Vista Health Plan, Inc. v. DHS ( 2018 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Vista Health Plan, Inc., :
:
Petitioner :
:
v. : No. 820 C.D. 2017
: Argued: October 18, 2017
Department of Human Services, :
:
Respondent :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge1
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WOJCIK FILED: April 11, 2018
Vista Health Plan, Inc. (Vista) petitions for review of the order of the
Department of Human Services (Department)2 denying Vista’s bid protests
1
This case was argued before an en banc panel of the Court that included former Judge
Joseph M. Cosgrove. Because Judge Cosgrove’s service on the Court ended January 1, 2018, this
matter was submitted on briefs to Judge Ellen Ceisler as a member of the en banc panel.
2
Pursuant to Section 201 of the Administrative Code of 1929, Act of April 9, 1929, P.L.
177, as amended, 71 P.S. §61(a), “[t]he executive and administrative work of this Commonwealth
shall be performed by the Executive Department, consisting of the . . . Department of Public
Welfare . . . .” Pursuant to Section 103(a) of the Act of June 13, 1967, P.L. 31, added by the Act
challenging the Department’s decision not to select Vista to progress to agreement
negotiations in certain zones with respect to reissued Request for Proposal No. 06-
15 (Reissued RFP) in which the Department sought managed care organizations
(MCOs) to provide HealthChoices Physical Health Program (HealthChoices)
services to Medical Assistance (MA) beneficiaries.3 We reverse.
of September 24, 2014, P.L. 2458, 62 P.S. §103(a), “[t]he Department of Public Welfare shall be
known as the Department of Human Services.”
3
As this Court has explained:
[The Department], formerly known as the Department of
Public Welfare (DPW), is the state agency that administers the
Commonwealth’s Medicaid program. “Medicaid is a joint state-
federal funded program for [MA] in which the federal government
approves a state plan for the funding of medical services for the
needy and then subsidizes a significant portion of the financial
obligations the state agreed to assume.” [The Department] delivers
Medicaid benefits in Pennsylvania through either (1) a “fee for
service” payment program, where the provider of care is paid by [the
Department] on a claim-by-claim basis; or (2) a “managed care”
program where [an MCO], under contract with [the Department], is
paid on a monthly, fixed-fee basis per enrollee, and the MCO pays
the provider pursuant to the terms of an agreement between the
MCO and the provider. Pennsylvania’s Medicaid managed-care
program is HealthChoices.
***
Section 443.5 of the Human Services Code, Act of June 13,
1967, P.L. 31, added by the Act of July 15, 1976, P.L. 993, 62 P.S.
§443.5, relating to prepayment for contracted medical services,
authorizes [the Department] to enter into contracts with insurers,
such as MCOs, through a competitive bidding process. Section
443.5 of the Human Services Code provides, in relevant part:
For categorically needy or medically needy persons
eligible for medical assistance, prepaid capitation
payments or insurance premiums for services under
2
Under the HealthChoices Program, the Department contracts with
MCOs to administer health services to those eligible for Medicaid in five “Zones,”
Northeast, Southeast, Lehigh-Capital, Southwest, and Northwest. Currently, Vista
operates as an MCO in the Southeast, Lehigh/Capital, Northeast, and Northwest
Zones.
On September 16, 2015, the Department issued Request for Proposal
No. 06-16 (Original RFP) seeking MCOs to administer HealthChoices in all five
Zones beginning in 2017. The Original RFP stated that the Department would award
three-year contracts to up to five MCOs in each Zone and identified the following
criteria: (1) technical criteria comprising 80% of the total points; (2) Small Diverse
Business Participation with a weight of 20% of the total points; and (3) Domestic
Workforce Utilization consisting of “bonus points” to a maximum of 3% of the total
points. To qualify as a responsible offeror, the Original RFP stated that an MCO’s
technical submission must receive a total score of at least 70% of the available points
allotted in the evaluation.
On July 21, 2016, the Department issued the Reissued RFP again
seeking MCOs to provide HealthChoices services to MA beneficiaries in the five
Zones.4 The Reissued RFP provides for agreements with a three-year term with an
the medical assistance State plan may be made on
behalf of eligible persons through competitive
bidding with profit or non-profit contractors,
insurers, or health maintenance organizations. Profit
and non-profit insurers must be approved under
applicable State laws. (Emphasis added.)
Aetna Better Health of Pennsylvania Inc. v. Department of Human Services, (Pa. Cmwlth., No.
351 M.D. 2016, filed July 6, 2016), slip op. at 1-3 n.1, 2 (citations omitted).
4
See Section 521 of the Procurement Code, 62 Pa. C.S. §521 (“[A] request for proposals
or other solicitation may be canceled . . . at any time prior to the time a contract is executed by all
3
option for one additional renewal two-year term. The Department’s Bureau of
Financial Operations, Division of Procurement and Contract Management was the
Issuing Office of the Reissued RFP, and “[t]he sole point of contact in the
Commonwealth for th[e Reissued] RFP” is Erin Slabonik, the Project Officer for the
Reissued RFP. Reproduced Record (R.R.) at 45a.
Initially, the Reissued RFP did not provide for a bid protest mechanism;
however, the Department issued Addendum 1 to the Reissued RFP which states that
“[i]n the event an Offeror elects to file a bid protest, the Department will accept the
bid protest. The Department will address the merits of the bid protest if the bid
protest is timely filed.” R.R. at 88a.
The Reissued RFP states that the following criteria was to be used to
evaluate the proposals: (1) technical criterion based on a Work Statement
Questionnaire/Soundness of Approach, Personnel Qualifications and Staffing, and
Prior Experience and Performance (80% or 8,000 of the possible 10,000 total
points); (2) Small Diverse Business and Small Business (SDB/SB) Participation as
determined by the Department of General Services’ (DGS) Bureau of Diversity,
Inclusion and Small Business Opportunities (BDISBO) (20% or 2,000 of the
possible 10,000 total points); and (3) Domestic Workforce Utilization bonus points
(up to 3% of the possible 10,000 total points). R.R. at 79a-81a. In order to be
considered a responsible offeror, “and therefore eligible for selection for agreement
parties when it is in the best interests of the Commonwealth. . . . The reasons for the cancellation
or rejection shall be made part of the contract file.”). See also Scientific Games International, Inc.
v. Department of Revenue, 66 A.3d 740, 758 (Pa. 2013) (“The Legislature has deliberately
excluded Section 521 cancellations from the scope of the right of protest. See 62 Pa. C.S.
§1711.1(a) (prescribing that bidders, offerors, and certain others “aggrieved in connection with the
solicitation or award of a contract, except as provided in section 521 (relating to cancellation of
invitations for bids or requests for proposals), may protest to the head of the purchasing agency in
writing” (emphasis added)).”).
4
negotiations,” the total score for the technical submission in a proposal for each Zone
“must be greater than or equal to 75% of the available technical points.” Id. at 81a.
