United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Wisconsin Physicians Service Insurance Corporation

File: B-401068.14; B-401068.15

Date: January 16, 2013

Steven S. Diamond, Esq., Ronald A. Schechter, Esq., Stuart W. Turner, Esq., 

Dominique L. Casimir, Esq., Emma V. Broomfield, Esq., Lauren L. Schlanger, Esq., 

and Derrick L. Williams, Esq., Arnold & Porter LLP, for the protester.

Daniel R. Forman, Esq., Peter J. Eyre, Esq., Jonathan M. Baker, Esq., Grant J. 

Book, Esq., Stephan D. Rice, Esq., Jacinta L. Alves, Esq., Derek R. Mullins, Esq., 

Margaret, A. Nielsen, Esq., Crowell & Moring LLP, and Barbara A. Duncombe, Esq., 

and Suzanne Sumner, Esq., Taft Stettinius and Hollister LLP, for National 

Government Services, Inc., the intervenor. 

Anthony E. Marrone, Esq. and Jamie B. Insley, Esq., Department of Health and 

Human Services, for the agency.

Glenn G. Wolcott, Esq., and Sharon L. Larkin, Esq., Office of the General Counsel, 

GAO participated in the preparation of the decision.

DIGEST

1. Agency reasonably considered protester’s adverse past performance related to 

information system security requirements, along with awardee’s commendable past 

performance regarding those requirements, in determining that awardee’s past 

performance was superior to protester’s, and agency reasonably considered that 

superiority in making award. 

2. Agency reasonably concluded that awardee’s proposal reflected a superior 

technical understanding of the contract requirements, where agency reasonably 

found that awardee’s proposal included innovations to address the contract’s unique 

requirements and that protester’s proposal failed to recognize the complexity of the 

solicitation’s requirements. 

3. Protest challenging agency’s cost realism evaluation is denied where record 

establishes that agency’s realism determinations were reasonable, including 

agency’s determination to upwardly adjust protester’s proposed cost/price where 

protester’s proposal failed to establish a basis for substantially reducing protester’s 

historical costs.

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-401068.14, B-401068.15 

DECISION

Wisconsin Physicians Service Insurance Corporation (WPS), of Madison, 

Wisconsin, protests the award of a contract to National Government Services, Inc. 

(NGS), of Indianapolis, Indiana, under request for proposals (RFP) No. RFP-CMS2007-0013, issued by the Department of Health and Human Services, Centers for 

Medicare and Medicaid Services (CMS), to obtain Medicare administrative 

contractor services. WPS challenges the agency’s evaluation and source selection 

decision with regard to the offerors’ past performance, the offerors’ technical 

understanding of the contract requirements, and the cost realism of the offerors’ 

proposals. 

We deny the protest. 

BACKGROUND

At the outset, we note that this is CMS’s third attempt to implement the statutory 

requirements for award of the contract at issue. Specifically, CMS first published 

the solicitation at issue in August 2007, seeking proposals to perform a cost-plusaward-fee contract as the Medicare Administrative Contractor (MAC)1 in a 

geographic area identified as “jurisdiction 6” (J6) for a 1-year base period and four 

1-year option periods.2

 

1 Pursuant to the Medicare Prescription Drug Improvement and Modernization Act 

of 2003 (MMA), MACs perform the claims services that were previously performed 

by “fiscal intermediaries” and “carriers.” Prior to enactment of the MMA, fiscal 

intermediaries were generally responsible for processing Medicare claims from 

institutional providers (for example, hospitals and nursing facilities) under Part A of 

the Medicare program, and carriers were responsible for processing Medicare 

claims from professional providers (for example, physicians and diagnostic 

laboratories) under Part B of the Medicare program. Prior contracts for 

performance of fiscal intermediary and/or carrier services are frequently referred to 

as “legacy” contracts. 

 Following the selection of an awardee in 2009, protests 

2 The statement of work (SOW) for J6 includes Part A and Part B Medicare 

workload for the states of Illinois, Minnesota, and Wisconsin, as well as home, 

health and hospice (HH&H) workload for Alaska, American Samoa, Arizona, 

California, Guam, Hawaii, Idaho, Michigan, Minnesota, Nevada, New Jersey, New 

York, Northern Mariana Islands, Oregon, Puerto Rico, U.S. Virgin Islands, 

Wisconsin, and Washington. Agency Report (AR), Tab A.3, RFP amend. 7, at 2; 

Contracting Officer’s Statement at 1. HH&H requirements are unique, and CMS 

has assigned HH&H workload to only four jurisdictions--jurisdictions 6, 11, 14 

and 15. AR, Tab A.4, Statement of Work, at 20. 
Page 3 B-401068.14, B-401068.15 

were filed challenging that selection decision. Thereafter, the agency cancelled the 

award, amended the solicitation,3 and sought new proposals. 

As amended, the solicitation provided for contract award to the offeror whose 

proposal offered the best value to the government after considering two evaluation 

factors: offeror capability4 and cost/price.5

 RFP amend. 7, at 127-33. Proposals 

were evaluated under the non-cost/price factor and subfactors by assignment of the 

following ratings: green, yellow and red.6

 With regard to evaluation of cost/price, 

the solicitation provided that proposals would be evaluated for reasonableness and 

realism, but would not be assigned adjectival ratings.7 

Initial proposals responding to the amended solicitation were submitted in 

July 2010; thereafter, discussions were conducted and final proposal revisions 

(FPR) were submitted. On September 30, 2011, the agency selected NGS for 

award; WPS filed a protest challenging that award in October 2011. In 

January 2012, the agency again advised this Office that it was taking corrective 

action, elaborating that it would either reevaluate proposals on the basis of the 

 

3 In June and July 2010, the agency issued RFP amendment Nos. 7, 8, and 9, 

substantially revising various sections of the solicitation including sections L and M. 

4 The offeror capability factor was divided into two subfactors: past performance 

and technical understanding. The solicitation further provided that the agency 

would consider the following aspects under each subfactor: customer service, 

financial management, operational excellence, and innovations and technology. 

RFP amend. 7, at 131-32.

