B-298912, Magellan Health Services, January 5, 2007

B-298912 Jan 05, 2007 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Magellan Health Services protests the award of a contract to Ceridian Corporation under request for proposals (RFP) No. 05FOHEAP, issued by the Division of Federal Occupational Health (FOH), Department of Health and Human Services (HHS), for employee assistance program (EAP) services. Magellan, the incumbent contractor, argues that the agency's evaluation of offerors' technical proposals, as well as the agency's evaluation of Ceridian's cost proposal, were unreasonable. Magellan also protests that the agency's source selection decision was improper, insofar as the agency failed to document the basis for its conclusion that the higher-rated Magellan proposal and the lower-rated Ceridian proposal were technically equal as part of its "best value" determination. We sustain the protest. View Decision B-298912, Magellan Health Services, January 5, 2007 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. Decision Matter of: Magellan Health Services File: B-298912 Date: January 5, 2007 Howard J. Stanislawski, Esq., Patrick K. O'Keefe, Esq., Joel Singer, Esq., and Patrick F. Linehan, Esq., Sidley Austin LLP, for the protester. Joseph J. Petrillo, Esq., and Karen D. Powell, Esq., Petrillo & Powell, P.L.L.C.; and John S. Pachter, Esq., Jonathan D. Shaffer, Esq., Stephanie D. Capps, Esq., and Mary Pat Gregory, Esq., Smith Pachter McWhorter PLC, for Ceridian Corporation, an intervenor. Douglas Kornreich, Esq., Department of Health and Human Services, for the agency. Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest challenging agency's evaluation of technical proposals is denied where the record establishes that the evaluation was reasonable and consistent with the evaluation criteria. 2. Agency's cost realism evaluation of awardee's proposal was unreasonable where agency failed to take into account cost adjustments made by its own cost analyst to awardee's proposal, and instead utilized awardee's proposed costs as the basis for its source selection decision. 3. Agency's cost realism evaluation of awardee's proposal was improper where, although knowing that awardee had proposed to recruit the incumbent workforce and match all existing salaries but had also failed to propose direct labor rates consistent with existing salaries, agency failed to adjust awardee's proposed labor rates as part of its cost realism evaluation. 4. Protest challenging adequacy of agency's –best value— source selection decision is sustained where there is insufficient information and analysis in the record, which includes both a contemporaneous source selection document and a post-protest statement, to determine that the selection official's key conclusion of technical equality, notwithstanding the higher technical rating assigned to the protester's proposal, was reasonable. DECISION Magellan Health Services protests the award of a contract to Ceridian Corporation under request for proposals (RFP) No. 05FOHEAP, issued by the Division of Federal Occupational Health (FOH), Department of Health and Human Services (HHS), for employee assistance program (EAP) services. Magellan, the incumbent contractor, argues that the agency's evaluation of offerors' technical proposals, as well as the agency's evaluation of Ceridian's cost proposal, were unreasonable. Magellan also protests that the agency's source selection decision was improper, insofar as the agency failed to document the basis for its conclusion that the higher-rated Magellan proposal and the lower-rated Ceridian proposal were technically equal as part of its –best value— determination. We sustain the protest. BACKGROUND FOH, a component of HHS, is the federal agency with responsibility for developing and maintaining prevention, intervention, and rehabilitation programs and services for federal employees who have alcohol and/or other problems. To fulfill this mission, FOH designs various occupational health services, including workplace-based behavioral health services, to promote and maintain the physical and mental health of federal employees. RFP Statement of Work (SOW) sect. C.I.A. EAP is the occupational health program by which FOH provides behavioral health services to approximately 400 federal agencies, departments, and other governmental organizations, and the estimated 1,350,000 employees of those entities and their family members, at locations throughout the United States, as well as certain international locations. Agency Report (AR), Nov. 1, 2006, at 2; Protest at 2. The RFP, issued on September 8, 2005, contemplated the award of a cost-plus-fixed-fee contract for a base year, together with four 1-year options, for the required EAP services.