KPMG LLP v. Com. of PA, DHS ( 2022 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
KPMG LLP, :
Petitioner :
: No. 491 C.D. 2021
v. :
: Argued: March 10, 2022
Commonwealth of Pennsylvania, :
Department of Human Services, :
Respondent :
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE STACY WALLACE, Judge
HONORABLE MARY HANNAH LEAVITT, Senior Judge
OPINION BY
JUDGE McCULLOUGH FILED: May 2, 2022
KPMG LLP (Petitioner) petitions for review from the April 23, 2021 final
order and determination of the Commonwealth of Pennsylvania, Department of Human
Services (Department), which denied its bid protest and supplemental bid protest.
Upon review, we affirm.
I. Background
On May 1, 2020, the Department issued Request for Proposal No. 12-18
(RFP) seeking proposals for comprehensive business planning services to support a
range of activities within the Information Technology (IT) program project delivery
services for the Department. The RFP divided the scope of the work into two lots: (1)
Business Planning and Business Architecture Services for program offices responsible
for Eligibility and Enrollment, Child Welfare, Child Care and Early Learning, and
Medical Assistance Waiver Populations (Lot 1); and (2) Business Planning and
Business Architecture Services for the program office responsible for Child Support
Enforcement. With respect to Lot 1, the Department received two proposals—one
from Petitioner, and one from Public Consulting Group, Inc. (PCG). In its proposal,
Petitioner proposed a solution which projected that it would require over 553,236 work
hours over the contract’s five-year duration, at a total proposed cost of $17,566,204.22
per year, and included a list of multiple project managers for the project. In contrast,
PCG proposed a solution with a total proposed cost of $10,425,302.00 per year.
However, PCG’s proposal did not include an estimate for the total number of work
hours needed to fulfill the requirements of the project and, further, arguably did not
include a complete list of project managers for the project. (Findings of Fact (F.F.) at
Nos. 1-2; Final Determination at 1.)1
According to the RFP, and procedural history of this case,
3. To be eligible for selection, the proposal had to be
timely received from an offeror and properly signed by the
offeror.
4. These two mandatory responsiveness requirements
were the only RFP requirements that were non-waivable.
5. The Department had sole discretion to waive any other
technical or immaterial nonconformities, allow an offeror to
cure a nonconformity, or consider the nonconformity in
scoring the offeror’s proposal.
6. The Department established three evaluation criteria
to be used in evaluating each proposal: (1) technical,
weighted at 50% of the total points; (2) cost, weighted at 30%
of the total points; and (3) small diverse business and small
1
In short, these two omissions on the part of PCG in completing its proposal under the RFP
constitute the gist of the dispute presently before the Court.
2
business ([]SOB/SB[]) participation, weighted at 20% of the
total points.
7. Bonus points of up to 3% of the total points were also
available for domestic workforce utilization.
8. The RFP provided that evaluation of the technical
criterion was based upon soundness of approach, contractor
qualifications, personnel qualifications, and understanding
the project.
9. To be responsible, an offeror was required to submit a
responsive proposal and possess the capability to fully
perform the contract requirements in all respects and the
integrity and reliability for the good faith performance of the
contract.
10. To be considered responsible and eligible for
selection, an offeror had to achieve a total raw technical score
of greater than or equal to 75% of the available raw technical
points and possess the financial capability to ensure good
faith performance of the contract.
11. The RFP allowed the Department to obtain Best and
Final Offers ([]BAFOs[]).
12. The RFP provided that the Department would select
the offeror whose proposal was determined to be the most
advantageous to the Commonwealth after taking into
consideration all of the evaluation factors.
13. The Department received two proposals for Lot 1[—
i.e., one from Petitioner and one from PCG].
14. The proposals were evaluated by an evaluation
committee consisting of agency representatives from the
Department’s Offices of Income Maintenance; Long-Term
Living; Child Development and Early Learning; Children,
Youth and Families; and Medical Assistance Programs; as
well as the Governor’s Office of Administration Health and
Human Services Delivery Center.
3
15. Both proposals received at least 75% of the available
raw technical points to be considered for selection for
BAFOs or contract negotiations.
16. Both offerors were selected to proceed to the BAFO
phase of the evaluation process for Lot 1.
17. The Department requested a cost BAFO from each
offeror and both offerors provided BAFO responses.
18. After the BAFO phase, the Department combined the
final technical score, SOB/SB participation score, cost score,
and domestic workforce utilization bonus points in
accordance with the weights in the RFP and determined that
PCG received the highest overall score.
19. PCG’s proposal was determined to the most
advantageous to the Commonwealth and PCG was
recommended for selection for contract negotiations.