5 The solicitation provided that offeror capability was more important than cost/price. 

Id. at 127.

6 With regard to evaluation of past performance, the agency identified past 

performance for each offeror that was considered beneficial, adverse, and/or 

decisively adverse prior to assigning an adjectival rating. A green rating reflected 

consistent quality service, a yellow rating reflected an acceptable level of service, 

and a red rating reflected habitual unacceptable performance. AR, Tab 2.A, Source 

Selection Decision (SSD) at 5-10. With regard to evaluation of technical 

understanding, the agency identified strengths, weaknesses, significant 

weaknesses, and/or deficiencies in each offeror’s proposal prior to assigning an 

adjectival rating. A green rating reflected the agency’s assessment of a high 

expectation of successful performance; a yellow rating reflected the agency’s 

assessment of a fair expectation of successful performance; and a red rating 

reflected an assessment of a low expectation of successful performance. Id. 

7

 The evaluated cost/price for the base year was added to the cost/price of the four, 

one-year options, to calculate a total evaluated cost/price. RFP amend. 7, at 128. 
Page 4 B-401068.14, B-401068.15 

existing record or reopen the procurement and request proposal revisions. Email 

from CMS to GAO, Jan. 25, 2012. 

On February 17, 2012, the agency once again requested submission of offerors’ 

proposals. On March 13, proposals were submitted by three offerors, including 

WPS and NGS.8 Thereafter, the agency’s technical evaluation panel (TEP) 

reviewed the submissions, and discussions were conducted with the offerors. 

Among other things, the agency noted that WPS’s proposal appeared to materially 

understate the level of effort (or, alternatively, appeared to overstate WPS’s 

projected productivity), associated with performing the J6 claims processing 

requirements--specifically with regard to the solicitation’s part A requirements which 

included the HH&H workload. AR, Tab 14.F, Technical Cost Analysis Review and 

Discussion Tracking, at 25-28. Consistent with that assessment, the agency 

advised WPS that its proposed level of effort for these requirements appeared to be 

unreasonable, particularly in light of WPS’s performance under its jurisdiction 5 (J5) 

MAC contract.9

 Accordingly, the agency provided WPS with the following 

discussion question: 

WPS’s proposed level of effort for [claims processing] appears 

unreasonable. To determine the reasonableness of WPS’ proposed 

level of effort, the Government compared WPS’s historic level of effort 

charged [for claims processing] on the Jurisdiction 5 contract for the 

time period of [deleted] through [deleted] to WPS’s proposed level of 

effort for this contract. . . . [F]or the J6 proposal, WPS would . . . 

process [deleted] more claims than its history. 

Although WPS proposes an increase over its historic hours . . . the 

hours appeared to be insufficient when the Government compared 

hours at the labor category level. The Government found that WPS 

has reduced level of effort for [specified labor categories]. 

 

8 The proposal of the third offeror is not relevant to resolution of WPS’s protest and 

is not further discussed in this decision. 

9 WPS has been the J5 MAC contractor since September 2007. The record 

establishes that WPS’s productivity under the J5 contract was [deleted] claims per 

day. AR, Tab 6.A.4, WPS Discussion Questions/Responses, at 33. In evaluating 

WPS’s initial proposal, the agency calculated WPS’s proposed J6 productivity to be 

[deleted] claims per day. Technical Cost Analysis Review and Discussion Tracking, 

at 27. In response, WPS increased its proposed staffing, but acknowledged that, 

even with increased staffing, its J6 proposal reflected productivity of [deleted] claims 

per day--[deleted] its historic productivity. WPS Discussion Questions/Responses, 

at 33. 
Page 5 B-401068.14, B-401068.15 

 . . . . .

In addition to the reduction in hours for these labor categories from 

WPS’s history, WPS’s proposed productivity appears unreasonable 

based on history. 

. . . . . 

Please provide a detailed rationale to support WPS’s proposed level 

of effort in this proposal. The rationale should include a discussion 

regarding the reduction in hours for the labor categories identified 

above. Further the rationale should provide sufficient data to support 

WPS’s proposed productivity in this proposal, inclusive of the exact 

formula and historic data used to calculate WPS’s historic productivity. 

WPS Discussion Questions/Responses, at 31-32.

In responding to the agency’s concerns, WPS stated, in part: 

Different Provider Mix. The mix of provider types and corresponding 

bill types in J5 are more complex than those in the J6 provider 

mix. . . . 

While Home Health services present some unique challenges, most 

reason codes result in a Return to Provider or rejection action if the 

claim is not payable. Because of these major shifts in the mix of 

provider types and bill types, it is difficult to compare productivity rates 

in an accurate manner between the J5 and J6 contracts. Clearly, the 

“average claim” in J6 will be less complex than that in J5. 

Id. at 34. 

As noted above, HH&H claims are unique to jurisdiction 6. Further, HH&H 

providers account for a substantial portion of J6 facilities, and CMS views the 

particular HH&H requirements in J6 as presenting unusual challenges--including a 

high propensity for fraud.10

 

10 In August 2012, the Department of Health and Human Services (HHS), Office of 

Inspector General (OIG) published a report criticizing the billing practices related to 

home health agencies (HHA), concluding that eighty percent of HHAs with 

questionable billing were located in four states--including California and Michigan, 

which are part of the J6 workload. Inappropriate and Questionable Billing By 

Medicare Home Health Agencies, OEI-04-11-00240 (Aug. 2012).

 RFP amend. 7, at 90-103; SSD at 34-35. Accordingly, 

CMS did not agree with WPS’s conclusion that, in the aggregate, J6 claims “will be
Page 6 B-401068.14, B-401068.15 

less complex” than J5 claims. Technical Cost Analysis Review and Discussion 

Tracking at 26. Further, the agency viewed WPS’s statement in that regard as an 

indication that WPS failed to fully understand the J6 contract requirements, 

including the unique complexities associated with the HH&H workload. 

Final revised proposals were submitted on July 25, 2012. In summary, these 

proposals were evaluated as follows: 

WPS NGS

Past Performance Green Green

Technical 

Understanding 

Green Green

Overall Offeror 

Capability

Green Green

Evaluated Cost/Price11 $326.8 million $330.1 million

SSD at 2.

