United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Palmetto GBA, LLC; CGS Administrators, LLC

File: B-407668; B-407668.2; B-407668.3; B-407668.4

Date: January 18, 2013

W. Jay DeVecchio, Esq., Kevin C. Dwyer, Esq., Edward Jackson, Esq., Daniel E. 

Chudd, Esq., Christopher J. Deal, Esq., Adam G. Unikowsky, Esq., and Ethan E. 

Marsh, Esq., Jenner & Block LLP, for Palmetto GBA, LLC; and Craig A. Holman, 

Esq., Kara L. Daniels, Esq., William S. Speros, Esq., Dana E. Peterson, Esq., and 

Michael E. Ginsberg, Esq., Arnold & Porter LLP, for CGS Administrators, LLC, the 

protesters.

Paul F. Khoury, Esq., Kathryn Bucher, Esq., Daniel P. Graham, Esq., Brian Walsh, 

Esq., Tracye Winfrey Howard, Esq., Katherine Rose McDonald, Esq., and Craig 

Smith, Esq., Wiley Rein LLP, for Noridian Administrative Services, LLC, the 

intervenor.

Brian E. Hildebrandt, Esq., and Christian P. Maimone, Esq., Department of Health 

and Human Services, for the agency.

John L. Formica, Esq., and Jonathan L. Kang, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

1. Protests challenging the agency’s evaluation of proposals under the solicitation’s 

past performance, implementation, and technical understanding factors are denied 

where the record shows that the evaluation was reasonable and consistent with the 

solicitation. 

2. Protests challenging the agency’s evaluation of the protesters’ and awardee’s 

proposed costs for realism, and upward adjustment of those costs, are denied 

where the evaluation and upward adjustments to the proposed costs were 

reasonable. 

DECISION

Palmetto GBA, LLC, of Columbia, South Carolina, and CGS Administrators, LLC, of 

Nashville, Tennessee, protest the award of a contract to Noridian Administrative 

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-407668 et al.

Services, LLC, of Fargo, North Dakota, under request for proposals (RFP) 

No. RFP-CMS-2011-0026, issued by the Department of Health and Human 

Services, Centers for Medicare and Medicaid Services (CMS), to obtain a Medicare 

Administrative Contractor (MAC) to provide services for the administration of 

Medicare Part A and Medicare Part B (A/B) fee-for-service benefit claims. The 

protesters argue that CMS’s evaluation of proposals, and selection of Noridian’s 

proposal for award, were unreasonable. 

We deny the protests. 

BACKGROUND

The RFP provided for the award of a cost-plus-award-fee contract for an 

implementation period of up to six months, a base period of one year with four 

1-year option periods, and an optional outgoing contractor transition period of up to 

six months, for A/B MAC services in Jurisdiction E.

1

 RFP at 2, 13, 80, 91. 

Jurisdiction E includes California, Hawaii, and Nevada, as well as American Samoa, 

Guam, and the Northern Mariana Islands.2

 

1 Pursuant to the Medicare Prescription Drug Improvement and Modernization Act 

of 2003 (MMA), 42 U.S.C. §§ 1395kk et seq. (2006), MACs perform the claims 

services that were previously performed by “legacy contractors,” acting as “fiscal 

intermediaries” or “carriers,” under the Title XVIII of the Social Security Act, 

42 U.S.C. §§ 1395c et seq. and 1395j et seq. (2000). Prior to the enactment of the 

MMA, fiscal intermediaries were generally responsible for processing claims from 

institutional providers, such as hospitals and nursing facilities, under Part A of the 

Medicare program; carriers were responsible for processing claims from 

professional providers, such as physicians and diagnostics laboratories, under 

Part B of the Medicare program. The MMA “required the phase-out of the legacy 

contracting method,” which did not require that contracts for fiscal intermediary or 

carrier services be competitively awarded, and imposed competition requirements 

and the use of Federal Acquisition Regulation (FAR)-based contracting, with the 

intent of improving “Medicare’s administrative services to beneficiaries and 

providers by bringing to Medicare the standard contracting principles which have 

long applied to other federal programs operating under the FAR.” Highmark 

Medicare Servs., Inc., et al., B-401062.5 et al., Oct. 29, 2010, 2010 CPD ¶ 285 

at 3 n.2

 Id. at 2. 

2 In the first phase of its Medicare modernization program, CMS divided the United 

States into fifteen separate jurisdictions (Jurisdictions 1 through 15) for the 

purposes of acquiring and providing MAC services. The agency has now combined 

certain of the 15 Jurisdictions, resulting in ten separate jurisdictions (Jurisdictions E 

through Jurisdiction N). RFP at 141; See TrailBlazer Health Enterprises, LLC, 

(continued...)
Page 3 B-407668 et al.

The RFP’s statement of work (SOW) requires the contractor to provide all 

necessary personnel, material, equipment, and facilities to perform the specified 

A/B MAC services. In this regard, the A/B MAC will “receive and control Medicare 

claims from institutional and professional providers, suppliers, and beneficiaries 

within its jurisdiction and will perform standard or required editing on these claims to 

determine whether the claims are complete and should be paid.” SOW at 2. The 

A/B MAC will also “calculate Medicare payment amounts and arrange for remittance 

of these payments to the appropriate party,” “enroll new providers,” “conduct 

redeterminations on appeals of claims,” “operate a Provider Customer Service 

Program . . . that educates providers about the Medicare program and responds to 

provider telephone and written inquiries,” “respond to complex inquiries from 

Beneficiary Contact Centers,” and “make coverage decisions for new procedures 

and devices in local areas.” Id. The SOW also identified two requirements specific 

to Jurisdiction E, related to the Rural Community Hospital Demonstration Program, 

and the designation of California as a “high risk fraud and abuse area[].” Id. 

at 156-159

The RFP stated that award would be made to the offeror submitting the proposal 

found to provide the best value to the agency, based upon cost, and the following 

non-cost evaluation factors: past performance (40% relative weight), technical 

understanding (40% relative weight), and implementation (20% relative weight). 

RFP at 138, 142. The RFP further provided that as part of the evaluation of each of 

the non-cost factors, the agency would consider four common elements: customer 

service, financial management, operational excellence, and innovations and 

technology. RFP at 143. Offerors were informed that the non-cost factors, when 

combined, were significantly more important than cost. RFP at 138.

Noridian, CGS, and Palmetto submitted proposals by the solicitation’s closing date. 

The offerors also delivered oral presentations to the agency, as required by the 

RFP.

 

A CMS technical evaluation panel (TEP) evaluated the offerors’ non-cost proposals. 

The TEP employed a rather convoluted evaluation scheme that resulted in numeric 

scores for proposals under each of the non-cost evaluation factors. With regard to 

the past performance factor, the TEP first “created a Baseline Score . . .by 

converting the adjectival ratings present in the National Institute[s] of Health 

(NIH)/Contractor Performance Assessment [Report] (CPAR), and the Award Fee 

percentage earned, into a total point value.” Agency Report (AR) at 4. For 

example, an adjectival CPAR rating of “exceptional” for a particular aspect of a 

 

(...continued)

B-406175, B-406175.2, Mar. 1, 2012, 2012 CPD ¶ 78 at 3 n.2. Palmetto is the 

incumbent MAC services contractor for Jurisdiction 1, which is now Jurisdiction E.
Page 4 B-407668 et al.

contractor’s performance would be assigned a numeric rating of 0.9, while a CPAR 

rating of “satisfactory” would be assigned a numeric rating of 0.5.3

 AR at 4; Tab 9a, 

TEP Report, at 8. The agency used a somewhat similar scheme with regard to NIH 

reports, assigning, for example, a numeric rating of 0.9 to a rating of “outstanding,” 

and a numeric rating of 0.5 to a rating of “good.”

4

 AR at 5; Tab 9a, TEP Report, 

at 9-10. Finally, with regard to award fee determinations, the agency assigned, for 

example, a numeric rating of 0.8 if the contractor had earned 91 percent to 100 

percent of the available award fee, and a numeric rating of 0.5 if the contractor had 

earned from 1 percent to 50 percent of the available award fee.5 AR at 4; Tab 9a, 

TEP Report, at 8. 

CMS explains that the TEP then determined “the average NIH/CPARS scores for 

each evaluation period, and the average rating for all Award Fees earned.” AR at 6; 

see AR, Tab 9a, TEP Report, at 10. The TEP next averaged the “single Award Fee 

score . . . with each of the NIH/CPARS evaluation period scores to determine the 

initial baseline score for that offeror.” Id. The agency explains that “[b]y doing it this 

way, the TEP placed more weight on the NIH and CPARS scores and less weight 

on the Award Fee scores in the calculation.” Id. 

The agency explains, and the record reflects, that “the baseline numeric scores 

produced were not the deciding factor for determining an Offeror’s overall Past 

Performance numeric score,” but rather, were “used by the TEP as one tool in 

determining an overall Past Performance rating.” AR, Tab 9A, TEP Report, at 10. 

In this regard, the TEP also “weighed the narrative” in each of the above reports 

considered, as well as “the source documents for each formal performance report.” 