The Reissued RFP specifically provides that “[t]he Department, in its
sole discretion, may undertake negotiations with Offerors whose proposals, in the
judgment of the Department, show them to be qualified, responsible, and capable of
providing the services.” R.R. at 48a.5 However, with respect to “Discussions for
Clarification,” the Reissued RFP states, “Offerors may be required to make an oral
or written clarification of their proposals to the Department to ensure thorough
mutual understanding and Offeror responsiveness to the solicitation requirements.
The Project Officer will initiate requests for clarification.” Id. at 54a-55a.
Additionally, the Reissued RFP provides that “[f]rom the issue date of this RFP until
the Department selects proposals for award, the Project Officer is the sole point of
contact concerning this RFP. Any violation of this condition may be cause for the
Department to reject the offending Offeror’s proposal.” Id. at 56a. Finally, the
Department would “notify the selected Offerors in writing of their selection for
5
Section 513(f) of the Procurement Code states:
As provided in the [RFP], discussions and negotiations may be
conducted with responsible offerors for the purpose of clarification
and of obtaining best and final offers [(BAFOs)]. Responsible
offerors shall be accorded fair and equal treatment with respect to
any opportunity for discussion and revision of proposals. In
conducting the discussions, there shall be no disclosure of any
information derived from proposals submitted by competing
offerors.
62 Pa. C.S. §513(f). In turn, Section 513(g) provides, “[t]he responsible offeror whose proposal
is determined in writing to be the most advantageous to the purchasing agency, taking into
consideration price and all evaluation factors, shall be selected for contract negotiations.” 62
Pa. C.S. §513(g).
5
negotiations after determining those proposals that are most advantageous and in the
best interest of MA beneficiaries and the Commonwealth.” Id. at 58a.
The Department received proposals from eleven different MCOs: nine
for the Southeast Zone; ten for the Lehigh/Capital Zone; seven for the Southwest
Zone; six for the Northwest Zone; and seven for the Northeast Zone. Vista submitted
a proposal in response to the Reissued RFP to provide services in all five Zones.
Likewise, Pennsylvania Health & Wellness, Inc. (PHW) sought to provide services
in all five Zones. On November 18, 2016, the Project Officer notified Vista that its
“proposals were not among those proposals determined to be the most advantageous
to the Commonwealth,” and four other MCOs filed a bid protest based on the
Department’s November Selection Memorandum to which Vista responded.
However, the November Selection Memorandum revealed that
BDISBO scored the SDB/SB portion of the proposals on a 200-point scale and not
a 2,000-point scale as provided in the Reissued RFP. On December 12, 2016, the
Department notified BDISBO of the scoring error and asked BDISBO to correct the
mistake. On December 15, 2016, the Department’s Secretary and DGS’s Secretary
notified Vista that the November Selection Memorandum would be rescinded due
to the error in scoring. As a result, the Department did not issue a written
determination of the bid protests stemming from the November Selection
Memorandum.
On December 19, 2016, Leesa Allen, the Department’s Deputy
Secretary for the Office of Medical Assistance Programs (OMAP), and Sallie
Rodgers, Deputy Chief Counsel in the Department’s Office of General Counsel, met
with Michael Neidorff, Chairman and CEO of Centene Corporation (Centene),
PHW’s parent corporation, and Brent Layton, an Executive Vice President and the
6
Chief Business Development Officer of Centene. R.R. at 488a-495a. Deputy
Secretary Allen requested the meeting with PHW to discuss PHW’s operational
readiness to operate as an MCO on a statewide basis. Id. at 492a-493a. Allen was
concerned about PHW’s readiness because of: the abbreviated time frame for the
implementation of the HealthChoices Program agreements; the significant amount
of resources that were necessary for a successful Readiness Review; the planned
implementation of Community HealthChoices Program (CHC), a new managed care
initiative separate from the HealthChoices Program that will begin implementation
in 2018 and for which PHW is a selected offeror in all five Zones; and the fact that
PHW was a new plan coming into the HealthChoices Program. Id. at 493a.
From Layton’s perspective, the December 19th meeting with the
Department’s Deputy Secretary and Deputy Chief Counsel was generally about
PHW’s readiness to perform in various Zones, the status of PHW’s Certificate of
Authority (COA) to conduct business in Pennsylvania, and its approval to operate in
specific counties. R.R. at 489a.6 Potential contracting issues in various Zones were
6
Section I-4 of the Reissued RFP states, in relevant part:
Participation in the HealthChoices [Physical Health] Program
will be limited to Commonwealth-licensed [Health Maintenance
Organizations (HMOs)]. All MCOs awarded an agreement for the
HealthChoices PH Program for any zone will be required to have a
[COA] to operate as an HMO in Pennsylvania, as well as
Pennsylvania Department of Health (DOH) operating authority in
each county in each zone for which they are selected, no later than
three months prior to the anticipated implementation date of
04/01/2017. By this date, all MCOs awarded an agreement for
a HealthChoices PH Zone must provide to the Department,
through the Project Officer, a copy of their [COA] to operate as
an HMO in Pennsylvania, as well as a copy of the
correspondence from the Pennsylvania DOH granting
7
discussed, but PHW did not modify or withdraw its proposal in any Zone. Id.
Layton indicated that if PHW was selected by the Department to proceed to
negotiations, as a new entrant into an existing market, one of the issues that it would
want to understand and discuss is the Department’s auto-assignment algorithm, but
no specific changes to the auto-assignment algorithm were agreed to by the parties.
Id.
On December 22, 2016, the Department issued a new December
Selection Memorandum, which corrected the SDB/SB scoring and made the
recommended selections of MCOs for agreement negotiations for the HealthChoices
Program in all five Zones. R.R. at 91a-100a. The Department selected five MCOs
in the Southeast Zone; four MCOs each in the Southwest Zone and the
Lehigh/Capital Zone; and three MCOs each in the Northeast Zone and the Northwest
Zone. Id. at 92a. Based on the Department’s scoring, Vista was selected for
negotiations in the Southeast, Southwest, and Northwest Zones.7 Id. at 99a. Vista
was not selected for negotiations in the Lehigh/Capital and Northeast Zones based
on its rankings as fifth in both of those Zones. Id. at 96a-97a.
In contrast, although the Department’s scoring of PHW’s proposals
were high enough for selection in all five Zones, the Department determined that
PHW would participate in the Southeast, Lehigh/Capital, and Southwest Zones.
R.R. at 98a. This determination was based on “discussions between [PHW] and the
operating authority in each county in the Zone(s) for which they
were selected for award.
R.R. at 47a-48a (emphasis in original).
7
The Department identified Vista through its affiliated subcontractors, AmeriHealth
Caritas Health Plan and Keystone First Health Plan. See R.R. at 95a-99a.
8
Department, [in which] the Department agreed that [PHW] will participate in the
Southeast, Southwest, and Lehigh/Capital zones.” Id.
