United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Diversified Collection Services, Inc.

File: B-406958.3; B-406958.4

Date: January 8, 2013

Michael D. McGill, Esq., Thomas L. McGovern, III, Esq., Elizabeth J. Galezio, Esq., 

and Michael J. Scheimer, Esq., Hogan Lovells US LLP, for the protester.

Scott M. McCaleb, Esq., Daniel P. Graham, Esq., Jon W. Burd, Esq., and Noree 

Lee, Esq., Wiley Rein LLP, for CGI Federal, Inc., an intervenor.

Douglas Kornreich, Esq., Department of Health and Human Services, Centers for 

Medicare and Medicaid Services, for the agency.

Tania Calhoun, Esq., and Edward Goldstein, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

1. Protest that firm should have been disqualified from competition due to a 

significant impaired objectivity organizational conflict of interest is denied, where the 

agency reasonably concluded that the vendor, if awarded the task order, would not 

be in a position to evaluate the services it provides to commercial customers.

2. Protest that contracting agency improperly conducted discussions solely with the 

selected vendor is denied where the record shows the exchange at issue 

constituted a clarification and there was no requirement to also seek clarification 

from protester.

3. Allegation that vendor’s “points for negotiation” took material exception to the 

solicitation’s terms is denied where the quote, when read as a whole, did not take 

exception to the terms of the solicitation, the agency did not negotiate any of the 

identified points with the selected vendor, and the agency’s offer of the task order to 

the vendor evidenced the agency’s rejection of the points of negotiation.

DECISION

Diversified Collection Services, Inc. (DCS), of Livermore, California, protests the 

decision of the Department of Health and Human Services, Centers for Medicare & 

Medicaid Services (CMS), to award a task order to CGI Federal, Inc., of Fairfax, 

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This version has been 

approved for public release.
Page 2 B-406958.3, B-406958.4 

Virginia, under request for quotations (RFQ) No. CMS-RFQ-2012-121210, issued to 

contract holders under the General Services Administration’s (GSA) Financial and 

Business Solutions Federal Supply Schedule (FSS), to serve as a Medicare 

Secondary Payer Recovery Audit Contractor. DCS argues that CMS improperly 

failed to identify and analyze CGI’s organizational conflict of interest, improperly 

conducted discussions solely with CGI, and improperly accepted CGI’s technically 

unacceptable quote.

We deny the protest.

BACKGROUND

Medicare is the federal health insurance program for persons aged 65 and over, 

certain younger individuals with disabilities, and individuals with end-stage renal 

disease. Medicare Part A covers inpatient hospital stays, skilled nursing facility 

care, hospice care, and some home healthcare. Medicare Part B covers certain 

doctors’ services, outpatient care, medical supplies, and preventive services. CMS 

contracts with private firms, known as Medicare Administrative Contractors (MAC), 

to process and pay Medicare claims. Contracting Officer’s Supp. Statement at 4.

Eligible Medicare beneficiaries often have health insurance coverage in addition to 

Medicare, however, such as through an employer-sponsored Group Health Plan 

(GHP). In such cases, the GHP has the primary responsibility to pay their claims

with Medicare acting as a secondary payer.1

 Because it is not always apparent that 

a beneficiary has other primary insurance, Medicare may inadvertently pay for 

services that are subsequently determined to be the financial responsibility of 

another payer. These mistaken payments represent money owned to Medicare and

are known as Medicare Secondary Payer debt.2

In order to address such inadvertent payments, CMS’s Coordination of Benefits 

program collects data on other insurance coverage for Medicare beneficiaries. 

CMS checks for potential GHP-based mistaken payments (situations where 

Medicare paid primary when it should have paid secondary) and pursues recovery 

as appropriate whenever it adds a new GHP Medicare Secondary Payer occurrence 

to its records. RFQ Statement of Work (SOW) at ¶ 1.2.

In this procurement, CMS seeks the services of a Medicare Secondary Payer 

(MSP) Recovery Audit Contractor (RAC) to identify and recover overpayments 

 

1 Medicare is generally prohibited from paying for healthcare services if payment 

can reasonably be expected to be made by a GHP. 42 U.S.C. § 1395y(b)(2)(A).

2 Medicare Secondary Payer: Improvement Needed to Enhance Debt Recovery 

Process, GAO-04-783 at 1-2 (Aug. 2004).
Page 3 B-406958.3, B-406958.4 

stemming from instances where Medicare made payment under Medicare Parts A 

or B as the primary insurer, but a GHP had primary payment responsibility.3 

The RFQ explains that another contractor, the Coordination of Benefits & Recovery 

Business Process Operations Contractor, will be responsible for coordination of 

benefit activities, including the collection of data related to new MSP occurrences. 

