Case: 19-2225 Document: 69 Page: 1 Filed: 03/31/2020
United States Court of Appeals
for the Federal Circuit
______________________
WELLPOINT MILITARY CARE CORP.,
Plaintiff-Appellant
v.
UNITED STATES, OPTUM PUBLIC SECTOR
SOLUTIONS, INC.,
Defendants-Appellees
______________________
2019-2225
______________________
Appeal from the United States Court of Federal Claims
in No. 1:19-cv-00676-LKG, Judge Lydia Kay Griggsby.
______________________
Decided: March 31, 2020
______________________
MARK COLLEY, Arnold & Porter Kaye Scholer LLP,
Washington, DC, argued for plaintiff-appellant. Also rep-
resented by KARA L. DANIELS, MICHAEL EDWARD SAMUELS,
NATHANIEL EDWARD CASTELLANO.
STEVEN MICHAEL MAGER, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for defendant-appellee
United States. Also represented by JOSEPH H. HUNT,
ROBERT EDWARD KIRSCHMAN, JR., DOUGLAS K. MICKLE.
Case: 19-2225 Document: 69 Page: 2 Filed: 03/31/2020
2 WELLPOINT MILITARY CARE CORP. v. UNITED STATES
JASON ANDREW CAREY, Covington & Burling LLP,
Washington, DC, argued for defendant-appellee Optum
Public Sector Solutions, Inc. Also represented by KEVIN
BARNETT, MARK MOSIER, KAYLEIGH SCALZO, EVAN RYERSON
SHERWOOD, BROOKE STANLEY.
______________________
Before DYK, TARANTO, and CHEN, Circuit Judges.
DYK, Circuit Judge.
This case involves a contract awarded by the United
States Department of Veterans Affairs (“VA”) to Optum
Public Sector Solutions (“OPSS”) for developing and man-
aging the VA’s program to provide veterans access to com-
munity-based healthcare in Region 3 of the VA’s
Community Care Network. WellPoint Military Care Cor-
poration (“WellPoint”), an unsuccessful bidder, brought a
bid protest action in the Court of Federal Claims (“Claims
Court”) challenging the award. The Claims Court found
that the VA conducted a reasonable best value determina-
tion, denied WellPoint’s request for injunctive relief, and
dismissed WellPoint’s bid protest challenge. We affirm.
BACKGROUND
On December 28, 2016, the VA issued Request for Pro-
posal No. VA791-16-R-0086 (“the Solicitation”) seeking
proposals to develop and manage community-based
healthcare networks in the VA’s Community Care Net-
work. The Solicitation stated that the Community Care
Network was divided into four geographic regions, and that
the VA contemplated awarding a maximum of one single-
award, firm-fixed-price indefinite-delivery, indefinite-
quantity contract per region. The Solicitation explained
that the VA would conduct a negotiated best value deter-
mination based on four factors: (1) Technical, (2) Past Per-
formance, (3) Socioeconomic Concerns, and (4) Price. The
Solicitation stated that “[f]actors 1, 2, and 3 are listed in
descending order of importance,” and that “[t]he non-price
Case: 19-2225 Document: 69 Page: 3 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 3
factors . . . , when combined, are significantly more im-
portant than Price.” J.A. 542. The Technical factor was
further divided into three subfactors, (1) Network Manage-
ment and Claims Adjudication, (2) Management Approach,
and (3) Corporate Experience/Capability. The Solicitation
stated that “subfactors 1 and 2 are of equal importance,
and both individually are more importan[t] than subfactor
3.” Id. With respect to subfactor 3, the Solicitation re-
quired that each bidder:
Provide a general corporate background, experi-
ence, and qualifications of the organization to in-
clude any offeror’s joint venture partner(s) or
affiliate(s)/parent organization(s) if the infor-
mation provided shows that the workforce, man-
agement, facilities or other resources of the joint
venture partner(s), affiliate(s)/parent organiza-
tion(s) will bear on the likelihood of successful per-
formance by the Offeror.
J.A. 536.