In performing her independent review of offerors’ proposals, the source selection 

authority (SSA) concluded that NGS’s proposal was superior to WPS’s under the 

offeror capability evaluation factor. Specifically, the SSA concluded that particular 

aspects of NGS’s proposal reflected a superior technical understanding of the 

contract requirements, noting that WPS’s assertion regarding the relative complexity 

of claims in J6 indicated that WPS “does not fully understand” the complexities of 

the J6 requirements. SSD at 34. The SSA elaborated as follows: 

I took into consideration that NGS is the current contractor handling 

the HH&H workload for 13 states (including the challenging states of 

California and Michigan, both of which have a high propensity for 

fraud) and 5 territories which encompass J6. In addition, NGS’s 

“forward thinking” regarding HH&H by offering the government two (2) 

innovations, [deleted] and [deleted] are both very beneficial.[12

 

11 In evaluating most probable costs, the agency upwardly adjusted both NGS’s and 

WPS’s proposed costs by a little more than $[deleted] million. Specifically, WPS’s 

cost/price was adjusted by $[deleted] million and NGS’s cost/price was adjusted by 

$[deleted] million. SSD at 2. 

] This 

“forward thinking” demonstrates NGS’s superior knowledge and 

understanding of the complexities and issues such as high fraud and 

abuse, which accompany this workload. In addition, NGS proposed a 

[deleted] to address the distinct differences in HH&H claims and the 

12 NGS proposed pilot programs to (1) [deleted], and (2) [deleted]. AR, Tab 11.a, 

NGS FPR, Vol. I, at 42-45. 
Page 7 B-401068.14, B-401068.15 

unique needs of the HH&H practitioners. WPS’ proposed approach, 

[deleted], received a strength but as the SSA, I am very concerned 

that the TEP, TCA [technical cost analyst] and CMS SME [subject 

matter expert] believe that WPS does not fully understand the 

complexities of the HH&H and FQHC [federally qualified health center] 

workloads. WPS’s assumption that the claims workload in J5 is more 

difficult than the claims workload in J6 caused some concern to the 

evaluation team, with which I concur. 

NGS’s HH&H solution and its prerequisite knowledge of this workload 

offered the TEP and SSA a level of confidence that NGS will be able 

to accomplish the effective management of this workload as a MAC 

which is superior to the solution offered by . . . WPS.

SSD at 34-35.

In addition, the SSA noted that the TEP had identified various aspects of WPS’s 

past performance that were adverse--including “System Security Evaluations 

(Section 912) – FY 2010.”13 SSD at 13; AR, Tab 14.A, TEP Report at 34. 

Specifically, the TEP referenced the section 912 audit findings in concluding that 

WPS’s nonconformance with system security requirements “may have put the 

Medicare program at risk,” elaborating that WPS’s adverse past performance “could 

have a negative effect on the Offeror’s ability to perform efficiently and protect the 

confidentiality, integrity and availability of Medicare FFS [fee for service] data and 

could result in the need for increased Government oversight and monitoring.” 

TEP Report, at 34. The SSA further noted that, in contrast, NGS had not had any 

section 912 high-risk ratings with regard to its most recent audit, that NGS was the 

only MAC contractor for which this was true, and concluded that “NGS’s 

performance in this area is superior to that of any other Medicare contractor.”14

 

13 Section 912 of the MMA requires annual evaluation, testing and reporting of 

contractors’ systems security programs to ensure that they meet certain information 

security requirements. The record shows that, in performing the required audit of 

WPS for fiscal year 2010, the security controls auditor identified [deleted] high risk 

findings and [deleted] medium risk findings; this was above the national average. 

TEP Report, at 34. 

 

14 The SSA elaborated: 

It is important to note that starting in 2010, the depth of Section 912 

System Security Evaluation testing was expanded over previous years 

to include additional focus on technical security controls. . . . As the 

SSA for this procurement, I thought it was very commendable for a 

contractor to have no high-risk findings in 2011 after the more 

stringent requirements were put into place in 2010. . . . Therefore, it is 

(continued...)
Page 8 B-401068.14, B-401068.15 

SSD at 24. Accordingly, the SSA concluded that NGS’s proposal was superior to 

WPS’s with regard to past performance.15 SSD at 56. 

Thereafter, the SSA performed a cost/technical tradeoff between WPS’s slightly 

lower cost/price16 and NGS’s evaluated superiority with regard to the more heavily 

weighted non-cost/price evaluation factors, concluding that: 

NGS’s total probable cost of performance is $3,344,236 more than 

WPS’s total probable cost of performance. NGS’s superior past 

performance in the area of Section 912 Security Evaluations is a 

benefit to CMS in that NGS does not require additional help with 

correcting high risk security areas. Failure to achieve security 

requirements puts the agency at risk and is very labor intensive for 

CMS to bring contractors in compliance with non-compliant issues. In 

addition, NGS’s superior technical approach with regards to HH&H 

which promotes its ability to pay HH&H claims accurately and reliably 

circumventing program integrity issues that are unique to the HH&H 

workload, and its forward thinking by offering a [deleted] and 

innovations regarding this workload that will potentially prevent fraud, 

collectively provides a superior approach than that of WPS.

 

(...continued)

noteworthy and valuable to CMS that NGS was the only Medicare 

Contractor to have no high-risk findings in its 2011 Section 912 

Evaluation.

SSD at 28. 

15 The agency’s evaluation also identified adverse past performance for WPS with 

regard to WPS’s quality assurance surveillance plan (QASP) Medicare secondary 

payer metrics in the J5 contract. The evaluation record notes that WPS’s 

performance in this regard was below the national average for the first part of the 

performance period and lacked accuracy in the referral of MSP (Medicare 

secondary payer) claims. SSD at 13; TEP Report, at 33-34. Additionally, the 

agency’s past performance evaluation of WPS reflected two major nonconformances with regard to WPS’s part A legacy workload and one major nonconformance with regard to WPS’s part B legacy workload; these 

non-conformances were corrected in subsequent periods. TEP Report, at 33-34; 

Contracting Officer’s Statement, Nov. 7, 2012, at 7. Finally, the agency’s past 

performance evaluation of WPS recognized multiple beneficial aspects of WPS’s 

past performance. TEP Report, at 29-33. 

