Earlier this week, Maximus filed a new pre-award bid protest with the Court of Federal Claims in relation to this important Contact Center Operations Support contract.
Maximus submits this pre-award bid protest Complaint challenging the decision of the Department of Health and Human Services (“HHS”), Centers for Medicare and Medicaid Services (“CMS” or the “Agency”) to include in Solicitation No. 75FCMC24R0010 (the “Solicitation” or “RFP”) requirements that inject CMS into labor relations of those seeking to do business with CMS and put a heavy thumb on the scale in favor of labor unions that do not represent—but want to represent—the offeror/contractor’s workforce. The challenged terms also provide an unearned competitive advantage to companies that already have a unionized workforce or which have entered into a socalled labor harmony agreement. These requirements are unprecedented, unlawful, unduly restrictive of competition, and mandated without a rational basis.
I. INTRODUCTION
1. CMS solicits contact center operations (“CCO”) support through a contractor operated, nationwide contact center, to handle customer inquiries about healthcare coverage under CMS programs such as 1-800-MEDICARE and the Health Insurance Marketplace.
2. Maximus is one of the nation’s largest providers of contact center services to the federal government, with decades of experience working with federal, state, and local government agencies. For over a decade, Maximus has provided uninterrupted, high-quality customer support services to CMS as the CCO contractor, including meeting the recruiting, retention, and Service Contract Labor Standard requirements governing this federal services contract.
3. Less than two years ago, after a protracted (nearly three year) full and open competition, CMS determined that Maximus presented the best value to the government—”a superior proposal [from] which the Government will greatly benefit”—and awarded the CCO contract again to Maximus. (GAO Protest Ex. G, Maximus 2022 Debriefing at 2.)1 4. At no time over the decade that Maximus has supported the CCO contract has Maximus ever experienced a service interruption from any source: the pandemic, weather events, or demonstrations by a labor union.
5. All performance records, including Maximus’s award fees, Contractor Performance Assessment Reports (“CPARs”), and CCO contract metrics that CMS maintains, document the high-quality service Maximus and its Customer Service Representatives (“CSRs”) provide to CMS and the Medicare and Marketplace constituents that the contact center supports. In a May 13, 2024 letter, the CMS Administrator noted: “Customer service is integral to the call centers and historically [Maximus has] had some of the highest customer satisfaction scores with the federal government (95% satisfaction in Medicare and 92% in Marketplace). These high scores would not be possible without the contribution of the [Maximus] call center representatives.”
6. Despite historically high customer service ratings and wholly uninterrupted performance by Maximus, CMS is re-soliciting this substantial contract early, in the second of nine one-year option periods.
7. The sole purpose of the re-solicitation is to add a so-called Labor Harmony Agreement (“LHA”) clause in the solicitation instructions and contractual clause, which will require the apparent successful offeror and contractor (and significant subcontractors) to execute, within 120 days, an agreement with any union that seeks to represent the offeror/contractor’s employees as a condition of award or contract performance.
8. Since 2022, a third-party labor union seeking to represent the Maximus call center workforce has staged a few sparsely attended demonstrations involving CCO personnel. All agree (as CMS’s own records confirm) that these demonstrations have caused no service disruption to the CCO contract. Nevertheless, within a few days of a rally by the union outside of the HHS Washington D.C. headquarters, the HHS Secretary announced that CMS would be recompeting the CCO contract, and then, approximately six months later, CMS issued the Solicitation with the challenged LHA requirements.
9. In the challenged LHA provisions, CMS requires the offeror/contractor (and significant subcontractor) to execute a LHA with any union that “demonstrates an intent” to represent the offeror/contractor’s CCO workforce, and mandates that the LHA prohibit the union and its members “from engaging in any picketing, work stoppage, boycott, or other economic interference” with the offeror/contractor’s operations under the solicited contract.
10. Failure to comply with the so-called “Labor Harmony Agreement” requirements may render the offeror ineligible for award or subject the contractor to a default termination, among other penalties for noncompliance with the LHA requirements in the Solicitation and solicited contract terms.
11. LHA requirements thus dictate how an otherwise responsible and best value offeror must manage labor organizing activities targeting the CCO workforce both to be eligible for award and also to remain in compliance with the contract once awarded.
12. The LHA requirements that CMS imposes in the Solicitation gives unions both unilateral control over the trigger for the awardee/contractor’s LHA obligations and extraordinary and illegal negotiation leverage. In return for the union’s limited promise not to interfere intentionally with the apparent successful offeror/contractor’s operations, the unions will demand—and will have the leverage to secure—many concessions that trample the employer’s and employees’ rights under the National Labor Relations Act (“NLRA”), including: (1) giving the union access to and space in the contractor’s workspace; (2) giving the union employees’ names and personal contact information; (3) preventing the employer from providing employees information contrary to the union’s interests; (4) allowing the union to determine the scope of the
bargaining unit; (5) substituting a union-led “card check” process for the employees’ right to a traditional election process; (6) requiring the employer to waive its right to file an election petition with the National Labor Relations Board (“NLRB” or “Board”) and waiver of both parties’ right to file unfair labor charges; and (7) requiring “interest arbitration” whereby any failure to agree to any collective bargaining terms within a specified period would go to a single arbitrator for resolution. That last term—interest arbitration—is particularly significant and potentially detrimental to performance under the CCO contract as it will vest the sole authority in a third-party arbitrator, with almost certainly no experience delivering these complex services, to decide material operational, cost, and performance terms.
13. The apparent successful offeror/contractor that wishes to obtain the award and not risk default will be forced to accept the union’s demands. (See, e.g., AR Tab 5C, Comm. On Educ. & Workforce RFI Response at 2 (“Common concessions in labor harmony agreements that ease the path to unionization include card check agreements and employer neutrality during the organizing process.”).)
14. It is well known that LHAs (sometimes referred to as “labor peace” or “neutrality” agreements) ease the path to unionization by including various employer concessions like neutrality during the organizing process, access to the employer’s facilities for organizing activities, provision of the names and contact information of company employees, and substituting a union-led “card check” process for the employee-favored secret ballot election process.
15. Before a previous challenge at GAO, arguments made by CMS acknowledged that the mandatory LHA requirements serve the third-party union’s interest, making the union’s efforts to organize (i.e., unionize) the offeror/contractor’s CCO workforce easier.
16. CMS lacks authority to impose the LHA requirements as condition of award or contract compliance and has acted arbitrarily in mandating such requirements in the instant procurement.
17. The Federal Acquisition Regulation (“FAR”) requires federal procuring agencies to remain impartial and not to interfere in labor relations between contractors and labor organizations. The LHA requirements do the exact opposite, placing …
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