Id. at 11. This included the TEP’s review of “source materials,” such as contractor 

monthly status reports, Medicare contractor provider satisfaction survey results, 

comprehensive error rate testing (CERT) results, and contractor rebuttals to NIH

reports and CPARs. Id. The record reflects that the TEP deliberated and “reached 

agreement with respect to the findings for each Offeror,” and “then deliberated as to 

whether the baseline numeric score (score assigned to Award Fees and 

NIH/CPARS evaluations) was a valid indicator of each Offeror’s past performance 

 

3 The remaining adjectival CPAR ratings and the numeric value assigned were as 

follows: very good = 0.8; marginal = 0.3; unsatisfactory = 0.2. AR at 4; Tab 9a, 

TEP Report, at 8.

4 The remaining adjectival NIH Report ratings and the numeric values assigned 

were as follows: excellent = 0.8; fair = 0.3; poor or unsatisfactory = 0.2. AR at 5; 

Tab 9a, TEP Report, at 9-10.

5 The remaining award fee earned percentages and numeric ratings assigned were 

as follows: 76 percent to 90 percent = 0.7; 51 percent to 75 percent = 0.6; 

0 percent = 0.4. AR at 4; Tab 9a, TEP Report, at 8. 
Page 5 B-407668 et al.

given the findings.” Id. at 12. Finally, depending “on the outcome of the 

deliberations, and the mix of relevant strengths, weaknesses, and significant 

weaknesses, the TEP adjusted the baseline score to determine an overall numeric 

score for each Offeror’s Past Performance.” Id.

The TEP’s evaluation of proposals under the technical understanding and 

implementation factors was less convoluted. In this regard, the TEP first identified 

strengths, weaknesses, significant weaknesses, and deficiencies in the proposals. 

After the TEP “reached consensus on all findings, the TEP members assigned an 

individual numeric rating to each evaluation factor” that assessed “the value of a 

proposal’s assertions and promises in light of the Offeror’s capability as determined 

by the TEP through review of all pertinent findings for a given evaluation factor.” Id.

at 6-7. The numeric ratings, which under the scheme here ranged from 0.1 to 0.9,

indicated whether the proposal was more likely to succeed than fail (0.6-0.9), 

equally likely to succeed or fail (0.5), or more likely to fail than succeed (0.1-0.4). 

Id.

A separate agency business evaluation panel (BEP) evaluated the offerors’ cost 

proposals for reasonableness and realism. CMS explains that the TEP assisted in 

this review by confirming whether the proposals “accurately reflected a clear 

understanding of the RFP requirements,” and confirming whether the business 

proposals were consistent with the relevant technical proposals. AR at 6. 

The final numeric scores assigned by the agency to the proposals submitted by 

Noridian, CGS, and Palmetto; the scores as multiplied by their relative weights; the 

offerors’ proposed costs; and agency-calculated probable costs; were as follows:

Noridian CGS Palmetto

Implementation .70 x 20% = .14 .80 x 20% = .16 .90 x 20% = .18

Technical .90 x 40% = .36 .60 x 40% = .24 .70 x 40% = .28

Past Performance .87 x 40% = .35 .70 x 40% = .28 .40 x 40% = .16

Total Weighted Score .85 .68 .62

Proposed Cost $345,206,187 $344,515,427 $392,324,976

Cost Adjustment $27,839,554 $26,716,738 $15,856,240

Probable Cost $373,045,741 $371,232,165 $408,181,217

AR, Tab 20A, Source Selection Decision, at 7, 29.

The contracting officer (CO) served as the source selection authority (SSA). In her 

role as the SSA, the CO “performed an independent review of the proposals,” and 

prepared a lengthy source selection decision addressing the strengths, 

weaknesses, and significant weaknesses of the offerors’ proposals as evaluated 

under the RFP’s past performance, implementation, and technical understanding 

factors. CO’s Statement at 7; see AR, Tab 20A, Source Selection Decision, 

at 1-61. The CO’s source selection decision also discussed the offerors’ proposed 
Page 6 B-407668 et al.

costs, as well as the cost realism adjustments and probable costs as evaluated by 

the agency. The CO ultimately concluded that Noridian’s proposal, as evaluated by 

the agency under the non-cost factors and considering the proposal’s probable 

costs, represented the best overall value to the government. In doing so, the CO

also noted as follows:

I have also reviewed the proposals in light of CGS’s and Palmetto’s 

proposed costs--that is, the costs proposed by CGS and Palmetto 

prior to the cost realism analysis--as compared to [Noridian’s] adjusted 

costs. Based on this review (where CGS and Palmetto were not cost 

adjusted, but [Noridian] was), I can state with certainty that I would 

nonetheless recommend an award to [Noridian] based on the past 

performance and technical approach discriminators detailed above in 

the trade-off analysis.

AR, Tab 20A, Source Selection Decision, at 60. After requesting and receiving 

debriefings, Palmetto and CGS filed these protests.

DISCUSSION

Palmetto and CGS raise numerous challenges to CMS’s evaluation of the offerors’ 

non-cost and cost proposals, and the agency’s conclusion that Noridian’s proposal 

represented the best value to the agency. Although we do not specifically address 

all of Palmetto’s and CGS’s arguments, we have fully considered all of them and 

find that they afford no basis on which to sustain the protest.

Past Performance Evaluation

Baseline Numeric Scores

The protesters challenge CMS’s past performance evaluation. In doing so, the 

protesters first argue at length, and in numerous different ways, that the process by 

which the agency calculated the offerors’ baseline numeric scores under the past 

performance factor was flawed and, and consequently rendered the final past 

performance evaluation scores unreasonable. 

The protesters contend, for example, that the agency’s evaluation process resulted 

in an unreasonable assessment of past performance, because it assigned a score 

of 0.5, defined as “[e]qually likely to succeed or fail,” to a “good” CPAR rating or a 

“satisfactory” NIH report rating. The protesters continue this argument by pointing 

out that under the scoring system adopted by the agency, a “good” CPAR rating 

would be assigned the same numeric value of 0.5 as an offeror who had received “a 

dismal 2% of the available ‘Award Fee’” under another contract. CGS Comments 

at 59; see AR at 4; Tab 9a, TEP Report, at 8. The protesters also argue that the 

process used by the agency in calculating the offerors’ baseline past performance 
Page 7 B-407668 et al.

scores failed to account for trends in the offerors’ past performance. Additionally, 

the protesters argue that the agency’s process for calculating the offerors’ baseline 

numeric scores placed too much emphasis on certain contracts, or certain 

performance periods of those contracts, and too little emphasis on others, and 

improperly excluded from consideration two categories of past performance 

evaluated under the CPAR system (management of key personnel and utilization of 

small business). 

Although we are mindful of the protesters’ concerns here, we do not find the 

agency’s evaluation of the offerors’ past performance unreasonable. In this regard, 

our Office has consistently recognized that ratings, be they numerical, adjectival, or 

color, are merely guides for intelligent decision-making in the procurement process. 

Where the evaluation and source selection decision reasonably consider the 

underlying basis for the ratings, including the advantages and disadvantages 

associated with the specific content of competing proposals, in a manner that is fair, 

and equitable, and consistent with the terms of the solicitation, the protester’s 

disagreement over the actual numerical, adjectival, or color ratings is essentially 

inconsequential in that it does not affect the reasonableness of the judgments made 

in the source selection decision. Similarly, the evaluation of proposals and 

consideration of their relative merit should be based upon a qualitative assessment 

of proposals consistent with the solicitation’s evaluation scheme, and should not be 

the result of a simple count of the relative strengths and weaknesses assigned to 

the proposals during the evaluation process. Highmark Medicare Servs., Inc., et al., 

B-401062.5 et al., Oct. 29, 2010, 2010 CPD ¶ 285 at 19.

As mentioned previously, the record reflects that the TEP considered the baseline 

numeric scores produced as simply “one tool” used by the agency in evaluating the 

merits of the offerors’ past performance. See AR, Tab 9A, TEP Report, at 10. As 

an initial matter, we note that the summaries of the CPAR and NIH reports prepared 

by the agency during its evaluation of the offerors’ proposals include narratives 

discussing in detail the reasons for the relevant CPAR or NIH report ratings, 

evidencing that the TEP engaged in far more than the simple mathematical exercise 

of determining the numeric scores to be assigned to the offerors under the past 

performance factor. See AR, Tab 9G, Past Performance Findings-Palmetto; 

Tab 9H, Past Performance Findings-CGS; Tab 9I, Past Performance 

Findings-Noridian. 

Additionally, and as will be discussed in more detail later with respect to the 

evaluation of each offeror, the TEP report includes lengthy narratives setting forth 

the TEP’s views as to the relative strengths, weaknesses, or significant weaknesses

associated with the offerors’ past performance. AR, Tab 9A, TEP Report, 

at 19-24, 30-33, 37-40. The narrative for each offeror concludes with a section 

detailing the considerations of the TEP in reaching a consensus as to the merits of 

a particular offeror’s past performance, and where the TEP felt necessary, an 

adjustment to the baseline numeric score initially calculated by the TEP. Id.
Page 8 B-407668 et al.

at 23-24, 32, 39-40. In this regard, as will be discussed in more detail below, the 

TEP, after focusing on the strengths, weaknesses, and significant weaknesses in

each offerors’ performance, made adjustments to each offeror’s baseline past 

performance score. For Palmetto, the TEP revised the baseline score of 0.58 to a 

final score of 0.4; for CGS, the TEP revised the baseline score from 0.66 to a final 

score of 0.70; and for Noridian, the TEP revised the baseline score from 0.82 to a 

final score of 0.87. Id. at 23-24, 33, 40. 