16 As noted above, NGS’s evaluated cost/price was approximately 1 percent higher 

than WPS’s evaluated cost/price.
Page 9 B-401068.14, B-401068.15 

NGS’s cost premium of $668,847 per year ($3,344,236/5) is minimal 

when compared to the overall cost of the contract and worth the 

additional potential benefits realized by the superior technical 

approach offered by NGS.[17

SSD at 59.

] 

On September 28, the agency advised WPS that NGS’s proposal had been 

selected for award. This protest followed. 

DISCUSSION

WPS protests the agency’s evaluation and source selection decision with regard to 

the offerors’ past performance, the offerors’ technical understanding of the contract 

requirements, and the cost realism of the offerors’ proposals. As discussed below, 

we find no merit in WPS’s various allegations.18

Past Performance

In challenging the agency’s evaluation of past performance, WPS first complains 

that the agency improperly considered WPS’s prior failures to comply with the 

section 912 system security requirements. In this regard, WPS asserts that the 

agency merely “counted up” the [deleted] high risk findings and failed to consider 

their “significance or context,” asserting that “the majority of the findings related to 

documentation errors that did not jeopardize CMS data or WPS networks.” Protest 

at 11-14. WPS also protests that the agency failed to properly consider what it 

describes as WPS’s “corrective action,” its “trend of improvement,” and its 

“commitment to improve in systems security.” Id. Further, WPS asserts that the 

agency’s focus on WPS’s adverse past performance regarding the section 912 

system security requirements constituted application of an “unstated evaluation 

criterion,” asserting that the agency’s consideration of this matter was “wholly 

 

17 The SSA also compared the offerors’ respective fee structures--noting that NGS 

offered a [deleted] percent base fee and [deleted] percent award fee, while WPS 

offered a [deleted] percent base fee and [deleted] percent award fee--concluding 

“[t]his means NGS bears a greater risk than [WPS] by ensuring itself of a [deleted]

[percent] fee, and having the [deleted] [percent] depend on successful 

performance.” SSD at 59. The SSA elaborated, “[i]f NGS does not perform over 

and above the contract requirements, then NGS will not receive award fee,” further 

noting that “NGS’ base fee (dollar amount) is the lowest of all Offerors.” SSD at 59. 

18 In its various protest submissions, WPS has raised multiple arguments that are in 

addition to, or variations of, the specific arguments discussed below. We have 

considered all of WPS’s arguments and find no basis to sustain its protest.
Page 10 B-401068.14, B-401068.15 

unreasonable.” Protest at 13; WPS Comments/Supp. Protest at 41. Finally, WPS 

attempts to avoid responsibility for the system security issues by asserting that “a 

large number of the findings related to a WPS subcontractor.” Protest at 12. 

The evaluation of past performance, including assessments of relevance and 

significance of an offeror’s performance history, is a matter of agency discretion

which we will not disturb unless those assessments are unreasonable. Yang Enter., 

Inc.; Santa Barbara Applied Research, Inc., B-294605.4 et al., Apr. 1, 2005, 2005 

CPD ¶ 65 at 5-7; Acepex Mgmt. Corp., B-283080 et al., Oct. 4, 1999, 99-2 CPD 

¶ 77 at 3, 5; TPL, Inc., B-297136.10, B-297136.11, June 29, 2006, 2006 CPD ¶ 104 

at 12. While consideration of past performance trends and corrective actions is 

generally appropriate, an agency is not required to ignore instances of negative past 

performance, The Bionetics Corp., B-405145, B-405145.2, Sept. 2, 2011, 2011 

CPD ¶ 173 at 7-8; further, a prime contractor is generally responsible for the prior 

performance of its subcontractors. ViaSat, Inc., B-291152, B-291152.2, Nov. 26, 

2002, 2002 CPD ¶ 211 at 8; Neal R. Gross & Co., Inc., B-275066, Jan. 17, 1997, 

97-1 CPD ¶ 30 at 4. Finally, in a best value procurement, a source selection official 

must determine whether one proposal’s superiority under non-cost/price factors 

warrants a higher cost. Remington Arms Co., Inc., B-297374, B-297374.2, 

Jan. 12, 2006, 2006 CPD ¶ 32 at 15; Chenega Technical Prods., LLC, B-295451.5, 

June 22, 2005, 2005 CPD ¶ 123 at 8. Proposals with the same adjectival ratings 

are not necessarily equal, and an agency may properly consider specific 

advantages that make one proposal more valuable than another. Id. at 6-7. In this 

regard, a single advantage, even under 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 Eng’g, Inc., B-402168.4 et al., Feb. 9, 

2011, 2011 CPD ¶ 39 at 16; DPK Consulting, B-404042, B-404042.2, Dec. 29, 

2010, 2011 CPD ¶ 12 at 13. 

Here, nothing in WPS’s various protest submissions challenge the accuracy or 

validity of the agency’s determination that WPS previously failed to comply with 

multiple aspects of the section 912 system security requirements. Further, the 

agency’s contemporaneous evaluation documentation establishes that it specifically 

considered, among other things, the following high-risk findings regarding WPS’s 

section 912 audit:

[deleted]

 

AR, Tab 14.B, TEP Report, attach. 5, at 25.

Although WPS expresses its opinion that its various prior failures did not actually 

result in harm to CMS’s data or WPS’s network, WPS’s opinion merely reflects its 

disagreement with the agency’s judgment as to the significance of WPS’s adverse 

past performance. As noted above, in addition to any actual prior harm, the agency 

was concerned about the potential for future harm, as well as the requirement that 
Page 11 B-401068.14, B-401068.15 

CMS would have to engage in labor-intensive monitoring and oversight efforts in 

order to bring WPS into compliance. TEP Report, at 34; SSD at 59. On this record, 

WPS’s views regarding the significance of its adverse prior performance provides 

no basis for sustaining the protest. 