(F.F. Nos. 3-19.)
On January 29, 2021, the Department awarded PCG the contract, and
Petitioner was “notified” of this fact on that same date. See Final Determination at 11-
14. On February 5, 2021, Petitioner filed a bid protest challenging the Department’s
decision not to select it for contract negotiations under the RFP. On February 11, 2021,
Petitioner filed a second or “supplemental” protest. In turn, PCG, the Department, and
the Governor’s Office of Administration Health and Human Services Delivery Center
filed responses to the protests, and, on March 29, 2021, the two protests were
consolidated for purposes of issuing a final administrative determination. (Final
Determination at 1.)
In a final agency determination dated April 23, 2021, the Department’s
Bureau Director, Tina L. Long (Director), rejected the claims raised in Petitioner’s first
bid protest that: (1) PCG’s proposal was not responsive and was improperly evaluated,
(2) PCG’s labor hour breakdown for the “Knowledge Transfer” and “Transition Task”
4
was inaccurate, (3) PCG lacked appreciation for the scope of the work required by the
RFP, (4) PCG should have received a lower technical score, and (5) PCG’s cost
proposal was unrealistically low.
As to Petitioner’s supplemental bid protest, the Director found that this
protest was untimely filed per section 1711.1(b) of the Commonwealth Procurement
Code (Procurement Code),2 62 Pa.C.S. §1711.1(b), which provides, in part, that
protests must be filed no later than seven days after a contract is awarded.3 Even if this
bid protest had been filed timely, the Director determined that the following claims of
Petitioner were without merit: (1) PCG failed to include the required “Project
Managers” in its proposal, (2) PCG’s proposal failed to include references to the work
products required under the Knowledge Transfer and Transition Task, (3) PCG’s
proposal failed to describe how it will perform work order estimate reviews, and (4)
2
62 Pa.C.S. §§101-2311.
3
In full, this statutory section provides as follows:
If the protestant is a bidder or offeror or a prospective contractor, the
protest shall be filed with the head of the purchasing agency within
seven days after the aggrieved bidder or offeror or prospective
contractor knew or should have known of the facts giving rise to the
protest except that in no event may a protest be filed later than seven
days after the date the contract was awarded. If the protestant is a
prospective bidder or offeror, a protest shall be filed with the head of
the purchasing agency prior to the bid opening time or the proposal
receipt date. If a bidder or offeror, a prospective bidder or offeror or a
prospective contractor fails to file a protest or files an untimely protest,
the bidder or offeror, the prospective bidder or offeror or the
prospective contractor shall be deemed to have waived its right to
protest the solicitation or award of the contract in any forum. Untimely
filed protests shall be disregarded by the purchasing agency.
62 Pa.C.S. §1711.1(b) (emphasis added).
5
PCG failed to propose sufficient personnel. Accordingly, the Director denied
Petitioner’s bid protests.
On May 10, 2021, Petitioner filed a petition for review with this Court.4
On May 11, 2021, Petitioner filed an application for a stay, which the Court denied on
July 16, 2021.
II. Discussion
In relevant part, the RFP asked (1) offerors to “describe in narrative form
the technical plan for accomplishing [] Lot 1 [p]roject work” and “[p]rovide the
number of labor hours allocated to each task.” (Reproduced Record (R.R.) at 105a)
(emphasis added). In addition, the RFP directed that (2) offerors propose one overall
“Project Manager,” dedicated as “Key Personnel,” who would be “responsible and
accountable for controlling and monitoring all phases of projects being planned or
executed,” and, further instructed that “[t]he Lot 1 selected [o]fferor must provide
project managers across all Lot 1 lines of business who will assess changes, risks, and
issues relative to the predefined schedule, performance, and budget.” (R.R. at 120a)
(emphasis added).
Here, in its proposal, PCG did not include a complete breakdown of labor
hours needed for each task within Lot 1. Arguably, PCG also did not provide a
complete listing of all the necessary “project managers” in its proposal.
4
This Court’s scope of review of the Director’s final determination is limited to considering
“whether the determination of the [Department] [was] arbitrary and capricious, an abuse of discretion
or contrary to law.” JPay, Inc. v. Department of Corrections, 89 A.3d 756, 761 n.2 (Pa. Cmwlth.
2014).
6
A. The Labor Hours and Project Manager Portions of the RFP were Waivable
by the Department Per Se
Before the Director, Petitioner asserted that the Department could not
award PCG the contract because PCG failed to provide the complete number of labor
hours needed to complete each task with the project for Lot 1 and, thus, its proposal
was fatally “non-responsive.”
In rejecting this argument, the Director reasoned, in part:
In its proposal, PCG included labor hours for the Knowledge
Transfer and Transition Task, but not the other tasks.