This contractor is to post MSP occurrences, or “leads,” to the Common Working File 

and related systems. RFQ SOW at ¶ 2.2.3.2.1. The MSP RAC, which will have 

access to these systems, is to use these MSP leads to identify Medicare Part A and 

Part B claims that were incorrectly paid by Medicare as the primary insurer, and to 

recover those payments consistent with a process described in the SOW and CMS 

guidance.4 RFQ SOW at ¶ 2.3.2.2. 

The solicitation, issued on April 24, 2012, anticipated the issuance of a fixed-price 

contingency fee task order to be performed over a 1-year base period, with up to 

four 1-year option periods. RFQ at ¶¶ 1.2, 3.1. The contractor is to perform its 

recovery activities in either the western or eastern part of the United States, as 

specified by CMS. RFP at § B.1. 

CMS was to evaluate vendors’ technical quotes under evaluation factors that are 

not at issue here. RFQ at ¶ 10.2. In their business quotes, vendors were to include 

“all (if any) assumptions, conditions, or expectations upon which their technical and 

business quote volumes were based.” Id. at ¶¶ 8.2 (emphasis in original). Vendors 

were also required to submit a conflict of interest certification that described 

business or contractual relationships or activities that might be viewed as a conflict 

of interest; methods the firm would apply to mitigate any such situations; and 

financial interests in other entities. RFQ at ¶ 9.1; see also RFQ at ¶ 5.9. CMS was 

to evaluate this certification to ensure that any real, potential, or perceived 

organizational conflicts of interest were adequately mitigated. Id. at ¶ 10.1(3). 

CMS deemed it essential that the contractor and its services be free, to the greatest 

extent possible, of all conflicts of interest. RFQ at ¶ 5.9(a). It recognized, however, 

that virtually every business by merit of its status as an employer that provides or 

facilitates GHP coverage for its employees is a potential debtor--including the 

recovery contractor and any entity with which it has a business relationship. As a 

 

3 Under the Tax Relief and Health Care Act of 2006, the Secretary of Health and 

Human Services is authorized to utilize RACs to identify and recover these 

overpayments, and to compensate them on a contingency fee basis. Pub. L. No. 

109-432, div. B, title III, § 302, 120 Stat. 2922, 2991 (2006).

4 The RFQ includes an optional task for the recovery of Non-GHP Non-Beneficiary 

Debts, which is not at issue here. RFQ at ¶ 10.3; RFQ SOW at ¶ 5.1. 
Page 4 B-406958.3, B-406958.4 

result, the RFQ included directions to address such situations. Agency Report 

(AR), Exh. 19, CGI OCI Analysis at 4, citing RFQ at ¶ 2.2.3.5

 

CMS was to select the quote that provided the best value to the government, based 

upon an assessment of the technical and business quotes. RFQ at ¶¶ 10.1, 10.2. 

CMS considered the non-price evaluation factors, when combined, to be equally 

important to the price/contingency fee percentage. Id. at ¶ 10.2.

CMS received quotes from two firms by the May 24 closing date, DCS and CGI, and 

selected CGI in June. DCS filed a protest of the selection in our Office challenging 

CMS’ evaluation of the quotes and alleging that CGI had an organizational conflict 

of interest (OCI). CMS subsequently advised our Office that it intended to grant the 

relief requested by DCS, including reevaluating the quotes and making a new 

source selection decision. We dismissed the protest as academic on August 7.

On September 29, CMS re-issued the task order to CGI. CMS found that both 

quotes were acceptable and raised no concerns that needed to be addressed prior 

to issuance of the task order. AR, Exh. 18, Revised Award Decision Memorandum 

at 3-4. CGI’s technical quote was evaluated as very good, with a proposed 

contingency fee of 14.95 percent. DCS’ technical quote was evaluated as 

satisfactory, with a proposed contingency fee of 12.9 percent. Id. CMS determined 

that the risk in CGI’s quote was substantially less than that presented by DCS, and 

concluded that CGI’s quote was a better value despite its higher contingency fee. 

Id. at 5. The selection decision memorandum attached the contracting officer’s OCI 

analysis with respect to CGI. As discussed below, the contracting officer identified 

and analyzed various potential OCIs and concluded that any potential conflict was 

not significant and could be adequately mitigated. AR, Exh. 19, CGI OCI Analysis.