OPSS and WellPoint submitted bids for Region 3 of the
Community Care Network (“Region 3”). 1 Ultimately, the
evaluation of the two competing bidders was as follows:
1 Region 3 includes Oklahoma, Arkansas, Louisiana,
Tennessee, Mississippi, Alabama, Georgia, South Carolina,
Florida, Puerto Rico, and the United States Virgin Islands.
Case: 19-2225 Document: 69 Page: 4 Filed: 03/31/2020
Case: 19-2225 Document: 69 Page: 5 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 5
On May 8, 2019, WellPoint filed a post-award bid pro-
test in the Claims Court seeking declaratory and injunctive
relief. As relevant to this appeal, WellPoint argued before
the Claims Court (1) that “the VA’s best value determina-
tion and trade-off analysis were flawed” because the VA
understated WellPoint’s relative cost savings in the Price
factor; and (2) that “the VA treated offerors unequally
when evaluating the solicitation’s Corporate Experi-
ence/Capability Subfactor,” i.e., that the VA gave greater
credit to OPSS, the winning bidder, for its overall corporate
experience and capability than WellPoint, a losing bidder.
J.A. 2.
The parties filed cross-motions for judgment on the ad-
ministrative record. The Claims Court rejected WellPoint’s
argument as to the cost savings evaluations. The Claims
Court also rejected WellPoint’s unequal treatment claim,
finding that WellPoint had failed to demonstrate that the
VA committed a prejudicial error because the SSA’s award
decision did not reflect any unequal treatment, and that
the SSA’s evaluation of the proposals was “reasonabl[e]”
and “consistent with the requirements.” J.A. 19.
The Claims Court concluded that “the VA conducted a
reasonable evaluation, reasonably found that [OPSS] pre-
sented the best value to the government, and that the VA
made a sound decision to award the Contract to [OPSS],”
denied WellPoint’s request for injunctive relief, and dis-
missed the case. J.A. 23–24. WellPoint appeals, and we
have jurisdiction under 28 U.S.C. § 1295(a)(3).
DISCUSSION
We review the Claims Court’s assessment of agency ac-
tions de novo under the standard set forth in the Adminis-
trative Procedure Act (“APA”). Comint Sys. Corp. v. United
States, 700 F.3d 1377, 1381 (Fed. Cir. 2012). Under that
standard, an agency action must be set aside if it is “arbi-
trary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(A). “[A] bid
Case: 19-2225 Document: 69 Page: 6 Filed: 03/31/2020
6 WELLPOINT MILITARY CARE CORP. v. UNITED STATES
award may be set aside if either: (1) the procurement offi-
cial’s decision lacked a rational basis; or (2) the procure-
ment procedure involved a violation of regulation or
procedure.” Impresa Construzioni Geom. Domenico Garufi
v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001). Im-
portantly, the APA requires that “due account shall be
taken of the rule of prejudicial error.” 5 U.S.C. § 706. “To
prevail in a bid protest, a protestor must show a significant,
prejudicial error in the procurement process.” Alfa Laval
Separation, Inc. v. United States, 175 F.3d 1365, 1367 (Fed.
Cir. 1999). We review the legal standard for prejudice ar-
ticulated by the Claims Court de novo, and we review the
Claims Court’s underlying factual findings for clear error.
Bannum Inc. v. United States, 404 F.3d 1346, 1353–54
(Fed. Cir. 2005).
I
WellPoint’s first argument (relating to the cost savings
calculation) boils down to an assertion that the VA commit-
ted a mathematical error. The VA assigned WellPoint’s
proposal a cumulative weighted score of 0.24398, meaning
that WellPoint’s proposed prices were “about 24.398% less
than what the Government expect[ed] to pay.” J.A. 2041.
The VA assigned OPSS’s proposal a cumulative weighted
score of 0.18968, which translated to prices “about 18.968%
less than [what] the Government expect[ed] to pay.” Id.
