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In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

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Inside the FCA blogInside the FCA blog features ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements. The blog provides timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability.

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GovCon Blog: Learning from Bid Protests: Award to Higher-Priced, Higher-Rated Proposal Requires Consideration and Documentation

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June 19, 2015

In best value procurements, the procuring agency generally has a great deal of discretion in selecting which proposal represents the best value to the government. Part of that discretion is the ability to select a proposal that is higher in price, and higher rated technically, than the competition. However, an agency cannot simply select a higher-priced offeror without considering the benefits of the higher-priced proposal and documenting why its technical superiority warrants paying the higher price.

This issue was at play in a recent GAO protest, DKW Communications, Inc. The solicitation in question here was issued by DARPA for various unclassified information technology services and support under GSA's Alliant Small Business Government-wide Acquisition Contract. The solicitation contemplated the award of a single cost-plus-award-fee task order to the offeror representing the best value to the government.

Because the awarded contract was going to be cost based (as opposed to fixed-price), the agency determined each offeror's probable cost based upon their proposed approach. To the extent an offeror's proposed cost differed from its probable cost, the agency considered that difference to be the "Cost Risk." In making its best value determination, the agency considered each offeror's technical rating, past performance rating, and cost risk. After its initial evaluations, the agency narrowed its consideration of award down to three offerors. The agency ultimately selected Agile Defense, Inc., whose proposal was higher-rated and higher-priced than the other two offerors under consideration.

The protester, DKW Communications, challenged the award to Agile, arguing that the agency failed to give meaningful consideration to its lower priced proposal, which was approximately 15% lower than Agile's price. GAO sustained DKW's protest, finding that the agency failed to conduct a proper best value determination.

Where an agency selects a higher-priced, higher technically rated proposal as the best value, it must first consider the relative merits of the lower-priced proposal(s). In doing so, the agency must consider the overall cost to the government, and determine whether the technical superiority represented by the higher-rated proposal is worth paying the higher price. Most importantly, this consideration must be documented. 

The record here showed that the agency's best value tradeoff decision was lacking. GAO found that the agency’s best value "analysis" merely consisted of looking at the adjectival ratings assigned to each offeror, as well as the cost risk of each proposal. Moreover, the entirety of the best value tradeoff decision consisted only of two simple sentences stating that Agile had the expertise to perform the requirements and that its proposed costs were reasonable and realistic. This falls far short of the requirements imposed upon a procuring agency in making a rational best value determination. The record failed to demonstrate any meaningful consideration of the technical merits of the various proposals, or why Agile's higher technical score warranted paying the approximately 15% price premium. As a result, the protest was sustained.

While procuring agencies certainly have discretion to make an award to a higher-rated, higher-priced proposal, they cannot do so without first justifying why such a decision is reasonable. The agency must go beyond the evaluation ratings, and actually consider the advantages and disadvantages offered by each proposal. Unsuccessful offerors finding themselves in similar situations would be wise to request a debriefing, when possible, and seek an explanation from the agency as to how it compared proposals and came to its best value decision. An agency's failure to provide a rational justification for its best value tradeoff could lead to a sustainable protest action.

Read more about government contracts on www.BassBerryGovCon.com.


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