The record further reflects, again as mentioned previously, that in performing the 

source selection the CO did not simply rely on the numeric scores assigned to the 

offerors’ proposals by the TEP under any of the non-cost factors. Rather, the CO, 

while considering the TEP’s evaluation, engaged in her own review of the offerors’ 

proposals. AR, Tab 20A, Source Selection Decision, at 39-61. In this regard, the 

CO’s summary of her views of the offerors’ respective past performance makes no 

mention of numeric past performance scores. Id. at 49-58. As such, while we 

understand the protesters’ concerns regarding the process by which the TEP 

calculated the baseline numeric past performance scores, the calculations did not 

drive the decision here. Instead, the record shows that the decision was driven by a 

consideration of the relative strengths and weaknesses underlying the numerical 

scores. As a result, we find no basis to conclude that the agency’s evaluation and 

source selection were unreasonable.

Next, the protesters argue that CMS’s evaluation of their respective past 

performance and that of Noridian was unreasonable. Here, the protesters focus on 

the strengths, weaknesses, and significant weaknesses identified by the agency 

under the past performance factor.

Where a protester challenges an agency’s past performance evaluation, we will 

examine the record to ensure that the evaluation was reasonable and consistent 

with the solicitation’s stated evaluation factors and applicable statutes and 

regulations. Although an agency is not required to identify and consider each and 

every piece of past performance information, it must consider information that is 

reasonably available and relevant as contemplated by the terms of the solicitation. 

Where an agency has considered reasonably available and relevant past 

performance information, its judgments regarding the relative merits of competing 

offerors’ past performance are primarily matters within the contracting agency’s 

discretion, and the protester’s mere disagreement with such judgments does not 

establish a basis for our Office to sustain a protest. Highmark Medicare Servs., 

Inc., et al., supra, at 16-17. 

The solicitation informed offerors that “[t]he evaluation of past performance will be 

based on the Offeror’s demonstrated ability, (considering its performance of the 

requirements of other contracts of a similar in nature, scope, and complexity as the 

MAC contract) to successfully meet the requirements of the SOW in this 

solicitation.” RFP at 142. To facilitate this evaluation, the RFP provided that 
Page 9 B-407668 et al.

offerors could submit past performance information pertaining to themselves or their 

proposed subcontractors, but stated that information need not relate to any “MAC 

contract, Medicare fiscal intermediary (FI) contract, or Medicare carrier contract,” as 

CMS would review “information maintained in its internal record and or with its 

personnel” pertaining to such contracts. Id. at 111. The RFP noted here that the 

agency may “consider information from a range of CMS internal and external 

sources to complete its past performance evaluation,” including Section “912 

Evaluations,”

6

 “Medicare Contractor Provider Satisfaction Survey (MCPSS) 

Results,” “Quality Assurance and Surveillance Plans,” “Reports of Contractor 

Performance,” and “Previous MAC Implementations.” Id. at 112. We address the 

evaluation of each offeror’s past performance in turn.

Palmetto

Palmetto argues that CMS’s assignment of a final numeric rating of 0.4 to its 

proposal under the past performance factor was unreasonable.7

 See AR, Tab 9A, 

TEP Report, at 6. Palmetto contends, for example, that the agency, in assigning 

Palmetto’s past performance score of 0.4, placed far more emphasis than was 

warranted on Palmetto’s Section 912 evaluations, and its difficulties with certain 

aspects of its medical review strategy. In Palmetto’s view, the agency should have 

given greater weight to its overall performance record as evidenced by its CPAR 

ratings. Palmetto Suppl. Comments at 18-20.

The TEP evaluated Palmetto’s past performance as evidencing a number of 

“strengths,” noting, for example, that during the base year of Palmetto’s A/B MAC 

Jurisdiction 11 contract, it had “met 100% of the standards reviewed in financial 

management, claim processing, and provider customer service,” which exceeded 

the national averages. AR, Tab 9A, TEP Report, at 19. As another example, the 

 

6 Section 912 of the MMA “implemented requirements for annual evaluation, testing,

and reporting on security programs at both MAC contractors and existing carrier 

and intermediary business partners (to include their respective data centers).” 

SOW at 47. As explained by the agency, “at its heart, Section 912 reviews evaluate 

the ability of the contractor to maintain the security of their Information Technology 

(IT) based systems.” AR at 36. More specifically, “Section 912 reviews check such 

things as whether you apply vendor-supplied security patches; whether passwords 

and computer access [are] properly managed; whether IT access is promptly 

removed from terminated employees; [and] whether the security procedures are 

well documented.” AR, Tab 2C, Statement of TEP Member, at 1.

7 As mentioned previously, ratings from 0.1 to 0.4 correlated to a determination that 

the proposal was considered “more likely to fail than succeed.” AR, Tab 9A, TEP 

Report, at 6-7.
Page 10 B-407668 et al.

TEP noted that Palmetto’s Jurisdiction 1 “Audit & Reimbursement reflect strong 

performance,” with the TEP specifically commenting on the upward trend in 

Palmetto’s performance as evidenced by the improvement in this area “reflected 

between Option Years 1 and 2.” Id.

The TEP also evaluated certain aspects of Palmetto’s past performance as 

“weaknesses” and “significant weaknesses.” For example, the TEP found that 

Palmetto’s performance as the Jurisdiction 1 A/B MAC was marred by “poor 

performance” in the “area of Provider Customer Service” during all of the evaluated 

periods of performance. Id. at 20. Accordingly, the TEP noted this aspect of 

Palmetto’s past performance as a “weakness.” Id. The TEP also found that certain 

of Palmetto’s CERT scores for its Jurisdiction 1 contract were “above the national 

averages”--indicating a higher than average rate of improper payments--and noted 

this as a weakness in Palmetto’s past performance. Id. at 20-21

The TEP also noted that certain aspects of Palmetto’s performance as the 

Jurisdiction 1 A/B MAC were substandard, as evidenced by the results of the 

agency’s Section 912 evaluation, wherein Palmetto had a higher number of risk 

findings than the national average. Id. at 21; Tab 9G, Past Performance 

Findings-Palmetto, at 15. These findings included, among other things, that 

Palmetto’s “[s]ecurity policies . . . did not address/enforce platform security 

configurations or patch management,” that the “system security plan was not kept 

current,” and that “[v]ulnerabilities were identified during the network penetration 

test.” AR, Tab 9G, Past Performance Findings-Palmetto, at 15. The TEP 

concluded that these findings “exhibited non-conformance with the contract 

requirements for information systems security,” and posed “substantial 

risk . . . because protected health information (PHI) and private financial data could 

be accessed inappropriately, exposing the Government to potential fraud, waste, 

and abuse.” AR, Tab 9A, TEP Report, at 21; see Tab 9G, Past Performance 

Findings-Palmetto, at 15. The TEP added here that “[b]y continually failing to 

properly safeguard PHI and other private health information, the Offeror has risked 

the availability, confidentiality, and security of the Medicare [fee-for-service] systems 

and data.” Id. This aspect of Palmetto’s past performance was considered a 

“significant weaknesses” by the TEP. Id.

The TEP also assessed two other aspects of Palmetto’s past performance as 

significant weaknesses. In this regard, the TEP first noted with regard to Palmetto’s 

performance as the Jurisdiction 1 A/B MAC, that Palmetto had “failed to meet the 

[Quality Assurance Surveillance Plan] Medical Review metric that assesses the 

MAC’s [medical review strategy] to ensure an appropriate and complete plan is in 

place to address vulnerabilities and the high CERT error rate in the jurisdiction.” 

AR, Tab 9A, TEP Report, at 22; Tab 9G, Past Performance Findings-Palmetto, at 7. 

The TEP continued here by pointing out that the performance issues in this regard 

were “sufficiently grievous to warrant a request from CMS senior management for 

corrective action,” and that even after “extensive oversight and direction from CMS 
Page 11 B-407668 et al.

beginning in April 2011. . . that included weekly meetings and multiple on-site

follow-up reviews, Palmetto continued to struggle with developing an effective 

strategy to correct the problems identified in the [Quality Assurance Surveillance 

Plan] review.” AR, Tab 9A, TEP Report, at 22. Although the TEP added that 

Palmetto had made some progress in this area, “the MAC program office has 

determined that weekly monitoring meetings with Palmetto remain necessary and 

continued intense oversight is still warranted.” Id.

The last aspect of Palmetto’s past performance assessed by the TEP as a 

“significant weakness” pertains to Palmetto’s performance as the Jurisdiction 11 

A/B MAC. Here, the TEP found that certain aspects of Palmetto’s performance 

were substandard, and that the cause was Palmetto’s failure to provide an 

adequate number of personnel to perform the required services. AR, Tab 9A, TEP 

Report, at 23; Tab 9G, Past Performance Findings-Palmetto, at 7; see Tab 13A(05), 

CMS Letter to Palmetto’s President (Dec. 5, 2011). Specifically, the record reflects 

that during first option year of Palmetto’s Jurisdiction 11 A/B MAC contract, the 

protester, for a number of months, provided less than 50 percent of the agreed upon 

full-time equivalent personnel for the functions at issue, and, for a number of other 

months, provided considerably less staff than it had proposed. AR at 25; AR, 

Tab 9A, TEP Report, at 23; Tab 9G, Past Performance Findings-Palmetto, at 7; 

Tab 13A, CMS Letter to Palmetto’s President (Dec. 5, 2011). The TEP noted, 

among other things, that CMS had “determined [that] this performance was 

sufficiently egregious to question whether to exercise the next [Jurisdiction] 11 

contract option year.” AR, Tab 9A, TEP Report, at 23.

