GAO Statement on Protest Filed by MAXIMUS Federal Services, Inc., B-422676

The following is a statement from Edward Goldstein, Managing Associate General Counsel for Procurement Law at the U.S. Government Accountability Office (GAO), regarding yesterday's decision resolving the bid protest filed by MAXIMUS Federal Services, Inc., B-422676.

On September 16, 2024, GAO sustained in part, and denied in part, a protest filed by MAXIMUS Federal Services, Inc., of McLean, Virginia. The protester challenged the inclusion of a "labor harmony agreement" (LHA) as part of request for proposals (RFP) No. 75FCMC24R0010, issued by the Department of Health and Human Services, Centers for Medicare and Medicaid Services for contract call center operations and support services.

The solicited services will support the agency's requirement to operate a toll-free, nation-wide, and continuously operating contract call center, which provides customer service to Medicare consumers and persons inquiring about benefits under the Affordable Care Act. The estimated total contract value, including all options, is approximately $6.6 billion.

MAXIMUS protested the RFP's inclusion of a requirement that the selected contractor (or apparent successful offeror) enter into an LHA with any labor organization demonstrating interest in representing the service employees performing work under the contract. An LHA is an agreement between a labor organization and an employer before the union has been selected or recognized as the collective bargaining representative of the employer's personnel. Under a typical LHA, the labor organization will give up its right to strike, and the employer will provide numerous concessions, including permitting the labor organization to recruit and organize its employees, remaining neutral in any organizing campaign, and providing employees' names and contact information.

GAO's decision expresses no view regarding the value of including an LHA for these call-center services, or whether an LHA is consistent with federal labor laws. Further, judgments about an agency's needs are reserved for the procuring agencies, subject only to statutory and regulatory requirements.

MAXIMUS raised several arguments challenging the LHA clause as contrary to law and unreasonable. The firm argued that the LHA clause either violated or was preempted by the Labor Management Relations Act (LMRA) and the National Labor Relations Act (NLRA), that the clause violated or was not authorized under Federal Acquisition Regulation (FAR) section 22.101-1, and that clause was either unduly restrictive of competition or ambiguous.

We sustained a single challenge that the LHA clause was ambiguous with respect to the negotiating period for an apparent successful offeror. The RFP provides that, after evaluating proposals, the agency will advise the apparent successful offeror of its status, and that the apparent successful offeror must agree to an LHA with any labor organization that has demonstrated interest in representing the service employees prior to award. After reviewing the RFP, we concluded that the solicitation was ambiguous as to how long the apparent successful offeror will have to negotiate the pre-award LHA.

We dismissed MAXIMUS's challenges that the LHA clause either violated or was preempted by the LMRA and the NLRA as outside of our jurisdiction because neither is a procurement statute as contemplated by the Competition in Contracting Act.

We denied MAXIMUS's challenge that the LHA clause either violated or was not authorized under Federal Acquisition Regulation section 22.101-1 because we concluded that those regulations did not prohibit an agency from requiring a contractor to enter into an LHA. We also denied MAXIMUS's challenge that the LHA clause was unduly restrictive of competition because the record demonstrated that the clause was consistent with the agency's minimum needs. Finally, we denied MAXIMUS's other challenges that the LHA clause was ambiguous with respect to when an LHA must be negotiated and the duration of any LHA, as well as the firm's challenge that some of the evaluation criteria was ambiguous as to what type of demonstrated corporate experience will be evaluated favorably.

GAO's bid protest process is handled by GAO's Office of General Counsel and examines whether procuring agencies have complied with procurement laws and regulations.

Today's decision was issued under a protective order because the decision may contain proprietary and source selection sensitive information. GAO has directed counsel for the parties to promptly identify information that cannot be publicly released so that GAO can expeditiously prepare and release a public version of the decision. When the public version of the decision is available, it will be posted to our website, "www.gao.gov."

For more information, please contact Edward Goldstein at 202-512-4483, Kenneth E. Patton at 202-512-8205, or Sarah Kaczmarek at 202-512-4800. More information about GAO's Bid Protest process is also available on the GAO website.

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