On December 29, 2016, Vista filed a Bid Protest challenging the
December Selection Memorandum. R.R. at 4a-17a. Vista claimed that: (1) the
process carried out by the Department in which it deselected Vista after having twice
selected it for negotiations in the Northeast and Lehigh/Capital Zones is
extraordinary and the Department’s rescission of the November Selection
Memorandum is inconsistent with its duty to carry out a fair competition in which
offerors are treated equally; (2) the Department violated Section III-38 of the
Reissued RFP because Vista was selected as a “responsible Offeror” whose proposal
was “determined to be the most advantageous and in the best interests of MA
beneficiaries and the Commonwealth” in the Northeast and Lehigh/Capital Zones
under the two prior versions of the Reissued RFP; (3) the Department failed to
properly apply the “Soundness of Approach” criteria stated in Section III-49 of the
8
Section III-3 states, in relevant part, “[t]he Department will notify in writing of its
selection for negotiations the responsible Offerors whose proposals are determined to be the most
advantageous and in the best interests of MA beneficiaries and the Commonwealth as determined
by the Department after taking into consideration all evaluation and selection factors.” R.R. at
79a.
9
Section III-4 states, in relevant part:
For the Zones that an Offeror includes in its proposal, the
Department’s evaluation will include but is not limited to review of:
Soundness of Approach, including but not limited to:
• Whether the Offeror has fully and appropriately accounted for
the particular and/or unique healthcare resources available to and
healthcare challenges faced by MA consumers in the Zone(s), and;
• Content that demonstrates how the Offeror’s approach has been
specifically crafted to address the particular and/or unique
9
Reissued RFP as evidenced by its non-selection in the Lehigh/Capital and Northeast
Zones which it had previously serviced; (4) the Department violated Section
1711.1(e) and (f)10 of the Procurement Code by failing to properly dispose of the bid
protests to the November Selection Memorandum through written determination; (5)
neither Section 521 of the Procurement Code nor the Reissued RFP authorized the
Department’s rescission of the November selection notices and the rescoring and
reevaluation of bids leading to the modified December selection notices; (6) the
Department’s decision to decrease the number of offerors selected for negotiations
in the Northeast and Capital/Lehigh Zones following the rescoring and reevaluation
of the proposals was arbitrary and capricious; (7) the Department erred in its scoring
and evaluation, or rescoring and reevaluation, of the SDB/SB and/or technical
submittals because it was not fair to all offerors, the Department failed to properly
investigate or consider relevant information, and the Department failed to inform
offerors regarding the process that was used; (8) the Department improperly failed
to vet and verify the transition plans of offerors in Zones where they are not currently
serving as MCOs under the HealthChoices Program; and (9) the Department’s
demographic, cultural, economic, geographic, or other relevant
characteristics of the regions, counties and municipalities
comprising the Zones(s)[, and;]
• Whether the Offeror had fully and appropriately demonstrated
how its past performance had improved quality, access and value for
a similar program.
R.R. at 79a-80a.
10
62 Pa. C.S. §1711.1(e), (f). Section 1711.1(e) and (f) states, in relevant part, “[t]he head
of the purchasing agency or his designee shall review the protest and any response or reply,” and
“[u]pon completing an evaluation of the protest in accordance with subsection (e), the head of the
purchasing agency or his designee shall issue a written determination stating the reasons for the
decision.”
10
removal of the “Heritage Factor” as a consideration from the Reissued RFP created
an anti-incumbent bias which allowed non-incumbents to benefit more from the
SDB/SB formula than incumbents. Id. at 9a-16a. Vista also reserved its right to
request an evidentiary hearing and file additional protests, and requested the
production of all documents considered by the Department in its evaluation of the
bid protest and that Vista be selected for contract negotiations in the Northeast and
Lehigh/Capital Zones. Id. at 16a-17a. Geisinger Health Plan (Geisinger), Gateway
Health Plan, Inc. (Gateway), PHW, and OMAP filed responses to Vista’s bid protest
outlining various reasons why the protest should be denied, id. at 18a-35a, 378a-
382a, 419a-423a, 439a-440a, and Vista replied to the responses, id. at 217a-227a.
On January 6, 2017, Vista filed another Bid Protest challenging the
December Selection Memorandum. R.R. at 228a-232a. Vista asserted that it had
learned through a bid protest filed by Aetna Better Health of Pennsylvania, Inc.
(Aetna) that Department had issued Addendum #1 to the Reissued RFP as a result
of improper communications between the Department and Aetna in violation of
Section I-21 of the Reissued RFP.11 R.R. at 229a-231a. Vista also argued that the
Department’s statement that it would continue to move forward and negotiate
agreements with six MCOs while a number of bid protests were pending violates the
stay provisions of Section 1711.1(k) of the Procurement Code.12 Id. at 231a. Vista
11
Section I-21 of the Reissued RFP states, in relevant part, “[f]rom the issue date of this
RFP until the Department selects proposals for award, the Project Officer is the sole point of
contact concerning this RFP. Any violation of this condition may be cause for the Department to
reject the offending Offeror’s proposal.” R.R. at 56a.
12
62 Pa. C.S. §1711.1(k). Section 1711.1(k) states:
In the event a protest is filed timely under this section and until the
time has elapsed for the protestant to file an appeal with
11
again reserved its right to request an evidentiary hearing and file additional protests,
and requested the production of all documents considered by the Department in its
evaluation of the bid protest. Id. Geisinger, PHW, and OMAP filed responses to
Vista’s bid protest outlining various reasons why the protest should be denied, id. at
233a-259a, 412a-413a, 424a-429a, and Vista replied to the responses, id. at 260a-
268a.
On January 13, 2017, the Department held a debriefing conference
regarding Vista’s bid protest. R.R. at 331a-339a. On January 20, 2017, Vista filed
another Bid Protest and Supplemental Protests in which it alleged: (1) the
Department acted arbitrarily and capriciously in failing to give points for prior
performance in meeting SDB/SB commitments as required by Section III-4(B)(7) of
the Reissued RFP;13 (2) the Department violated the “blackout” provisions of
Sections I-914 and I-21 of the Reissued RFP that are required to be followed under
Section 513 of the Procurement Code in its December 19th meeting with PHW and
Commonwealth Court, the purchasing agency shall not proceed
further with the solicitation or with the award of the contract unless
and until the head of the purchasing agency, after consultation with
the head of the using agency, makes a written determination that the
protest is clearly without merit or that award of the contract without
delay is necessary to protect substantial interests of the
Commonwealth.
13
Section III-4(B)(7) states, “[t]he Offeror’s prior performace in meeting its agreement
obligations to [SDBs] and [SBs] will be considered by BDISBO during the scoring process. To
the extent the Offeror has failed to meet prior commitments, BDISBO may recommend to the
Issuing Office that the Offeror be determined non-responsible for the limited purpose of eligibility
to receive [SDB] and [SB] points.” R.R. at 80a-81a.