The record shows that the TEP reasonably considered its findings regarding 

Palmetto’s past performance, and concluded that although it had calculated a 

baseline numeric score of 0.58 for Palmetto’s past performance, a lower numeric 

score of 0.4 was warranted in light of the strengths, weaknesses, and significant 

weaknesses highlighted above. Id. The TEP specifically noted its concerns with 

“Palmetto’s anemic improvement in Jurisdiction 1 Medical Review program after 

more than a year of CMS’ stringent oversight,” and “Palmetto’s failure in 

Jurisdiction 11 to hire the appropriate number of personnel to meet the contract 

requirements.” Id. at 24. In her source selection decision, the CO agreed with the 

TEP’s concerns, noting with regard to the results of Palmetto’s Section 912 

evaluations, that “Palmetto’s performance demonstrates its difficulty performing 

portions of the work at an acceptable level, and a failure to establish internal 

controls and manage its IT systems in a way which clearly maintains the 

confidentiality, integrity and availability of Medicare systems operations.” AR, 

Tab 20A, Source Selection Decision, at 21. The CO further commented in her 

source selection decision that Palmetto’s provision of less staff than “agreed upon” 

for certain of the services to be provided by Palmetto as the Jurisdiction 11 A/B 

MAC “had a major negative impact on the quality of service in these areas . . . and 

put the Medicare program at unacceptable levels of risk.” Id. at 22.
Page 12 B-407668 et al.

Although Palmetto clearly disagrees with the agency’s evaluation of its past 

performance, we cannot find this aspect of the agency’s evaluation to be 

unreasonable. The record of the evaluation evidences the agency’s clear concerns 

with Palmetto’s past performance in the areas discussed above, and the impact that 

these significant weaknesses had and could have on the Medicare program and its 

beneficiaries.

CGS

CGS contends that CMS’s evaluation of its past performance and assignment of a 

numeric rating of 0.7 to its proposal under this factor were unreasonable. CGS 

argues that the agency’s evaluation failed to recognize numerous strengths 

demonstrated by its past performance record. CGS continues by arguing that the 

agency’s evaluation of its past performance gave undue consideration to the past 

performance of Palmetto, which was proposed by CGS as its [DELETED]

subcontractor [DELETED]. CGS Protest at 31; see AR, Tab 9A, TEP Report, at 38. 

The TEP evaluated CGS’s past performance as presenting a number of strengths, 

noting, for example, that CGS has met “100% of the metrics for medical review in 

Option Years 2-4,” and “100% [of] its Claims Processing metrics for Option Years 2 

and 3” with regard to its Durable Medical Equipment (DME) MAC. AR, Tab 9A, TEP 

Report, at 37. The TEP noted as another strength that CGS had “implemented a 

project” to consolidate certain Medicare Summary Notices “into one envelope,” and 

that this consolidation had “saved the program approximately $500,000 throughout 

the year and was subsequently adopted by the [fee-for-service] contractor 

community.” Id. By way of another example, the TEP assigned a strength to CGS’s 

past performance “based on [CGS’s] ability to maintain low CERT rates in its legacy 

Part B workload,” and an additional strength for “CGS’ past performance with 

respect to its legacy contract for its work as an outgoing contractor.” Id. at 37-38. 

The TEP noted here that CGS “worked closely” with a number of entities “to 

transition the Tennessee Part B workload” to the incoming MAC for Jurisdiction 10, 

thereby eliminating “disruption to the Tennessee providers.” Id. at 38. The TEP 

continued by commenting here that “CGS was able to decrease its workload 

inventories to historical lows allowing the incoming MAC an advantage during its 

implementation,” which in the TEP’s view “demonstrated [CGS’s] willingness to 

focus on the Agency’s goals for the implementation even while losing part of its own 

workload.” Id.; see Tab 9H, Past Performance Findings-CGS, at 8. 

The weaknesses and significant weaknesses noted by the TEP with regard to 

CGS’s past performance concerned the Section 912 evaluations for CGS itself, and 

Palmetto, which as mentioned above, was proposed as CGS’s [DELETED]

subcontractor. CGS Protest at 31; see AR, Tab 9A, TEP Report, at 38. The TEP 

noted here that the agency’s Section 912 evaluations conducted in connection with 

CGS’s performance of its legacy carrier contract noted more “high risk findings” 

than the national average for fiscal year 2010, and a number of “high risk findings” 
Page 13 B-407668 et al.

and “medium risk findings” for fiscal year 2011. AR, Tab 9A, TEP Report, at 39. 

The TEP concluded that CGS, as well as any offeror with “high risk findings” in this 

area, warranted a weakness because, among other things, the “failure to perform 

efficiently and protect the confidentiality, integrity and availability of Medicare 

[fee-for-service] data could result in the need for increased Government oversight 

and monitoring.” Id. 

With regard to Palmetto, the record reflects that the TEP carefully considered 

Palmetto’s role and responsibilities as CGS’s subcontractor, where Palmetto would 

be providing the [DELETED] in performing this contract. The TEP assessed this as 

a significant weakness in CGS’s proposal under the past performance factor, given 

the issues with Palmetto’s performance as identified during the Section 912 

evaluations as discussed earlier in this decision. Id.

The TEP ultimately assigned a numeric score of 0.7 to CGS under the past 

performance factor, rather than the calculated baseline score of 0.67. Id. at 40. 

The TEP noted here that despite CGS’s “strong past performance on its legacy 

[c]arrier contract,” as well as its performance as the DME MAC for Jurisdiction C as 

evidenced by its CPAR report, NIH Reports, and award fees earned, the 

“weaknesses revolving around the Section 912 findings for both CGS and its 

proposed subcontractor, Palmetto, led the TEP to assign a 0.7 numeric rating for 

this factor.” Id. 

We find nothing unreasonable in the agency’s evaluation here. As indicated above, 

the agency’s evaluation of CGS’s past performance was comprehensive, and 

contrary to CGS’s assertions and based upon our review of the record, well 

documented. With regard to the impact that Palmetto, as CGS’s subcontractor, had 

on CGS’s past performance score, we cannot find the agency’s actions 

unreasonable. As explained by the agency, given Palmetto’s role as CGS’s 

subcontractor [DELETED]. AR at 36. As such, Palmetto’s ability to secure its IT 

systems, which is the subject of the Section 912 evaluations, clearly was relevant to 

the agency’s consideration of the past performance of CGS and its proposed 

subcontractor Palmetto.

Noridian

Both protesters argue that CMS’s evaluation of Noridian’s past performance, and 

assignment of a 0.87 under this factor, was unreasonable and evidenced unequal 

treatment. The protesters point out, for example, that the agency’s Section 912 

evaluations of Noridian for fiscal years 2010 and 2011 included a number of high 

risk findings--which in the case of the protesters, led to the assessment of 

weaknesses and contributed to their lower ratings. 

With regard to Noridian’s past performance, the TEP noted “a number of operational 

excellence indicators from past internal Quality Assurance Surveillance 
Page 14 B-407668 et al.

Program . . . reviews where [Noridian] clearly exceeded the national norms.” AR,

Tab 9A, TEP Report, at 30. For example, the agency noted that Noridian had 

“met 100% of the claims processing metrics,” and “100% of the Provider Customer 

Service Plan metrics,” in each of the three years reviewed by CMS with regard to 

Noridian’s performance as the Jurisdiction 3 A/B MAC. Id. The TEP added that 

Noridian, as the Jurisdiction 3 A/B MAC, had performed at a level well above the 

national average in a number of areas, including the area of Provider Enrollment. 

Id. at 31.

The TEP further identified a “very high quality strength” based on Noridian’s 

performance on its legacy Fiscal Intermediary and Carrier contracts. Id. at 31. In 

doing so, the TEP described Noridian’s actions in responding to “a devastating 

flood” near Noridian’s North Dakota headquarters in March 2009, and noted that 

“[t]hroughout this period, [Noridian], monitored its performance and staffing levels to 

ensure CMS requirements were met.” Id.

While noting that there were “no findings” in CMS’s fiscal year 2009 Section 912 

evaluation of Noridian, the TEP assigned a weakness to Noridian under the past 

performance factor because the fiscal year 2010 Section 912 evaluation of Noridian 

revealed high and medium risk findings, and that as such, Noridian’s performance 

during this period had been only “slightly better than the national average.” Id.

at 31-32. The agency concluded in this regard that the fiscal year 2010 Section 912 

evaluation findings “detract from [Noridian’s] ability to perform efficiently and protect 

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

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

at 32. The record reflects that the TEP, in assigning a final numeric score of 0.87 to 

Noridian under the past performance factor, noted that while the “nature of the 

Section 912 weaknesses did reduce the final rating to some extent,” the “strengths 

cited greatly outweighed the weaknesses.” Id. Here, the TEP pointed to, among 

other things, the “excellence in many of the . . . metrics measured,” where Noridian 

had achieved 100 percent ratings. Id.

