Maximus wins partial victory in $6.6B CMS battle but several issues remain

CORRECTION: This story has been updated to clarify the points where Government Accountability Office ruled in favor of Maximus and where the agency ruled against.

The Government Accountability Office has sided with Maximus on just one of several issues the company raised in its dispute with the Centers for Medicare and Medicaid Services, one of its biggest customers.

The fight started when CMS decided not to renew the option on a $6.6 billion Contact Center Operations contract that Maximus won as the incumbent in 2022.

CMS began a recompete process instead and the new solicitation included a labor harmony agreement clause that essentially would require Maximus to negotiate with unions for its workforce.

GAO ruled that certain aspects of the labor harmonization clause ere ambiguous, the watchdog agency said Monday.

GAO said CMS has to be clearer about how long the winning bidder will have to negotiate the LHA with the union.

That was the only ruling in favor of Maximus.

Maximus filed its protest in June just before proposals were due. The company argued several points, including that the labor harmonization agreement requirement violated the Labor Management Relations Act and the National Labor Relations Act.

GAO dismissed those challenges because those laws do not cover procurement, which means they are outside GAO’s jurisdiction.

In its statement, GAO said it was not expressing a “view regarding the value of including an [labor harmony agreement] for these call center services or whether an LHA is consistent with federal labor laws.”

GAO denied Maximus’ challenge that CMS violated the Federal Acquisition Regulations by including a labor harmony agreement requirement in the solicitation. The FAR does not prohibit the inclusion of a labor harmony agreement, GAO said.

GAO also denied the argument that a labor harmony agreement would restrict competition.

Maximus also did not convince GAO of its challenge that the LHA requirement was ambiguous with respect to the timing of when an agreement has to be negotiated and how long that agreement will last.

We’ve reached out to CMS for any actions they may take in light of the GAO decision.

Maximus issued a statement acknowledging that it hasn’t seen the GAO decision because it is under a protective order, so it cannot fully comment on it.

“We understand from the GAO press release, however, that they recognized the merit in one of our protest grounds, recommending the agency reconsider its solicitation requirements," a company spokesperson told WT in a statement. "We continue to believe that all our protest arguments have legal merit and intend to carefully review the opinion, once available, and continue to press our legal rights in response to the GAO decision and any subsequent agency corrective action. Meanwhile, Maximus will continue to provide high quality and efficient services on behalf of our customer by helping millions of Americans access healthcare every day.”

The GAO decision is going through a vetting process among the attorneys who will agree on a public version of the decision. The process can take days to weeks to months depending on how sensitive the information in the decision is.