However, the inclusion of the labor hours for each of the
tasks in the RFP was not a mandatory requirement for a
proposal to be deemed responsive. The RFP explicitly stated
only two mandatory requirements for a proposal to be
deemed responsive: the proposal had to be timely received
and properly signed by the offeror. All other RFP
requirements were waivable. The RFP gave the Department
sole discretion to waive any other technical or immaterial
nonconformities, allow the offeror to cure a nonconformity,
or consider the nonconformity in scoring the offeror’s
proposal.
By the terms of the RFP, the Department had discretion to
waive the nonconformity in PCG’s proposal or consider that
nonconformity in the scoring. The failure to include labor
hours did not render PCG’s proposal non-responsive to the
RFP, as PCG met the RFP’s two mandatory responsiveness
requirements.
(Final Determination at 5) (emphasis added).
Albeit in its second or “supplemental protest,” Petitioner also asserted that
the Department could not award PCG the contract because PCG failed to comply with
the RFP’s directive to list project managers for each of the lines of business under Lot
1 and, thus, its proposal was fatally “non-responsive.”
7
In finding that this contention lacked merit, the Director, in part, provided
the following rationale:
PCG complied with the RFP’s requirements by naming an
individual for each Key Personnel position listed, including
a Project Manager. Contrary to [Petitioner’s] argument, the
RFP did not require an offeror to identify the project
managers across all Lot 1 lines of business, but merely stated
that such a position would be required. Further, as set forth
above, the RFP included only two mandatory requirements
and any other noncompliance could be waived, cured, or
considered in scoring at the Department’s sole discretion.
Id. at 9 (emphasis added).
Here, regardless of any surface appeal that Petitioner’s arguments (as
reproduced above and below) may have, this Court’s decisional law supports the
proposition that the Department has discretion to decide which criteria are
“mandatory,” and which criteria are waivable, in an RFP. In Language Line Services,
Inc. v. Department of General Services, 991 A.2d 383 (Pa. Cmwlth. 2010), this Court
reviewed arguments that are substantially similar to those made by Petitioner here and
concluded:
[The rejected bidder (RB)] argues that [the agency] erred in
awarding the contract to [the successful bidder (SB)] when
its proposal failed to meet several nonwaivable requirements
set forth in the RFP. Specifically, [the RB] alleges that [the]
proposed program manager did not have the required
minimum experience, [the SB] failed to identify its customer
service personnel or demonstrate that they had the required
experience, and it failed to provide information directly
requested by the RFP. However, there were only two
mandatory responsiveness requirements in the RFP at
issue—timeliness of receipt and proper signature execution.
[The SB] met both of these requirements. Our Supreme
Court has noted that imperatives in bid documents are not
necessarily dispositive of materiality. Therefore, even if the
8
RFP in this case indicated that a proposed program manager
“must” have a certain level of experience, such language
would not necessarily make this requirement material or
nonwaivable. None of the issues [the RB] raises amount to
mandatory requirements and none were indicated as such in
the RFP.
Id. at 390 (emphasis added; internal citation omitted); accord JPay, Inc. v. Department
of Corrections, 89 A.3d 756, 766-67 (Pa. Cmwlth. 2014).
Akin to the circumstances in Language Line Services, Inc., where the RFP
stated that timely receipt and proper signature execution of the proposal were the only
two mandatory requirements, and the successful bidder complied with both of them,
here, PCG met the two mandatory responsiveness requirements, as stated in the RFP
itself—i.e., the proposal had to be timely received and properly signed by the offeror.
Consequently, in accordance with the plain language of the RFP, PCG’s failure to
include a complete breakdown of labor hours and (arguably) a complete listing of all
“project managers” was waivable by the Department per se. Following our decision
in Language Line Services, Inc., we therefore conclude that the Director did not err in
determining that the Department did not engage in arbitrary or capricious conduct, or
otherwise commit legal error, in awarding the contract to the PCG.5
5
As an additional ground for affirmance with respect to the “project manager” issue, we
conclude that, based on the plain language of the RFP, PCG properly listed the overall “project
manager,” and the RFP did not require PCG to denote, at the time of its proposal, all of the subordinate
“project managers” for each line of business within Lot 1. Instead, the RFP merely required the
successful bidder to supply such “project managers” in the event the bidder was awarded the contract
and as a post-execution obligation of that contract. See R.R. at 120a (stating that “[t]he Lot 1 selected
[o]fferor must provide project managers across all Lot 1 lines of business who will assess changes,
risks, and issues relative to the predefined schedule, performance, and budget”) (emphasis added).