Next, regarding WPS’s assertions that the agency failed to consider either WPS’s 

“trend of improvement” or the context of WPS’s past performance, the record is to 

the contrary; the record establishes that the agency did, in fact, consider these 

matters. That is, it is clear that the agency’s evaluation recognized and 

documented positive aspects of WPS’s past performance, including its correction of 

various deficiencies. TEP Report, at 29-34; SSD at 12-13, 30, 32-35, 55-56. 

Nonetheless, the agency determined that, by comparison, NGS’s past performance

was superior. SSD at 31-36, 55-59. Specifically, as noted above, the SSA 

recognized that the section 912 evaluation had been made more rigorous in 2010 

and that, following those changes, NGS’s audit revealed no high-risk findings--

which the agency considered “commendable” in that NGS was the only MAC 

contractor for which this was true. SSD at 28. Thus, it is clear that the agency did, 

in fact, fully consider WPS’s past performance, taking note of both its positive and 

negative aspects in the context of this competition, and reasonably concluded that 

NGS’s past performance was superior.19 Further, as noted above, a single 

advantage may properly be relied upon as a key discriminator for source selection 

purposes, particularly where, as here, other factors such as cost/price are relatively 

close. Smiths Detection, Inc.; American Science and Eng’g, Inc., supra; DPK 

Consulting, supra. 

Finally, while WPS attempts to absolve itself of responsibility for the section 912 

failures by blaming those failures on its prior subcontractor, its attempt is unavailing. 

As noted above, a prime contractor is responsible for the performance of its 

subcontractor. ViaSat, Inc., supra; Neal R. Gross & Co., Inc., supra. Here, the fact 

that WPS may no longer rely on a particular subcontractor it previously selected 

does not preclude the agency from considering the results of WPS’s prior 

subcontractor selection.

In sum, based on our consideration of the entire record, we find no merit in WPS’s 

various arguments challenging the reasonableness of the agency’s evaluation of 

past performance, the agency’s determination that NGS’s past performance was 

 

19 Although WPS touts various steps it has taken to improve its past performance, 

we note that WPS’s protest expressly acknowledges that, at the time of its 2011 

section 912 system security audit, WPS had eliminated only [deleted] of the 

[deleted] high-risk findings. Protest at 14. Further, as noted above, notwithstanding 

consideration of a contractor’s corrective action, an agency is not required to ignore 

instances of negative prior past performance. The Bionetics Corp., supra. Nothing 

in the record provides a basis for concluding that this principle is inapplicable here. 
Page 12 B-401068.14, B-401068.15 

superior to WPS’s, or the agency’s consideration of such superiority in selecting 

NGS’s slightly higher-priced proposal for award.20 

Technical Understanding

WPS next challenges the agency’s evaluation of both offerors’ proposals under the 

technical understanding subfactor. In this regard, WPS complains that the agency 

erroneously questioned WPS’s understanding of the solicitation requirements; 

improperly credited NGS with a thorough understanding of the requirements; and 

unreasonably evaluated NGS’s proposed staffing plan. As discussed below, we 

find no merit in these allegations. 

WPS first asserts that the agency unreasonably concluded that WPS’s proposed 

level of effort and productivity assumptions reflected WPS’s view that the 

aggregated claims under the J6 statement of work would be less complex than 

those processed under WPS’s J5 contract. In light of WPS’s response to the 

agency’s discussion questions set forth above, and repeated below, WPS makes 

the somewhat startling assertion that: “Nowhere does WPS’s productivity 

assumption assert that the types of claims handled in J6 will be less complex than 

the types of claims handled in J5.” Supp. Protest, Nov. 19, 2012, at 29 (italics in 

original). The record is to the contrary. 

As discussed above, the agency was concerned with the level of effort and the 

associated productivity on which WPS’s J6 proposal was based, as compared to its 

historic level of productivity.21

 

20 WPS also complains that the agency failed to properly consider what WPS 

asserts was negative past performance by NGS in transitioning contract 

responsibilities pursuant to the award of a MAC contract in jurisdiction 8 (J8). 

In 2011, WPS was selected for award of the J8 MAC contract, and NGS was the 

legacy contractor for many of the J8 requirements. WPS attacks NGS’s transition 

activities, alleging that NGS’s “errors, inflexibility and unwillingness to work 

collaboratively [with WPS] resulted in unnecessary chaos, confusion and delays.” 

Protest at 26. The agency responds that implementation of the J8 MAC was similar 

to other MAC implementations, that CMS was satisfied with the performance of both 

NGS and WPS during the J8 transition, and that CMS management was never 

notified of a significant risk of failure while transition was ongoing. See Statement of 

CMS Director of Medicare Contractor Management Group, Nov. 8, 2012, at 3-4. 

Based on our review of the record, we find no basis to question the agency’s 

assessments. 

 Accordingly, during discussions, the agency brought 

21 As noted above, the record shows that WPS’s historic productivity was [deleted] 

claims per day and WPS acknowledges that its J6 proposal was based on projected 

productivity of [deleted] claims per day. WPS Discussion Questions/Responses, 

at 33. 
Page 13 B-401068.14, B-401068.15 

several specific areas of concern to WPS’s attention, concluding with the following 

request: 

Please provide a detailed rationale to support WPS’s proposed level 

of effort in this proposal. The rational should include a discussion 

regarding the reduction in hours for the labor categories identified 

above. Further the rationale should provide sufficient data to support 

WPS’s proposed productivity in this proposal, inclusive of the exact 

formula and historic data used to calculate WPS’s historic productivity. 

WPS Discussion Questions/Responses, at 32.

WPS’s FRP responded to this request, stating:

Different Provider Mix. The mix of provider types and corresponding 

bill types in J5 are more complex than those in the J6 provider 

mix. . . . 

While Home Health services present some unique challenges, most 

reason codes result in a Return to Provider or rejection action if the 

claim is not payable. Because of these major shifts in the mix of 

provider types and bill types, it is difficult to compare productivity rates 

in an accurate manner between the J5 and J6 contracts. Clearly, the 

“average claim” in J6 will be less complex than that in J5. 

Id. at 34.

