DoD's $176.5M Tricare Contract Awarded to United Concordia Companies, Inc. for Direct Health and Medical Insurance Carriers

Contract Overview

Contract Amount: $176,506,640 ($176.5M)

Contractor: United Concordia Companies, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-01-06

End Date: 2006-09-30

Contract Duration: 267 days

Daily Burn Rate: $661.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE AWARD FEE

Sector: Healthcare

Place of Performance

Location: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17110

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $176.5 million to UNITED CONCORDIA COMPANIES, INC. for work described as: Key points: 1. The contract value is substantial at $176.5 million, indicating significant program scope. 2. United Concordia Companies, Inc. secured this award, suggesting their competitive positioning in the health insurance sector. 3. The award type (FIXED PRICE AWARD FEE) implies performance-based incentives, potentially mitigating cost overruns but requiring careful monitoring. 4. The sector is Direct Health and Medical Insurance Carriers, a critical area for government personnel and their families.

Value Assessment

Rating: good

The contract value of $176.5 million for a 9-month period (2006-01-06 to 2006-09-30) appears reasonable given the scope of direct health and medical insurance services. Benchmarking against similar large-scale government health insurance contracts would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing and ensures the government receives the best value. The specific pricing mechanisms within the fixed-price award fee structure would influence the final price discovery.

Taxpayer Impact: Full and open competition generally leads to more efficient use of taxpayer funds by driving down costs through market forces.

Public Impact

Ensures healthcare coverage for military personnel and their families. Supports the readiness and well-being of the armed forces. Impacts a significant number of beneficiaries relying on Tricare services. Contributes to the overall healthcare infrastructure supporting national defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Fixed Price Award Fee structure requires careful monitoring of performance metrics to ensure value.
Short contract duration (9 months) may indicate a bridge contract or a need for re-competition, raising questions about long-term stability.
Lack of specific details on the 'award fee' component makes it difficult to assess the full potential cost.
No indication of small business participation.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
United Concordia Companies, Inc. is a known entity in the health insurance market.
The contract aims to provide essential health services to military members and their families.

Sector Analysis

The Direct Health and Medical Insurance Carriers sector is vital for government operations, particularly for agencies like the Department of Defense that provide comprehensive benefits. Spending in this area is often substantial due to the large number of beneficiaries.

Small Business Impact

There is no indication of small business participation in this contract award. Further analysis would be needed to determine if opportunities were missed or if the nature of the contract precluded small business involvement.

Oversight & Accountability

The award was made by the Tricare Management Activity, suggesting a dedicated oversight body for this program. The fixed-price award fee structure implies performance-based oversight is intended.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Defense Contracting
Tricare Management Activity Programs

Risk Flags

Potential for cost creep if award fee criteria are not strictly managed.
Short contract duration may indicate instability or future re-competition challenges.
Lack of transparency on specific performance metrics for the award fee.
No apparent small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $176.5 million to UNITED CONCORDIA COMPANIES, INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is UNITED CONCORDIA COMPANIES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Tricare Management Activity).

What is the total obligated amount?

The obligated amount is $176.5 million.

What is the period of performance?

Start: 2006-01-06. End: 2006-09-30.

What specific performance metrics are tied to the 'award fee' component of this contract, and how are they measured to ensure optimal value for the government?

The 'award fee' component is typically linked to predefined performance standards and objectives. These could include metrics related to claims processing efficiency, beneficiary satisfaction, network adequacy, and quality of care. The Tricare Management Activity would likely have established a detailed evaluation plan to assess United Concordia's performance against these criteria, with the fee adjusted based on the degree of success achieved in meeting or exceeding these targets.

Given the short contract duration of 9 months, what is the strategic rationale behind this award, and what are the potential risks associated with a potentially transitional contract?

A short duration often suggests this contract may be a bridge to a larger, long-term procurement, or it could be a limited-scope requirement. Risks include potential disruption in service continuity if a follow-on contract is delayed, increased administrative burden for both parties due to frequent re-procurement activities, and potentially higher unit costs if economies of scale are not achieved over a longer period.

How does the pricing structure of this fixed-price award fee contract compare to other similar direct health and medical insurance contracts awarded by the DoD or other federal agencies?

Without specific cost breakdowns, a direct comparison is challenging. However, fixed-price contracts aim to provide cost certainty, while the award fee mechanism allows for flexibility based on performance. This structure aims to balance cost control with incentivizing high-quality service delivery, which is common in complex service contracts where performance can vary.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › MEDICAL, DENTAL, AND SURGICAL SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Parent Company: Highmark Inc (UEI: 067096644)

Address: 4401 DEER PATH ROAD, HARRISBURG, PA, 10

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $176,506,640

Exercised Options: $176,506,640

Current Obligation: $176,506,640

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9400205D0001

IDV Type: IDC

Timeline