The record further reflects that the CO, in comparing Nordian’s past performance to 

that of CGS and Palmetto, considered the findings of the TEP as set forth above, 

and “conducted an independent review of each Offeror’s past performance.”

8

 

8 The section of the CO’s source selection decision detailing the offerors’ past 

performance does not refer at any time to either the baseline numeric scores 

calculated by the TEP, or the final numeric scores assigned to the offerors by the 

TEP under the past performance factor.

 AR, 

Tab 20A, Source Selection Decision, at 58. The CO’s source selection decision

discusses, in considerable detail, many of the same points cited by the TEP, and 

certain additional information, such as CGS’s performance as the Jurisdiction 15 
Page 15 B-407668 et al.

A/B MAC, as reflected in the CPARs. Id. at 57. The CO ultimately concluded that 

“[n]either Palmetto nor CGS has achieved the level of successful past performance 

as [Noridian],” and that Noridian’s “past performance provides the SSA with a high 

level of confidence that it could successfully perform the requirements of 

[Jurisdiction] E.” Id. at 58. 

We find nothing unreasonable in the agency’s evaluation here. The record 

demonstrates that the agency reasonably considered Noridian’s past performance 

as demonstrating numerous strengths. The record further reflects that the agency 

reasonably considered the results of the Section 912 evaluations, and did not 

engage in unequal treatment with regard to its ultimate consideration of the relative 

merits of the offerors’ past performance. In this regard, and as noted above, the 

record establishes that the agency was aware of and considered the Section 912 

evaluation results for Noridian during its assessment of Noridian’s past 

performance, and reasonably considered that while they represented a weakness, 

they were offset in part by the numerous strengths evidenced by Noridian’s past 

performance. The record also establishes that, as compared to Noridian, CGS and 

Palmetto both had a greater number of high and medium risk findings in fiscal 

years 2010 and 2011 as evaluated under Section 912, and as such, the agency’s 

assessments in this regard were not unreasonable. AR, Tab 9A, TEP Report, 

at 21, 31-32, 39. In sum, we see nothing unreasonable about the agency’s 

evaluation of the offerors’ competing proposals under the past performance factor, 

and its conclusion, as set forth in the source selection decision, that “[n]either 

Palmetto nor CGS has achieved the level of successful past performance as 

[Noridian].” See AR, Tab 20A, Source Selection Decision, at 58.

Implementation Evaluation

CGS argues that CMS’s evaluation of its proposal and the proposal submitted by 

Noridian under the implementation factor was unreasonable.9 

The evaluation of offerors’ technical proposals, including the determination of the 

relative merits of proposals, is primarily a matter within the contracting agency’s 

discretion, since the agency is responsible for defining its needs and the best 

method of accommodating them. Highmark Medicare Servs., Inc., et al., supra, 

at 12. In reviewing an agency’s evaluation, we will not reevaluate the proposals, but 

will examine the record of the evaluation to ensure that it was reasonable and 

consistent with the stated evaluation criteria as well as with procurement law and 

 

9 Palmetto, whose proposal was assigned a numeric score of 0.9 (the highest score 

available) under the implementation factor, does not raise any challenge to the 

agency’s evaluation of proposals under this factor.
Page 16 B-407668 et al.

regulation. Id. A protester’s mere disagreement with a procuring agency’s 

judgment is insufficient to establish that the agency acted unreasonably. Id. 

The RFP required each offeror to “provide a clear and concise description of its 

understanding of implementation activities and its ability to resolve any issues that 

may arise.” RFP at 119. The RFP specifically requested that proposals address 

“[i]ssues, concerns, and key assumptions of the implementation,” and “[a]ctions that 

will be taken to communicate with Medicare providers, practitioners, suppliers, and 

other affected partners and stakeholders in order to minimize the impact of the

implementation.” Id.

CGS

The TEP assessed a number of strengths in CGS’s proposal in evaluating it under 

the implementation approach factor. The TEP found, for example, that CGS’s 

continued use of [DELETED] and that because of CGS’s proposed use of the 

incumbent contractor, Palmetto, for [DELETED]. AR, Tab 9A, TEP Report, at 34. 

The TEP also pointed out that CGS’s proposed use of [DELETED].” Id.

The TEP also evaluated CGS’s proposed approach to implementation as posing a 

weakness in the “area of provider outreach and education.” Id. at 34. The TEP 

found that certain aspects of this area of CGS’s implementation plan, as set forth in 

its proposal and presented during its oral presentation, were “vague,” in that the 

plan did “not specify how [CGS] will provide the outreach necessary for such a large 

provider community.” Id. The TEP concluded that, overall, CGS’s approach was 

“solid,” and that the strengths associated with CGS’s proposed approach to 

implementation “all benefit the Government substantially and set the stage for a low 

risk implementation.” Id. at 35. The CO, as reflected in her source selection 

decision, concurred with the TEP’s views. AR, Tab 20A, Source Selection Decision, 

at 41-42.

In arguing that the agency’s evaluation of its proposal under the implementation 

factor was unreasonable, CGS simply repeats many of the features of its approach 

as set forth in its proposal and its oral presentation, and asserts that the agency’s 

assignment of a numeric rating of 0.8 to CGS’s proposal under the implementation 

factor, rather than the maximum available rating of 0.9, was unreasonable. See

CGS Protest at 39-43; CGS Comments at 79-82; AR, Tab 7A, CGS Proposal, 

Implementation Approach at 1-10; Tab 7G, CGS Oral Presentation, at 64-69, 

111-19. Based upon our review of the record, CGS’s arguments here evidence 

nothing more than its disagreement with this aspect of the agency’s evaluation, and 

as such, provides no basis to find the agency’s evaluation unreasonable.
Page 17 B-407668 et al.

Noridian

CGS next argues that CMS failed to properly consider risks in Noridian’s proposal 

under the implementation factor. CGS contends, for example, that in contrast to its 

own implementation approach, Noridian’s approach includes personnel new to 

Jurisdiction 1 [DELETED], and proposed to transition from the incumbent 

contractor’s EDI to Noridian’s own EDI [DELETED]. CGS also complains that the 

agency erroneously concluded that Noridian’s staffing plan was “well thought out,” 

and unreasonably credited Noridian for including a risk mitigation plan as part of its 

implementation approach. See Tab 9A, TEP Report, at 26.

As pointed out by the agency, Noridian’s proposal and oral presentation included 

detailed explanations as to how it intends to retain, or recruit, hire, and train, the 

personnel necessary to perform the contract. Agency Suppl. Report at 27, citing

AR, Tab 6aC, Noridian Proposal, § C.1.2 at 1-11; Tab 6F, Noridian Oral 

Presentation, at 16-32. The agency also points out that Noridian’s proposal 

includes a description of a specific technical innovation to assist in transitioning the 

EDI, and that contrary to CGS’s assertion, Noridian’s oral presentation specifically 

mentions its provision of a risk mitigation plan as a deliverable under the contract. 

Agency Suppl. Report at 23-24, citing AR, Tab 6aD, Noridian Proposal, at D3. 

Based upon our review of the record, CGS’s arguments here again evidence 

nothing more than its mere disagreement with this aspect of the agency’s 

evaluation, and as such, we have no basis on which to find the agency’s evaluation 

of Noridian’s proposal, and assignment of a numeric score of 0.7 to that proposal 

under the implementation factor, to be unreasonable.

Technical Understanding Evaluation

The protesters argue that CMS’s evaluation of proposals under the technical 

understanding factor was unreasonable, with each protester making multiple 

challenges to the evaluation of its own and Noridian’s proposals. 

The RFP provided that the agency would consider customer service, financial 

management, operational excellence, and innovations and technology, in evaluating 

proposals and “determining the overall rating for the technical understanding 

evaluation factor.” RFP at 112. The solicitation advised offerors that in addressing 

the technical understanding factor their proposals were to include sections 

addressing personnel (to include key personnel and a staffing plan), innovations, 

their medical review strategy, and their customer service strategy. RFP at 113-119. 

The RFP included detailed explanations as to what was meant by each of these 

areas, as well as the type of information offerors were to include in their proposals. 
Page 18 B-407668 et al.

Noridian

In challenging the propriety of CMS’s evaluation under the technical understanding 

factor, Palmetto and CGS focus on the agency’s evaluation of Noridian’s proposal 

and its conclusion that an innovation proposed by Noridian applicable to the 

provider enrollment process, termed RapidApp, constituted a strength. 

The TEP noted that Noridian’s RapidApp “automates the provider enrollment 

process, which is currently very much a manual system.” AR, Tab 9A, TEP Report, 

at 28. The TEP found that Noridian “proposes to streamline the enrollment process” 

through RapidApp “by interviewing the enrollee via an online application and 

electronically capturing the information, which was previously recorded on paper 

forms.” Id. The TEP also noted that, through the use of RapidApp, the enrollee 

would be validated “against external sanction and licensure databases,” and that 

RapidApp as proposed allows for a “paperless process” through the use of 

“electronic signatures and attachments.” Id. Additionally, the TEP cited RapidApp’s 

achievement of “an [DELETED] reduction in the time it takes [Noridian] to process 

similar paper provider enrollment applications in the pilot of this system currently 

being conducted in [Noridian’s] Jurisdiction F contract with physician assistants.” Id. 