DISCUSSION

DCS alleges that CMS improperly failed to identify and analyze a significant 

impaired objectivity OCI that would arise by issuance of the task order to CGI. DCS 

 

5 Before initiating recovery actions beyond identification of cases, the MSP RAC is 

to submit a monthly report identifying any potential debtors, including business 

associates, that present a conflict of interest. If a conflict is identified at any point in 

the recovery process, the contractor is to halt all activities and provide case 

information to CMS. If the conflict cannot be mitigated, CMS may determine 

alternative recovery procedures for the case. RFQ SOW at ¶ 2.2.3.
Page 5 B-406958.3, B-406958.4 

also argues that CMS improperly conducted discussions solely with CGI, and 

improperly accepted CGI’s technically unacceptable quote.6

 

Organizational Conflict of Interest 

DCS argues that, in conducting its OCI investigation and analysis, CMS 

unreasonably concluded that CGI will not be in a position to evaluate services it has 

provided its commercial customers. Specifically, DCS contends that CGI, as the 

MSP RAC, will necessarily be required to evaluate coverage determinations and 

coordination of benefits determinations it has made on behalf of its commercial 

clients.

7

 DCS also argues that CGI will be required to evaluate determinations it 

has made for its commercial clients in connection with post-payment audits to 

identify claims that were coded improperly or that were not medically necessary. 

CMS counters that its investigation and analysis included meaningful consideration 

of all of these matters, and that it reasonably found that CGI would not be in a 

position to evaluate its own services. Specifically, CMS asserts that it reasonably 

found that CGI does not make coverage determinations or coordination of benefits 

determinations for its commercial clients. Additionally, to the extent CGI performs 

post-payment medical coding and medical necessity services for its commercial 

clients, CMS contends that these activities do not pose an OCI because the MSP 

RAC is not required to evaluate these matters. 

As a general matter, the Federal Acquisition Regulation (FAR) requires that 

contracting officers avoid, neutralize or mitigate potential significant OCIs. FAR 

§ 9.504(a). An impaired objectivity OCI, as addressed in FAR subpart 9.5 and the 

decisions of our Office, arises where a firm’s ability to render impartial advice to the 

government would be undermined by the firm’s competing interests. FAR 

§ 9.505-3; Aetna Gov't Health Plans, Inc.; Foundation Health Fed. Servs., Inc., 

B-254397.15 et al., July 27, 1995, 95-2 CPD ¶ 129 at 13. The concern in such 

impaired objectivity situations is that a firm’s ability to render impartial advice to the 

government will be undermined by its relationship to the product or service being 

evaluated. PURVIS Sys., Inc.

 

6 Our decision does not address all of DCS’s arguments, but we have fully 

considered each of them and conclude that the remaining arguments do not provide 

a basis to sustain the protest. 

, B-293807.3, B-293807.4, Aug. 16, 2004, 2004 CPD 

¶ 177 at 7. 

7 For the purposes of our decision, the phrase “coverage determination” refers to a 

determination whether a claim is covered by a particular insurance policy, and the 

phrase “coordination of benefits” refers to a determination as to which payer 

(whether a private insurer or other entity such as Medicare) has primary coverage 

responsibility. DCS Supp. Protest at 16, 17; CGI Supp. Comments at 7 n.3.
Page 6 B-406958.3, B-406958.4 

The FAR advises contracting officers to examine each situation individually and to 

exercise common sense, good judgment, and sound discretion in assessing 

whether a significant potential conflict exists and in developing an appropriate way 

to resolve it. FAR § 9.505. The responsibility for determining whether an actual or 

apparent conflict of interest will arise, and to what extent the firm should be 

excluded from the competition, rests with the contracting agency. Aetna Gov’t 

Health Plans, Inc.; Foundation Health Fed. Servs., Inc., supra, at 12. 

OCI determinations must be based on hard facts that indicate the existence or 

potential existence of a conflict; mere inference or suspicion of an actual or 

potential conflict is not enough. See Turner Constr. Co., Inc. v. United States, 645 

F.3d 1377, 1387 (Fed. Cir. 2011); PAI Corp. v. United States, 614 F.3d 1347, 1352 

(Fed. Cir. 2010). The identification of conflicts of interest are fact-specific inquiries 

that require the exercise of considerable discretion. Axiom Res. Mgmt., Inc., 564 

F.3d at 1382. 

Our Office reviews a contracting officer’s consideration of an OCI for 

reasonableness and, where an agency has given meaningful consideration to 

whether a significant conflict of interest exists, we will not substitute our judgment 

for the agency’s, absent clear evidence that the agency’s conclusion is 

unreasonable. See TeleCommunication Sys. Inc., B-404496.3, Oct. 26, 2011, 2011 

CPD ¶ 229 at 3-4; PCCP Constructors, JV; Bechtel Infrastructure Corp., B-405036 

et al., Aug. 4, 2011, 2011 CPD ¶ 156 at 17.

Our review of the record, including all of the arguments raised by the parties, shows 

that the contracting officer meaningfully considered whether CGI had a significant 

impaired objectivity OCI. Given the considerable discretion afforded contracting 

officers, and the absence of any “hard facts” to the contrary, we have no basis on 

which to find the CO’s determination unreasonable.8 We begin our discussion by 

summarizing the relevant portions of the contracting officer’s detailed OCI 

investigation and analysis. 

