Blue Cross Blue Shield of Texas, Inc.

B-261316.4 Nov 09, 1995 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Agency was not obligated to advise offeror that its price for a portion of the proposal was higher than the government estimate where agency did not consider the price unreasonable. Agency's methodology for assessing a risk premium associated with each offeror's projected costs was reasonable and consistent with the evaluation scheme set forth in the solicitation. Awardee's reduction in price between initial proposals and best and final offers was reasonable where government estimate during this period decreased in an amount greater than the awardee's price reduction. Agency's evaluation of awardee's proposal was reasonable where agency recognized and quantified the risk associated with awardee's proposed high price and considered that risk in making its source selection decision. View Decision Matter of: Blue Cross Blue Shield of Texas, Inc. File: B-261316.4 Date: November 9, 1995 * REDACTED DECISION Agency was not obligated to advise offeror that its price for a portion of the proposal was higher than the government estimate where agency did not consider the price unreasonable. Agency's methodology for assessing a risk premium associated with each offeror's projected costs was reasonable and consistent with the evaluation scheme set forth in the solicitation. Awardee's reduction in price between initial proposals and best and final offers was reasonable where government estimate during this period decreased in an amount greater than the awardee's price reduction. Where one element of awardee's proposed pricing methodology significantly exceeded the government's estimate, agency's evaluation of awardee's proposal was reasonable where agency recognized and quantified the risk associated with awardee's proposed high price and considered that risk in making its source selection decision. [Deleted] Agency reasonably evaluated awardee's proposal as offering a "net" savings approach to resource sharing expenditures. Agency reasonably determined that award to offeror submitting lower-rated, lower-price proposal was in the government's best interest. Attorneys REDACTED DECISION A protected decision was issued on the date below and was subject to a GAO Protective Order. This version has been redacted or approved by the parties involved for public release. DECISION Blue Cross Blue Shield of Texas, Inc. (BCBSTX) protests the award of a contract by the Office of the Civilian Health and Medical Program of the Uniformed Services to Foundation Health Federal Services, Inc. (FHFS) under request for proposals (RFP) No. MDA906-93-R-0004. [1] The RFP sought proposals to provide managed health care services for CHAMPUS beneficiaries in Arkansas, Oklahoma, Louisiana, and Texas. The RFP contemplated award of a contract for a base period with five 1-year options. BCBSTX protests that the agency failed to conduct meaningful discussions, improperly evaluated various aspects of its and FHFS' proposals, and failed to perform an appropriate cost/technical tradeoff. We deny the protest. BACKGROUND The RFP was issued on November 1, 1993, and sought proposals for the development and operation of a health care delivery and support system for CHAMPUS beneficiaries in the States of Oklahoma and Arkansas and major portions of the States of Texas and Louisiana, which are collectively referred to as Region 6. Offerors were required to submit proposals in two parts: one part to perform administrative functions (primarily claims processing and support services) and one part to provide health care services. Separate technical and business proposals were required and the RFP provided that, in the source selection decision, technical factors would be given a weight of 60 percent and business factors a weight of 40 percent. Regarding the health care portion of the contract, proposals were required to offer CHAMPUS beneficiaries three health care options with increasing levels of managed care. The required options were (1) "TRICARE Standard," under which beneficiaries select providers of their own choosing who are compensated on a fee-for-service basis; (2) "TRICARE Extra," under which the beneficiaries' health care is to be provided by members of the contractor's preferred provider organization (PPO); and (3) "TRICARE Prime," under which the beneficiaries' health care is to be provided through a contractor-established health maintenance organization (HMO). The RFP stated that the government intended to award a fixed-price contract (with the price subject to specified adjustments during performance). For the administrative portion of the business proposal, the RFP required conventional firm, fixed-price proposals. Under the health care portion of the contract, the fixed-price nature of the contract was modified by a risk-sharing arrangement which is a key characteristic of OCHAMPUS managed-care solicitations.