CBCA 6824

DENIED: June 23, 2021 CBCA 6824 VALOR HEALTHCARE, INC., Appellant, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent. Stuart B. Nibley, Amy C. Hoang, and Sarah F. Burgart of K&L Gates LLP, Washington, DC, counsel for Appellant. Neil S. Deol, Office of General Counsel, Department of Veterans Affairs, Decatur, GA, counsel for Respondent. Before Board Judges BEARDSLEY (Chair), GOODMAN, and SULLIVAN. SULLIVAN, Board Judge. Valor Healthcare, Inc. (Valor), contracted with Department of Veterans Affairs (VA) to provide primary care services to veterans at three community clinics within the region served by the Butler Medical Center, in Butler, Pennsylvania. When the number of patients seeking care at two of the clinics were fewer than the number estimated by VA in the request for proposals and resulting contract, Valor submitted a claim to the contracting officer for the difference between the amount of profit that Valor expected and the amount that it realized. Valor appealed the denial of its claim to the Board, alleging, as it did in its claim, that VA prepared negligent estimates or that VA possessed superior knowledge regarding the basis for the estimates that it should have shared with Valor. CBCA 6824 2 VA filed a motion for summary judgment, asserting that, because the contract is an indefinite quantity contract, Valor’s claims fail as a matter of law. Valor responded that the contract should be viewed as a requirements contract and, so viewed, its claims survive VA’s challenge. Because the contract is an indefinite quantity contract, precedent requires us to grant VA’s motion and deny Valor’s appeal. Background I. Contract Terms In May 2015, Valor and VA executed the contract, which required the provision of health care services at three community clinics for a base year and four option years. Exhibit 5 at 1, 13-15.1 In bidding the contract, Valor provided a price per member per month (PMPM) for each of the clinics for each of the years of the contract. This price was multiplied by the estimated number of patients provided by VA to obtain the total estimated cost for each year of the contract at each clinic. VA’s estimates for two of the clinics (Armstrong and Clarion) are the subject of the dispute in this appeal. Because Valor’s contract covered three clinics, the contract for the base period and any options exercised guaranteed a minimum quantity of 2000 PMPM. Exhibit 5 at 13. The maximum quantity was 30,000 PMPM. Id. The contract also contained the Federal Acquisition Regulation (FAR) Indefinite Quantity clause, FAR 52.216-22. Id. at 123-24. Valor was required to provide a “sufficient number of Primary Care providers so that each Primary Care provider has a reasonable caseload.” Exhibit 5 at 26. Pursuant to the contract, “[c]urrent caseload ratios are based on the expectation that a fulltime physician will care for approximately 1200 patients and a midlevel provider will care for approximately 900 patients.” Id. Based upon these expectations, the contract required Valor to fulfill staffing models described in the contract. Id. at 26-27. The contract also contained “minimum staffing requirements” tied to the number of veterans served and the staffing models. Id. at 28. Pursuant to the instructions in the request for proposals, Valor was required to provide “a description of the methods by which it will ensure provider panel sizes remain within established parameters” and “a detailed discussion of how the structure and/or processes of the Contractor shall be adjusted when/if the providers’ panel sizes exceed the established requirements.” Exhibit 2 at 158. Valor also was required to provide the number of exam rooms it proposed to supply per provider and meet or exceed the requirement of 2.5 exam 1 All exhibits are found in the appeal file, unless otherwise noted. CBCA 6824 3 rooms per provider. Id. at 159. The contracting officer evaluated the price Valor proposed for reasonableness, defined as “a cost (Price) that provides best value to the Government when consideration is given to prices in the market, . . . technical and functional capabilities of the offeror,” and realism, defined as “what it would cost the offeror to perform the effort if the offeror operates with reasonable economy and efficiency.” Id.