DoD's $187M contract to United Concordia for health insurance services awarded in 2007

Contract Overview

Contract Amount: $187,238,055 ($187.2M)

Contractor: United Concordia Companies, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-01-23

End Date: 2007-09-30

Contract Duration: 250 days

Daily Burn Rate: $749.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE AWARD FEE

Sector: Healthcare

Official Description: OBLIGATE FUNDS FOR FEBRUARY 2007. REMAINDER OF FUNDING FOR OP-2 SAF.

Place of Performance

Location: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17110

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $187.2 million to UNITED CONCORDIA COMPANIES, INC. for work described as: OBLIGATE FUNDS FOR FEBRUARY 2007. REMAINDER OF FUNDING FOR OP-2 SAF. Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Fixed Price Award Fee, which incentivizes performance but can lead to cost overruns if not managed carefully. 3. The contract duration of 250 days is relatively short, indicating a specific, time-bound need. 4. The awarded amount of $187.2M for a 250-day period suggests a significant per-diem or per-service cost. 5. The contractor, United Concordia Companies, Inc., operates in the health insurance sector, aligning with the contract's purpose. 6. The contract was awarded under the Tricare Management Activity, a key DoD program for military healthcare.

Value Assessment

Rating: fair

The contract's value of $187.2 million for a 250-day period translates to a substantial daily obligation. Benchmarking this against similar health insurance contracts for military personnel is crucial for a comprehensive value assessment. Without specific per-member-per-month rates or service utilization data, it's difficult to definitively assess if the pricing was competitive or represented good value for money at the time of award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely invited to submit proposals. The presence of multiple bidders generally fosters price discovery and can lead to more competitive pricing for the government. The number of bids received would provide further insight into the level of competition.

Taxpayer Impact: A competitive bidding process for this significant health insurance contract likely resulted in better pricing and terms for taxpayers compared to a sole-source award.

Public Impact

Beneficiaries include active duty military personnel, their families, and potentially retirees covered under the TRICARE program. Services delivered include direct health and medical insurance coverage and administration. The geographic impact is likely widespread, covering beneficiaries wherever they are stationed or reside. Workforce implications may include the need for administrative staff by the contractor to manage the insurance services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the Award Fee component if performance targets are not met or are excessively rewarded.
The short duration might indicate a stop-gap measure or a contract that was part of a larger, phased acquisition, requiring further analysis.
Lack of detailed performance metrics in the provided data makes it hard to assess the quality of service delivered.
The significant dollar amount for a relatively short period warrants scrutiny regarding efficiency and necessity.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
The contractor, United Concordia Companies, Inc., is a known entity in the health insurance market, implying relevant experience.
The contract aligns with the Department of Defense's mission to provide healthcare to its personnel and their families.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on health insurance and managed care services for a government entity. The market for government health insurance contracts is substantial, with agencies like the Department of Defense being major purchasers. Comparable spending benchmarks would involve analyzing other TRICARE contracts or similar large-scale health insurance procurements for federal employees or military populations.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. As a large-dollar contract likely awarded to a major insurance provider, the primary focus would be on the prime contractor's capabilities. Subcontracting opportunities for small businesses might exist within the broader healthcare services ecosystem, but are not explicitly detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Tricare Management Activity and the Department of Defense's contracting and financial management offices. Accountability measures would be tied to the performance metrics outlined in the Fixed Price Award Fee structure. Transparency is generally facilitated through contract award databases, though detailed performance reports may be less publicly accessible.

Related Government Programs

TRICARE Prime
TRICARE Select
Department of Veterans Affairs Health Care
Federal Employee Health Benefits Program (FEHBP)

Risk Flags

Potential for cost growth due to Award Fee structure.
Short contract duration may indicate a need for follow-on contracts or transition planning.
Reliance on a single contractor for a critical service like health insurance carries inherent risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $187.2 million to UNITED CONCORDIA COMPANIES, INC.. OBLIGATE FUNDS FOR FEBRUARY 2007. REMAINDER OF FUNDING FOR OP-2 SAF.

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 $187.2 million.

What is the period of performance?

Start: 2007-01-23. End: 2007-09-30.

What was the specific performance criteria that determined the 'Award Fee' for United Concordia Companies, Inc. on this contract?

The provided data does not specify the performance criteria used to determine the Award Fee for United Concordia Companies, Inc. on this contract. Typically, Award Fee contracts include a detailed statement of work with measurable performance objectives related to service quality, timeliness, cost control, and customer satisfaction. The fee amount would be determined by an evaluation of the contractor's performance against these pre-defined metrics by a government representative. Without access to the contract's statement of work and performance evaluation reports, the exact criteria and awarded fee cannot be ascertained from the given information.

How does the per-diem cost of this contract compare to other similar health insurance contracts for military personnel awarded around the same period?

Directly comparing the per-diem cost of this $187.2 million contract for 250 days requires more granular data than is provided. The total obligation divided by the duration gives a daily rate of approximately $748,952. However, this figure represents the total funding obligated, not necessarily the cost per beneficiary or per service rendered. To make a meaningful comparison, one would need to know the number of covered lives, the scope of services included (e.g., inpatient, outpatient, pharmacy), and the specific benefit structure. Benchmarking against other TRICARE contracts or similar large-scale health insurance procurements from 2007 would involve accessing detailed contract line item data and utilization reports from that period.

What were the primary risks identified by the Department of Defense prior to awarding this contract to United Concordia Companies, Inc.?

The provided data does not explicitly list the risks identified by the Department of Defense prior to awarding this contract. However, common risks associated with large health insurance contracts include contractor performance failures (e.g., inadequate network access, poor claims processing), cost overruns (especially with cost-plus or award-fee structures), cybersecurity breaches of sensitive health information, and potential disruptions to healthcare services for beneficiaries. Given the 'Fixed Price Award Fee' structure, a key risk managed would be ensuring the contractor meets performance standards to achieve the award fee while staying within the fixed price ceiling. The short duration might also imply risks related to continuity of service if not properly managed.

What was the historical spending pattern for similar health insurance services by the Tricare Management Activity in the years preceding 2007?

The provided data does not include historical spending patterns for the Tricare Management Activity (TMA) prior to 2007. To analyze historical spending, one would need to access TMA's budget documents, contract databases, and financial reports for preceding fiscal years. This would allow for the identification of trends in contract awards for health insurance and medical services, including the number of contracts, their values, and the primary contractors. Such analysis would help determine if the $187.2 million obligation in 2007 represented an increase, decrease, or consistent level of spending for these services.

How many other bids were received for this contract, and what does the level of competition indicate about the market for military health insurance?

The provided data indicates the contract was awarded under 'FULL AND OPEN COMPETITION' and lists 'NO' bids as 3. This suggests that while the competition was open, only three distinct bids were formally submitted and considered. A competition with three bidders is generally considered moderate. It implies that the market, while not limited to a single provider, may not have been intensely crowded with numerous potential offerors for this specific type of large-scale military health insurance contract at that time. This level of competition can influence price negotiation and the government's leverage in securing favorable terms.

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: $187,238,055

Exercised Options: $187,238,055

Current Obligation: $187,238,055

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9400205D0001

IDV Type: IDC

Timeline