The SSA concluded that “WellPoint’s score represents . . .
a 5.430% additional cost savings over what [OPSS] pro-
posed,” i.e., that the absolute difference in savings between
the two proposals was 5.430%. Id. WellPoint argues that
the SSA was required to use the relative difference in sav-
ings between WellPoint’s proposal and OPSS’s proposal:
28.627%. But the methodology that WellPoint advances is
merely a different way of describing the same comparison.
The VA did not act irrationally by choosing one of two
equivalent methodologies. Indeed, there is a third way of
comparing the magnitude of the cost savings—by compar-
ing the expected cost savings under WellPoint’s proposal
Case: 19-2225 Document: 69 Page: 7 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 7
(said to be $134 million) to the overall contract price (said
to be $2.47 billion). This comparison shows that it is the
same 5.430% savings, additionally confirming reasonable-
ness of the agency’s methodology.
WellPoint also asserts that the SSA failed to recite the
“true magnitude,” i.e., the dollar amount of the cost sav-
ings, of each proposal. Appellant’s Br. 40. However, noth-
ing in the Solicitation, the Federal Acquisition Regulation
(“FAR”), or the Competition in Contracting Act of 1984, 41
U.S.C. § 3306(c), requires the SSA to recite dollar amounts
in an award decision, dollar amounts that were uncertain
at the time of contract formation, given the indefinite-de-
livery, indefinite-quantity nature of the contract.
We conclude that the Claims Court correctly found that
the “VA’s methodology for evaluating price in connection
with this procurement was both reasonable and in accord-
ance with the terms of the Solicitation.” J.A. 20.
II
A
WellPoint next argues that the VA “treated WellPoint
and OPSS disparately” when evaluating their proposals
under the Corporate Experience/Capabilities subfactor.
Appellant’s Br. 46. FAR § 1.602-2(b) requires SSAs to give
“impartial, fair, and equitable treatment” to all govern-
ment contractors. See Office Design Grp. v. United States,
No. 19-1337, slip op. at 7 (Fed. Cir. 2020). This court has
recently held that to demonstrate unequal treatment, “a
protestor must show that the agency unreasonably down-
graded its proposal for deficiencies that were ‘substantively
indistinguishable’ or nearly identical [to] those contained
in other proposals’” or that “the agency inconsistently ap-
plied objective solicitation requirements between it and
other offerors.” Id. at 7 (collecting cases). “To prevail, [the
protestor] must show that [the] instance of unequal treat-
ment was prejudicial.” Id. at 10. The Claims Court
Case: 19-2225 Document: 69 Page: 8 Filed: 03/31/2020
8 WELLPOINT MILITARY CARE CORP. v. UNITED STATES
rejected WellPoint’s unequal treatment claim, finding that
WellPoint’s alleged error “did not prejudice WellPoint with
regard[] to the VA’s award decision.” J.A. 18.
The proposals here were evaluated by the VA utilizing
a Source Selection Plan (“SSP”) approved by the SSA. 2 The
SSP stated that the proposals were evaluated using a
“three-tier approach [that] consist[ed] of a Source Selection
Evaluation Board (SSEB), Source Selection Advisory
Council (SSAC) and the Source Selection Authority (SSA).”
J.A. 1935.
The first tier of review was the SSEB. The SSEB con-
sisted of a Chairperson, legal counsel, and four evaluation
teams. The four evaluation teams corresponded to the four
factors identified in the Solicitation: (1) the Technical Eval-
uation Team (“TET”); (2) the Past Performance Evaluation
Team; (3) the Socioeconomic Evaluation Team; and (4) the
Price Evaluation Team. The SSEB’s report consisted of
four individual reports prepared by the four separate eval-
uation teams. We are concerned here with the TET report
and particularly the portion of the report dealing with the
Corporate Experience/Capability subfactor.
The second tier of review was the SSAC. The SSAC
consisted of a Chairperson, legal counsel, and three other
members. The SSAC was responsible for reviewing the
SSEB’s report “to ensure the evaluation process follow[ed]
the evaluation criteria and the ratings [were] appropriately
and consistently applied” and “consolidat[ing] the advice
2 Although the SSP is an internal agency document
that was not part of the Solicitation, WellPoint does not ar-
gue that the SSP is inconsistent with the Solicitation or
that VA has departed from the procedures set forth in the
SSP. Both parties treat the SSP as governing, and we do
as well. We consider the SSP in evaluating the rationality
of the agency’s actions.
