Department of Defense obligated $69.7M for health insurance services, extending contract for 15 months

Contract Overview

Contract Amount: $187,604,033 ($187.6M)

Contractor: United Concordia Companies, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-02-01

End Date: 2012-04-30

Contract Duration: 454 days

Daily Burn Rate: $413.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE AWARD FEE

Sector: Healthcare

Official Description: DELIVERY ORDER 0011 FOR OPTION PERIOD 6 SERVICES UNDER CONTRACT H94002-05-D-0001, FOR THE PERIOD OF FEBRUARY 1, 2011 THROUGH JULY 31, 2011 IS HEREBY ISSUED. FUNDING, SUBJECT TO THE CONDITIONS OF THE FY2011 CONTINUING RESOLUTION AUTHORITY UNDER H.R. 3082, IS HEREBY OBLIGATED IN THE AMOUNT OF $69,765,270.15 FOR THE PERFORMANCE OF SERVICES FOR THE MONTHS OF FEBRUARY AND MARCH 2011. FUNDING FOR THE REMAINING FOUR MONTHS OF OPTION PERIOD 6 IS SUBJECT TO THE AVAILABILITY OF FISCAL YEAR 2011 (FY11) FUNDS IN ACCORDANCE WITH FEDERAL ACQUISITION REGULATION CLAUSE 52.232-19 AND WILL BE PROVIDED ON SUBSEQUENT MOD(S) TO THIS DELIVERY ORDER AS ADDITIONAL FUNDING IS MADE AVAILABLE.

Place of Performance

Location: HARRISBURG, DAUPHIN County, PENNSYLVANIA, 17110, UNITED STATES OF AMERICA

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $187.6 million to UNITED CONCORDIA COMPANIES, INC. for work described as: DELIVERY ORDER 0011 FOR OPTION PERIOD 6 SERVICES UNDER CONTRACT H94002-05-D-0001, FOR THE PERIOD OF FEBRUARY 1, 2011 THROUGH JULY 31, 2011 IS HEREBY ISSUED. FUNDING, SUBJECT TO THE CONDITIONS OF THE FY2011 CONTINUING RESOLUTION AUTHORITY UNDER H.R. 3082, IS HEREBY OBLIGATED IN … Key points: 1. Contract awarded via full and open competition, suggesting a competitive pricing environment. 2. The contract type is Fixed Price Award Fee, which incentivizes performance while managing cost. 3. Funding is subject to continuing resolution authority, indicating potential budget uncertainties. 4. The contract has a duration of 454 days, covering a significant period of service. 5. The primary contractor, United Concordia Companies, Inc., has a substantial contract value. 6. The North American Industry Classification System (NAICS) code 524114 points to direct health and medical insurance carriers.

Value Assessment

Rating: good

The obligated amount of $69.7 million for a 15-month period (February 2011 - April 2012) for health insurance services appears reasonable given the scope. While a direct per-unit cost comparison is not readily available without more granular data on covered individuals, the total contract value of over $187 million suggests a significant scale of operations. Benchmarking against similar large-scale health insurance contracts for federal agencies would provide a more precise value assessment.

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 considered. This competitive process is generally expected to drive down prices and ensure fair market value for the services rendered. The presence of multiple bidders suggests a healthy market for these types of health insurance services.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure services at the most advantageous prices, preventing potential overspending and ensuring efficient use of public funds.

Public Impact

Beneficiaries include military personnel and their families who receive direct health and medical insurance coverage. Services delivered encompass the administration and provision of health insurance benefits. The contract's geographic impact is likely widespread, covering beneficiaries across various locations. Workforce implications may include jobs within the contractor's organization and potentially within the Defense Health Agency for oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Funding is subject to continuing resolution authority, which can introduce budget instability.
The fixed-price award fee structure requires careful monitoring to ensure performance targets are met.
The long contract duration necessitates ongoing performance evaluation to maintain service quality.

Positive Signals

Awarded under full and open competition, suggesting a robust and competitive market.
The contract is with a known entity, United Concordia Companies, Inc., implying established capabilities.
The fixed-price award fee structure can incentivize high performance and cost control.

Sector Analysis

This contract falls within the Health Care and Social Assistance sector, specifically the insurance carriers sub-sector (NAICS 524114). The federal government is a major purchaser of health insurance, particularly for its military and civilian workforce. Spending in this area is substantial, with numerous contracts awarded annually to provide comprehensive health benefits. This contract represents a portion of the Defense Health Agency's overall spending on healthcare services for its beneficiaries.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this particular delivery order. Analysis of the contractor's past performance and subcontracting plans would be necessary to determine the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Health Agency, with specific contracting officers and program managers responsible for monitoring performance, invoicing, and compliance. The Federal Acquisition Regulation (FAR) clauses embedded within the contract provide the framework for accountability. Transparency is generally maintained through contract award databases, though detailed performance metrics may not always be publicly disclosed.