The contracting officer reviewed the information in CGI’s conflict of interest 

certification, and conducted an internet search to ascertain potential unknown or 

undisclosed facts that might present an actual or potential OCI. The information 

she gathered led her to identify various potential and/or actual OCIs for CGI, which 

 

8 When CGI’s potential OCIs were brought to CMS’s attention during the prior 

protest, CMS investigated and analyzed whether the facts raised an OCI that could 

not be mitigated or neutralized. Insofar as CMS considered these potential OCIs 

after the initial award and protest, our Office has recognized that an agency may 

investigate possible OCIs after the filing of a bid protest. See, e.g., PCCP 

Constructors, JV; Bechtel Infrastructure Corp., supra, at 16. 
Page 7 B-406958.3, B-406958.4 

she documented and analyzed. She flagged the fact that CGI has commercial 

healthcare payer customers as a concern on several fronts. To ascertain whether 

CGI’s relationships with its commercial customers presented a potential or actual 

OCI here, and in light of the allegations raised in DCS’s prior protest, the contracting 

officer asked CGI a series of questions about its commercial activities to ascertain 

whether the firm would be in a position to evaluate its own work. AR, Exh. 27, 

CGI’s OCI Response at 3. She also consulted the agency’s program office to better 

understand the MSP RAC process. AR, Exh. 19, CGI OCI Analysis at 9.

The contracting officer found, as a general matter, that in many of CGI’s commercial

customer arrangements, CGI performed post-payment audits to identify claims that 

were coded improperly or that were not medically necessary, but did not review 

claims on behalf of payers to make initial private insurance coverage 

determinations.9

 In this regard, the contracting officer found that when CGI 

provided audit services, the commercial client had already determined that the claim 

was one for which it was responsible. Since the role of the MSP RAC is to 

determine whether such coverage is primary or secondary, not whether claims have 

been coded properly or were medically necessary, the contracting officer concluded 

that performance by CGI did not pose an OCI. Id. at 10. 

In responding to the contracting officer’s questions, CGI affirmatively represented 

that it did not review claims on behalf of payers to make private insurance coverage 

determinations, and did not help payers decide whether they or another payer 

should be primarily responsible for a claim. AR, Exh. 27, CGI’s OCI Response at 3. 

Based on CGI’s response, the contracting officer concluded that CGI would not be 

in a position to review its own work. AR, Exh. 19, CGI OCI Analysis at 10. With 

respect to CGI’s business relationships more generally, the contracting officer 

considered that any risk was insignificant, given the MSP RAC’s limited ability to 

manipulate individual recovery cases and the various oversight mechanisms that 

were in place. As an additional measure, however, she required CGI to provide, on 

a monthly basis, a list of all of its current business partners and to flag those 

identified as recovery leads in order to enable CMS and another contractor to audit 

those recovery efforts. Id. at 13.

DCS takes issue with CGI’s representations, arguing that CGI does in fact make 

coverage determinations and coordination of benefits determinations on behalf of its 

 

9 CGI’s post-payment audits allows for determinations regarding medical necessity, 

either for a particular diagnosis or for any diagnosis. By way of example, a 

determination that services paid were not medically necessary may occur where the 

services are considered experimental or cosmetic in nature. These determinations 

are not, however, based on coverage with respect to a particular insurance policy. 

CGI Comments, Attachment A, Declaration of CGI Vice-President of Health 

Compliance at ¶¶ 13, 14. 
Page 8 B-406958.3, B-406958.4 

commercial customers. As support for its argument, DCS cites marketing materials 

on CGI’s website. One brochure cited by DCS describes the firm’s software and 

services by, among other things, including a bulleted list that includes 

“[c]oordination of benefits opportunities,” “[i]neligible members,” and “[n]on-covered 

services that were paid.”10 DCS Comments at 16. DCS argues that these materials 

evidence CGI’s performance of coverage and coordination of benefits 

determinations, but that CMS failed to raise the information in this brochure and 

CGI’s other marketing materials during its OCI investigation.

During her investigation of the alleged OCI, the contracting officer squarely 

addressed the question whether CGI makes coverage determinations and/or 

coordination of benefits determinations for its commercial customers. Again, a 

primary focus of her inquiry was the nature of CGI’s work for its commercial 

customers and whether, as the MSP RAC, it would ever be in a position to evaluate 

that work. In response to her question on this very point, CGI explained that it 

serves payers by conducting post-payment audits to confirm that providers billed 

using proper diagnoses and procedure codes, and then evaluating those codes and 

determining whether the services were medically necessary. AR, Exh. 27, CGI OCI 

Response at 3. CGI explained, however, that this process is separate and distinct 

from the insurance coverage determination process. Id. CGI made the following 

express representations:

• Neither CGI nor its parent reviews claims on behalf of payers to make 

private insurance coverage determinations; 

• CGI is not responsible for determining whether the medical procedure

was covered under the particular benefit package, and does not know 

what the particular benefit packages are when performing its services; 

• Because CGI does not render decisions on whether a benefit is 

covered by the benefit package, CGI does not help payers decide 

whether that payer or another payer, including Medicare, should be 

primarily responsible for paying a given claim;

• CGI’s commercial healthcare clients have already determined that the 

claim is one for which they are responsible under their contracts with 

providers and consumers.