Thus, consistent with the unambiguous terms of the RFP, PCG satisfied the requirement of the RFP
with respect to the “project manager” issue.
Further, the Director concluded that the “project manager” issue was waived because
Petitioner failed to raise it in a timely fashion, reasoning as follows:
(Footnote continued on next page…)
9
The Procurement Code states that an offeror shall file a protest within
seven days after it knew or should have known of the facts giving rise
to the protest “except that in no event may a protest be filed later than
seven days after the date the contract was awarded.” 62 Pa.C.S.
§1711.1(b). “Untimely protests shall be disregarded by the purchasing
agency.” Id.
Here, [Petitioner] acknowledges that it was notified of the contract
award and received a debriefing and Recommendation for Contractor
Selection memorandum on January 29, 2021. Nonetheless, [Petitioner]
argues its [s]econd [p]rotest should be accepted because the
Department provided the contract to [Petitioner] on February 4, 2021.
The Department provided a copy of the contract to [Petitioner] as soon
as practicable and [Petitioner] has failed to demonstrate any bad faith
on behalf of the Department. Although [Petitioner] relies on the
Procurement Handbook as support for its claim that the Department
should have provided it with the contract sooner, the Department
complied with the Procurement Handbook by notifying [Petitioner] in
writing of the award and opportunity for debriefing.
Moreover, . . . [n]o time frame exists within which the Department is
required to provide a copy of the awarded contract to a disappointed
offeror. As such, the Department did not act improperly by providing
the contract to [Petitioner] on February 4, 2021, and [Petitioner’s]
[s]econd [p]rotest is untimely because it was filed on February 11,
2021, more than seven days after the contract was awarded.
(Final Determination at 9) (internal citations omitted). We agree. Because Petitioner raised this issue
more than seven days after the contract was awarded, in a second or supplemental protest, the issue
is untimely and waived. See Premier Comp Solutions, LLC v. Department of General Services, 949
A.2d 381, 384-85 (Pa. Cmwlth. 2008) (noting that pursuant to section 1711.1(b) of the Procurement
Code, a “prospective contractor” was required to challenge the contract within seven days of the
award of the contract and concluding that the prospective contractor waived any protest to the
contract, even when “it was impossible for it to file [a protest] within seven days after the date the
contract was awarded because it was unaware that the award was made for at least three months”).
Notably, Petitioner could have raised the “project manager” issue in a timely manner in its first protest
because, at that point in time, Petitioner had express knowledge that PCG did not provide a listing for
all the personnel that Petitioner believed was required by the RFP, and the terms of the actual contract
that was awarded to PCG does not negate or otherwise question this knowledge.
10
B. Alternatively, the Labor Hours and Project Manager Portions of the RFP
were Waivable by the Department Pursuant to Gaeta v. Ridley School District,
788 A.2d 363 (Pa. 2002)
Here, even if the labor hours and project manager information requested
by the RFP were mandatory requirements, we would nonetheless conclude that these
requirements were waivable by the Department based on our Supreme Court’s decision
in Gaeta.
Traditionally, under Pennsylvania law, if a term or condition in an RFP is
“mandatory,” a bidder or offeror must strictly adhere to the requirement in order to be
awarded a public contract. See Dragani v. Borough of Ambler, 37 A.3d 27, 31 (Pa.
Cmwlth. 2012). Although the failure to include “mandatory,” requisite information in
an RFP generally disqualifies an offeror from an award of a contract,
courts have not eliminated the discretionary aspect of
executive decision making when the government is
confronted with a non-compliant bid that it might choose to
consider to achieve effective utilization of the public fisc. In
describing the available latitude, conceptions of materiality
and competitive advantage have been utilized, both of which
[] are closely tied to the legislative objectives underlying
competitive bidding statutes. Accordingly, the following
two considerations are widely accepted as central in
determining whether a non-compliant bid for public work
may be accepted or cured:
first, whether the effect of a waiver would be to deprive the
municipality of its assurance that the contract will be entered
into, performed and guaranteed according to its specified
requirements, and second, whether it is of such a nature that
its waiver would adversely affect competitive bidding by
placing a bidder in a position of advantage over other bidders
or by otherwise undermining the necessary standard of
competition.
Gaeta, 788 A.2d at 367-68 (internal citations omitted).
11
In Gaeta, our Supreme Court determined that the above “formulation
represents an apt synthesis of prevailing Pennsylvania precedent on the assessment of
the availability of waiver and cure in the public works setting,” and it adopted such test
as the basis for determining whether a proposal is fatally defective or, in other words,
“non-responsive.” Id. at 368. Stated somewhat differently, “a bid irregularity may
only be clarified or disregarded as a waivable defect if the effect of a waiver of that
term: (1) would not deprive the bid solicitor of an adequate assurance that the contract
would be performed according to its specified requirements and (2) would not
advantage the bidder over the other bidders.” Cardiac Science, Inc. v. Department of
General Services, 808 A.2d 1029, 1034 (Pa. Cmwlth. 2002).
