SouthWest Critical Care Associates, B-279773, July 16, 1998

B-279773 Jul 16, 1998 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights That agency unreasonably failed to take into account the tax consequences of awardee's plan to treat proposed employees as independent contractors is an untimely challenge to an alleged solicitation defect. Were unreasonable. The technical factors were implementation plan. A prospective offeror is encouraged to investigate the potential tax consequences should they elect to perform the resulting contract by using subcontractors in lieu of individuals carried on their payrolls. The successful offeror's determination is challenged. The Navy will not consider favorably any request for equitable adjustment to the contract based upon the successful offeror's receipt of an adverse decision by the IRS. View Decision Matter of: SouthWest Critical Care Associates File: B-279773 Date: July 16, 1998 DIGEST Attorneys DECISION SouthWest Critical Care Associates protests the award of a contract to NES Government Services, Inc. under request for proposals (RFP) No. N62645-98-R-0008, issued by the Naval Medical Logistics Command for medical services. Southwest argues that the evaluation of its proposal, as well as the evaluation of NES's proposal, were unreasonable. We deny the protest. On November 3, 1997, the Navy issued the RFP for a fixed-price contract to provide the services of physicians, registered nurses, and emergency medical technician-paramedics (EMT-P) for the urgent care clinic in Lemoore, California, for a 5-month base period, with five 1-year option periods. The RFP provided for award to the offeror submitting the proposal determined "most advantageous to the Government," considering price and other factors, with technical factors significantly more important than price. RFP Sec. M.2. With respect to price, the RFP provided that the agency would evaluate prices for completeness, reasonableness, and realism. RFP Sec. M.3.(a). The technical factors were implementation plan, recruitment and retention plan, and past performance report. RFP Sec. M.3.(b). In pertinent part, the solicitation required offerors to "submit a comprehensive recruitment and retention plan which describes in detail the strategy for providing personnel to ensure the continuity of services and care as required by the solicitation." RFP Sec. M.3.(b)(2). The cover sheet to the RFP contained the following legend: Before submitting a proposal in response to this solicitation, a prospective offeror is encouraged to investigate the potential tax consequences should they elect to perform the resulting contract by using subcontractors in lieu of individuals carried on their payrolls. Under this RFP, the Navy does not dictate whether the individual health care workers provided would be classified by the successful offeror as "independent contractors" or "employees" for federal tax purposes. This determination shall be made solely by the offeror. If, subsequent to award, the successful offeror's determination is challenged, this shall be a matter to be resolved between the offeror and the Internal Revenue Service (IRS). The Navy will not consider favorably any request for equitable adjustment to the contract based upon the successful offeror's receipt of an adverse decision by the IRS. The agency received nine proposals prior to December 5, 1997, the date set for receipt of initial proposals. It evaluated them, established a competitive range of six offers, and conducted discussions. Among the issues raised with Southwest was its failure to specify its methods of recruitment, beyond a stated plan of contacting the existing staff physicians and nurses for expressions of interest in continued employment. Attachment to Navy letter dated February 11, 1998, at 1. The agency specifically pointed out that although Southwest did plan to utilize pre-hospital services available in the community, it had no agreement with any of the local companies to provide EMT-P's. Southwest acknowledged, in its response, that it had no agreement with local providers; the protester did outline plans to create a recruiting network and to advertise opportunities for employment as EMT-P's. Protester response to discussion questions, February 17, 1998, at 5. As a result of discussions, the protester's overall technical rating improved from yellow/marginal to green/acceptable. While the evaluators considered Southwest's response to the question of recruiting EMT-P's acceptable, they considered NES's arrangement, using an agreement with a local provider of EMT-P's, preferable. Since NES had received the highest technical rating and had proposed the lowest price of all offerors, the Navy selected NES for award, in accordance with the RFP's stated selection criteria.