Id.

CMS contends that it was entitled to rely on CGI’s representations absent significant 

countervailing evidence, of which it was reasonably aware, that should create doubt 

 

10 DCS also cites marketing materials specific to CGI’s software and proposed for 

use here. Our conclusion concerning the brochure applies equally to these 

marketing materials, and we see no need to discuss them separately.
Page 9 B-406958.3, B-406958.4 

as to whether the representations are accurate. See Vinculum Solutions, Inc., 

B-406760, B-406760.2, Aug. 22, 2012, 2012 CPD ¶ 249 at 9. CMS asserts that its 

OCI investigation, which relied in part on information raised in DCS’ prior protest, 

sought to ascertain not what CGI advertised it could do, but what it actually did. In 

our view, while the marketing materials cited by DCS raise the question whether 

CGI provides the services at issue, CGI’s responses to the agency’s inquiry answer 

that question in the negative. We agree with CMS that the fact that CGI has 

marketed these services in the past does not contradict its express representation 

that it has not actually sold these services. 

CGI has provided an affidavit from the individual who signed CGI’s quotation and 

responded to the contracting officer’s OCI questions. He reaffirms the statements 

he made, cited above, concerning CGI’s actual commercial activities. Again, he 

specifically represents that neither CGI nor its affiliates “reviews claims on behalf of 

commercial payers to make private insurance coverage determinations or to identify 

other payers that have primary coverage responsibility, and “[no] software sold by” 

CGI or its affiliates “performs these functions for commercial payers either.” CGI 

Comments, Attachment A, Declaration of CGI Vice-President of Health Compliance 

at ¶¶ 5, 8. He also indicates that neither CGI nor its affiliates “performs coordination 

of benefits work for commercial payers, nor do the software products sold by CGI 

Federal and its affiliates provide that functionality for commercial payers.” Id. at ¶ 9. 

He explains that the reference to, for example, “coordination of benefits” in its 

marketing materials refers to functionality that the firm contemplated at one point 

could be offered to commercial payers through its software but never was. As he 

notes, the firm could write software code that would allow commercial payers to use 

it to make coordination of benefits determinations, but neither CGI nor its affiliates 

have done so, or intend to do so in the future. Id. at ¶¶ 9, 10, 11. 

In the face of CGI’s express representation that it does not actually make coverage 

or coordination of benefits determinations for its commercial customers, we cannot 

conclude that the marketing materials proffered by DCS, standing alone, constitute 

the requisite hard facts necessary for us to find the contracting officer’s OCI 

determination unreasonable. 

DCS next disputes the CO’s determination that the MSP RAC will not be required to 

evaluate the types of post-payment audit work performed by CGI for its commercial 

clients--to identify claims that were coded improperly or not medically necessary. 

The record does not, however, support the protester’s contentions in this regard. 

During the course of the OCI investigation, CGI informed CMS that it served payers 

by confirming that providers billed using the proper diagnosis and procedure codes 

and then evaluating those codes and determining whether the services were 

medically necessary. AR, Exh. 29, CGI OCI Response at 3. In her OCI 

memorandum, after consulting with the program office, the contracting officer stated 

that the MSP RAC was not responsible for determining whether a claim was 
Page 10 B-406958.3, B-406958.4 

properly coded or whether a billed service was necessary, and, therefore, CGI 

would never be in a position to review these services. AR, Exh. 19, CGI OCI 

Memorandum at 10. The contracting officer explained that it is the Medicare 

Administrative Contractors (MACs) that make these determinations as part of their 

responsibility to process and pay claims submitted to Medicare for reimbursement. 

For every MSP lead, Medicare has already paid the claim--a MAC has already 

determined that the claimed service was properly coded and medically necessary--

and the MSP RAC does not “second guess” this determination. Contracting 

Officer’s Supp. Statement at 4, 5. The only question for the MSP RAC is whether 

Medicare’s coverage is primary or secondary. Id.

DCS points to the requirement that the MSP RAC “identify” and recover payments, 

mirrored in CGI’s quote, to support its argument that the MSP RAC must 

necessarily make or review these types of determinations. We are not persuaded 

by this argument.