1. Labor Hours
Here, regarding the labor hours issue, the Director disposed of Petitioner’s
arguments as follows:
[A]lthough PCG may not have provided the specific
breakdown of labor hours for the other tasks, PCG included
detailed information regarding its experience and planned
approach for the work to be performed pursuant to the RFP,
including information on each resource for each functional
area of the RFP. From this information and PCG’s proposal
as a whole, the Department was able to ensure the contract
would be adequately staffed to perform the requirements of
the RFP.
PCG’s failure to include this information did not prevent the
Department from performing a fair evaluation of the two
proposals. The Department evaluated the proposals in
accordance with the evaluation factors set forth in the RFP,
including soundness of approach, contractor and personnel
qualifications, and understanding the project. It is axiomatic
that each offeror will include differing information within its
proposal. Contrary to [Petitioner’s] claim, this does not
12
prevent the Department from conducting a fair evaluation, as
the proposals are scored using the same evaluation criteria,
which ensures the Department conducts an objective
evaluation.
[Petitioner] has also failed to satisfy its burden of
demonstrating that PCG’s failure to include labor hour
breakdowns conferred a competitive advantage on PCG. See
Gaeta [], 788 A.2d [at] 366 []. [Petitioner] obtained a higher
technical score than PCG, demonstrating that PCG did not
receive any advantage by not including the labor hour
breakdowns. For these reasons, [Petitioner] has failed to
satisfy its burden of demonstrating that PCG’s proposal was
non-responsive and was improperly evaluated by the
Department and this claim is without merit.
(Final Determination at 5-6) (internal citations omitted).
In dismissing Petitioner’s related argument that, due to PCG’s failure to
include a labor hour breakdown for all the required tasks, the Department could not
determine whether PCG’s proposed Full Time Equivalents (FTEs) could realistically
accomplish those tasks, the Director opined, in part:
The RFP did not require a specific level of staffing. In fact,
in response to a question regarding the current staffing levels,
the Department advised that “current staffing levels do not
reflect the services required by the RFP. Offerors must
propose the level of effort necessary to achieve the
requirements of the RFP.” . . .
[Petitioner’s] decision to propose a higher number of FTEs
than PCG does not lead to the conclusion that PCG’s
proposed staffing is unrealistic. . . . [Petitioner] cannot
replace its judgment for that of the Department and . . . I am
barred from conducting a post-selection reweighing of the
proposals. The evaluation committee had discretion to
review PCG’s overall submission, including its staffing
levels, and could determine from the information presented
that PCG was capable of providing the services sought by the
RFP. This decision cannot be overturned unless it was
clearly erroneous, arbitrary, capricious, or contrary to law
13
and [Petitioner] has failed to satisfy its burden of meeting that
standard here.
(Final Determination at 6-7.)
In its appellate brief before this Court, Petitioner seeks to impugn the
Director’s rationale, arguing that the Department’s acceptance and evaluation of PCG’s
non-responsive proposal prevented a fair evaluation of the proposals. More
specifically, Petitioner asserts that it submitted a complete responsive offer, while PCG
did not, and, for support, provides charts detailing its projected hours for the specific
tasks in the proposal vis-à-vis PCG. See Pet’r’s Br. at 22-23, 25. From this, Petitioner
states that “whereas [Petitioner’s] proposal included a labor hour breakdown for all
tasks, totaling 545,618 hours, to substantiate the assumptions underlying its proposed
approach using an average of 62 FTEs,” “PCG[]’s proposal only included a labor hour
breakdown for only one task, totaling 11,820 hours, and failed to provide evaluators
with the quantifiable support required by the RFP to justify the use of only 42 FTEs.”
Id. at 28. Petitioner asserts that “PCG[] provided no labor hours for the actual work
requested in the RFP” and, instead, “provided hours only for transition activities, which
is at the most for the first six months of a five-year contract.” Id. at 28-29.
