Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Omnicare, Inc. v. Department of Public Welfare

Commonwealth Court of Pennsylvania

May 15, 2013

Omnicare, Inc., Petitioner
v.
Department of Public Welfare, Respondent

Argued: February 11, 2013

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION

RENÉE COHN JUBELIRER, JUDGE

Omnicare, Inc. (Omnicare) petitions for review of the Final Agency Determination (Final Determination) of the Director of the Bureau of Administrative Services (Director) of the Department of Public Welfare (DPW) that denied Omnicare's bid protest (Protest) of the award of a contract (Contract) for the provision of pharmaceuticals for DPW's five Developmentally Disabled Centers (DDCs) to Diamond Drugs, Inc. (Diamond). Omnicare argues that the Director erred in holding its Protest was untimely, and that DPW violated the Commonwealth Procurement Code (Code), 62 Pa. C.S. §§ 101 – 2311, when it used the Medical Assistance (MA) pricing formula[1] for pharmaceuticals to which this formula cannot apply, and failed to evaluate costs when considering proposals for the Contract.

DPW operates five DDCs at which it previously maintained its own pharmacies in combination with an incumbent contract vendor, Omnicare, to provide medications to the DDCs' residents. (Final Determination at 9; Request for Proposals for Pharmacy Management Services (RFP 18-09) Part IV at 2, R.R. at 92a.) On March 10, 2011, DPW issued RFP 18-09 for the purpose of providing and delivering all pharmaceuticals, medical and pharmaceutical supplies, clinical support, and billing services to the DDCs so that it could consolidate its pharmaceutical sourcing to a single vendor and shut down its existing pharmacies. (RFP 18-09 §§ I-4, IV-4, R.R. at 61a, 95a-102a.)

RFP 18-09 contained the following provisions: (1) the contracted vendor would supply both legend and non-legend pharmaceuticals[2] for the DDCs, (RFP 8-09 § I-4, R.R. at 61a); (2) with regard to compensation, "[t]he selected vendor will be reimbursed through either Medicare Part D based upon the resident's Prescription Drug Plan (PDP) or billed directly to each individual DDC, " (RFP 18-09 § I-5, R.R. at 62a); (3) there should be no cost submittal with proposals and the selection of the winning vendor would be based 80% on the technical elements and 20% on disadvantaged business participation, with bonus points for domestic workforce utilization, enterprise zone small business participation, and contractor partnership program participation, (RFP 18-09 at 16, §§ II-11, III-4, R.R. at 73a, 84a, 86a); (4) offerors could submit questions to DPW by email, (RFP 18-09 § I-10, R.R. at 62a-63a); and (5) any protests in connection with the RFP must comply with the provisions of Section 1711.1 of the Code, 62 Pa. C.S. § 1711.1, and could be filed "[i]n no event . . . later than seven days after the date the notice of award of the contract is posted on the" Department of General Services (DGS) website, (RFP 18-09 § I-29, R.R. at 72a).

Four offerors, including Omnicare, submitted proposals to DPW on April 29, 2011. DPW scored Diamond's proposal the highest and selected it for the Contract. (Recommendation for Contractor Selection at 3, R.R. at 119a.) DPW scored Omnicare's proposal the third-highest, with 7, 193 points, compared to Diamond's 10, 415 points. (Recommendation for Contractor Selection at 3-4, R.R. at 119a-20a.) DPW officially notified Omnicare that it was not selected for the Contract on July 25, 2011. (Letter from DPW to Omnicare (July 25, 2011), R.R. at 145a.) At Omnicare's request, DPW provided Omnicare with a debriefing, at which DPW informed Omnicare that its proposal was ranked third. DPW notified Diamond of the approval of the Contract on March 2, 2012. (Letter from DPW to Diamond (March 2, 2012) at 1, R.R. at 127a.) On that date a copy of the executed Contract was posted on the website of the Pennsylvania Treasury Department (Treasury). In the process of preparing to transition from Omnicare to Diamond, DPW informed Omnicare on March 14, 2012 that it had selected Diamond for the Contract. A copy of the Contract was posted to the DGS website on April 27, 2012.

Omnicare filed its Protest on May 4, 2012, protesting that the Contract was awarded without considering price and without competitive bidding for medications that would be paid for by the DDCs rather than a third-party such as Medicare or a private insurer. (Omnicare Bid Protest at 2, R.R. at 5a.) DPW's Contracting Officer responded on May 21, 2012, stating that Omnicare's Protest was untimely for a number of reasons, including that the information that Omnicare needed for its Protest was in RFP 18-09, and that DPW's solicitation did not violate the Code. (Contracting Officer's Response at 4, 6, R.R. at 141a, 143a.) Omnicare replied to the Contracting Officer's Response on June 8, 2012, generally asserting the same arguments as it asserts in this appeal.