14
Section I-9 states, in relevant part, “[i]f an Offeror has any questions regarding this RFP,
the Offeror must submit the questions by email . . . to the Project Officer named in Part I, Section
I-2 of the RFP.” R.R. at 50a.
12
by engaging in contract negotiations regarding the auto-assignment algorithm;15 and
(3) the Department did not identify the factors and scoring of the technical portion
of the proposals in the Reissued RFP thereby applying an impermissible “secret”
scoring criterion.16 Id. at 270a-273a.17 Vista again reserved its right to request an
evidentiary hearing and file additional protests, requested the production of all
documents considered by the Department in its evaluation of the bid protest, and
Vista also cited a portion of the Department’s script from the Reissued RFP Preproposal
15
Conference held on July 28, 2016, which states, in relevant part:
As those of you who are familiar with standard procurement
procedures and who may have attended such conferences previously
will be aware, now that this [Reissued] RFP has been released, we
have entered what is commonly referred to as a “black-out” period.
This means that anyone who wishes to communicate with the
Commonwealth regarding the RFP must do so by directing their
inquiries to me, the Project Officer, as the sole point of contact, in
the manner described in Section I-2 of the [Reissued] RFP. It also
means that my colleagues and I will ensure that we conduct today’s
conference in a consistent manner by following a script and
procedure.
R.R. at 510a.
16
Of the 8,000 points, the Department assigned 800 points for the Personnel component;
200 points for the Prior Experience component; and 7,000 points for the Soundness of Approach
component. R.R. at 272a. In turn, the 7,000 total points of the Soundness of Approach component
were allocated as follows: (1) Planned Approach – 150 points; (2) Member Management – 550
points; (3) Utilization Management – 150 points; (4) Care Management – 600 points; (5) Special
Needs – 300 points; (6) Coordination of Care – 400 points; (7) Quality and Performance
Management – 2,325 points; (8) Provider Network Composition and Network Management – 725
points; (9) Value Based Purchasing – 1,200 points; (10) Pharmacy/Outpatient Drugs – 250 points;
and (11) Management Information Systems – 350 points. Id.
17
See Aetna Better Health of Pennsylvania Inc., slip op. at 31 (“At this early stage of the
proceedings, the Court has real concerns about the credibility of the procurement process used for
RFP 06-15. It is apparent that, despite Aetna’s objection to [the Department]’s unprecedented use
of secret evaluation criterion through Aetna’s bid protest . . . , [the Department] plans to move
forward with the procurement.”).
13
requested confirmation that the Department stay, pursuant to Section 1711.1(k) of
the Procurement Code, any further contract negotiations for the Northeast and
Lehigh/Capital Zones pending the resolution of the bid protests. Id. at 274a-275a.
Geisinger, PHW, and OMAP filed responses to Vista’s bid protest outlining various
reasons why the protest should be denied, id. at 286a-349a, 414a-418a, 430a-438a,
and Vista replied to the responses, id. at 350a-362a.
On February 28, 2017, Vista filed a Supplement in Support of Bid
Protests asserting the following:
[T]here are serious questions regarding the selection of
PHW for contract negotiations in three zones that the
Secretary should investigate and resolve, including but not
limited to the fact that PHW’s SDB/SB submittal appears,
on its face, to have violated the terms of the Reissued RFP;
there was a further defect in the scoring of PHW’s
proposal, in that the total scoring did not reflect the fact
that, in the Department’s view, PHW did not have the
ability to perform simultaneously in all five zones for
which it proposed; and the fact that the Department has
provided a shifting set of explanations about its secret
December 19th meeting with PHW that resulted in the
Department selecting PHW for contract negotiations in
three zones despite its scores in the remaining two zones,
after soliciting from PHW the zones that it preferred. The
fact that PHW’s SDB/SB submittal was not with the
SDB/SB submittals of other offerors, therefore, further
calls into question whether PHW was treated differently
than other offerors during this re-procurement.
R.R. at 366a.
Ultimately, on June 5, 2017, the Department’s Director issued a Final
Agency Determination disposing of all of Vista’s bid protests. Final Agency
Determination at 1-33. With respect to Vista’s claims regarding the December 19th
meeting, the Director initially noted that “[i]n order to protest the solicitation or
14
award of a contract or agreement, a bidder or offeror must be ‘aggrieved’ in
connection with the solicitation or award.” Id. at 26 (citations omitted). The
Director determined that Vista was not aggrieved by any contact or discussion
between OMAP and PHW because “[t]he non-selection of PHW in two of the five
zones conferred a benefit or advantage to Vista by rendering an additional ‘slot’
available for selection,” and that “[t]he only offeror that may potentially have been
aggrieved by the non-selection of PHW in the Northeast and Northwest zones was
PHW itself.” Id. at 26-27. As a result, the Director concluded, “Vista was not
aggrieved by not having a similar meeting with OMAP.” Id.18
Alternatively, the Director rejected Vista’s assertion that the December
19th meeting violated Section I-9 of the Reissued RFP because that section “outlines
the procedure by which an offeror may submit questions,” and it “does not prohibit
the meeting or discussions between the Department and PHW.” Final Agency
Determination at 27. The Director also rejected Vista’s assertion that it violated
Section I-21 because “[t]his argument attempts to extend the scope of Part I-21 to be
a mutual restriction on contact, applying equally to OMAP as to potential offerors,”
but “the provision does not restrict the method by which OMAP may initiate
contact.” Id.
18
We find untenable the Director’s determination that Vista was not “aggrieved” by the
selection process. First, the Director only determined that Vista was not aggrieved with respect to
the two Zones from which PHW withdrew its proposal, not addressing Vista’s aggrievement with
respect to the three remaining Zones. Moreover, in considering a request for a preliminary
injunction with respect to the Original RFP, we held that the Department’s failure to comply with
the provisions of the Procurement Code, as alleged in Vista’s protest herein, constitutes
“irreparable injury.” See Aetna Better Health of Pennsylvania Inc., slip op. at 27 (“Failure to
comply with a statute is sufficiently injurious to constitute irreparable harm. Wyland v. West Shore
Sch. Dist., 52 A.3d 572, 583 (Pa. Cmwlth. 2012).”).
15
The Director also determined that the December 19th meeting did not
violate the provisions of Section 513(f) of the Procurement Code, requiring that all
offerors “be accorded fair and equal treatment with respect to any opportunity for
discussion and revision of proposals,” because Section I-17 of the Reissued RFP19
“permits the Department to seek oral or written clarifications of an offeror’s proposal
to ensure mutual understanding and responsiveness to the solicitation requirements.”
Final Agency Determination at 27. While Section I-17 “provides that the Project
Officer will initiate requests for clarification,” and “[w]hile OMAP acknowledges
that the December 19 meeting was initiated by Secretary Allen and not the Project
Officer, both OMAP and PHW describe the primary purpose of the meeting as an
inquiry into PHW’s readiness to operate on a statewide basis and to ensure an
adequate network of providers.” Id. (citations omitted).