The TEP concluded that Noridian’s proposed use of RapidApp merited a strength, 

based on the following:

[T]he continued development and roll out of the RapidApp 

application . . . will foster efficiencies in the administration of the 

Medicare [fee-for-servce] program, serve to enhance customer service 

by effectively responding to provider’s needs and inquiries, and also 

promote the fiscal integrity of the Medicare [fee-for-service] program 

and prompt claims payment . . . by processing enrollment applications 

more quickly and accurately.

Id. 

In her source selection decision, the CO recognized that while “RapidApp is a very 

progressive innovation,” it “has not been in place for a sufficient period of time to 

demonstrate that it will achieve everything that is proposed.” AR, Tab 20A, Source 

Selection Decision, at 43. The CO also specifically noted in her consideration of 

Noridian’s proposal that “subsequent to the completion of the TEP Report, it was 

learned that CMS may disallow the front-end on-line ‘interview’ feature of RapidApp, 

since CMS now has on-line data entry screens available for provider applications.” 

Id. After discussing this matter with the TEP, the CO concluded that “despite this 

new information, RapidApp remains a strength within [Noridian’s] proposal,” 

because “the ‘back-end’ automation features of RapidApp may be retained and may 

serve to foster efficiencies in the administration of the Medicare [fee-for-service] 
Page 19 B-407668 et al.

program.”

10 Id. at 43-44; see CO’s Suppl. Statement at 2. As such, the CO

continued to consider Noridian’s RapidApp as a strength, and cited to it as one of 

the seven non-cost strengths supporting her determination that Noridian’s proposal 

represented the best value to the agency. AR, Tab 20A, Source Selection Decision, 

at 60.

The protesters argue at length that the CO’s continued consideration of Noridian’s 

RapidApp as a strength was unreasonable, contending that CMS either “would not 

support” or “was likely to discontinue support for the [Rapid App] technology,” as 

evidenced by the “new information” referenced by the CO in her source selection 

decision. CGS Comments at 49; CGS Suppl. Comments at 24; see Palmetto 

Comments at 23; Palmetto Suppl. Comments at 12-13. The protesters also argue 

here that the record lacks support for the CO’s conclusion that the “back-end” of 

RapidApp may be retained and may be of value. See Id.

As an initial matter, we note that, in a number of instances, the protesters 

mischaracterize the record as establishing that CMS had decided to withdraw its 

support for Noridian’s RapidApp pilot program.11 Rather, as set forth in the CO’s 

source selection decision, the record provides only that CMS “may” withdraw such 

support. AR, Tab 20A, Source Selection Decision, at 43; Tab 19g, CMS emails, 

at 18; Tab 19h, CMS emails, at 128. 

In any event, the record shows that the CO was aware and considered the available 

information regarding Noridian’s RapidApp innovation, including the 

above-referenced “new information” set forth in emails between CMS personnel 

stating that CMS “may” withdraw its support of Noridian’s RapidApp pilot project, 

and discussing the effect of that withdrawal of support on the viability of Noridian’s 

 

10 As explained by the CO, the “front end” of RapidApp provides for the interview of 

the provider “‘online’ by using question-and-answer input screens and electronically 

capturing the application data provided.” CO’s Suppl. Statement at 1. The “back 

end” of the RapidApp process “takes this enrollee information and validates it 

against multiple external databases such as licensure and sanction databases,” 

thereby automating many of the required verifications that had previously been 

done manually. Id. It also allows for “automatic letter generation.” Id.

11 In this regard, the protesters’ submissions include the assertions that CMS 

“intended to cancel the [RapidApp] pilot,” CGS Comments at 49; CGS Suppl. 

Comments at 22, that CMS had “rejected the proposed RapidApp innovation,” CGS 

Comments at 49, that CMS “will cancel the RapidApp pilot,” CGS Comments at 49, 

that “CMS would not support further RapidApp development,” CGS Supp. 

Comments at 22, or that CMS would “likely eradicate the RapidApp pilot program.” 

Palmetto Suppl. Comments at 12. 
Page 20 B-407668 et al.

RapidApp and its claimed efficiencies. Id. Although the protesters clearly disagree 

with the CO’s conclusion that Noridian’s RapidApp remained a strength, they have 

not shown it to be unreasonable, and their arguments reflect nothing more than their 

disagreement with the agency’s ultimate evaluation. 

Palmetto and CGS

The protesters raise a number of other issues challenging the propriety of CMS’s

evaluation of proposals under the technical understanding factor, arguing that the 

agency’s evaluation of proposals was unreasonable or evidenced unequal 

treatment. For example, both CGS and Palmetto argue that the agency

unreasonably assigned a weakness to their proposals under the technical 

understanding factor based on the agency’s determination that the proposals

included certain erroneous assumptions regarding the work to be performed under 

the audit and reimbursement function. See AR, Tab 9A, TEP Report, at 18, 36; 

Tab 20A, Source Selection Decision, at 46, 48.

In this regard, Palmetto and CGS both proposed the same subcontractor, First 

Coast Service Options (FCSO), to perform the audit and reimbursement tasks 

required by the RFP, and “FCSO submitted identical proposals to CMS for both 

companies.”

12 AR at 67 n.42. The agency found that FCSO’s proposal (and thus 

Palmetto and CGS) “made number of assumptions concerning the workloads 

involved in Audit and Reimbursement activities that are not reasonable and 

underestimate the work required.”13

 

12 FCSO performed the same services on the incumbent contract.

 AR, Tab 9D, Technical Understanding 

Findings-Palmetto, at 7. Specifically, the CMS subject matter expert (SME) for the 

Audit and Reimbursement function found that FCSO’s proposed performance of this 

function was erroneously predicated on the assumption that [DELETED]. Id. The 

SME added here that FCSO’s proposal was also predicated on its assumption that 

[DELETED]. Id. The CMS SME also noted that FSCO’s proposal was predicated 

on the assumption that [DELETED], and that this was “contrary to CMS 

experience.” Id. 

13 The agency explains that “[d]ue to a clerical oversight in the process, the FCSO 

specific findings for Technical Understanding were included in the Palmetto 

[technical understanding] Findings file, but not the CGS Findings file.” AR 

at 67 n.42. The agency explains, and the record reflects, that since FCSO was 

proposed by both Palmetto and CGS as their subcontractor for the audit and 

reimbursement function, and since FCSO submitted identical proposals for Palmetto 

and CGS, the “evaluation of [FCSO] was identical between both Palmetto and 

CGS,” and “the findings documented within the Palmetto file are applicable to CGS.” 

Id.
Page 21 B-407668 et al.

The TEP considered and adopted the findings of the CMS SME, and concluded that 

a weakness was merited for both Palmetto’s and CGS’s proposals because FCSO’s 

“assumptions pose the risk that a large portion of the institutional provider 

community may not be adequately audited resulting in the Agency reimbursing 

these providers more than they are entitled to receive.” AR, Tab 9A, TEP Report, 

at 18, 36. This weakness was noted by the CO in her source selection decision, 

with the CO specifically commenting that the “incorrect audit and reimbursement 

assumptions also operate to qualitatively weaken [Palmetto’s and CGS’s proposals] 

in comparison to the [Noridian] proposal.” AR, Tab 20A, Source Selection Decision, 

at 48.

The protesters raise a number of arguments in challenging the reasonableness of 

the agency’s conclusions here. For example, the protesters argue that FCSO’s 

proposal was based upon the workload estimates set forth in the RFP, and point out 

that the agency did not make any adjustment to FCSO’s proposed costs (and thus, 

those proposed by Palmetto and CGS) based upon the agency’s determination that 

the above-described assumptions were not reasonable. The protesters also assert 

that the assumptions set forth in FCSO’s proposal were based upon FCSO’s 

experience gained from performing these services in Jurisdiction 1 as a 

subcontractor to Palmetto (the incumbent contractor), with CGS specifically 

objecting to the agency’s determinations on the basis that “[a] review of each of the 

assumptions that CMS criticized shows that the SME rejected FCSO’s assumptions 

without data to offer any more reasonable or realistic alternative.” Palmetto 

Comments at 21; CGS Comments at 32-35.

As explained by the agency and evidenced by the record, the agency’s criticisms of 

FCSO’s proposal here did not involve the number of hours proposed for 

performance of the work, or any concern that the hours proposed were not based 

upon the RFP’s workload estimates. Rather, the agency’s criticism and assignment 

of a weakness to the protesters’ proposals under the technical understanding factor 

reflected the agency’s concerns that the assumptions set forth in FCSO’s proposal--

which were unique to FCSO and thus based upon FCSO’s view of the work to be 

performed--were inconsistent with the CMS SME’s understanding of the agency’s 

requirements regarding the audit and reimbursement function. AR, Tab 9A, TEP 

Report, at 18, 36. In this regard, although the protesters repeatedly assert that the 

assumptions set forth in FCSO’s proposal should have been accepted by the 

agency because they were based upon FCSO’s experience in performing the audit 

and reimbursement function under the incumbent contract, the agency notes that 

FCSO failed to substantively explain this in its proposal, or include any data or other 

information of any kind in support of its views. Agency Suppl. Report at 28-29. An 

offeror’s technical evaluation is dependent upon the information furnished; there is 

no legal basis for favoring a firm with presumptions on the basis of its incumbent 

status. HealthStar VA, PLLC, B-299737, June 22, 2007, 2007 CPD ¶ 114 at 2. It is 

the offeror’s burden to submit an adequately written proposal; an offeror, including 

an incumbent contractor (or here, subcontractor), must furnish, within its proposal, 
Page 22 B-407668 et al.

all information that was requested or necessary to demonstrate its capabilities in 

response to a solicitation. Id. In sum, although the protesters clearly disagree with 

the agency’s determinations here, they have not shown them to be unreasonable.