The Director issued the Final Determination on July 3, 2012. In the Final Determination, the Director first held that Omnicare's Protest was untimely because RFP 18-09 stated that pricing would not be considered. (Final Determination at 4.) The Final Determination also stated that RFP 18-09 was clear that all drugs were to be included. (Final Determination at 5.) The Final Determination stated that DPW's solicitation was not contrary to the Code because a cost evaluation factor was not necessary due to DPW's use of the MA pricing formula for medications to be paid for by the DDCs. (Final Determination at 7.) Finally, the Director stated that, even if the Contract were contrary to the Code, he ratified the Contract as being in the Commonwealth of Pennsylvania's best interests pursuant to Section 1711.2(2)(i) of the Code, 62 Pa. C.S. § 1711.2(2)(i). (Final Determination at 8.) Omnicare now appeals to this Court.[3] [4]

Before this Court, Omnicare argues that it timely filed its Protest because it could not know the basis of its Protest from RFP 18-09 and was not required by RFP 18-09 to file its Protest until the Contract was posted on the DGS website. Omnicare also argues that DPW violated the Code by failing to consider price as an element of the proposals and that DPW may not apply the MA pricing formula to non-compensable drugs. DPW argues that, even if it did violate the Code, it properly ratified the Contract between Diamond and DPW pursuant to Section 1711.2(2)(i).

In the Final Determination, the Director held that Omnicare's Protest was untimely because Omnicare knew or should have known from the terms of RFP 18-09 the factual basis for the issues it complained of in its Protest. Section 1711.1(b) provides that a prospective bidder must file its protest within seven days of the date on which it knew or should have known of the facts giving rise to its protest:

If the protestant is a bidder or offeror or a prospective contractor, the protest shall be filed with the head of the purchasing agency within seven days after the aggrieved bidder or offeror or prospective contractor knew or should have known of the facts giving rise to the protest except that in no event may a protest be filed later than seven days after the date the contract was awarded. If the protestant is a prospective bidder or offeror, a protest shall be filed with the head of the purchasing agency prior to the bid opening time or the proposal receipt date. If a bidder or offeror, a prospective bidder or offeror or a prospective contractor fails to file a protest or files an untimely protest, the bidder or offeror, the prospective bidder or offeror or the prospective contractor shall be deemed to have waived its right to protest the solicitation or award of the contract in any forum. Untimely filed protests shall be disregarded by the purchasing agency.

62 Pa. C.S. § 1711.1(b). Omnicare argues that it is not bound by the timeliness requirements of Section 1711.1(b) because Section I-29 of RFP 18-09 requires only that "[i]n no event may an Offeror file a protest later than seven days after the date the notice of award of the contract is posted on the DGS website." (RFP 18-09 § I-29, R.R. at 72a.) Omnicare asserts that this statement lulled it into believing it was not required to file its Protest until after DPW posted the Contract on the DGS website and that DPW must, therefore, be estopped from asserting a different deadline. In support, Omnicare cites Department of Public Welfare v. UEC, Inc., 483 Pa. 503, 514, 397 A.2d 779, 784 (Pa. Cmwlth. 1979), in which the Pennsylvania Supreme Court held that DPW was estopped from asserting a six-month statute of limitations where it repeatedly assured Universal Education Corporation, Inc., that it would pay the balance due under a terminated contract. A party may be estopped from invoking a "bar of limitation of action" where "through fraud or concealment the defendant causes the plaintiff to relax his vigilance or deviate from his right of inquiry." Nesbitt v. Erie Coach Co., 416 Pa. 89, 92, 204 A.2d 473, 475 (1964). "It is . . . well established that mere negotiations toward an amicable settlement afford no basis for an estoppel, nor do mistakes, misunderstandings or lack of knowledge in themselves toll the running of the statute." Id. at 93, 204 A.2d at 475.

In this case, however, DPW did not misrepresent the timeliness requirement for bid protests. In addition to the language relied upon by Omnicare, Section I-29 also states that protests must comply with the requirements of Section 1711.1. The statement that "[i]n no event may an Offerer file a protest later than seven days after the notice of award of the contract is posted on the DGS website, " (RFP 18-09 ยง I-29, R.R. at 72a), does not conflict with Section 1711.1(b) and would not lull a party reading Section 1711.1 into failing to exercise its protest rights under Section 1711.1. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.