The Director also found that the Department’s discussions did not
violate Section 513(g) of the Procurement Code requiring the Department to select
a “responsible offeror” for contract negotiations. Final Agency Determination at 27-
28. The Director explained that “[t]here is a distinction between earning a score high
enough in a zone to be a selected offeror under the Reissued RFP, and being able to
ramp up a business operation as complex and demanding as being an MCO in both
the [HealthChoices] and CHC programs.” Id. at 27. The Director found that “[t]here
is nothing improper in seeking assurance from an MCO that stands to go from zero
to five zones in not just the [HealthChoices] program, but the new CHC program, as
well,” and that “[e]ven if the result of the December 19 meeting was that PHW was
19
Section I-17 states “Offerors may be required to make an oral or written clarification of
their proposals to the Department to ensure thorough mutual understanding and Offeror
responsiveness to the solicitation requirements. The Project Officer will initiate requests for
clarification.” R.R. at 202a.
16
not selected in the Northeast zone or the Northwest zone, . . . such result is evidence
that OMAP exercised its judgment when evaluating which proposals were most
advantageous to the Commonwealth.” Id. at 27-28.
The Director also determined that Vista “has presented no evidence that
the Department offered any quid pro quo in exchange for PHW’s non-selection in
two zones or that PHW altered its proposal to withdraw from those zones,” and that
“[t]he December Selection Memorandum, which still lists PHW in the Northeast and
Northwest zones, demonstrates that PHW did not withdraw or modify its proposals
in those zones.” Final Agency Determination at 28 (citations and footnote omitted).
The Director explained that even if he was to accept Vista’s characterization of the
meeting, it was permitted under Section I-5 of the Reissued RFP, which allows the
Department, “in its sole discretion, [to] undertake negotiations with Offerors whose
proposals, in the judgement of the Department, show them to be qualified,
responsible, and capable of providing the services,” and Section 513(f) of the
Procurement Code which “permits the Department to conduct ‘discussions and
negotiations’ with responsible offerors as long as responsible offerors are accorded
‘fair and equal treatment with respect to any opportunity for discussion and revision
of proposals.’” Id. (citation omitted).
The Director also found that “the Department had discretion to engage
in negotiations with PHW” at the December 19th meeting and that it did not violate
Section 513(f) because “[f]air and equal treatment does not mean identical
treatment.” Final Agency Determination at 28 (citation omitted). The Director
noted that while “[i]n the December 19 meeting, a term of the agreement was
discussed, namely the auto-enrollment algorithm,” the meeting did not violate “fair
17
and equal treatment” under Section 513(f) “given that no changes or agreements
were made as a result of that discussion.” Id.
The Director also rejected Vista’s assertion that the December 19th
meeting did not violate the automatic stay provision of Section 1711.1(k) of the
Procurement Code based on Aetna’s bid protest of the November Selection
Memorandum. Final Agency Determination at 29. The Director explained that
“[u]pon the rescission of the original sections [in that Memorandum], the protest of
those selections became moot thereby eliminating any need for a written
determination of those protests.” Id. Accordingly, the Director concluded, “[e]ven
if the December 19 meeting occurred while an automatic stay was in place, such a
violation does not warrant the remedy of rescission sought by Vista.” Id. Rather,
he found that “[e]ven assuming a stay was in place, any violation thereof was a mere
technical violation and does not warrant cancelling the selections made under the
Reissued RFP.” Id. at 30.
The Director also determined that the December 19th meeting did not
violate Section I-23 and the Procurement Code regarding readiness review
discussions because Section I-23 “does not prohibit the Department from engaging
in readiness review prior to the selection of offerors,” and that it “explicitly permits
the Department to conduct this assessment before the formal readiness review
period.” Final Agency Determination at 30. He concluded that “[t]he discussion
regarding PHW’s readiness to operate on a statewide basis that occurred at the
December 19 meeting was not in violation of the terms of the Reissued RFP,” and
that “the discussion at the December 19 meeting did not violate the Procurement
Code.” Id.
18
The Director also rejected Vista’s claim that PHW was selected despite
concerns about its ability to perform. Final Agency Determination at 31. He cited
Section 513(g) of the Procurement Code and Section III-3 of the Reissued RFP,
which provide for the selection of a responsible offeror whose proposal is
determined to be the most advantageous to MA recipients and the Commonwealth
as determined by the Department after considering all of the evaluation and selection
factors, and “[n]either the Procurement Code nor the Reissued RFP requires that the
highest score be chosen.” Id. The Director found that “OMAP exercised
programmatic discretion, not just across zones, but across programs in deciding to
select PHW for three zones instead of five,” which is “permissible under the terms
of the Reissued RFP and the discretion under the Procurement Code . . . .” Id.
Finally, the Director rejected Vista’s claim that PHW’s scores and ranking were
disclosed prior to issuing its notices of selection, citing Deputy Secretary Allen’s
affidavit in which she “explicitly stated that no information was provided to PHW
regarding the scores or ranking of any offeror, including PHW.” Id.
Based on the foregoing, the Director concluded, “Vista has failed to
meet its burden of demonstrating that the Department acted in a manner that was
arbitrary, capricious, an abuse of discretion, or contrary to law by meeting with PHW
on December 19, 2016,” and that Vista’s claims in this regard “are without merit.”
Final Agency Determination at 31. Accordingly, the Director denied Vista’s bid
protests. Id. at 33.20
20
The Director also denied Vista’s requests for the production of documents or for an
evidentiary hearing, and rejected as without merit Vista’s claims that: (1) OMAP’s evaluation and
scoring of the technical portions of the proposals was not arbitrary, capricious, an abuse of
discretion, or contrary to law; (2) the manner in which OMAP and DGS designed and scored the
SDB/SB portions of the proposals was not arbitrary, capricious, an abuse of discretion, or contrary
to law; (3) the design of the Reissued RFP and the scoring of the proposals did not have an anti-
19
In this appeal,21, 22 Vista claims that the Director erred in denying its bid
protests because the December 19th meeting between the Department’s Deputy
Secretary for OMAP and Deputy Chief Counsel in the Department’s Office of
General Counsel, and Centene’s Chairman and CEO and Executive Vice President
and the Chief Business Development Officer is not authorized by the Reissued RFP
thereby violating the Procurement Code and the Procurement Handbook. We agree.
incumbent bias; (4) the process by which OMAP rescinded and rescored the November Selection
Memorandum was appropriate and permissible under the Procurement Code; and (5) OMAP’s
contact with Aetna was permissible and appropriate under the Reissued RFP, did not violate a stay
or blackout period, and was not arbitrary, capricious, an abuse of discretion, or contrary to law.
See Final Agency Determination at 11-26, 32.
21
Section 1711.1(i) of the Procurement Code states that this Court “shall hear the appeal,
without a jury, on the record of determination certified by the purchasing agency,” and “[s]hall
affirm the determination of the purchasing agency unless it finds from the record that the
determination is arbitrary and capricious, an abuse of discretion or is contrary to law.” 62 Pa. C.S.