Based on the above, we find nothing unreasonable in the agency’s conclusion that 

WPS’s lower proposed level of effort and higher productivity assumptions for the J6 

contract reflected WPS’s belief that the aggregated claims WPS would process 

under the J6 statement of work would be less complex than the aggregated claims 

that WPS had processed under the J5 contract. Any WPS assertion to the contrary 

is without merit. 

Next, WPS’s protest effectively asserts that it was unreasonable for the agency to 

reject the substance of WPS’s assumption that J6 claims would be less complex 

than J5 claims. In this regard, WPS’s multiple protest submissions present various 

arguments regarding various aspects and variables of the two jurisdictions’ 

workloads, including: the number and type of facilities in each jurisdiction, the 

number of claims per provider, differing hospital types, the nature of the claims likely 
Page 14 B-401068.14, B-401068.15 

to be submitted, the projected “suspense rate,”22 whether or not the provider 

numbers in a given jurisdiction are “legitimate proxies” for the “comparative claim 

mix,” and other factors. Protest at 27-33; Supp. Protest at 27-36; Supp. Comments 

at 33-42. In short, WPS’s protest submissions assert that WPS’s assumption 

regarding the relative complexity of the J6 workload was reasonable and, therefore, 

the agency’s rejection of WPS’s assumption--along with its determination that WPS 

failed to fully understand the complexity of the contract requirements--was 

unreasonable. Based on its various assertions regarding the factors affecting the 

relative complexity of the J6 workload, WPS maintains that we should sustain its 

protest. We decline to do so. 

In reviewing an agency’s evaluation of proposals and source selection decision, it is 

not our role to reevaluate submissions; rather, we examine the supporting record to 

determine whether the decision was reasonable, consistent with the stated 

evaluation criteria, and adequately documented. Trofholz Techs., Inc., B-404101, 

Jan. 5, 2011, 2011 CPD ¶ 144 at 3; Johnson Controls World Servs., Inc., B-289942, 

B-289942.2, May 24, 2002, 2002 CPD ¶ 88 at 6. A protester’s disagreement with 

the agency’s evaluation judgments, or with the agency’s determination as to the 

relative merits of competing proposals, does not establish that the evaluation or the 

source selection decision was unreasonable. Smiths Detection, Inc.; Am. Sci. and 

Eng'g, Inc., B-402168.4 et al., supra, at 6-7; ITW Military GSE, B-403866.3, Dec. 7, 

2010, 2010 CPD ¶ 282 at 5.

 

The record here shows that, in rejecting WPS’s assumption regarding the relative 

complexity of the J6 requirements, the agency relied on its extensive experience 

with MAC contracts generally, and considered the same variables that WPS 

references in support of its position that the J6 requirements are comparatively less 

complex. While WPS attempts to characterize its various assertions as challenging 

something other than WPS’s and the agency’s differing views regarding the relative 

complexity of the J6 requirements, we reject those characterizations. That is, 

WPS’s various arguments challenging the agency’s evaluation of WPS’s proposal 

with regard to the technical understanding subfactor reflect its mere disagreement 

with the agency’s judgment regarding the relative complexity of the J6 

requirements, and nothing WPS has presented persuades this Office that the 

agency’s judgment regarding that ultimate, dispositive issue was unreasonable. 

To summarize, our review of the record leads us to conclude that: (1) WPS’s 

proposed level of effort assumed productivity that was substantially higher than its 

historic J5 productivity; (2) during discussions, the agency advised WPS that its 

level of effort and proposed productivity appeared to be unreasonable, requesting 

 

22 The “suspense rate” is the percentage of claims which, for any reason, cannot be 

electronically processed and require manual intervention. Agency Legal 

Memorandum at 59; RFP amend. 7, append. A, Key Definitions, at 14. 
Page 15 B-401068.14, B-401068.15 

that WPS provide its rationale for its low level of effort and high productivity; 

(3) WPS responded, stating that it believed the J6 claims processing workload was 

“less complex” than the J5 workload; (4) the agency rejected WPS’s view regarding 

the relative complexity of the J6 workload and, accordingly, concluded that WPS did 

not fully understand the J6 contract requirements; and (5) nothing in the record 

provides a basis for us to conclude that the agency’s substantive disagreement with 

WPS regarding the relative complexity of the J6 workload was unreasonable. 

Accordingly, we have no basis to question the agency’s assessment that WPS 

failed to fully understand the J6 contract requirements, and WPS’s protest 

challenging the agency’s evaluation of WPS’s proposal under the technical 

understanding subfactor is denied. 

WPS next protests the agency’s evaluation of NGS’s proposal under the technical 

understanding subfactor, challenging the conclusion that NGS had “superior 

knowledge and understanding of the complexities” of the J6 contract requirements. 

Among other things, WPS complains that, in reaching this conclusion, the agency 

improperly considered two innovations in NGS’s proposal: (1) [deleted] and 

(2) [deleted]. 

As noted above, with regard to the first innovation, NGS proposed [deleted]. NGS 

FPR, Vol. 1 at 43. While recognizing that “there could be implementation and/or 

legal issues with aspects of this proposed pilot,” the agency concluded that the 

proposal demonstrated NGS’s superior understanding of the HH&H issues and had 

“solid potential to reduce improper payments and integrity issues in high risk states.” 

TEP Report, at 48. NGS’s second innovation addressed [deleted].

23 NGS 

proposed to [deleted]. Id. 

In challenging the agency’s consideration of NGS’s innovations, WPS complains 

that NGS’s proposed pilot programs are still in a “nascent developmental stage,” 

and did not reflect associated costs. Accordingly, WPS maintains that it was 

unreasonable for the agency to conclude that the innovations were likely to occur. 

Supp. Protest at 36-40. 

As noted above, we will not reevaluate proposals; rather, we will review the record 

to determine if the agency’s evaluation was reasonable, and a protester’s mere 

disagreement with the agency’s judgments does not establish that the evaluation 

was unreasonable. Trofholz Techs., Inc., supra; Johnson Controls World Servs., 

Inc., supra; Smiths Detection, Inc.; Am. Sci. and Eng'g, Inc., supra; ITW Military 

GSE, supra. 

