its last FPR is 

incorrect. United reorganized its labor categories, bringing its price proposal into 

accord with its revised cost accounting standards disclosure statement, which 

DCMA certified as accurate in August 2011, but it did not lower its labor rates. 

Intervenor’s Comments at 52. In this regard, the agency points out that, despite the 

protester’s claims to the contrary, United generally proposed more staff and higher 

prices to support those staff than TriWest did. AR at 216-17; AR, Tab 29, 2012 

Price/Cost Team Report, at 15 (noting that TriWest proposed an average of 

[deleted] FTEs per year, while United proposed an average of [deleted] FTEs per 

year).

Cost realism, which measures the likely cost of performance, is a mandatory 

consideration for the award of cost-reimbursement contracts because the 

government will generally bear the actual costs of performance. However, cost 

realism is typically not a factor in the evaluation of proposals when a fixed-price 

contract is contemplated, because the government’s liability is fixed and the 

contractor bears the risk of any cost escalation. J&J Maintenance, Inc., 

B-244366.2, Mar. 7, 1994, 94-1 CPD ¶ 177 at 10. Since the government exposes 

itself to the risk of poor performance when a fixed-price contractor is forced to 

provide services at little or no profit, where a solicitation provides for the award of a 

fixed-price contract, or a fixed-price portion of a contract, an agency may provide in 

the RFP for the use of price realism analysis for the limited purpose of measuring 

an offeror’s understanding of the requirements or to assess the risk inherent in an 

offeror’s proposal. FAR § 15.404-1(d)(3) (cost realism may be used in competitive 

fixed-price contracts when new requirements may not be fully understood by 

competing offerors, there are quality concerns, or past experience indicates that 

contractor’s proposal costs have resulted in quality or service shortfalls); Raytheon 

Tech. Servs. Co. LLC, B-406136, B-406136.2, Feb. 15, 2012, 2012 CPD ¶ 99 at 5; 

see J&J Maintenance, Inc., supra, at 10. The depth of such an analysis is a matter 

within the sound exercise of the agency’s discretion. Grove Resource Solutions, 

Inc., B-296228, B-296228.2, July 1, 2005, 2005 CPD ¶ 133 at 5; Citywide Managing 

Servs. of Port Washington, Inc., B-281287.12, B-281287.13, Nov. 15, 2000, 2001 

CPD ¶ 6 at 4-5.

Here, the record reflects that the agency adequately considered the realism of 

United’s fixed-price CLINs. The agency’s price/cost team report reflects that, in 

initially reviewing the offerors’ proposals, the agency’s realism analysis consisted of 
Page 37 B-401652.12, B-401652.13 

review and evaluation of specific elements of each offeror’s proposed cost estimate 

and prices to determine whether the estimated proposed cost elements were 

realistic for the work to be performed, reflected a clear understanding of the 

requirements, and were consistent with the unique methods of performance and 

materials described in the offeror’s technical proposal. AR, Tab 29, 2012 Price/Cost 

Team Report, at 1. The agency’s initial realism analysis included DCAA audits 

performed in 2008. Id. at 19. The agency’s price/cost team stated that during the 

reevaluation, no labor salary verifications were requested from DCAA for United 

because the firm is not currently in operation, the rates did not change significantly 

since FPR1, and the proposed labor salaries were previously audited by DCAA for 

the original proposal. Id. at 20. However, the agency did have DCAA perform labor 

salary verifications of the firm’s payroll records, which did not result in any 

significant differences between the proposed labor rates and the payroll records. Id. 

The agency also requested that DCMA review the awardee’s proposed indirect 

rates. Id. Finally, DCMA reviewed the revisions to United’s cost accounting 

standards disclosure statement and found them to comply with the cost accounting 

standards and FAR Part 31. AR, Tab 98, DCMA/DCAA Review, at 1. On this 

record, we find that the agency’s analysis of offerors’ fixed-price CLINs was 

sufficient. This protest ground is denied.

Source Selection Decision Trade-Off

The protester argues that the agency improperly gave unequal weight to certain 

subfactors rather than valuing them equally as required by the RFP. Specifically, 

TriWest contends that the SSA diminished the importance of the subfactor in which 

TriWest’s proposal was considered to be superior, and elevated the importance of 

the two subfactors in which United was found to have the advantage. Comments 

at 85. The protester bases this claim, in part, on the SSA’s statement that “the 

significant advantage that [United] demonstrated in Subfactors 1 and 3 of the 

technical approach provides clear discriminators that outweigh the relative parity 

between the [United] and TriWest proposals otherwise.” Comments at 85 (quoting 

AR, Tab 7, SSDD, at 1). This statement, the protester claims, proves that the SSA 

ignored TriWest’s acknowledged technical advantage under subfactor 4, enrollment. 

It is well settled that a single evaluation factor--even a lower-weighted factor--may 

properly be relied upon as a key discriminator for purposes of a source selection 

decision. Smiths Detection, Inc.; American Science and Engineering, Inc., 

B-402168.4 et al., Feb. 9, 2011, 2011 CPD ¶ 39 at 16 (citing DPK Consulting, 

B-404042, B-404042.2, Dec. 29, 2010, 2011 CPD ¶ 12 at 13 (source selection 

authority, in making a tradeoff analysis, may ultimately focus on a particular 

discriminator, even if it is not the most heavily weighted factor)).

