CMS contract nixed because of poor OCI decision

A unit of NCI Inc. will get a second chance at a Centers of Medicare and Medicaid Services IT support contract after proving that CMS ignored a possible conflict of interest.

AdvanceMed initially lost the competition for the contact to Safeguard Service Inc. CMS sought a contractor to provide IT support for fraud, waste and abuse work. The contract is known as a United Program Integrity Contract or UPIC. CMS has an UPIC contract in each of its regions.

This contract covers work in the southeastern region of West Virginia, Virginia (except Arlington and Fairfax counties and the city of Alexandria), North Carolina, South Carolina, Tennessee, Georgia, Florida, Puerto Rico and the Virgin Islands.

It was a best-value competition and Safeguard won the contract with a bid of $129.9 million compared to AdvanceMed’s proposal of $87.7 million.

CMS also gave Safeguard higher evaluations than AdvanceMed in the criteria of overall technical approach, functional requirements and staffing plans.

But there were two problems with Safeguard’s bid that AdvanceMed saw and then raised to the Government Accountability Office.

First, Safeguard’s parent company holds the Medicaid management information system contract for four of the states in the southeast region to process medical claims for CMS. AdvanceMed argued that this represented an organizational conflict of interest.

CMS said it talked to Safeguard but decided there was no conflict because one contract is for claims processing and the other contract is for IT support -- not actual fraud investigation work. So neither Safeguard nor the agency took any steps to mitigate the perceived OCI.

Ironically, the solicitation stated the opposite. CMS said that it would consider it an OCI situation if a bidder or its affiliate held both the UPIC and MMIS contracts in the same region.

Another reason GAO disagreed with Safeguard and CMS is that the agency took the word of Safeguard that there was no need for a mitigation plan.

“The primary responsibility for determining whether a conflict is likely to arise, and the resulting appropriate action, rests with the contracting agency,” GAO wrote in its decision.

That finding alone would have been enough for GAO to sustain AdvanceMed’s protest but the company also complained that the Safeguard bid didn’t comply with Section 508 requirements around accessibility to the systems.

Because it was not 508 compliant, Safeguard’s bid should have been deemed technically acceptable but less superior to AdvanceMed’s.

CMS argued that being 508 compliant was not a requirement for award. The only requirement was that the winning bidder had to demonstrate an ability to meet the standards.

But GAO ruled that the wording in CMS’ solicitation did not support the agency’s interpretation of its own solicitation.

In sustaining AdvanceMed’s protest, GAO said CMS needs to document and consider the OCI and then make a new award selection. If CMS still feels that there is not an OCI, then it needs to rewrite the solicitation, get new and revised proposals and made a new award decision.

Either way, the agency has some work ahead of it.

Generally, I warn that just because a company wins a bid protest does not automatically mean that they will win the contract in round two.

But I would bet on AdvanceMed in this instance if I were a betting man. That OCI issue is going to be a tough one to get over.