Related Government Programs

TRICARE Health Insurance Programs
Federal Employee Health Benefits Program (FEHBP)
Department of Veterans Affairs Healthcare Services

Risk Flags

Funding subject to Continuing Resolution authority
Potential for budget uncertainty impacting full contract performance
Award Fee component requires diligent performance monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $187.6 million to UNITED CONCORDIA COMPANIES, INC.. DELIVERY ORDER 0011 FOR OPTION PERIOD 6 SERVICES UNDER CONTRACT H94002-05-D-0001, FOR THE PERIOD OF FEBRUARY 1, 2011 THROUGH JULY 31, 2011 IS HEREBY ISSUED. FUNDING, SUBJECT TO THE CONDITIONS OF THE FY2011 CONTINUING RESOLUTION AUTHORITY UNDER H.R. 3082, IS HEREBY OBLIGATED IN THE AMOUNT OF $69,765,270.15 FOR THE PERFORMANCE OF SERVICES FOR THE MONTHS OF FEBRUARY AND MARCH 2011. FUNDING FOR THE REMAINING FOUR MONTHS OF OPTION PERIOD 6 IS SUBJECT TO THE AVAILABILITY OF FISCAL YEAR 2011 (FY11)

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 $187.6 million.

What is the period of performance?

Start: 2011-02-01. End: 2012-04-30.

What is the historical spending trend for this contract or similar services with United Concordia Companies, Inc. by the Department of Defense?

Analyzing historical spending for this specific contract (H94002-05-D-0001) and other contracts with United Concordia Companies, Inc. by the Department of Defense would reveal spending patterns over time. This includes examining the total obligated amounts across different fiscal years, the number of delivery orders issued, and the duration of each option period. Such an analysis could identify any significant increases or decreases in spending, potential contract expansions, or shifts in service requirements. For instance, if spending has consistently grown year-over-year, it might indicate increasing demand for services or inflationary pressures. Conversely, a decline could suggest a reduction in scope or a shift to alternative providers. Understanding these trends provides context for the current $69.7 million obligation and helps assess the long-term financial commitment to the contractor.

How does the per-member-per-month (PMPM) cost for this contract compare to other federal health insurance contracts or private sector benchmarks?

To assess the value for money, a comparison of the per-member-per-month (PMPM) cost is crucial. This requires calculating the PMPM rate by dividing the total contract cost by the number of covered individuals and the contract duration in months. This calculated PMPM rate can then be benchmarked against similar TRICARE contracts, other federal health insurance programs (like FEHBP), and industry averages for private sector health insurance plans. If the PMPM cost for this contract is significantly higher than comparable benchmarks, it could indicate potential overpricing or a less efficient service delivery model. Conversely, a lower PMPM cost might suggest favorable negotiation or economies of scale. Without specific enrollment numbers for this contract period, a precise PMPM calculation is not possible, but it remains a key metric for evaluating cost-effectiveness.

What are the specific performance metrics and award criteria associated with the 'Award Fee' component of this contract?

The 'Award Fee' component of this Fixed Price Award Fee contract implies that the contractor, United Concordia Companies, Inc., can earn additional amounts beyond the base fixed price based on achieving specific performance objectives. These objectives are typically defined in a Performance Work Statement (PWS) and may include metrics related to claims processing timeliness, accuracy rates, customer satisfaction scores, network adequacy, and compliance with regulations. The contracting officer or a designated representative evaluates the contractor's performance against these criteria, usually on a periodic basis (e.g., quarterly or annually), and determines the amount of award fee earned. Understanding these metrics is vital for assessing whether the contractor is incentivized to deliver high-quality services and whether the government is effectively managing performance to ensure value for taxpayer dollars.

What is the overall value and duration of the base contract (H94002-05-D-0001) from which this delivery order was issued?

The base contract H94002-05-D-0001, under which this delivery order was issued, has a significant overall value and duration. The provided data indicates a total contract value of $187,604,033.18 and a total duration of 454 days. This suggests that the contract was initially awarded for a substantial period and amount, and this delivery order represents a specific funding obligation for a portion of that larger contract, likely for option period 6 services. Understanding the full scope and history of the base contract provides essential context for evaluating the significance of individual delivery orders and the long-term commitment of the Department of Defense to these services.

What are the potential risks associated with funding this contract under a Continuing Resolution (CR) authority?

Funding this contract under a Continuing Resolution (CR) authority, as indicated by the reference to H.R. 3082, introduces several potential risks. A CR typically extends previous fiscal year's funding at a specific rate, often preventing new starts or significant program increases, and can lead to budget uncertainty. For this contract, it means that funding for the full six months of Option Period 6 is not guaranteed upfront and is subject to the availability of FY2011 funds. This could lead to disruptions in service delivery if subsequent funding is delayed or reduced. It also complicates long-term financial planning for the Defense Health Agency and the contractor. The reliance on CRs can signal broader budget challenges within the government, potentially impacting the stability and predictability of contract performance.

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: $191,421,906

Exercised Options: $191,421,906

Current Obligation: $187,604,033

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9400205D0001

IDV Type: IDC

Timeline