Vista Health Plan, Inc. v. DHS

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