Again, MSP RACs are responsible for obtaining and reviewing insurance 

information to determine whether Medicare should have been the primary payer, or 

whether the beneficiary had other insurance that may have been responsible for the 

primary payment. According to information on the Medicare Secondary Payer 

Recovery Contractor (MSPRC) website,11 they begin this process by verifying the 

MSP leads with the relevant employers and insurers to ensure the accuracy of such 

information as coverage dates for the beneficiary, dates of retirement (if applicable), 

and policy numbers. MSP GHP Recovery Process at 7, 9-22. This “identification” 

of payments does not involve second guessing a MAC’s determination whether a 

claimed service was properly coded and medically necessary but, as CMS has 

explained, involves reviewing insurance information to verify whether there is a 

primary payer other than Medicare that is financially responsible for the claim. 

Similarly, the section of CGI’s quote that specifically addresses “identification” of 

MSP claims for recovery explains how CGI intends to verify MSP leads for errors 

(with respect to such things as names, addresses, and amounts), and for exclusions 

and other matters that have nothing to do with whether a claim was properly coded 

and medically necessary. AR, Exh. 5, CGI Technical Quote at ¶ 1.3.2. 

It is true that a GHP may assert a defense to an MSP overpayment demand, and 

the MSP RAC is required to respond to valid documented defenses. However, the 

contracting officer states that it is not a valid defense for a GHP to assert that a 

claim was not properly coded or medically necessary. CO’s Supp. Statement at 5, 

 

11 The website, http://www.msprc.info/, was among the references contractors were 

required to use in performing this work. RFQ SOW at ¶ 1.2.1.1; see also RFQ

Vendor Questions and Answers (Q/A) Exchange No. 61 and 62. The MSPRC is the 

current contractor performing MSP recovery, including the GHP recovery work 

solicited here. Id. at Exchange No. 7.
Page 11 B-406958.3, B-406958.4 

citing relevant portions of CMS’ MSP Manual. On this record, there is no evidence 

that CGI, as the MSP RAC, would be called upon to review the post-payment 

services it provided to its commercial clients. 12 

In conclusion, we find that CMS gave meaningful consideration to whether a 

significant conflict of interest exists here. We further find that DCS has presented 

no hard facts that compel us to find that the agency’s conclusion that any potential 

OCI was not significant and mitigated was unreasonable.

CGI’s Assumptions and Points for Negotiation

DCS argues that CMS improperly conducted discussions with CGI concerning its 

proposed pricing, and permitted the firm to revise its unacceptable quote without 

affording DCS the same opportunity. The agency counters that it never considered 

CGI’s quote to be unacceptable and CGI’s quote was never revised. CMS asserts 

that the exchange at issue was merely a clarification of one of the assumptions CGI 

was required to include in its quote. 

Clarifications are “limited exchanges” that agencies may use to allow offerors to 

clarify certain aspects of their proposals or to resolve minor or clerical mistakes.13

 

12 DCS argues that CGI has an incentive to structure its commercial services in a 

way that leads to fewer claims covered by private insurance and more claims 

covered by Medicare. This argument is misplaced, since it raises a concern 

regarding CGI’s objectivity with respect to the performance of its commercial 

contracts. Moreover, as explained above, CGI provides its post-payment audit 

services to clients who have already determined that they are responsible for the 

claims. Hence, DCS’ scenario depends on a series of speculative events, including 

the private insurer using CGI’s input to reverse its determination that it is 

responsible for a given claim, and the MAC determining that the claim involves an 

MSP debt. Thus, the allegation is entirely too speculative and remote to establish a 

significant conflict of interest. 

FAR § 15.306(a)(2). Requesting clarification from one offeror does not trigger a 

requirement to seek clarification from other offerors. See Gulf Copper Ship Repair, 

Inc., B-293706.5, Sept. 10, 2004, 2005 CPD ¶ 108 at 6; Priority One Servs., Inc., 

B-288836, B-288836.2, Dec. 17, 2001, 2002 CPD ¶ 79 at 5. Discussions occur 

when an agency communicates with an offeror for the purpose of obtaining 

13 The procedures of FAR Part 15 governing contracting by negotiation, including 

those concerning exchanges with offerors after receipt of proposals, do not govern 

competitive procurements under the FSS program. FAR § 8.404(a); USGC Inc., 

B-400184.2 et al., Dec. 24, 2008, 2009 CPD ¶ 9 at 3. However, exchanges that do 

occur with vendors in a FAR subpart 8.4 procurement, like all other aspects of such 

a procurement, must be fair and equitable; our Office has looked to the standards in 

FAR Part 15 for guidance in making this determination. Id. 
Page 12 B-406958.3, B-406958.4 

information essential to determine the acceptability of a proposal, or provides the 

offeror with an opportunity to revise or modify its proposal in some material respect. 