Case: 19-2225 Document: 69 Page: 9 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 9
and recommendations . . . into a written comparative anal-
ysis and recommendation” for the SSA. J.A. 1978. The
SSAC had the authority to “add or remove a strength, sig-
nificant weakness, omission or deficiency” assigned by the
TET to “ensure [that] the evaluation process follow[ed] the
evaluation criteria and that the ratings are appropriately
and consistently applied.” J.A. 1979.
The SSA was the final authority. The SSA “use[d] the
factors established in the SSP and solicitation to make the
source selection decision in accordance with FAR
[§] 15.308.” J.A. 1943. FAR § 15.308 required that the SSA
use his “independent judgment.” FAR § 15.308 (providing
that “[w]hile the SSA may use reports and analyses pre-
pared by others, the source selection decision shall repre-
sent the SSA’s independent judgment”); see also J.A. 1943
(explaining that the SSA was to make the final award de-
cision under the SSP in accordance with FAR § 15.308).
The SSA oversaw the procurement and selected the mem-
bers of the selection team, i.e., SSAC and SSEB.
B
WellPoint alleges that the TET report failed to appre-
ciate the fact that OPSS (the successful bidder) was a dif-
ferent entity from “the larger [OPSS] corporate family,”
despite treating WellPoint (an unsuccessful bidder) as an
entity distinct from its parent corporation, Anthem. Appel-
lant’s Br. 20–21. WellPoint argues that the TET evaluated
WellPoint’s proposal by focusing WellPoint “standing
alone,” without subjecting OPSS’s proposal to the same
level of scrutiny. Appellant’s Br. 47. WellPoint identifies
three specific alleged errors in the TET’s report: (1) the
TET’s statement that WellPoint had only three years of ex-
perience in the healthcare industry and, “standing alone,
[did] not have adequate corporate depth to manage a large,
complex and comprehensive healthcare network,”
J.A. 1265; (2) the TET’s focus on the fact that WellPoint
“employ[ed] only 9 staff,” id.; and (3) the TET’s observation
Case: 19-2225 Document: 69 Page: 10 Filed: 03/31/2020
10 WELLPOINT MILITARY CARE CORP. v. UNITED STATES
that “[t]he fact that [WellPoint] plans to rely on an affiliate
. . . increases the risk of unsuccessful performance,” id.,
and “[t]he lack of detail of [WellPoint as] the prime [offeror]
raise[d] questions regarding [WellPoint’s] background, and
qualifications in managing a federal health care network of
similar size or scope as the [Community Care Network]
contract,” J.A. 1430.
WellPoint asserts that the TET evaluation of OPSS’s
proposal, unlike its evaluation of WellPoint’s proposal, did
not focus on OPSS’s capabilities, “standing alone.” Well-
Point argues that the TET credited OPSS with the back-
ground, experience, and qualifications of its entire
corporate family. For example, WellPoint points out that
the TET credited OPSS with the corporate experience and
capabilities of its parent corporation, UnitedHealth Group,
which was “an organization with experience serving 134
million individuals worldwide.” J.A. 1440.
In short, WellPoint argues that the TET myopically fo-
cused on WellPoint as an individual entity and failed to
credit WellPoint for the strengths of the Anthem corporate
family. WellPoint asserts that, in contrast, the TET’s eval-
uation of OPSS’s proposal never criticized OPSS for its lim-
ited individual capabilities, and credited OPSS with the
full experience and capabilities of the Optum corporate
family.
C
Even if we were to accept WellPoint’s assertion that the
TET report reflected unequal treatment, this would not es-
tablish that the VA committed a prejudicial error. This is
so because the TET’s findings were further reviewed by two
more entities: the SSAC and the SSA.