Further, Petitioner contends that, “[w]ithout the required labor hour
breakdown, [the Department] was unable to determine if PCG[] could actually perform
the work promised for the price proposed,” and “the omission of a labor hour
breakdown by PCG[] deprived the [Department] of the ability to determine if PCG[]
possessed an adequate understanding of the project and proposed adequate staff to meet
all requirements.” Id. at 26. In this vein, Petitioner maintains that, “while a technical
evaluator reviewing [its] labor hour breakout—at the task and subtask level—could
draw a conclusion regarding [Petitioner’s] understanding of each discrete requirement
and whether [its] staffing assumptions were reasonable, that same evaluator could not
14
draw the same conclusion in regards to PCG[]’s proposal simply because the hours
were not there.” Id. at 29 (emphasis in original). Petitioner posits that, therefore,
“[a]ny conclusion [by the Department] regarding PCG[]’s understanding of the number
of hours it would take to perform the subtasks would be inherently speculative.” Id. at
29 (emphasis in original).
Somewhat relatedly, Petitioner claims that PCG’s failure to provide the
necessary labor hours breakdown deprived the Department of reasonable assurances
that it could perform the contract and afforded PCG a competitive advantage; thus, the
omission could not be waivable pursuant to Gaeta. In this regard, Petitioner contends
that “[h]ad [Petitioner] known that it was not required to justify its staffing model,
coupled with a metric tied to the reasonable scope of the work, it too could have
proposed to the [Department] a low price unconnected to its proposed labor hours,”
and ultimately provided “a lower bid to the [Department],” while, on the other hand,
PCG’s “[c]oncealment of its labor hour breakdown allowed [it] to submit a low-cost
proposal unchecked by any realism.” Id. at 40, 42. In addition, Petitioner argues that
“[it] was prejudiced because PCG[]’s technical proposal was scored higher than it
should have been,” and that had the Department “properly evaluated PCG[]’s
submission, [] PCG[]’s technical score, if not deemed non-responsive, should have at
a minimum been much reduced,” thereby providing PCG with “a direct and plain
competitive advantage.” Id. at 41.
In its brief, intervenor PCG, emphasizing its “extensive proposal,
spanning more than 1,000 pages,” id. at 6, argues that, even if the breakdown of hours
was a mandatory requirement, the Department properly determined that it was
waivable under Gaeta. In so doing, PCG reiterates the Director’s findings that the
15
Department had adequate assurances that PCG would fully and satisfactorily perform
the contract, and, additionally contends that
[Petitioner] does nothing more than disagree with the
Department’s conclusion, but the Department’s conclusion
was reasonable and is entitled to deference. PCG’s proposal
contained more than 250 pages (plus appendices with work
samples and work plans) in response to the “Tasks” section
of the RFP. PCG specifically described how each of the
required tasks would be performed . . . .
Nor was the Department in the dark about the level of staffing
that PCG believed to be necessary. PCG proposed to use
41.86 full-time employees, which amounts to more than
435,000 labor-hours over the five-year term of the contract.
PCG also provided the Department with a labor hours
breakdown, albeit by position rather than task. There, PCG
identified the number of expected hours worked for each
position and for each year of the contract term and each
option year.
Ultimately, however—and as the Department rightly
concluded—PCG’s hours estimates were immaterial because
the contract is a fixed-price contract, and PCG is obligated to
complete the specified work for a fixed price regardless of
the number of hours required.
Intervenor’s Br. at 27-28.
For its part, the Department largely echoes the arguments of PCG and adds
that, with respect to the tasks for Lot 1, its “needs are highly variable from year to year”
and that “for many tasks, the number of labor hours is unknown.” (Resp’t’s Br. at 33.)
According to the Department: “For example, the number of hours for the Defect
Analysis and Resolution Support task is unknown because the very existence of such
defects and their nature and scope are unknown.” Id.
Here, assuming, arguendo, the labor hours criteria was mandatory, the
Department, acting pursuant to Gaeta, could waive PCG’s omission if the effect of the
16
waiver would not deprive the Department of the assurance that the contract would be
entered and performed by PCG, and the waiver would not confer a competitive
advantage on PCG when compared to Petitioner. For the reasons set forth above in the
Director’s final determination and the arguments made by the Department and PCG,
we conclude that the omission does not tend to undermine PCG’s promise to perform
the contract or that PCG obtained an unfair competitive advantage. Particularly, as
detailed by the Director, PCG, and the Department, PCG provided lengthy
documentation that sufficiently outlined and explained its planned approach to
accomplish the “tasks” section of the project, the level of effort necessary to complete
the specified requirements of the project, the number of projected employees by
position and total amount of labor hours for each employee by position. Moreover,
given the nature of the project, the total amount of labor hours was inherently
indeterminable, in the sense of mathematical precision and, hence, an estimated amount
of total labor hours needed to fulfill the contract was naturally speculative,
necessitating an exercise of business judgment and prediction on the part of Petitioner
and PCG. Although Petitioner may have proposed a lesser amount of total labor hours
and average FTEs than PCG, and projected hours for more discrete classes of work
tasks than PCG, this does not equate to PCG having received an unfair advantage.