Here, the record reflects that the agency did, in fact, question NGS regarding the 

feasibility of its proposed innovations and sought information regarding potential 

 

23 [deleted]. Legal Memorandum at 63.
Page 16 B-401068.14, B-401068.15 

costs to the agency. NGS responded by acknowledging that not all of the 

technology was developed, stated that the agency would not bear any costs for the 

[deleted], and discussed its view regarding the practical viability of its proposed 

innovations. NGS FPR, Vol I, at 42-46. The agency noted that NGS had not 

identified potential agency costs, but concluded that such potential costs appeared 

to be minimal; further, NGS’s proposed cost/price did not take any credit for cost 

savings associated with the innovations. Ultimately, the SSA concluded that NGS’s 

“forward thinking” innovations were beneficial in that they “demonstrate[d] NGS’s 

superior knowledge and understanding of the complexities and issues such as high 

fraud and abuse, which accompany this workload,” and reflected NGS’s ability to 

provide “ideas to combat the problems.” SSD at 34, 58. On this record we find 

nothing unreasonable in the agency’s favorable consideration of NGS’s proposed 

innovations as demonstrating a superior technical understanding of the J6 

requirements. WPS’s criticisms of the agency’s evaluation, again, reflect only 

disagreement with the agency’s judgments regarding the offerors’ relative technical 

understanding of the J6 requirements.24 

Next, WPS protests the agency’s evaluation of NGS’s proposed staffing plan. 

Specifically, NGS asserts that the agency improperly gave NGS credit for proposing 

recently-severed employees as “experienced” staff,25 complaining that NGS is 

unlikely to be successful in re-hiring its former employees. 

 

24 In its supplemental comments, following receipt of the agency’s response to its 

supplemental protest, WPS for the first time asserts that NGS’s proposal failed to 

comply with section L solicitation provisions regarding proposed implementation 

dates. Since this matter was not raised within 10 days of WPS’s receipt of the 

NGS’s proposal and the agency’s evaluation documentation, the argument 

regarding proposed implementation dates is not timely. 4 C.F.R. § 21.2(a) (2012). 

In any event, it is not clear that section M.4 of the solicitation precludes the agency’s 

consideration of innovative ideas in assessing an offeror’s technical understanding 

based on the flaws that WPS has untimely asserted existed in NGS’s proposal. 

25 The solicitation indicated that experienced staff was preferred over inexperienced 

staff, and each offeror was required to identify the portion of its proposed staff that 

was experienced. Consistent with this requirement, the solicitation contained the 

following instruction: 

The Offeror shall identify each FTE [full time equivalent] as 

“experienced” or “inexperienced.” The “experienced” label should be 

used for existing staff or new hires that have experience working in 

the Medicare Fee-For-Service Program, or equivalent work 

experience. [Bolding added.]

AR, Tab 3.B.1, Staffing Matrix Instructions. 
Page 17 B-401068.14, B-401068.15 

As noted above, NGS was not selected for award in the recent competition for the 

J8 MAC contract. Because NGS had been performing a substantial part of the J8 

workload under legacy contracts, NGS was forced to lay off [deleted] employees 

who were displaced by that award in July and August of 2012. NGS Discussion 

Questions/Response, at 3-6. NGS’s J6 proposal indicated that it intended to re-hire 

approximately half of these experienced employees upon award.26 During 

discussions, the agency questioned NGS regarding this matter. Id. NGS explained 

that, at the time they were severed, approximately half of the employees had signed 

letters of interest in being re-hired by NGS if it were awarded the J6 contract. Id. 

Based on this explanation, the agency accepted NGS’s assertion that it would rehire approximately half of its experienced, prior employees, and gave NGS’s 

proposal credit in that regard. 

WPS protests that it was unreasonable for the agency to accept NGS’s proposal to 

re-hire its former employees. More specifically, WPS complains that CMS 

“improperly equated an employee’s mere expression of interest in employment with 

a binding commitment,” asserting that there was no certainty that NGS’s former 

employees “would be willing and available to return to NGS” upon award of the J6 

contract. Supp. Protest at 9. Accordingly, WPS maintains that NGS will, in fact, fill 

those positions with inexperienced new hires, and asserts that the level of risk 

associated with re-hiring NGS’s recently-severed personnel rendered the agency’s 

evaluation unreasonable. We disagree. 

Here, the record establishes that NGS fully disclosed its proposed staffing intentions 

to the agency with regard to re-hiring its experienced employees, listing by name 

each of the employees that had signed letters of interest.27 NGS Discussion 

Questions/Response, at 3-6. Further, NGS advised the agency that it was 

maintaining communications with its former employees and that, upon award, it 

would immediately initiate the re-hiring process. Id. In evaluating NGS’s response, 

the agency acknowledged the existence of some risk regarding NGS’s success in 

re-hiring, but noted that “the risk is not as great as if NGS was hiring new 

inexperienced staff.” TEP Report at 46. Ultimately, the agency concluded “there is 

minimal risk in rehiring the recently severed employees,” referring to the letters of 

interest signed by the former employees. Id. On this record, we do not find the 

agency’s determination to accept NGS’ proposed staffing plan, and to give NGS 

credit for planning to re-hire its experienced, prior employees, to be unreasonable. 

 

26 Clearly, all of NGS’s previously-severed employees who had performed under 

NGS’s legacy contracts, met the solicitation’s definition of “experienced” personnel, 

noted above.

27 The TEP recognized that NGS’s previously-severed personnel make up 

approximately [deleted] percent of NGS’s total staffing. TEP Report, at 46. 
Page 18 B-401068.14, B-401068.15 

Cost Realism 

Finally, WPS challenges the agency’s cost realism evaluation. As discussed above, 

the agency upwardly adjusted both WPS’s and NGS’s proposed costs/prices by 

approximately $[deleted] million. WPS challenges various cost realism adjustments 

the agency made to WPS’s proposal, and complains that the agency should have 

made additional adjustments to NGS’s proposal. We have considered all of WPS’s 

cost realism assertions and find no basis to sustain its protest. 