§1711.1(i). See also Section 561 of the Procurement Code, 62 Pa. C.S. §561 (“The determinations
required by the following sections are final and conclusive unless they are clearly erroneous,
arbitrary, capricious or contrary to law: . . . Section 513(a) and (g) (relating to competitive sealed
proposals).”). Purchasing agencies are bound by the express terms of their RFPs. American
Totalisator Co. v. Seligman, 414 A.2d 1037, 1041 (Pa. 1980). An agency abuses its discretion
when it fails to follow its own regulations and procedures. Peoples Natural Gas Company v.
Pennsylvania Public Utility Commission, 542 A.2d 606, 608 (Pa. Cmwlth. 1988).
22
PHW, UnitedHealthcare of Pennsylvania, Inc. (United), Geisinger, Gateway, HPP, and
Aetna have intervened in Vista’s appeal. Additionally, Aetna filed a petition for review in our
original jurisdiction, and both Aetna and United have appealed Department orders denying their
bid protests, with respect to the Reissued RFP. Their actions are lodged in this Court at Nos. 274
M.D. 2017 and 790 C.D. 2017, respectively. By Stipulation and Order approved by this Court on
June 30, 2017, the Department agreed to stay all procurement activities with regard to the Reissued
RFP, including negotiations of any kind or readiness review activities, until this Court’s disposition
of Aetna’s petition for review. The Department also agreed that the existing HealthChoices
agreements will remain in effect and will not be terminated.
20
As noted above, Section 513(f) of the Procurement Code states that
“[a]s provided in the [RFP], discussions and negotiations may be conducted with
responsible offerors for the purpose of clarification and of obtaining [BAFOs,23]”
and that “[r]esponsible offerors shall be accorded fair and equal treatment with
respect to any opportunity for discussion and revision of proposals.” 62 Pa. C.S.
§513(f). See also Part I, Chapter 6(B)(10)(e)(1)(f) of the Procurement Handbook
(“It is imperative that offerors selected to submit a [BAFO] be accorded fair and
equal treatment with respect to any opportunity for discussion and revision of
proposals.”). In turn, Section 513(g) provides that “[t]he responsible offeror whose
23
The Procurement Code does not define “discussions,” “negotiations,” or “clarification.”
As a result, the rules of statutory construction apply. City of Philadelphia v. City of Philadelphia
Tax Review Board ex rel. Keystone Health Plan East, Inc., 132 A.3d 946, 952 (Pa. 2015). ‘“When
statutory words or phrases are undefined by the statute, the Court construes the words according
to their plain meaning and common usage.’ A statute must be given its plain and obvious
meaning.” Harmer v. Pennsylvania Board of Probation and Parole, 83 A.3d 293, 299 (Pa.
Cmwlth.), appeal denied, 97 A.3d 746 (Pa. 2014) (citations omitted). “[I]t is axiomatic that in
determining legislative intent, all sections of a statute must be read together and in conjunction
with each other, and construed with reference to the entire statute.” Hoffman Mining Company,
Inc. v. Zoning Hearing Board of Adams Township, 32 A.3d 587, 592 (Pa. 2011) (citation omitted).
“Where a court needs to define an undefined term, it may consult definitions in statutes, regulations
or the dictionary for guidance, although such definitions are not controlling.” Adams Outdoor
Advertising, LP v. Zoning Hearing Board of Smithfield Township, 909 A.2d 469, 483 (Pa. Cmwlth.
2006), appeal denied, 923 A.2d 1175 (Pa. 2007).
“Discussion” is defined as “consideration of a question in open usu. informal debate” and
“argument for the sake of arriving at truth or clearing up difficulties.” Webster’s Third New
International Dictionary 648 (1976). “Negotiation” is defined as “a business transaction” and the
“action or process of negotiating or of being negotiated.” Id. at 1514. In turn, “negotiate” is
defined as “to communicate or confer with another so as to arrive at the settlement of some matter;”
to “meet with another so as to arrive through discussion at some kind of agreement or compromise
about something.” Id. See also Black’s Law Dictionary 1150 (10th ed. 2009) (defining
“negotiation” as “[a] consensual bargaining process in which parties attempt to reach agreement
on a disputed or potentially disputed matter” and “[d]ealings conducted between two or more
parties for the purpose of reaching an understanding.”). Finally, “clarification” is defined as “the
act or process of clarifying.” Id. at 415. In turn, “clarify” is defined as “to explain clearly,” to
“make understandable,” or “to make less complex or less ambiguous.” Id.
21
proposal is determined in writing to be the most advantageous to the purchasing
agency . . . shall be selected for contract negotiation.” 62 Pa. C.S. §513(g).
In Pepco Energy Services, Inc. v. Department of General Services, 49
A.3d 488 (Pa. Cmwlth. 2012), the bidder submitted a proposal to DGS in response
to an RFP seeking a Design Build Contractor to design, finance, construct, own,
operate, and maintain a state-of-the-art Combined Heating, Cooling, and Power
Plant to provide electricity, steam, hot and chilled water to a proposed State
Correctional Facility in Montgomery County. In the proposal, Pepco stated that it
was based on the understanding that it will have the opportunity to negotiate the
Energy Services Agreement, the Ground Lease, and the Surety Agreement prior to
selection. Ultimately, DGS rejected the proposal as non-responsive because the RFP
provided that these provisions were not negotiable and the proposal’s conditional
language constituted an impermissible alternative proposal. Pepco filed a bid protest
that DGS denied and appealed to this Court. On appeal, Pepco argued that DGS
erred in rejecting the proposal as non-responsive because its attempt to negotiate key
terms and conditions was valid under Section 513(g) of the Procurement Code.
With respect to subsections (f) and (g) of Section 513 of the
Procurement Code, this Court explained:
Section 513(g) of the Code [] provides that an offeror
“shall be selected for contract negotiation[.”] Section
513(g) of the Code first requires that the offeror be a
“responsible offeror.” (Emphasis added). The Code
specifically defines “responsible offeror” as “[a]n offeror
that has submitted a responsive proposal and that
possesses the capability to fully perform the contract
requirements in all respects and the integrity and
reliability to assure good faith performance.” Section 103
of the Code, 62 Pa. C.S. §103 (emphasis added). The Code
further defines “responsive proposal” as “[a] proposal
which conforms in all material respects to the
22
requirements and criteria in the [RFP].” Id. (emphasis
added). By definition, therefore, if a proposal on its face
does not meet the requirements and criteria of a[n RFP],
then it is not considered a responsive proposal and the
offeror cannot be considered a responsible offeror. Thus,
read in concert with Section 103 of the Code, Section
513(g) of the Code establishes a framework whereby the
issuing agency must first determine if the offeror is a
responsible offeror, meaning that its proposal meets the
requirements and criteria of the [RFP]. Then, the
responsible offeror with the most advantageous proposal
is “selected for contract negotiation.” This interpretation
is further supported by the language of Section 513(g),
which provides that the “responsible offeror whose
proposal is determined . . . to be the most advantageous . .