Gulf Copper Ship Repair, Inc., supra, at 6; see also FAR § 15.306(d). The record 

shows that the exchange here was a limited exchange to clarify one of CGI’s pricing 

assumptions and the agency was not required to seek clarification from DCS.

In their business quotes, vendors were required to provide any explanations 

deemed imperative for CMS to understand the derivation of their proposed pricing. 

RFQ at ¶ 8.1. Further, vendors were to submit “all (if any) assumptions, conditions, 

or expectations upon which their technical and business quote volumes were 

based.” Id. at ¶ 8.2 (emphasis in original). CGI’s business quote complied with this 

instruction. As relevant here, the firm’s business quote stated:

CGI’s price quote is predicated in the following assumptions. These 

items are not intended as exceptions to the RFQ or the GSA FABS 

schedule terms and conditions, but rather are intended to help [the] 

agency understand how CGI estimated project scope, timing, 

resources, roles, and responsibilities. They represent the underlying 

beliefs used to prepare our proposed solution, implementation 

approach, and price quote.

Given the amount of upfront and operational costs associated with this 

type of contract, should the actual volumes during project execution 

be substantially less than the CMS estimates, CGI reserves the right 

to enter into discussions with CMS regarding the contingency rate.

AR, Exh. 6, CGI Business Quote at ¶ 1.4.

After CMS made its initial source selection decision, the contracting officer 

contacted CGI to notify the firm of its selection and to clarify that she “took 

exception” to this assumption. The contracting officer states that she advised CGI 

that it should not assume that CMS would enter into discussions with CGI 

concerning the firm’s proposed contingency fee if there were variances in the 

workload volumes, and CGI confirmed that it understood this position. Contracting 

Officer’s Supp. Statement at 1. This exchange is recounted in the revised award 

decision memorandum. AR, Exh. 18, Revised Award Decision Memorandum at 4.

DCS argues that the contracting officer considered that CGI took exception to the 

RFQ’s requirements for a fixed-price contingency fee, rendering the quote 

unacceptable. Based upon this premise, DCS contends that the above exchange 

constituted discussions because it had the effect of converting the quote from one 

that was unacceptable to one that was acceptable and, having opened discussions 

with CGI, CMS was required to also conduct meaningful discussions with DCS. 
Page 13 B-406958.3, B-406958.4 

The premise of DCS’ argument is erroneous. There is no evidence that CMS 

considered CGI’s quote to be unacceptable. That the contracting officer “took 

exception” to CGI’s assumption does not mean that CGI “took exception” to the 

solicitation’s terms. CGI’s quote was merely complying with the RFQ’s requirement 

to include “any and all” assumptions upon which its quote was based, and clearly 

stated that its assumptions were “not intended as exceptions” to the RFQ or its 

schedule contract’s terms and conditions. AR, Exh. 6, CGI Business Quote at 

¶ 1.4. Moreover, there is no evidence that CGI revised its quote. Communications 

that do not permit an offeror to revise or modify its proposal, but rather request that 

the offeror confirm what it has already committed to do, are clarifications and not 

discussions. Highmark Medicare Servs., Inc., et al., B-401062.5 et al., Oct. 29, 

2010, 2010 CPD ¶ 285 at 11. We view the contracting officer’s exchange with CGI 

for confirmation that it should not assume that CMS would enter into these 

discussions to constitute a clarification that it would perform under the contingency 

fee included in its quote. Accordingly, there was no requirement to also seek 

clarification from DCS, or to enter into discussions with either vendor. See Serco 

Inc., B-406061.1, B-406061.2, Feb. 1, 2012, 2012 CPD ¶ 61 at 13.

In addition to describing its assumptions, CGI’s business quote included a section 

entitled “Points for Negotiation.” AR, Exh. 6, CGI Business Quote at ¶ 1.6. Under 

that heading, CGI stated:

CGI understands that the CMS is acquiring the Medicare Secondary 

Payer Services under the terms of the GSA FABS schedule which 

includes FAR Clause 52.212-4, Commercial Terms and Conditions. 

CGI has reviewed the terms and conditions and in accordance with 

our general practice, is proposing the following points for negotiation.

Id. This paragraph was followed by a bulleted description, in more declarative 

language, of “points for negotiation” concerning such things as the termination, 

warranty, and limited liability provisions of FAR § 52.212-4. Id. 

DCS argues that these points for negotiation take material exception to the standard 

FAR clause, rendering the quote technically unacceptable. DCS contends that, by 

including CGI’s quote as an attachment to the awarded task order, CMS improperly 

accepted these material exceptions.