Because the SSA had the full authority to award the
contract to WellPoint instead of OPSS, we need not be con-
cerned with errors in the interim reports by the TET or
SSAC unless they were carried forward to the SSA’s final
Case: 19-2225 Document: 69 Page: 11 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 11
decision. In Shinseki v. Sanders, 556 U.S. 396 (2009), the
Supreme Court explained that the prejudicial error inquiry
under the APA involves the “same kind of ‘harmless-error’
rule that courts ordinarily apply in civil cases.” Id. at 406.
“[T]he factors that inform a reviewing court’s ‘harmless-er-
ror’ determination are various, potentially involving,
among other case-specific factors, an estimation of the like-
lihood that the result would have been different [and] an
awareness of what body . . . has the authority to reach that
result . . . .” Sanders, 556 U.S. at 411. Under this stand-
ard, an error in the TET report, standing alone, is not prej-
udicial. “De minimis errors in the procurement process do
not justify relief.” Office Design, No. 19-1337, slip op. at 10.
To show prejudicial error, WellPoint must show a “substan-
tial chance” that the SSA (the body with authority) would
have made a different award decision but for the alleged
error in the TET report. Id.; Info. Tech. & Applications
Corp. v. United States, 316 F.3d 1312, 1319 (Fed. Cir.
2003).
D
WellPoint argues that the alleged errors in the TET re-
port were in fact prejudicial because they were carried over
to the SSA’s decision. WellPoint asserts that the alleged
TET errors were reproduced in the SSAC’s comparative
analysis, which was in turn relied upon by the SSA. Well-
Point attempts to establish this connection by citing to por-
tions of the SSAC’s comparative analysis document
repeating the same alleged error that appeared in the TET
report. However, WellPoint’s citation is not to the SSAC’s
own analysis, but rather, its summary of the TET’s find-
ings. WellPoint has not established error in the SSAC’s
own analysis.
The SSA’s decision document is also free of error. First,
the SSA’s decision contains no citation or reference to the
alleged errors in the TET report. WellPoint concedes in its
briefing that the problematic language is not present in the
Case: 19-2225 Document: 69 Page: 12 Filed: 03/31/2020
12 WELLPOINT MILITARY CARE CORP. v. UNITED STATES
SSA’s award decision. Instead, the SSA’s decision reflected
a reliance on other elements of the TET report, but not the
alleged errors. The SSA’s decision statement noted that
“selection was made based upon the factors established in
the solicitation, [the SSA’s] review of the [SSAC] compara-
tive analysis, the detailed evaluation results submitted by
the [SSEB] . . . , and [the SSA’s] integrated assessment and
comparison of the strengths, weaknesses, and risks of the
proposals submitted in response to the solicitation.”
J.A. 2029.
Second, the SSA’s analysis of the Corporate Experi-
ence/Capability subfactor considered the experience of both
offerors. The very first paragraph of the SSA’s analysis
identified “UnitedHealth Group [as] the parent organiza-
tion of [OPSS],” demonstrating the SSA’s awareness of
OPSS’s organizational structure. J.A. 2039. Similarly, the
SSA’s summary of WellPoint’s general corporate back-
ground acknowledged its parent company, Anthem. The
SSA’s analysis considered OPSS’s affiliate, UnitedHealth
Group, as having experience in pharmacy benefit manage-
ment as “dat[ing] back to 1976,” and credited WellPoint
with the experience and capabilities of Anthem Pharmacy
Solutions, which has been in operation “since 1989.”
J.A. 2039–40. The SSA also credited OPSS with the “30
years’ experience managing . . . dental programs” of its af-
filiate, UnitedHealth Group, and WellPoint with the “sig-
nificant dental network management record [of] 45 years”
of its affiliate, DeCare. Id. The SSA also observed that
“[a]ll three offerors have provided existing networks in the
states comprising Region 3.” J.A. 2041. Since WellPoint
itself had no care network in Region 3, the SSA must nec-
essarily have been contemplating the entire organization
behind WellPoint, including its parents and affiliates.
