HHS awarded $224.8M to General Dynamics for contact center services, with 16 orders over 3 years

Contract Overview

Contract Amount: $224,772,260 ($224.8M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2002-09-15

End Date: 2005-06-30

Contract Duration: 1,019 days

Daily Burn Rate: $220.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: TAS::75 0511::TAS

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $224.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TAS::75 0511::TAS Key points: 1. Contract value of $224.8M over three years suggests significant investment in contact center operations. 2. Full and open competition indicates a broad market engagement, potentially leading to better pricing. 3. The contract type (Cost Plus Award Fee) allows for flexibility but requires careful oversight to manage costs and incentivize performance. 4. A duration of 1019 days (approx. 3 years) is typical for large-scale service contracts. 5. The North American Industry Classification System (NAICS) code 561422 points to specialized telemarketing and contact center services. 6. The contract was awarded by the Centers for Medicare and Medicaid Services (CMS), a major health agency. 7. The presence of 16 delivery orders suggests a phased or modular approach to service delivery. 8. The contractor, General Dynamics Information Technology, is a large, established federal contractor.

Value Assessment

Rating: good

The total award of $224.8M over approximately three years for contact center services appears reasonable given the scale and duration. Benchmarking against similar large-scale federal contact center contracts would provide a more precise value-for-money assessment. The Cost Plus Award Fee (CPAF) structure, while common for complex services, necessitates robust performance metrics to ensure the award fees align with demonstrated value and do not inflate costs unnecessarily. Without specific performance data or detailed cost breakdowns, a definitive value assessment is challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The fact that it resulted in a single award does not diminish the competitive nature of the initial solicitation. A broad competition typically fosters price discovery and encourages vendors to offer competitive terms. The number of bidders is not specified, but the 'full and open' designation implies a robust process designed to maximize market participation.

Taxpayer Impact: Taxpayers benefit from full and open competition as it generally drives down prices and encourages innovation by allowing the government to select the best value offer from a wide pool of qualified vendors.

Public Impact

Beneficiaries include Medicare and Medicaid beneficiaries who rely on contact center services for inquiries and support. Services delivered likely encompass call handling, information dissemination, and potentially enrollment assistance for health programs. The geographic impact is national, supporting beneficiaries across the United States. Workforce implications include the creation of jobs within the contractor's organization, potentially in various locations where contact centers are operated.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee (CPAF) contracts can lead to cost overruns if not managed diligently, as contractor profit is tied to meeting performance targets, which can sometimes incentivize higher spending.
The long duration of the contract (over 3 years) increases the risk of scope creep or misalignment with evolving program needs if not actively managed.
Reliance on a single large contractor for critical contact center operations could pose a risk if the contractor experiences performance issues or financial instability.
Lack of specific details on performance metrics and award fee criteria makes it difficult to assess the effectiveness of incentivizing desired outcomes.
The sheer volume of the award ($224.8M) necessitates stringent oversight to ensure funds are used efficiently and effectively.

Positive Signals

Awarded under full and open competition, which typically leads to better pricing and selection of the most capable vendor.
The contractor, General Dynamics Information Technology, is a well-established entity with significant experience in federal contracting, suggesting a lower risk of performance failure.
The Cost Plus Award Fee (CPAF) structure, while requiring oversight, is designed to incentivize high performance and achieve specific program goals.
The contract's duration and significant value indicate a commitment to providing essential services to a large beneficiary population.
The existence of multiple delivery orders (16) suggests a structured approach to service implementation and management.

Sector Analysis

The federal contact center services market is a significant segment within the broader IT and professional services sector. Agencies rely heavily on these services for citizen engagement, support, and information dissemination. Spending in this area is driven by the need for efficient, scalable, and reliable communication channels. Comparable spending benchmarks would involve analyzing other large federal contracts for similar services, such as help desks, call centers, and citizen support portals, across various agencies like SSA, IRS, and VA.

Small Business Impact

The contract details indicate that small business participation was not a primary set-aside consideration, as the award was made to a large prime contractor (General Dynamics) and the 'small business' flag is false. However, large prime contractors are often required to have subcontracting plans that include goals for utilizing small businesses. The effectiveness of these subcontracting plans in benefiting the small business ecosystem would depend on the specific requirements outlined in the contract and the contractor's adherence to them. Without details on the subcontracting plan, it's difficult to assess the direct impact on small businesses.

Oversight & Accountability

Oversight for this Cost Plus Award Fee (CPAF) contract would typically be managed by the Contracting Officer's Representative (COR) and the contracting office within HHS/CMS. Key accountability measures would revolve around the performance metrics defined in the contract and the criteria for earning award fees. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Federal Contact Center Services
IT Professional Services
Healthcare IT Services
Customer Relationship Management (CRM) Services
Telecommunications Services

Risk Flags

Cost Plus Award Fee (CPAF) requires diligent oversight to manage costs.
Long contract duration increases risk of requirement misalignment.
Potential for vendor lock-in due to contract size and duration.
Performance metrics and award fee criteria need clear definition and monitoring.
Reliance on a single large contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $224.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TAS::75 0511::TAS

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC..