CGS also argues that CMS’s evaluation under the technical understanding factor

was flawed because “CGS’ proposal and oral presentation offered the same 

features proposed by [Noridian], typically with significantly more detail than 

[Noridian] offered, yet CGS received no credit.” CGS Suppl. Comments at 30; see

CGS Comments at 27. For example, CGS contends that the agency credited 

Noridian, but not CGS, for proposing a “law enforcement liaison,” even though CGS 

noted in its oral presentation that it will [DELETED].

14 CGS Comments at 27; see

CGS Suppl. Comments at 28-29.

The TEP assigned several strengths to Noridian’s proposal under the technical 

understanding factor based upon Noridian’s proposed staffing plan and key 

personnel. In doing so, the agency noted that Noridian’s proposal “goes beyond the 

requirements in the RFP” through its inclusion of three additional positions as “key 

personnel/managers,” including the position of “Provider Education Manager and 

Law Enforcement Liaison.” AR, Tab 9A, TEP Report, at 27. The TEP also noted 

that establishing the Provider Enrollment Manager and Law Enforcement Liaison as 

a key personnel position “indicates [that Noridian] understands the impact of 

medical review and provider enrollment on the success of the [Jurisdiction] E 

contract given California is one of the highest impact fraud states in the country.” 

AR, Tab 9F, Technical Findings-Noridian, at 1; see Tab 9A, TEP Report, at 27. The 

CO noted Noridian’s proposed key personnel position of Provider Education 

Manager and Law Enforcement Liaison in her source selection decision, stating that 

this aspect of Noridian’s proposal demonstrates that Noridian “is pro-active in its 

desire and intent to meet the agency[’s] needs” to reduce the risk of “fraud and 

abuse.”

15 AR, Tab 20A, Source Selection Decision, at 42-43.

 

14 ZPICs perform program integrity functions for Medicare Parts A, B, C, and D; 

Durable Medical Equipment Prosthetics, and Orthotics Supplier; Home Health and 

Hospice; and the Medicare-Medicaid Data Matching Program (a partnership 

between Medicaid and Medicare designed to enhance collaboration between the 

two programs to reduce fraud, waste, and abuse). See TriCenturion, Inc.; 

SafeGuard Services, LLC, B-406032 et al., Jan. 25, 2012, 2012 CPD ¶ 52 at 2.

15 The CO cited Noridian’s proposed “Key Personnel/Managers” as one of the 

seven non-cost strengths supporting her determination that Noridian’s proposal 

represented the best value to the agency. AR, Tab 20A, Source Selection Decision, 

at 60.
Page 23 B-407668 et al.

CMS also notes that Noridian’s proposal included the curriculum vitae of the 

proposed Provider Education Manager and Law Enforcement Liaison, which 

provides in part that, in that position, the Provider Education Manager and Law 

Enforcement Liaison “collaborates with the Federal Bureau of Investigation (FBI), 

Office of Inspector General (OIG), and Assistant United States Attorneys (AUSA) in 

pursuing actions against suspected fraudulent providers and suppliers.” AR, Tab 

6A, Noridian Technical Proposal, Technical Understanding, Key Personnel, 

Provider Education Manager and Law Enforcement Liaison. This section of 

Noridian’s proposal further explains that the Provider Education Manager and Law 

Enforcement Liaison “provides expert assistance to law enforcement agencies on 

issues affecting Medicare guidelines, policies, and other claims related issues.” Id. 

In contrast, CGS merely referred to [DELETED] one time in its oral presentation, 

and that reference was in the context of its awareness of the “uniqueness” of 

Jurisdiction E. AR, Tab 7G, CGS Oral Presentation, at 90. While recognizing that it 

is a fundamental principle of government procurement that the contracting agency 

must treat all offerors equally, and in so doing must evaluate proposals 

evenhandedly against common requirements, we see no evidence of unequal 

treatment. See Contingency Mgmt. Group, LLC; IAP Worldwide Servs., Inc., 

B-309752 et al., Oct. 5, 2007, 2008 CPD ¶ 83 at 15. That is, as discussed above, 

Noridian’s proposal established the Provider Education Manager and Law 

Enforcement Liaison as a key personnel position, and described the position in a 

detailed manner that was reasonably evaluated by the agency as advantageous. In 

contrast, CGS’s proposal included no such position or description, or any other 

similar information. 

Cost Realism Evaluation

Palmetto and CGS contend that CMS’s evaluation of Noridian’s and the protesters’ 

cost proposals was unreasonable. Although these arguments span a variety of cost 

elements, such as productivity rates and indirect rates, the protesters focus on the 

agency’s determinations regarding provider enrollment productivity. The protesters 

argue that the agency’s upward adjustment of $4,052,414 to Noridian’s proposed 

costs for the Medicare Part B provider enrollment function was inadequate, and that 

the agency’s upward adjustment to their respective proposed costs of $2,327,481 

for the same function was excessive. AR, Tab 15A, BEP Report-Noridian, at 10; 

Tab 16A, BEP Report-CGS, at 18; Tab 17A-BEP Report-Palmetto, at 34.

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

contract, an offeror’s proposed estimated costs are not dispositive because, 

regardless of the costs proposed, the government is bound to pay the contractor its 

actual and allowable costs. FAR §§ 15.305(a)(1); 15.404-1(d); Tidewater Constr. 

Corp., B-278360, Jan. 20, 1998, 98-1 CPD ¶ 103 at 4. Consequently, the agency 

must perform a cost realism analysis to determine the extent to which an offeror’s 

proposed costs are realistic for the work to be performed. FAR § 15.404-1(d)(1). 
Page 24 B-407668 et al.

An agency is not required to conduct an in-depth cost analysis, see FAR 

§ 15.404-1(c), or to verify each and every item in assessing cost realism; rather, the 

evaluation requires the exercise of informed judgment by the contracting agency. 

Cascade Gen., Inc., B-283872, Jan. 18, 2000, 2000 CPD ¶ 14 at 8. Further, an 

agency’s cost realism analysis need not achieve scientific certainty; rather, the 

methodology employed must be reasonably adequate and provide some measure 

of confidence that the rates proposed are reasonable and realistic in view of other 

cost information reasonably available to the agency as of the time of its evaluation. 

See SGT, Inc., B-294722.4, July 28, 2005, 2005 CPD ¶ 151 at 7; Metro Mach. 

Corp., B-295744, B-295744.2, Apr. 21, 2005, 2005 CPD ¶ 112 at 10-11. Because 

the contracting agency is in the best position to make this determination, we review 

an agency’s judgment in this area only to see that the agency’s cost realism 

evaluation was reasonably based and not arbitrary. Hanford Envtl. Health Found., 

B-292858.2, B-292858.5, Apr. 7, 2004, 2004 CPD ¶ 164 at 8.

By way of background, the record reflects that the agency, in preparing its cost 

realism analysis, received and considered audit reports from the Defense Contract 

Audit Agency, and prepared separate, lengthy, and detailed Business Evaluation 

Reports regarding the proposals submitted by Noridian, CGS, and Palmetto. AR, 

Tab 15A, BEP Report-Noridian; Tab 16A, BEP Report-CGS; Tab 17A-BEP 

Report-Palmetto. The record further reflects that the agency reviewed, among other 

things, the offerors’ proposed “labor rates and escalation factors” and “indirect rates 

including their pool and base composition for reasonableness, realism, and 

acceptability,” as well as the offerors’ proposed “other direct costs for allowability, 

realism and supportability.” Id. at 2. The agency also considered the offerors’ 

proposed “labor mix in relation to the technical requirements,” the “proposed 

productive hours and whether they are reasonable, realistic and computed 

correctly,” and compared the “proposed/historical productivity [to] ensure that 

differences are explained.” Id. at 2-3. The agency also considered, where 

available, historic data specific to Noridian, CGS, and Palmetto regarding the above 

elements, and “compared the historic data” for each offeror to that offeror’s 

“proposed labor mix, level of effort, productivity, and/or unit cost” for a number of the 

functions set forth in the statement of work, including the provider enrollment 

function. Id. at 3. 

Noridian

As discussed previously with regard to the technical factor evaluation, Noridian

proposed to automate the provider enrollment process through its RapidApp 

process. AR, Tab 6A, Noridian Technical Proposal, at C.2-5. Noridian explained in 

its proposal that “RapidApp streamlines Medicare provider enrollment by 

interviewing the enrollee and capturing the information that was previously recorded 

on multiple, complex paper forms.” Id. Noridian’s proposal further stated that 

“RapidApp automates many aspects of the [provider enrollment and validation] 

process, such as validation against sanction and licensure databases,” and claimed 
Page 25 B-407668 et al.

in its proposal that RapidApp “reduces the time it takes us to process these 

[provider enrollment] applications from an average of 90 minutes down to 20 

minutes.” Id. 

