DoD's $232.8M Delivery Order to United Concordia for Health Insurance Carriers in FY10
Contract Overview
Contract Amount: $232,761,640 ($232.8M)
Contractor: United Concordia Companies, Inc.
Awarding Agency: Department of Defense
Start Date: 2010-01-26
End Date: 2010-09-30
Contract Duration: 247 days
Daily Burn Rate: $942.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIXED PRICE AWARD FEE
Sector: Healthcare
Official Description: OP-5, FY10 DELIVERY ORDER FOR PERIOD OF FEBRUARY 1, 2010 THROUGH SEPTEMBER 30, 2010.
Place of Performance
Location: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17110, UNITED STATES OF AMERICA
Plain-Language Summary
Department of Defense obligated $232.8 million to UNITED CONCORDIA COMPANIES, INC. for work described as: OP-5, FY10 DELIVERY ORDER FOR PERIOD OF FEBRUARY 1, 2010 THROUGH SEPTEMBER 30, 2010. Key points: 1. Significant contract value highlights the scale of healthcare services procured. 2. Direct Health and Medical Insurance Carriers sector is critical for military readiness. 3. Fixed Price Award Fee contract type aims to balance cost control with performance incentives. 4. Competition method is 'Full and Open', suggesting a robust market for these services.
Value Assessment
Rating: fair
The award amount of $232.8M for a 247-day period is substantial. Benchmarking against similar large-scale health insurance contracts is necessary to fully assess value, but the fixed-price award fee structure suggests an attempt at cost control.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors were likely considered. This method generally promotes competitive pricing and allows the government to select the best value offering.
Taxpayer Impact: Taxpayer funds are utilized for essential healthcare services for military personnel and their families, aiming for efficient and effective delivery through competitive procurement.
Public Impact
Ensures healthcare coverage for military personnel and their families. Supports the operational readiness of the armed forces by providing essential medical services. Impacts the healthcare insurance market through significant government procurement.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- Short contract duration (247 days) may lead to frequent re-competition and potential transition costs.
- Award Fee component requires careful monitoring to ensure it drives desired performance without excessive payouts.
Positive Signals
- Full and open competition suggests a healthy market and potential for good pricing.
- Fixed Price Award Fee structure provides cost certainty while incentivizing performance.
Sector Analysis
This contract falls within the Direct Health and Medical Insurance Carriers sector, a critical area for government spending, particularly within the Department of Defense. Benchmarks for similar large-scale health insurance contracts are essential for evaluating cost-effectiveness.
Small Business Impact
The data does not indicate any specific set-aside for small businesses. Given the scale and nature of direct health and medical insurance carriers, large, established companies are typically the primary participants.
Oversight & Accountability
The 'PA' (Procurement Instrument Type) and 'AW' (Award Type) suggest standard procurement processes were followed. Oversight would focus on performance against the award fee criteria and adherence to contract terms.
Related Government Programs
- Direct Health and Medical Insurance Carriers
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Short contract duration may limit long-term strategic benefits.
- Award fee mechanism requires diligent oversight to prevent overpayment.
- Potential for high administrative costs in large-scale insurance contracts.
- Dependence on a single carrier for a defined period carries inherent risk.
Tags
direct-health-and-medical-insurance-carr, department-of-defense, pa, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $232.8 million to UNITED CONCORDIA COMPANIES, INC.. OP-5, FY10 DELIVERY ORDER FOR PERIOD OF FEBRUARY 1, 2010 THROUGH SEPTEMBER 30, 2010.
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 (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $232.8 million.
What is the period of performance?
Start: 2010-01-26. End: 2010-09-30.
What was the specific performance criteria tied to the award fee, and how effectively did United Concordia meet them?
The award fee structure likely included metrics related to claims processing efficiency, network adequacy, beneficiary satisfaction, and adherence to quality standards. Detailed performance reports and audits would be necessary to assess how effectively United Concordia met these criteria and whether the award fee truly reflected superior performance or simply standard service delivery.
How did the pricing of this contract compare to other similar full and open competition contracts for health insurance carriers during FY10?
A comprehensive price comparison would involve analyzing the per-member-per-month costs, administrative fees, and overhead rates against a benchmark of comparable contracts awarded by other federal agencies or even state governments. Factors like geographic coverage, scope of services, and specific benefit designs would need to be normalized to ensure a fair comparison.
What was the long-term impact of this specific delivery order on the DHA's ability to secure competitive pricing in subsequent contract periods?
This delivery order, awarded through full and open competition, could have established a competitive baseline for future solicitations. However, the short duration might have limited long-term strategic impact. Analyzing subsequent contract awards and their pricing would reveal whether this initial competition fostered sustained cost savings or if market dynamics shifted.
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, 17110
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $232,761,640
Exercised Options: $232,761,640
Current Obligation: $232,761,640
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: H9400205D0001
IDV Type: IDC
Timeline
Start Date: 2010-01-26
Current End Date: 2010-09-30
Potential End Date: 2010-09-30 00:00:00
Last Modified: 2015-02-17
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