Indeed, of the two proposals, Petitioner’s proposal obtained a higher technical score,
which subsumed an evaluation of projected labor hours; Petitioner proceeded to the
BAFO phase and submitted a cost BAFO; and, most importantly, PCG is bound by the
overall contract price, regardless of how many hours it would actually take in the future
to fulfill the obligations of the contract. Standing alone, the fact that Petitioner bid a
higher yearly and total price for the five-year fixed-term contract does not demonstrate
any impropriety in the bidding process or by the Department in assessing the proposals.
17
Therefore, we conclude that PCG provided the Department with adequate
information upon which the Department could be assured that PCG would perform the
contract according to the RFP’s specified requirements and that PCG did not obtain an
unfair competitive advantage. As such, the Director did not err in determining that the
Department did not engage in arbitrary or capricious conduct, or otherwise commit
legal error, in awarding the contract to PCG.
2. Project Managers
Here, the Director concluded that, notwithstanding its determination that
Petitioner waived the “project managers” issue and that PCG fully complied with the
plain language and requirements of the RFP, see supra note 5, Petitioner’s arguments
failed on the merits. In so determining, the Director proffered the following rationale:
As to Project Management, the RFP stated, “[t]he Lot 1
selected Offeror must provide project managers across all
Lot 1 lines of business who will assess changes, risks, and
issues relative to, the predefined schedule, performance, and
budget.” The RFP also instructed offerors to include the
names and resume or education and experience for Key
Personnel, which included the following: Executive Account
Director, Project Manager, Requirements Manager, Quality
Assurance/Quality Control Manager, Functional Lead,
Testing Manager, and Training Manager. The names of non-
Key Personnel were only required if available.
....
Moreover, since the RFP did not require an offeror to identify
the project managers across all Lot 1 lines of business, PCG
could not have obtained a competitive advantage by not
including such information. Concomitantly, [Petitioner’s]
decision to include a project manager for each line of
business, which it argues resulted in it proposing a higher
cost, did not put it at an unfair disadvantage.
(Final Determination at 9-10.)
18
In its appellate brief, Petitioner asserts that it submitted a complete
responsive offer, and PCG did not, and, therefore, the Department erred in awarding
the contract to Petitioner. With respect “to the project managers for the Lines of
Business,” Petitioner argues that “PCG[] proposed only an overarching Project
Manager, failing to propose dedicated project managers for each of the four Lines of
Business under Lot 1 as required by the RFP.” (Pet’r’s Br. at 28.) Petitioner maintains
that “[t]his was not simply an omission on an organizational chart” because
“[i]nclusion of these additional project managers . . . increased [Petitioner’s] price in
excess of $7 million, accounting for roughly 9.15% of its bid price.” Id. Petitioner
argues that, “without proposing the required Line of Business project managers, the
[Department] was unable to discern that PCG[] proposed the required (let alone
sufficient) staff to ensure that tasks were managed and completed in accordance with
the requirements of the contract.” Id. at 33-34.
In asserting PCG’s omitted information that was not waivable per Gaeta,
Petitioner continues:
With regard to the missing project managers, PCG[]
identified only a single lead Project Manager [but] failed to
propose a project manager position overseeing any of the
Lines of Business; this omission meant that there is no one
within the PCG[] organization who has dedicated
responsibility to assess changes, risks, and issues relative to
the predefined schedule, performance, and budget for each
line of business, as is required. Without this required role,
the [Department] ha[d] no single point of contact within each
Line of Business and would have to interface with the
different thread managers (Requirements Manager, Testing
Manager, Training Manager, Quality Assurance/Quality
Control Manager) based on the activity being discussed.
This is not an efficient or workable system; but more
importantly, it deviated materially from what was required
by the RFP.
19
(Pet’r’s Br. at 35.)
In addition, Petitioner asserts that the Director “incorrectly concluded that
the RFP did not require a lead Project Manager plus multiple Lines of Business project
managers, misreading the RFP and ignoring the textual significance of the RFP
requirement ‘The Lot 1 selected Offeror must provide project managers [plural] across
all Lot 1 lines of business.’” Id. at 42 (emphasis and brackets in brief). According to
Petitioner, “the RFP contemplated and anticipated that each offeror would include
multiple project managers for the Lines of Business in addition to the overall Project
Manager for the contract.” Id.
In its brief, PCG contends the “Director and the Department [] reasonably
concluded that PCG would not receive an unfair competitive advantage as a result of
omitting a breakdown of hours by task or the specific names of individual project
managers.” (Intervenor’s Br. at 29.) In this regard, PCG notes that its “proposal clearly
acknowledged that it was required to provide project managers across all Lot 1 lines of
business and PCG never took exception to, or requested relief from, that requirement”
and, thus, “[t]his requirement became part of PCG’s contract with the [Department].”