In evaluating Noridian’s proposed costs, the agency noted that Noridian’s proposed 

level of effort for the provider enrollment function was based upon its RapidApp 

innovation. Noridian claimed that use of RapidApp would create efficiencies in the 

processing of provider enrollment applications, and would result in an increase in its 

processing rate from Noridian’s historical rate of 5 provider enrollment applications 

per day to [DELETED] provider enrollment applications per day, with the same level 

of effort. AR, Tab 15C, Technical Cost Findings-Noridian, at 8. The agency noted 

that because of certain of the uncertainties regarding RapidApp as discussed 

previously in this decision, including the “limited application of RapidApp at the time 

of [the] evaluation” and “when RapidApp may be deployed in [Jurisdiction E] and to 

what extent,” it was “unable to estimate a level of productivity savings going 

forward.” Id. at 8-9. The agency thus rejected the majority of Noridian’s claimed 

savings here. 

While the agency recognized Noridian’s RapidApp as a strength, it nonetheless 

found that Noridian’s proposed productivity gains to be realized from RapidApp 

“overstated.” AR, Tab 15A, BEP Report-Noridian, at 10. The agency considered 

“the options for making an adjustment” to Noridian’s proposed costs, given its 

inability “to estimate a level of productivity savings going forward,” and determined 

that “the preferred method” was to adjust Noridian’s costs upwards based upon an 

application of the “most recent baseline [provider enrollment] productivity numbers” 

as calculated by CMS using its “internal productivity measures.” AR, Tab 15A, BEP 

Report-Noridian, at 10; Tab 15C, Technical Cost Findings-Noridian, at 8. When 

applied to Noridian’s proposed costs, this calculation, which yielded a baseline 

of 12 applications per day (rather than [DELETED] per day as proposed by 

Noridian), resulted in the aforementioned $4,052,414 upward adjustment to 

Noridian’s proposed costs. AR, Tab 15A, BEP Report-Noridian, at 10; Tab 15C, 

Technical Cost Findings-Noridian, at 8.

The protesters argue that the agency should have rejected Noridian’s assumption 

that the RapidApp innovation would have resulted in increased productivity, and 

therefore adjusted Noridian’s costs upwards based upon the application of 

Noridian’s “historic” provider enrollment productivity rate of five applications per day. 

The protesters further argue that the agency’s adjustment of Noridian’s proposed 

costs upwards based upon the application of the agency’s calculated “national 

average of 12 applications per day” lacked a reasonable basis. Palmetto 

Comments at 35; see CGS Comments at 19-20; Palmetto Suppl. Comments at 4; 

CGS Suppl. Comments at 14-17. 

As pointed out by the agency in response to the protests, and as explained 

previously in this decision with regard to the technical factor, the agency did not 
Page 26 B-407668 et al.

reject Noridian’s RapidApp innovation. Nor does the record reflect that the agency 

rejected, in their entirety, the proposed productivity gains that Noridian claimed had 

been achieved and would be achieved as the result of its RapidApp innovation. 

Rather, as explained above, the record reflects that the agency reasonably found

that while Noridian’s RapidApp was a technical strength and may result in certain 

efficiencies, Noridian’s claimed efficiencies were “overstated,” and a partial 

adjustment to Noridian’s proposed costs was thus appropriate. While the protesters 

clearly disagree, and believe that the agency should have adjusted Noridian’s 

proposed costs based upon Noridian’s historic provider enrollment productivity rate, 

and without consideration of Noridian’s RapidApp innovation, we cannot find the 

agency’s conclusion that a partial adjustment to the agency’s calculated average 

of 12 applications per day to be unreasonable.

Palmetto and CGS

Both Palmetto and CGS proposed FCSO as their subcontractor to perform the 

Medicare Part B provider enrollment tasks required by the RFP. The record reflects 

that FCSO’s proposed level of effort, and thus in part, its proposed costs for the 

provider enrollment function, was based on a productivity rate of [DELETED]

provider enrollment applications per day. AR, Tab 16C, Technical Cost 

Findings-CGS, at 7; Tab 17C, Technical Cost Findings-Palmetto, at 14. FCSO’s 

proposal provided a narrative explaining the basis for its proposed provider 

enrollment productivity rates, which included descriptions of certain process 

improvements it claimed would “improve efficiency and increase productivity.” AR, 

Tab 7E, FCSO Subcontact-CGS Vol. II, Tab F.1, Business Proposal Assumptions, 

at 3-4; Tab 8E, FCSO Subcontact-CGS Vol. II, Tab F.1, Business Proposal 

Assumptions, at 3-4. FCSO added elsewhere in its proposal that its proposed 

provider enrollment productivity rates were based upon its experience in performing 

the provider enrollment function in Jurisdiction 1, “adjusted for enhancements to the 

provider enrollment process as outlined in the RFP and FCSO initiated process 

improvements.” Id. at 11. FCSO’s proposal did not, however, include any historical 

data as to its provider enrollment productivity rates.

The agency considered FCSO’s proposed “process improvements,” as well as 

FCSO’s proposed provider enrollment productivity rates, and found that “there were 

no innovations or other technical proposals to support the Offeror’s proposed 

productivity.” AR, Tab 16C, Technical Cost Findings-CGS, at 7; Tab 17C, Technical 

Cost Findings-Palmetto, at 14. The agency also noted here that while in most 

cases it “uses the Offeror’s historic workloads and level of effort data derived from 

various CMS systems and report . . . to arrive at historic productivity calculations,” it 

was unable to do so with regard to provider enrollment productivity rates, given the 

manner in which that data is reported to CMS. Id. As such, the record reflects that 

the agency compared FCSO’s proposed provider enrollment productivity rate 

of [DELETED] applications per day to the agency’s “most recent baseline [provider 

enrollment] productivity numbers” as calculated by CMS using its “internal 
Page 27 B-407668 et al.

productivity measures”--as the agency had also done when considering Noridian’s 

proposal. Id.; see AR, Tab 15A, BEP Report-Noridian, at 10; Tab 15C, Technical 

Cost Findings-Noridian, at 8. When applied to FCSO’s proposed costs, this 

calculation, which yielded a baseline of 12 applications per day (rather than 

[DELETED] per day as proposed by FCSO), resulted in the aforementioned 

$2,327,481 upward adjustment to FCSO’s proposed costs (and thus those of 

Palmetto and CGS). Tab 16A, BEP Report-CGS, at 18; Tab 17A-BEP 

Report-Palmetto, at 34.

In challenging this aspect of the agency’s evaluation, the protesters argue that the 

agency had no reasonable basis to reject FCSO’s proposed provider enrollment 

productivity rate, as it was based upon FCSO’s “historical experience.” Palmetto 

Comments at 30-31; see CGS Comments at 9; Palmetto Suppl. Comments at 11; 

CGS Suppl. Comments at 9-12. We disagree. As noted above, FCSO did not 

provide in its proposal (and the protesters have not provided during the course of 

this protest) the productivity rates on which its proposed rate was purportedly 

based, and thus failed to provide any verifiable support for its claim that its 

proposed provider enrollment productivity rate was based upon its “historical 

experience.” We also find the protesters assertion that the agency’s evaluation 

here was “mechanical[]” to be without merit. CGS Comment at 12. Specifically, the 

record reflects that the agency considered the information in FCSO’s proposal, as 

well as the lack of information regarding FCSO’s historic provider enrollment 

productivity rates, and found no basis to conclude that FCSO would achieve a 

provider enrollment processing rate that exceeded the agency’s calculated provider 

enrollment productivity baseline by [DELETED] percent. See CGS Comments at 

12. In sum, although the protesters clearly disagree with the agency’s evaluation of 

FCSO’s proposal and its upward adjustment to FCSO’s costs, we cannot find the 

agency’s actions here to be unreasonable.

CONCLUSION

In sum, we find CMS’s evaluation of the offerors’ proposals, and conclusion that 

Noridian’s proposal was superior under the non-cost factors to the proposals 

submitted by Palmetto and CGS, to be reasonable and consistent with the RFP’s 

evaluation scheme. We also find reasonable the agency’s evaluation of the 

offerors’ proposed costs, including the probable cost adjustments. Finally, we find 

reasonable the agency’s conclusion that Noridian’s proposal represented the best 

value to the government, particularly given the CO’s determination that Noridian’s 

proposal would remain the best value even if Noridian’s proposal was considered 
Page 28 B-407668 et al.

on the basis of its probable costs and the proposals of Palmetto and CGS were 

considered on the basis of their proposed costs. 16 See AR, Tab 20A, Source 

Selection Decision, at 60.

The protests are denied.

Susan A. Poling

General Counsel

 

16 As indicated above, Palmetto and CGS have made numerous other contentions 

concerning the evaluation of proposals under both the non-cost and cost factors, 

and the agency’s source selection decision. Although these arguments are not all 

specifically addressed in this decision, each was considered, including the 

protesters’ general and specific assertions that the conduct of the agency reflected 

unequal treatment in a number of ways, and were found either to be insignificant in 

view of our other findings, or without merit based upon record as a whole.