. , taking into consideration . . . all evaluation factors,
shall be selected for contract negotiation.” . . .
[Additionally,] a[n RFP] may provide for contract
negotiations. In Language Line Services, Inc. v.
Department of General Services, 991 A.2d 383 (Pa.
Cmwlth.), appeal denied, [13 A.3d 481 (Pa. 2010)], we
noted that Section 513 of the Code allows an issuing
agency “the opportunity to enter into discussions and
negotiations with responsible offerors ‘[a]s provided in
the [RFP].’” Language Line Services, 991 A.2d at 390(emphasis added). It also provides that “[r]esponsible
offerors shall be accorded fair and equal treatment.”
Section 513(f) of the Code. In Language Line Services,
when considering whether the issuing agency had violated
the Code and fundamental principles governing public
contracting when it requested [BAFOs] from only certain
bidders, this Court looked to the Code and the language of
the [RFP] at issue. The language in the [RFP] in that case
“specifically stated and put offerors on notice that [the
issuing agency] was reserving the right to limit BAFO
discussions to responsible offerors whose proposals were
considered ‘reasonably susceptible of being selected for
award.’” Id. . . .
Based upon the language of Section 513(g) of the
Code and our decision in Stanton–Negley [Drug Company
v. Department of Public Welfare, 943 A.2d 377 (Pa.
23
Cmwlth.), appeal denied, 959 A.2d 321 (Pa. 2008)], it is
apparent that Section 513, in itself, does not entitle an
offeror to engage in contract negotiations before the
issuing agency makes a determination regarding whether
the offeror is a responsible offeror (i.e., whether the
offeror submitted a responsive or non-responsive
proposal) or before the issuing agency makes a
determination as to which proposal is most advantageous.
An agency, however, through its [RFP], may provide
offerors with an opportunity to negotiate or provide
revised proposals throughout the [RFP] process. See
Stanton–Negley.
Pepco, 49 A.3d at 493-94.
Thus, we rejected Pepco’s “contention that under Section 513(g),
following the submission of a proposal, every term of a contract becomes negotiable,
including provisions that the issuing agency already identified as non-negotiable in
its [RFP].” Pepco, 49 A.3d at 493. We also concluded “that, pursuant to the
provisions of the RFP, [Pepco] had no right to negotiate the terms of the Design
Build Contract and the documents appended to it.” Id. at 494.
With respect to the December 19th meeting in this case, the
Department’s Director found as fact that the “Deputy Secretary [] had requested the
December 19 meeting with PHW to discuss PHW’s readiness to operate as an MCO
on a statewide basis,” and that she “was concerned with PHW’s operational
readiness because of ‘the abbreviated time frame for the implementation of the new
[] HealthChoices agreements, the significant amount of resources necessary for a
successful Readiness Review, the planned implementation of CHC, and PHW
coming into the HealthChoices Program as a new plan.’” Final Agency
Determination at 9. The Director also found that “potential contracting issues were
discussed, that PHW did not modify or withdraw its proposal in any zone, and that
if selected to proceed to negotiations, PHW would ‘want to understand and discuss’
24
the Department’s auto-assignment algorithm, but no specific changes to the auto-
assignment algorithm were agreed to.’” Id.
Whether the December 19th meeting between the Department’s Deputy
Secretary and Deputy Chief Counsel was a “discussion” or “negotiation” with PHW
“for the purpose of clarification and of obtaining a [BAFO],” or merely to assist in
determining whether PHW was a “responsible” bidder, within the purview of
Section 513 of the Procurement Code, it is clear that the meeting violated the
provisions of the Procurement Code, the RFP and the Procurement Handbook. It is
true that Section I-5 of the Reissued RFP states that “[t]he Department, in its sole
discretion, may undertake negotiations with Offerors whose proposals, in the
judgment of the Department, show them to be qualified, responsible, and capable of
providing the services.” R.R. at 49a. See also Section I-26, id. at 58a (“The
Department will notify the selected Offerors in writing of their selection for
negotiations after determining those proposals that are most advantageous and in the
best interests of MA beneficiaries and the Commonwealth.”); Section III-3, id. at
79a (“The Department will notify in writing of its selection for negotiations the
responsible Offerors whose proposals are determined to be the most advantageous
and in the best interests of MA beneficiaries and the Commonwealth as determined
by the Department after taking into consideration all evaluation and selection
factors.”).
However, Section I-2 of the Reissued RFP states that, prior to such a
determination and written notification, the Department’s Bureau is the Issuing
Office “[t]he sole point of contact in the Commonwealth for this RFP shall be . . .
the Project Officer for this RFP.” R.R. at 45a. See also Section I-21, id. at 56a
(“From the issue date of this RFP until the Department[] selects proposals for
25
award[,] the Project Officer is the sole point of contact concerning this RFP.”).
Likewise, Part I, Chapter 6(B)(2)(q) of the Procurement Handbook provides that
“[t]he Issuing Office . . . [c]onducts pre-selection negotiations, if desired, consistent
with the terms of the RFP.” Finally, Part I, Chapter 6(B)(10)(e)(2)(c) of the
Procurement Handbook states that “[t]he issuing office, or the evaluation committee
chairperson or designee, will conduct the pre-selection negotiations.”
With respect to the clarification of PHW’s proposal, Section I-17 of the
Reissued RFP specifically provides that “Offerors may be required to make an oral
or written clarification of their proposals to the Department to ensure thorough
mutual understanding and Offeror responsiveness to the solicitation requirements.
The Project Officer will initiate requests for clarification.” R.R. at 55a (emphasis
added). See also Section I-9, id. at 50a (“If an Offeror has any questions regarding
this RFP, the Offeror must submit the questions by email . . . to the Project Officer
named in Part I, Section I-2 of the RFP.”).
Likewise, Part I, Chapter 6(B)(2)(m) of the Procurement Handbook
states that “[t]he Issuing Office: . . . [r]equests clarification of proposals from
offerors as determined necessary to ensure responsiveness to the solicitation and
thorough understanding of the proposals.” Additionally, Part I, Chapter
6(B)(3)(b)(2) of the Procurement Handbook states that “[i]f clarification of a
proposal is needed, [the Evaluation Committee] communicates the need for
clarification to the issuing office and assists the issuing office in communicating
with those offerors whose proposals need clarification.” See also Part I, Chapter
6(B)(10)(c)(1) and (2) (“The evaluation committee may ask the issuing office to seek
clarification from an offeror to assure full understanding of and responsiveness to
26
the RFP. . . . The issuing officer, on behalf of the evaluation committee, shall make
all contacts with the offeror in writing.”).