Id. at 29-30. In the words of PCG:
In sum, PCG submitted a proposal that included all staff
required to perform the full scope of the contract, without
exception, including the specifically identified Project
Manager, and others who would serve as project managers
across all Lot 1 lines of business. PCG did not get any price
advantage because it did provide all project managers for the
fixed price included in its proposal; it simply did not have to
name them. This confers no competitive advantage.
Id. at 30.
20
In support of the Director’s final determination, the Department’s
contentions mirror those advanced by PCG. Further, the Department contributes the
following elaboration:
Contrary to [Petitioner’s] assertion, PCG[] was not required
to name a specific project manager for each line of business
within the scope of Lot 1 of [the] RFP[.] In actuality, [the
Department] only required that an offeror specifically
identify individuals for those positions designated as Key
Personnel. For non-Key Personnel, offerors were required to
identify individuals by name, only “if available.” The
Department identified the following as Key Personnel:
Executive Account Director, Project Manager, Requirements
Manager, Testing Manager, Quality Assurance/Quality
Control Manager, Functional Lead, and Training Manager.
Each of these roles was singular, requiring only one person
in each key role. The Project Manager’s prescribed
responsibilities also plainly reference a single individual
performing in that role. PCG[] identified an individual for
each of these Key Personnel positions, including a Project
Manager. As such, PCG[] fully complied with the only RFP
requirement for specifically identifying an individual as a
project managers by identifying the overall Project Manager
as part of its response to Key Personnel.
Id. at 39-40 (emphasis in original).
Here, assuming, arguendo, the project managers criteria was mandatory,
the Department, acting pursuant to Gaeta, could waive PCG’s omission if the effect of
the waiver would not deprive the Department of the assurance that the contract would
be entered into and performed by PCG, and the waiver would not confer a competitive
advantage on PCG when compared to Petitioner. Initially, the RFP directed that
offerors propose one overall “Project Manager,” dedicated as “Key Personnel,” who
would be “responsible and accountable for controlling and monitoring all phases of
projects being planned or executed,” and further instructed that “[t]he Lot 1 selected
[o]fferor must provide project managers across all Lot 1 lines of business who will
21
assess changes, risks, and issues relative to the predefined schedule, performance, and
budget.” (R.R. at 120a.) In accordance with our observation above, we conclude that,
consistent with the unambiguous terms of the RFP, PCG—at the very least—
substantially complied by listing the overall “project manager” and all other positions
identified as “Key Personnel.” See supra note 5. Moreover, as previously stated, PCG
provided lengthy documentation that sufficiently outlined and explained its planned
approach to accomplish the “tasks” section of the project, the level of effort necessary
to complete the specified requirements of the project, the number of projected
employees by position and total amount of labor hours for each employee by position,
albeit not by a specified task or line of business. On this note, even if the RFP required
PCG to list subordinate or “second tier” or “sub-project managers” for each business
that was headed by an individual identified as “Key Personnel”—i.e., Executive
Account Director, Project Manager, Requirements Manager, Testing Manager, Quality
Assurance/Quality Control Manager, Functional Lead, and Training Manager—we are
unable to discern how PCG’s omission in this regard placed PCG’s assurance that it
would satisfactorily complete the contract into jeopardy or conferred PCG with an
unfair advantage. Specifically, PCG did not obtain a price advantage because it is
bound by its proposed price, irrespective of how many “project managers” are needed,
and PCG attested that it will provide all the necessary and enumerated “project
managers” when it comes time for performance of the contract.
Therefore, we conclude that PCG provided the Department with adequate
information upon which the Department could be assured that PCG would perform the
contract according to the RFP’s specified requirements and that PCG did not obtain an
unfair competitive advantage. As such, the Director did not err in determining that the
22
Department did not engage in arbitrary or capricious conduct, or otherwise commit
legal error, in awarding the contract to the PCG.
III. Conclusion
Accordingly, for the above-stated reasons, we affirm the April 23, 2021
final order and determination of the Department, acting by and through the Director.
________________________________
PATRICIA A. McCULLOUGH, Judge
23
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
KPMG LLP, :
Petitioner :
: No. 491 C.D. 2021
v. :
:
Commonwealth of Pennsylvania, :
Department of Human Services, :
Respondent :
ORDER
AND NOW, this 2nd day of May, 2022, the April 23, 2021 final
determination of the Commonwealth of Pennsylvania, Department of Human
Services, is hereby AFFIRMED.
________________________________
PATRICIA A. McCULLOUGH, Judge