Judge says HHS' evaluation of a contract was inappropriate

A federal judge said HHS showed a "cavalier disregard” for the truth and favoritism during the evaluation of bid proposals for its financial management system.

Senior Judge Eric Bruggink levied an injunction against HHS in a 20-page opinion (PDF) laying out HHS' Program Support Center after determining that the center canceled a support contract for its financial management system after being repeatedly told that it needed to re-evaluate the bid proposals it had received.

“In short, the record contains no basis on which the agency can pin the rationality of its decision to cancel,” the decision said. “The conclusion is inescapable that the agency was arbitrary in its cancellation of the solicitation. It must therefore be set aside.”

The Program Support Center issued a request for quotations in November 2014 for a small business to support its Unified Financial Management System. Although the incumbent contractor for the past decade, Starry Associates Inc., submitted a bid, it said it was never technically evaluated because another contractor with ties to the head of the HHS center–Intellizant LLC–was awarded the contract.

Over the past two years, Starry has filed three bid protests with the U.S. Government Accountability Office and a lawsuit at the U.S. Court of Federal Claims challenging HHS' contract award and subsequent corrective actions. Although it scored some victories in the challenges, it alleged HHS canceled the contract so it could award work with Intellizant in the future.

Bruggink didn't determine whether HHS had been biased in Intellizant's favor during the evaluation period–the head of the Program Support Center is a former Intellizant employee–but said Starry was irreparably harmed by HHS' actions.

According to depositions in the case, contract evaluators were "indifferent to the fidelity of the procurement process” and made it clear that they never seriously considered awarding the contract to any company but Intellizant, even after the bid protest decisions.

The depositions also showed that agency officials didn't compare the companies' bids or acknowledge that they wouldn't receive the same support for the financial management system from the bidders.

“The only fig leaf covering for his decision boils down to the fact that the word 'support' appears both in the UFMS support contract and in the license agreements,” the decision said.

But Starry's counsel Lars Anderson of Odin Feldman Pittleman PC said there was an even more disturbing issue beyond the evaluators' conduct.

“HHS counsel and other senior procurement officials allowed these repeated blatant violations of federal procurement regulations and fundamental standards for conducting competitive procurements,” he said. “Now the issue will be to see if HHS procurement officials do the right thing or retaliate against Starry for exposing their improper conduct.”

Bruggink ruled that the evaluators and head of the Program Support Center cannot be involved in any future re-evaluations involved with the solicitation.

Intellizant counsel Brian Whisler of Baker & McKenzie LLP had no comment on the decision. HHS did not respond to a request for comment.


Erica Teichert

Erica Teichert assigns, edits and directs news coverage for Modern Healthcare’s website and magazine. She previously served as the publication’s New York bureau chief and legal reporter. Before joining Modern Healthcare in 2016, she worked at Law360 as legal newswire’s first D.C. bureau chief after three years as a court reporter covering the U.S. Supreme Court, D.C. Circuit and other federal courts and agencies. Prior to that, she worked as an associate editor for FierceMarkets. She has a bachelor's degree in communications with a print journalism emphasis from Brigham Young University.

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