The SSA here properly focused on the subfactors in which he found key 

discriminators. Specifically, the SSA concluded that the offerors were essentially 

equal under four subfactors, TriWest had a slight advantage under subfactor 4, and 
Page 38 B-401652.12, B-401652.13 

United had a substantial advantage under subfactors 1 and 3. Although the RFP 

provided that all technical subfactors were to be given equal weight, to the extent 

that the SSA properly determined that there were key discriminators under certain 

subfactors, there is nothing objectionable in the SSA’s reliance upon those key 

discriminators for purposes of his source selection decision. Further, while the SSA 

acknowledged that TriWest had an advantage under one subfactor, the record 

reflects that the protester’s advantage in this regard was consistently referred to as 

“slight.” See, e.g., AR, Tab 7, SSDD, at 4, 14; AR, Tab 9, SSEB Chair Report, at 

39, 43.50 In comparison, the contemporaneous documentation supports the 

agency’s characterization of United’s advantage under subfactors 1 and 3 as 

“substantial.” AR, Tab 7, SSDD at 4, 10, 18; AR, Tab 9, SSEB Chair Report, at 43. 

We find that the SSA properly relied upon the key discriminators between the 

proposals in making the selection. Therefore, we deny this basis of protest.

Common Stock Ownership

Finally, TriWest contends that United was ineligible for award under the terms of the 

RFP because the stock of United and other TRICARE contractors are held by 

common investors, which TriWest asserts is prohibited by the solicitation. Protest 

at 68. In this regard, the RFP states that no company or business entity may be 

awarded more than one TRICARE contract as a prime contractor. In connection 

with this prohibition, the solicitation states: 

For purposes of exclusion of sources under this solicitation, a company 

or business entity identified in an offer as a potential prime Contractor 

shall be considered to include the named company or business entity, 

its parent or subsidiary, or a company or business entity directly 

related to the company or business entity through common (regardless 

of the percentage) ownership, control, or management (whether by a 

parent company or otherwise).

RFP at 97.

The protester contends that this exclusion provision renders United ineligible for 

award because United is a publicly traded company and its stock is held by entities 

 50 See also, AR, Tab 8, Source Selection Advisory Committee Report, at 6-7 

(stating that the members of the SSAC believed that the SSEB chair had been 

conservative in awarding strengths, and that, in reviewing the logic applied to the 

reports prepared by the TET, the SSAC believed that United also could have been 

considered superior under subfactors 2 and 7, and noting that, had these two 

subfactors been awarded as advantages to United, the final tally would have shown 

United superior under four subfactors and TriWest superior under one subfactor).
Page 39 B-401652.12, B-401652.13 

that also own the stock of other publicly-traded TRICARE contractors, such as 

Humana (South Region) and Health Net (North Region). Protest at 68-70. 

The agency maintains that the solicitation provision does not provide a basis to 

disqualify a publicly-traded contractor based only on stock ownership. Moreover, 

the agency maintains, and we agree, that TriWest’s allegations regarding this 

matter are based on information that was readily apparent to TriWest long before 

this protest was filed. 

As discussed above, this procurement has an extensive history. During the first 

round of awards, TMA awarded the contract for the TRICARE West Region to 

TriWest. In 2009, United filed an agency-level protest, which eventually resulted in 

the agency’s decision to take corrective action. There is no indication in the record 

that TriWest challenged United’s standing to file a protest of the 2009 award based 

on United’s alleged failure to comply with the RFP provision regarding common 

ownership--even though the type of information on which TriWest now relies was 

publicly available at that time. In short, it has been clear to TriWest since 2009 that 

the agency considered United to be eligible to receive the award of the contract 

here.51 Since TriWest chose to wait until after the contracts had been awarded in 

the last round of competition before raising this matter, this protest ground is 

untimely and will not be considered. 4 C.F.R. § 21.2(a)(1). 

CONCLUSION

In summary, for the reasons discussed above, we conclude that TriWest’s protest is 

without merit. While we understand that the protester disagrees with various 

aspects of the agency’s evaluation and source selection decision, such 

disagreements provide no basis for our Office to sustain the protest. 

The protest is denied.

Lynn H. Gibson

General Counsel

 51 To the extent TriWest’s protest is based on an assertion that the solicitation was 

ambiguous, it is clear that such ambiguity was readily apparent from the face of the 

solicitation and, as such, constitutes a patent ambiguity. See Harrington, Moran, 

Barksdale, Inc., B-401934.2, B-401934.3, Sept. 10, 2010, 2010 CPD ¶ 231 at 5; 

Ashe Facility Servs., Inc., B-292218.3, B-292218.4, Mar. 31, 2004, 2004 CPD ¶ 80 

at 11. A patent ambiguity must be protested prior to the next closing time for the 

submission of proposals in order to be considered timely. Bid Protest Regulations, 

4 C.F.R. § 21.2(a)(1); Ashe Facility Servs., Inc., supra.