CMS and CGI counter that CGI did not take material exception to the clause, but 

merely proposed items for discussion that represented the firm’s effort to explain the 

terms of the standard clause in the context of this fixed-price contingency fee task 

order. Moreover, CMS argues, the contracting officer did not negotiate these points 

with CGI, and the clause was not changed in CGI’s schedule contract or the 

awarded task order. CMS contends that its mere attachment of CGI’s quote to the 

task order does not mean that it accepted CGI’s points for negotiation.
Page 14 B-406958.3, B-406958.4 

When a request for proposals or an invitation for bids is issued, vendors are 

required to respond with offers that must comply with all material provisions of the 

solicitation. An offeror’s failure to comply with all such provisions renders the bid 

nonresponsive or the proposal unacceptable. When quotations are solicited from 

FSS vendors, however, the situation is not the same. The quotations are not offers 

that can be accepted by the government; rather, they are informational responses, 

indicating the goods or services the vendors would propose to meet the agency’s 

requirements and the price of those goods or services that the government may use 

as the basis for issuing a task order to an FSS contractor. There is, therefore, no 

requirement that the quotation comply precisely with the terms of an RFQ, since the 

quotation is not subject to government acceptance. Spacesaver, B-224339, Aug. 

22, 1986, 86-2 CPD ¶ 219 at 2; see also Zarc Int’l, Inc., B-292708, Oct. 3, 2003, 

2003 CPD ¶ 172 at 2 (vendors in the RFQ context hold the power of acceptance).

Here, the record shows that CGI’s points for negotiation cannot reasonably be read 

as taking exception to the solicitation’s provisions or as conditioning its acceptance 

of the government’s offer on CMS’ agreement to its points of negotiation.14 To the 

extent that the awarded task order evidences any intent on behalf of CMS, it 

evidences a rejection of CGI’s points of negotiation. 

CGI’s quote acknowledged that the procurement was conducted under the terms of 

its schedule contract, which included the standard clause at FAR § 52.212-4. AR, 

Exh. 6, CGI Business Quote at ¶ 1.6. CGI also stated that it would provide these

services “in accordance with the terms and conditions of [its] GSA Schedule 

contract.” Id. at ¶ 1.4.1. Having expressly committed to the terms and conditions of 

its schedule contract, including this standard clause, we cannot read CGI’s 

proposed points for negotiation as taking exception to those terms and conditions; 

rather, the relevant language in CGI’s quote, which, as explained above, was not an 

offer, merely served as an invitation to the agency to further negotiate the identified 

points. 

This is not a case where a vendor makes it clear that it does not intend to commit to 

the solicitation’s terms. See, e.g., Rel-Tek Sys. & Design, Inc., B-280463.3, Nov. 

25, 1998, 99-1 CPD ¶ 2. DCS’s interpretation of CGI’s quote would require us to 

ignore all of its language except the bulleted descriptions of its proposed points for 

negotiation, which we will not do. See, e.g., McAbee Constr., Inc. v. United States, 

97 F.3d 1431, 1435 (Fed. Cir. 1996) (“Where, as here, the provisions of the 

Agreement are phrased in clear and unambiguous language, they must be given 

their plain and ordinary meaning . . . . The Agreement must be considered as a 

 

14 Because we conclude that CGI’s points for negotiation did not take exception to 

the solicitation’s terms, we need not reach the question whether they represent 

material departures from the standard FAR clause.
Page 15 B-406958.3, B-406958.4 

whole and interpreted so as to harmonize and give reasonable meaning to all of its 

parts.”). 

The record also further shows that CMS did not take the invitation to negotiate any 

of these points with CGI, and the standard FAR clause was not revised in CGI’s 

schedule contract or in the awarded task order that CGI signed to signify its 

acceptance of the government’s offer. At most, CMS’s inclusion of CGI’s quote as 

an attachment to the task order simply incorporates the firm’s proposal of these 

points for negotiation.15 Instead of indicating CMS’s agreement to the points of 

negotiation, the task order itself evidences their rejection. In this regard, FAR 

§ 52.212-4 is a clause in CGI’s GSA schedule contract, and the task order explicitly 

states: 

Only those contract sections which differ from General Services 

Administration (GSA) Contract Number GS-23F-0019Y under FABS 

Schedule 520-9 for Recovery Audit Services terms and conditions, or 

provide more detailed information specific to this particular Task 

Order, are provided below. For those contract sections not identified 

below, all terms and conditions of the contract remain in effect.

AR, Exh. 20, Task Order at 2. None of the contract sections in the task order 

mention FAR § 52.212-4 or address any intent by the parties to modify the clause. 

The protest is denied.

Susan A. Poling

General Counsel

 

15 CMS argues that there is no evidence of mutual intent to be bound by these 

points for negotiation, citing Rumsfeld v. Freedom NY, Inc., 346 F.3d 1359, 1361 

(Fed. Cir. 2003) (“[o]ne party to a contract cannot bind the other simply by attaching

a document to a copy of the contract.”).