The SSA concluded that “[OPSS] . . . and WellPoint
each have prior experience managing large healthcare con-
tracts; however, Optum’s breadth, depth and diversity of
its corporate experience will provide [the] VA with
Case: 19-2225 Document: 69 Page: 13 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 13
guidance and expertise to fulfill its mission.” J.A. 2040.
The SSA’s decision stated that “[OPSS]’s robust network
and extensive corporate experience, . . . far exceed[ed] the
other offerors,” and that “[OPSS]’s demonstrated corporate
experience represents a clear competitive advantage over
. . . WellPoint.” J.A. 2041.
Finally and most significantly, the SSA’s award deci-
sion stated that:
As the SSA, I recognize that this decision is to re-
flect[, as required by the FAR,] my own independ-
ent, integrated, and comparative assessment. In
this role, I understand that I am free to agree or
disagree, based upon my assessment of the find-
ings, with the recommendation of the SSAC.
J.A. 2041 (emphasis added).
We conclude there has been no showing that the al-
leged errors in the TET were carried over to the SSA’s de-
cision. Therefore, the Claims Court did not err when it
found that “the VA reasonably evaluated the responsive
proposals under the Solicitation’s Corporate Experi-
ence/Capability Subfactor.” J.A. 19.
E
Even if the TET’s error had been carried over to the
SSA’s decision, WellPoint has not demonstrated that the
SSA’s decision would have been different. As noted earlier,
the Supreme Court explained in Sanders that the mere
possibility of harm is insufficient to rise to the level of prej-
udicial error. We have held that the appropriate standard
is that the bid protestor must allege a “significant error”
that affected the award decision. Alfa Laval, 175 F.3d at
1368. WellPoint must show that “but for the error, it would
have had a substantial chance of securing the contract.”
CliniComp Int’l, Inc. v. United States, 904 F.3d 1353, 1358
(Fed. Cir. 2018).
Case: 19-2225 Document: 69 Page: 14 Filed: 03/31/2020
14 WELLPOINT MILITARY CARE CORP. v. UNITED STATES
The Solicitation establishes that “[t]he non-price fac-
tors . . . , when combined, [were] significantly more im-
portant than [the] Price [factor].” J.A. 542. The other
technical subfactors, “Network Management and Claims
Adjudication” and “Management Approach,” were “both in-
dividually . . . more importan[t] than [the Corporate Expe-
rience/Capability] subfactor.” J.A. 541–42. The award
decision shows that for the Network Management and
Claims Adjudication subfactor, the SSA considered OPSS’s
“thorough approach and . . . readily available network,
which targets the areas with the VA’s greatest needs,” to
be “a clear competitive advantage over . . . WellPoint.”
J.A. 2038. For the Management Approach subfactor, the
SSA noted that OPSS’s proposal offered “several call cen-
ters in multiple locations” covering “all local time zones”
within Region 3, while WellPoint’s proposal offered “two
geographically separated call centers.” Id. The SSA found
that OPSS’s proposal “indicated significant experience in
call center operations,” while WellPoint’s proposal indi-
cated that it was prepared to “scale up availability.”
J.A. 2038–39. The SSA concluded that “although Well-
Point provide[d] a viable proposal . . . there [were] no ad-
vantages that separate[d] it from [OPSS].” J.A. 2042.
In the circumstances of this case, WellPoint did not
demonstrate that the Claims Court erred when it con-
cluded that WellPoint would not would have had a “sub-
stantial chance” of winning the contract, even if the SSA’s
decision reflected the alleged error in the TET report, and
even if WellPoint had been rated higher under the Corpo-
rate Experience/Capability subfactor.
Since WellPoint has not shown prejudice, there is no
basis for setting aside the award based on the alleged une-
qual treatment.
CONCLUSION
WellPoint’s challenges to the award were properly re-
jected by the Claims Court.
Case: 19-2225 Document: 69 Page: 15 Filed: 03/31/2020
WELLPOINT MILITARY CARE CORP. v. UNITED STATES 15
AFFIRMED