Finally, with respect to an inquiry into, or a determination of, whether
PHW can adequately perform under the contract or is a “responsible offeror” under
the Reissued RFP, Section I-23 states:
I-23. Issuing Office Participation.
***
Prior to the enrollment of MA consumers in an MCO, the
Department will conduct a readiness review. MA
Consumers will not be able to enroll in a selected MCO
and the Department will not enter into an agreement with
the selected [MCO] until the Department determines that
the MCO has satisfied the readiness review requirements.
. . . At its discretion, the Department may commence
monitoring before the effective or operational dates of the
agreement, and before the formal Readiness Review
period.
R.R. at 56a (emphasis added). See also Section III-5, id. at 81a, 82a (“To be
responsible, an offeror must submit a responsive proposal and possess the capability
to fully perform the agreement requirements in all respects and the integrity and
reliability to assure good faith performance of the agreement. . . . [T]he Issuing
Office will award an agreement only to those Offerors determined to be responsible
in accordance with the most current version of Commonwealth Management
Directive 215.9, Contractor Responsibility Program [(CRP).24]”).
24
Section 321(6) of the Procurement Code states that DGS shall “[p]articipate in the
management and maintenance of a [CRP] in coordination with the Office of the Budget and other
agencies as may be directed by the Governor.” 62 Pa. C.S. §321(6). See also Section 327(b) of
the Procurement Code, 62 Pa. C.S. §327(b) (“The Office of the Budget shall participate in the
management and maintenance of a [CRP] in coordination with [DGS] and other agencies as may
be directed by the Governor.”). Management Directive 215.9 Amended from the Governor’s
Office establishes the policy, responsibilities, and procedures for the operation of the CRP.
27
Likewise, Part I, Chapter 6(B)(2)(o) of the Procurement Handbook
states that “[t]he Issuing Office: . . . [m]akes a determination of offerors’
responsibility in accordance with Management Directive 215.9 Amended and Part I,
Chapter 14 of this handbook.”25 See also Part I, Chapter 6(B)(10)(e)(1)(b) of the
Procurement Handbook (“In order for an offeror to participate in the [BAFO]
process, the issuing office must determine that the submitted and gathered financial
and other information of the offeror demonstrates that the offeror possesses the
financial and technical capability, experience and qualifications to assure good faith
performance of the contract.”).
Based on the foregoing, it is clear that the Director erred in denying
Vista’s bid protests. The December 19th meeting between the Department’s Deputy
Secretary for OMAP and Deputy Chief Counsel in the Department’s Office of
General Counsel, and Centene’s Chairman and CEO and Executive Vice President
and the Chief Business Development Officer, which occurred after the bids had been
opened, but before PHW was found to be a “responsible offeror” and before its
proposal was determined to be responsive or the most advantageous, was not
authorized by the Reissued RFP thereby violating the Procurement Code and the
25
Part I, Chapter 14(C)(1) of the Procurement Handbook provides:
Since the [Procurement] Code requires award to a “responsible”
bidder or offeror, purchasing agencies are explicitly required to
make an affirmative determination of a bidder or offeror’s
responsibility prior to award. Further, purchasing agencies are
required to make a responsibility determination prior to requesting
a [BAFO] when the [RFP] method of procurement is utilized.
Determining responsibility is an affirmative duty, and the
purchasing agency may not presume that all bidders or offerors are
responsible.
28
Procurement Handbook. See, e.g., Pepco, 49 A.3d at 495 (“Based upon the
numerous provisions of the RFP summarized above, we must conclude that the
provisions of the RFP did not entitle Petitioner to engage in contract negotiations
before the Department made a determination regarding whether Petitioner was a
responsible offeror who submitted a responsive proposal or before the Department
made a determination as to which proposal was most advantageous.”) (emphasis in
original).26
As a result, the Department’s order denying Vista’s bid protests will be
reversed. See American Totalisator Co., 414 A.2d at 1041 (“When competitive
bidding is used and the procedures followed emasculate the benefits of such bidding,
we believe judicial intervention is proper.”); Hanisco v. Township of Warminster,
41 A.3d 116, 123 (Pa. Cmwlth. 2012) (“A deviation from competitive bidding will
not be countenanced even where there is no evidence of fraud or favoritism.”). See
also Section 1711.1(j) of the Procurement Code, 62 Pa. C.S. §1711.1(j) (“[I]f the
court determines that the solicitation or award of a contract is contrary to law, then
26
See also Stapleton v. Berks County, 593 A.2d 1323, 1331 (Pa. Cmwlth. 1991) (“We
recognize that the procurement process for a complex contract such as the one negotiated in this
case will necessitate some procedures which are not the norm. For this reason we do not find it
objectionable that the county did not require bid or performance bonds in this case. . . . The events
which transpired after the bids were opened are another matter. Private meetings and negotiations
with some bidders to the exclusion of others before the contract is awarded is precisely the sort of
favoritism and unfair advantage that Harris[ v. Philadelphia, 129 A. 460 (Pa. 1925)] and its
progeny disdained.”); Conduit and Foundation Corp. v. City of Philadelphia, 401 A.2d 376, 380
(Pa. Cmwlth. 1979) (“[W]e believe that the case falls, by analogy, under the line of cases raising
the issue, not as to the city’s discretion, but as to whether a bidder had a competitive advantage in
preparing his bid because of the city’s incomplete or misleading bid specifications or the city’s
having negotiated after the formal bid-opening.”) (citations omitted).
29
the remedy the court shall order is limited to canceling the solicitation or award and
declaring void any resulting contract.”).27
Accordingly, the Department’s order is reversed.
MICHAEL H. WOJCIK, Judge
Judge Cohn Jubelirer did not participate in the decision of this case.
Judge Fizzano Cannon did not participate in the decision of this case.
27
Based on our disposition of Vista’s claim with respect to the Department’s violation of
the Reissued RFP, the Procurement Code, and the Procurement Handbook, we will not address the
remaining claims in this appeal. See, e.g., Peoples Natural Gas Co. v. Pennsylvania Public Utility
Commission, 529 A.2d 1176, 1178 (Pa. Cmwlth. 1987) (“As the Commission points out, our
Supreme Court has held with finality that the original jurisdiction of this Court is limited in matters
involving Commonwealth agencies to those actions not within our appellate jurisdiction. We
conclude that Peoples’ Petition clearly sets forth the matter for our appellate review; therefore, we
must sustain the demurrer. [Our ruling with respect to the demurrer makes it unnecessary for us
to rule upon the Commission’s other objections.]”) (citation omitted).
30
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Vista Health Plan, Inc., :
:
Petitioner :
:
v. : No. 820 C.D. 2017
:
Department of Human Services, :
:
Respondent :
ORDER
AND NOW, this 11th day of April, 2018, the order of the Department
of Human Services dated June 5, 2017, denying the bid protests of Vista Health Plan,
Inc. with respect to the reissued Request for Proposal No. 06-15 is REVERSED.
__________________________________
MICHAEL H. WOJCIK, Judge