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 $224.8 million.

What is the period of performance?

Start: 2002-09-15. End: 2005-06-30.

What is the historical spending trend for contact center services at CMS?

Analyzing historical spending trends for contact center services at CMS requires accessing historical contract data beyond this specific award. Typically, agencies like CMS have consistent needs for contact center support due to the large volume of beneficiaries and inquiries related to Medicare and Medicaid. Spending can fluctuate based on program changes, legislative mandates, and the introduction of new services or technologies. A review of past contracts, including their values, durations, and scopes, would reveal whether this $224.8M award represents an increase, decrease, or stable level of investment in contact center operations compared to previous periods. Factors such as the transition to new healthcare policies or the expansion of telehealth services could also influence spending patterns.

How does the pricing structure (Cost Plus Award Fee) compare to other federal contact center contracts?

The Cost Plus Award Fee (CPAF) structure is common for complex service contracts where performance outcomes are critical but difficult to define precisely upfront. Compared to fixed-price contracts, CPAF offers more flexibility for the government to adapt to changing requirements and incentivizes the contractor to meet or exceed performance targets through award fees. However, it also carries a higher risk of cost growth if not managed meticulously. Many federal contact center contracts utilize a mix of pricing structures, including Firm-Fixed-Price (FFP) for well-defined services and CPAF or Cost-Plus-Incentive-Fee (CPIF) for performance-driven aspects. The appropriateness of CPAF here depends on the complexity and variability of the services required by CMS.

What are the key performance indicators (KPIs) used to determine award fees for this contract?

The specific Key Performance Indicators (KPIs) used to determine award fees for this General Dynamics Information Technology contract are not detailed in the provided summary data. However, for federal contact center services, typical KPIs often include metrics such as average call handling time, first call resolution rate, customer satisfaction scores (e.g., via post-call surveys), agent adherence to schedule, and compliance with privacy regulations. The Cost Plus Award Fee (CPAF) structure necessitates clearly defined, measurable, achievable, relevant, and time-bound (SMART) KPIs. The government's COR would monitor these KPIs rigorously to assess contractor performance and justify the payment of award fees, ensuring that taxpayer money is spent effectively to achieve desired service levels.

What is General Dynamics Information Technology's track record with similar HHS contracts?

General Dynamics Information Technology (GDIT) has a substantial track record of performing IT and professional services contracts for the Department of Health and Human Services (HHS) and its various agencies, including CMS. Their experience often spans areas like health IT modernization, data analytics, program management, and contact center operations. A review of their past performance on similar HHS contracts would likely show a history of managing large-scale, complex projects. Assessing their performance history, including any past performance issues, contract modifications, or successful delivery outcomes, is crucial for understanding their capability and reliability in fulfilling the requirements of this specific contact center services award.

What are the potential risks associated with the long duration and high value of this contract?

The long duration (over 3 years) and high value ($224.8M) of this contract present several potential risks. Firstly, the extended timeline increases the possibility of technological obsolescence or shifts in program requirements that the original contract may not adequately address, necessitating costly modifications or re-competition. Secondly, such a large contract value concentrated with one vendor could create vendor lock-in, making it difficult and expensive to switch providers if performance degrades. Thirdly, the extended period requires sustained and vigilant government oversight to prevent scope creep, ensure continued cost-effectiveness, and maintain service quality. Finally, a significant portion of federal funding allocated over a long period requires robust financial controls and performance monitoring to ensure accountability and prevent waste.

How does this contract contribute to CMS's overall mission and strategic goals?

This contract directly supports the Centers for Medicare and Medicaid Services' (CMS) core mission of advancing the health of the American people. Effective contact center services are crucial for beneficiaries to access information about healthcare coverage, benefits, enrollment processes, and to resolve issues related to their health insurance. By ensuring efficient and responsive communication channels, CMS can improve beneficiary experience, promote program integrity, and facilitate access to healthcare services. The contract's focus on telemarketing and contact centers aligns with CMS's strategic goals of enhancing stakeholder engagement, improving operational efficiency, and ensuring beneficiaries have the support they need to navigate the complex healthcare landscape.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Telemarketing Bureaus and Other Contact Centers

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 16

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 3211 JERMANTOWN RD, FAIRFAX, VA, 22030

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $224,772,260

Exercised Options: $224,772,260

Current Obligation: $224,772,260

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 500010050

IDV Type: IDC

Timeline