CGI wins appeal in bid protest fight

EDITOR'S NOTE: This story has been updated to include a statement from CGI on the court's ruling.

CGI Federal has prevailed in a bid protest fight it took to the U.S. Court of Appeals, and the court's ruling has implications beyond a single company.

The Professional Services Council filed an amicus brief supporting CGI because the issue dealt with the need for GSA schedules to follow the same commercial item provisions as any other type of government contract.

This sequence of events that raised the issue began in February 2014 when CGI Federal and HealthDataInsights Inc. filed pre-award protests on a Center for Medicaid and Medicare contract to collect overpayment. Both companies were incumbents when CMS released the solicitation for the new contract.

CGI and HealthDataInsights argued that CMS had changed the solicitation in a way that restricts competition and violates current laws and regulations—specifically that it does not follow the commercial practices laid out in part 12 of the Federal Acquisition Regulation.

The way incumbent contracts worked, the two companies were paid once an overpayment had been collected; however, CMS’ new contract stipulated that payments are contingent on clearing the appeals process, which could take between 120 and 420 days.

A few months later, in April, both companies lost their arguments when the Government Accountability Office ruled against them, saying that CMS had the flexibility to establish the payment methods consistent with the requirements for a commercial contract under the GSA schedules program, which is included in part 8 of the Federal Acquisition Regulation.

CGI took that decision to task and made the case first to the Court of Federal Claims, where it lost, and then to the U.S. Court of Appeals. They argued that, in fact, part 12 of the FAR, which governs commercial items for other government contracts, was also applicable to the GSA schedules program.

In October, the PSC filed its brief supporting CGI Federal.

“For us, the reason we entered into the case was because it was the first time a court of appeals had been asked to adjudicate the hierarchy between far part 12 commercial items in the FAR and the absence of that language in the GSA schedules program in FAR part 8,” said Alan Chvotkin, executive vice president and counsel at PSC.

PSC’s position was that you cannot have two sets of commercial item provisions. “There’s one executive branch, there’s one federal acquisition regulation, and there is one set of commercial items provisions,” Chvotkin said.

The U.S. Court of Appeals sided with CGI on March 10. The case now goes back to the Court of Federal Claims to make a new ruling based on the appeals court decision.

"CGI is pleased at the court’s decision to recognize our position against the new payment terms proposed for Medicare recovery auditors," said CGI spokeswoman Linda Odorisio. "Today's ruling encourages private sector participation in a vital government initiative to identify and recover improper payments for the Medicare program."

CGI and HealthDataInsights have continued to do the overpayment recovery work for CMS pending a final resolution of the protests, Chvotkin said.

PSC in a release said that this is first time an appeals court ruled on the application of the explicit commercial item provisions of the 1994 Federal Acquisition Streamlining Act and the FAR to orders against GSA schedules

“The court is establishing the preference and primacy of FAR part 12 over any other agency action or inconsistent regulatory provisions governing the acquisition of commercial items," Chvotkin said. "That’s a big deal.”