## Facts

- The Department of Defense, through the TRICARE Management Activity (TMA), issued a request for proposals (RFP) for the TRICARE Dual Eligible Fiscal Intermediary Contract (TDEFIC) to provide claims-processing services for beneficiaries eligible for both TRICARE and Medicare.
- The RFP provided that proposals would be evaluated under three equally weighted factors: (1) technical merit (including claims processing and data access), (2) past performance, and (3) cost.
- PGBA, LLC (PGBA) and Wisconsin Physicians Service Insurance Corporation (WPS) submitted proposals.
- After discussions with TMA, both offerors submitted revised final proposals.
- During discussions, TMA raised questions about access to beneficiary claims-processing data. In its final proposal, PGBA responded by giving specific details, including how many government employees would have access to PGBA’s data.
- TMA evaluated the final proposals using a multi-stage evaluation process that included a price/cost analysis.
- WPS’s evaluated cost was higher than PGBA’s evaluated cost.
- In its evaluation and source selection decision, TMA:
  - penalized PGBA for the specificity of its data-access plan, even though the agency had requested clarification during discussions;
  - rated PGBA and WPS the same on the claims-processing subfactor;
  - made a mistaken calculation regarding how much WPS could recoup through Medicare “cross-over” fees; and
  - concluded that WPS’s higher cost was justified by greater technical merit.
- TMA awarded the TDEFIC contract to WPS.
- PGBA filed a post-award bid protest in the U.S. Court of Federal Claims under 28 U.S.C. § 1491(b), seeking to set aside the award and obtain injunctive relief.
- By the time the court resolved the merits, the TDEFIC procurement process had been underway for approximately 18 months.

## Issues

1. Did TMA commit material evaluation or cost/price-analysis errors that made the award decision arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law under 28 U.S.C. § 1491(b)?
2. If TMA committed such errors, did PGBA show competitive prejudice (i.e., a substantial chance of receiving the award but for the errors)?
3. If PGBA proved error and prejudice, should the court grant permanent injunctive relief or deny an injunction and instead award bid preparation and proposal costs under 28 U.S.C. § 1491(b)(2)?

## Decision

- The Court of Federal Claims held that the government committed errors in the procurement that materially affected the competition adversely to PGBA.
- The court found significant flaws in TMA’s evaluation, including the treatment of PGBA’s data-access approach (where PGBA was effectively downgraded for providing the specificity the agency had requested) and a mistake in calculating the cost impact of WPS’s expected Medicare cross-over fee recoupment.
- The court concluded that the identified errors were prejudicial to PGBA in light of the close best-value judgment and the role the flawed technical and cost findings played in the tradeoff.
- Despite PGBA’s success on the merits, the court denied injunctive relief and declined to set aside the award to WPS, citing equitable considerations that included the procurement’s advanced stage and the public interest in uninterrupted performance of TRICARE-related claims-processing services.
- As the alternative statutory remedy, the court awarded PGBA its reasonable bid preparation and proposal costs under 28 U.S.C. § 1491(b)(2).

## Legal Principles

- Bid protests in the Court of Federal Claims are reviewed under 28 U.S.C. § 1491(b), using the Administrative Procedure Act standard incorporated by § 1491(b)(4): whether the agency action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
- An agency must evaluate proposals based on the solicitation’s stated evaluation factors and must make judgments supported by the administrative record.
- A protester must show both (1) a significant procurement error and (2) competitive prejudice, commonly framed as a substantial chance of award absent the error.
- When an evaluation contains material mistakes affecting technical scoring, cost analysis, or the best-value tradeoff, the award decision may be set aside as irrational or contrary to law if the errors affect the outcome.
- Injunctive relief in bid protests is discretionary and turns on equitable factors, including the protester’s harm, the balance of harms, and the public interest; even proven error and prejudice do not require an injunction.
- If the court finds procurement error and prejudice but denies injunctive relief, 28 U.S.C. § 1491(b)(2) authorizes an award of bid preparation and proposal costs as a monetary remedy.

## Conclusion

In *PGBA, LLC v. United States*, the Court of Federal Claims found that TMA’s TDEFIC evaluation and tradeoff decision contained material, prejudicial errors—including how it assessed PGBA’s data-access details and how it calculated cost effects tied to WPS’s cross-over fee recoupment—but the court declined to disturb the award to WPS due to equitable and public-interest considerations and instead granted PGBA recovery of reasonable bid preparation and proposal costs under § 1491(b)(2).


PGBA, LLC v. United States, No. 03-2773-C (Apr. 22, 2004)