HHS Spends $56.8M on BCBS AL for Automated Info System Services Over 9 Years
Contract Overview
Contract Amount: $56,851,535 ($56.9M)
Contractor: Blue Cross and Blue Shield of Alabama
Awarding Agency: Department of Health and Human Services
Start Date: 2002-07-31
End Date: 2011-12-31
Contract Duration: 3,440 days
Daily Burn Rate: $16.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: AUTOMATED INFORMATION SYSTEM SVCS
Place of Performance
Location: BIRMINGHAM, SHELBY County, ALABAMA, 35244
State: Alabama Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $56.9 million to BLUE CROSS AND BLUE SHIELD OF ALABAMA for work described as: AUTOMATED INFORMATION SYSTEM SVCS Key points: 1. Significant long-term contract awarded through full and open competition. 2. Cost-plus award fee structure may incentivize performance but requires careful oversight. 3. No small business participation noted, potentially missing opportunities for smaller vendors. 4. Long contract duration (9 years) suggests a critical, ongoing need for these services.
Value Assessment
Rating: fair
The contract's cost-plus award fee structure makes direct pricing comparison difficult. The total award value of $56.8M over 9 years averages approximately $6.3M annually, which needs to be benchmarked against similar IT service contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded using full and open competition, indicating a robust price discovery process. However, the cost-plus award fee type means the final price is tied to performance and costs incurred, not a fixed bid.
Taxpayer Impact: Taxpayer funds were used for this contract. The cost-plus award fee structure necessitates diligent oversight to ensure costs are reasonable and performance meets expectations to maximize value.
Public Impact
Impacts beneficiaries of Medicare and Medicaid through IT system support. Ensures continuity of essential healthcare administrative services. Potential for cost overruns if not managed effectively due to the award fee structure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus award fee structure requires strong oversight.
- Lack of small business participation.
- Long contract duration could lead to vendor lock-in or outdated technology if not managed.
Positive Signals
- Awarded via full and open competition.
- Long-term commitment suggests critical service provision.
- Established vendor (BCBS AL) likely has deep domain knowledge.
Sector Analysis
This contract falls within the Information Technology sector, specifically for automated information system services supporting healthcare administration. Benchmarking IT service contracts of this duration and value requires comparison with similar government or large enterprise IT outsourcing agreements.
Small Business Impact
The data indicates no small business participation in this contract. This suggests that either small businesses were not considered or did not bid, potentially limiting opportunities for economic development and diverse vendor engagement.
Oversight & Accountability
The cost-plus award fee structure requires robust oversight from CMS to ensure that costs are reasonable and that the contractor meets performance objectives. Regular audits and performance reviews are crucial for accountability.
Related Government Programs
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Potential for cost overruns due to cost-plus award fee structure.
- Lack of small business participation.
- Long contract duration (9 years) may not reflect current market pricing or technology.
- Dependence on a single vendor for critical IT infrastructure.
Tags
department-of-health-and-human-services, al, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $56.9 million to BLUE CROSS AND BLUE SHIELD OF ALABAMA. AUTOMATED INFORMATION SYSTEM SVCS
Who is the contractor on this award?
The obligated recipient is BLUE CROSS AND BLUE SHIELD OF ALABAMA.
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).
What is the total obligated amount?
The obligated amount is $56.9 million.
What is the period of performance?
Start: 2002-07-31. End: 2011-12-31.
What specific automated information system services were provided, and how did they improve efficiency or effectiveness for CMS?
The specific services provided under this contract likely encompassed the development, maintenance, and operation of IT systems crucial for managing Medicare and Medicaid programs. These could include claims processing, beneficiary enrollment, data management, and reporting systems. The effectiveness would be measured by system uptime, processing accuracy, security compliance, and the ability to support evolving healthcare regulations and policy changes.
Given the cost-plus award fee structure, what mechanisms were in place to control costs and ensure value for taxpayers?
A cost-plus award fee contract typically involves a base fee plus an award fee determined by performance against pre-defined metrics. To control costs and ensure value, CMS would need stringent oversight, including detailed cost audits, regular performance reviews against established criteria, and clear definitions of what constitutes exceptional performance warranting higher award fees. Benchmarking costs against industry standards would also be critical.
How did the full and open competition process ensure the best possible outcome for the government, considering the long duration and cost-plus structure?
Full and open competition theoretically allows the widest range of qualified vendors to bid, fostering a competitive environment that drives better pricing and service offerings. For a long-term, cost-plus contract, this process aims to select a vendor capable of delivering complex services reliably and efficiently. However, the cost-plus nature means ongoing management and oversight are paramount to realizing the full benefits of the initial competition.
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 450 RIVERCHASE PARKWAY EAST, BIRMINGHAM, AL, 35244
Business Categories: Category Business, Nonprofit Organization, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $56,851,535
Exercised Options: $56,851,535
Current Obligation: $56,851,535
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: 500990017
IDV Type: IDC
Timeline
Start Date: 2002-07-31
Current End Date: 2011-12-31
Potential End Date: 2011-12-31 00:00:00
Last Modified: 2022-11-29
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