By way of example, WPS challenges the agency’s upward adjustment of WPS’s 

proposed cost/price related to its customer service program. In this regard, WPS 

proposed cost savings by significantly decreasing the length of customer service 

telephone calls to just [deleted] minutes. WPS Discussion Questions/Responses, 

at 19. WPS’s proposal asserted that its projected decrease would be accomplished 

through [deleted], [deleted],28 and [deleted]. Id. at 20-21. In evaluating WPS’s 

initial proposal, the agency noted that WPS’s average customer service call under 

its J5 contract had been [deleted] minutes during 2011. AR, Tab 13.A.1, Business 

Evaluation Panel (BEP) Report, at 15. Following discussions with WPS on this 

matter, CMS upwardly adjusted WPS’s proposed costs. WPS protests that the 

agency’s adjustment was improper because it maintains that it has reduced its 

average call time in recent months and, accordingly, the agency was required to 

accept the lower costs associated with WPS’s projected extension of that purported 

trend. Protest at 45. 

When an agency evaluates proposals for the award of a cost-reimbursement 

contract, an offeror’s proposed estimated cost of contract performance is not 

considered controlling since, regardless of the costs proposed by the offeror, the 

government is bound to pay the contractor its actual and allowable costs. Metro 

Machine Corp., B-402567, B-402567.2, June 3, 2010, 2010 CPD ¶ 132 at 6; 

Honeywell Tech. Solutions, Inc., B-400771, B-400771.2, Jan. 27, 2009, 2009 CPD 

¶ 49 at 17; see FAR § 16.301. Based on the results of the cost realism analysis, 

an offeror’s proposed costs should be adjusted when appropriate. FAR § 15.404-

1(d)(2)(ii). An agency’s cost realism analysis need not achieve scientific certainty; 

rather, the methodology employed must be reasonably adequate and provide a 

measure of confidence that the agency’s conclusions about the most probable costs 

under an offeror’s proposal are reasonable and realistic in view of the cost 

information reasonably available to the agency at the time of its evaluation. See

Metro Mach. Corp., supra. We review an agency’s judgment in this area only to see 

that the agency’s cost realism evaluation was reasonably based and adequately 

documented. Honeywell Tech. Solutions, Inc., supra; Jacobs COGEMA, LLC, 

B-290125.2, B-290125.3, Dec. 18, 2002, 2003 CPD ¶ 16 at 26.

 

 

28 WPS describes [deleted]. AR, Tab 4.a, WPS Initial Proposal, Vol. I, at 34. 
Page 19 B-401068.14, B-401068.15 

Here, the record shows that, during discussions, the agency asked WPS to respond 

to the following: 

WPS has not provided sufficient data to support a reduction of nearly 

[deleted] minutes to call handle times. . . . Therefore, please provide a 

detailed rationale to support these proposed call handle times. WPS’s 

rational should include its Part A J5 MAC historic call handle times for 

the most recent six months (at a minimum). In addition, the rationale 

should include data and research conducted to estimate/project 

savings to this historic handle time in this proposal.

WPS Discussion Questions/Responses, at 20-21.

In response, WPS submitted J5 data for the prior [deleted] months showing that the 

average call times had actually increased to [deleted] minutes.29 Id. at 21. WPS 

also submitted various information discussing its proposed use of [deleted], 

[deleted], and [deleted], but failed to submit any research, calculations, or 

quantification of its projected savings. 

Based on WPS’s explanation that its recent [deleted] activities had “temporarily 

impacted” its call times in a negative manner, CMS did not consider the [deleted]

minute average call time as representative and, therefore, relied on the 2011 call 

time of [deleted] minutes. BEP Evaluation Report for WPS, at 16. However, CMS 

rejected WPS’s assertion that expanding the pool of personnel capable of handling 

customer calls [deleted] would have any impact on the length of those calls. Id. at 

15. Further CMS noted that, despite its request that WPS provide a “detailed 

rationale” including “data and research conducted to estimate/project savings,” 

WPS had provided none, nor had it adequately explained how it arrived at any 

proposed call time reduction. Id. Accordingly, CMS upwardly adjusted WPS’s 

proposed costs to more closely reflect its historic costs.30 Id.

Based on our review of this record, we do not question the agency’s cost realism 

adjustment. As noted above, the agency specifically requested a “detailed 

rationale,” including “data and research conducted to estimate/project savings.” Our 

review of the record shows that WPS did not comply with this request. Instead, 

WPS argues that the data it submitted reflected an overall “downward trend,” and 

 

29 WPS explained that the time had increased due to its [deleted] efforts which 

“temporarily impacted” average call time. WPS Discussion Questions/Responses, 

at 21.

30 In calculating the cost realism adjustment the agency downwardly adjusted the 

2011 call time of [deleted] minutes to reflect a [deleted] percent productivity gain per 

year. BEP Evaluation Report for WPS, at 16. 
Page 20 B-401068.14, B-401068.15 

that the agency was required to accept WPS’s projected extension of that “trend.” 

WPS Discussion Questions/Responses, at 21. Even if we accepted WPS’s 

interpretation of the data as reflecting a “downward trend,” we find no basis to 

conclude that the agency was obligated to accept an extension of that “trend” in the 

absence of the detailed information the agency had requested. While WPS 

effectively asserts that the burden was on the agency to disprove the realism of its 

projections, the contrary is true. An offeror is obligated to present an adequately 

written proposal, including sufficient support for its assumptions. See United Def. 

LP, B-286925.3, et al., Apr. 9, 2001, 2001 CPD ¶ 75 at 19. On the record here, 

WPS’s protest challenging this aspect of the agency’s evaluation is denied. Further, 

we have considered all of WPS’s assertions regarding the cost realism evaluation of 

the two proposals and find no basis to sustain any of its arguments. 

In summary, WPS’s protest challenges virtually every aspect of the agency’s 

evaluation and source selection decision and uniformly reflects WPS’s 

dissatisfaction with the agency’s judgments and determinations. Nonetheless, in 

our view, WPS has failed to provide any basis to conclude that the source selection 

decision was materially flawed. 

The protest is denied. 

Susan A. Poling

General Counsel