Task Order #2 for FOSS awarded to SERCO INC by PBGC for $37.8M, focusing on pharmacy benefit management

Contract Overview

Contract Amount: $37,817,298 ($37.8M)

Contractor: Serco Inc

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2020-11-19

End Date: 2024-07-18

Contract Duration: 1,337 days

Daily Burn Rate: $28.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: TASK ORDER #2 FOR FOSS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20170

State: Virginia Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $37.8 million to SERCO INC for work described as: TASK ORDER #2 FOR FOSS Key points: 1. Value for money appears fair given the multi-year duration and scope of pharmacy benefit management services. 2. Competition dynamics indicate a full and open competition, suggesting potential for competitive pricing. 3. Risk indicators are moderate, with a Time and Materials contract type potentially leading to cost overruns if not managed closely. 4. Performance context is within the Pension Benefit Guaranty Corporation's operational needs for managing benefits. 5. Sector positioning is within administrative services for insurance and pension funds, a specialized area.

Value Assessment

Rating: fair

The contract value of $37.8 million over approximately four years for pharmacy benefit management and third-party administration is substantial. Benchmarking against similar contracts is challenging without more specific service details, but the price per year averages around $9.5 million. This figure needs to be assessed against the volume of beneficiaries and claims processed to determine true value for money. The Time and Materials (T&M) pricing structure, while common for evolving requirements, carries inherent risks of cost escalation if not meticulously monitored.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but the nature of the competition implies a level of market engagement that should drive competitive pricing. The agency's choice of full and open competition is generally a positive indicator for achieving fair market value.

Taxpayer Impact: A full and open competition provides taxpayers with assurance that the government sought the best possible price and quality by allowing all qualified vendors to participate.

Public Impact

Beneficiaries of the Pension Benefit Guaranty Corporation's programs are indirectly impacted through the efficient administration of their benefits. Services delivered include pharmacy benefit management and other third-party administration, crucial for pension fund operations. Geographic impact is national, as the PBGC serves a nationwide constituency. Workforce implications are primarily within the contractor's organization, though PBGC staff will oversee the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type increases risk of cost overruns if not closely managed.
Lack of specific performance metrics in the provided data makes it difficult to assess efficiency.
The duration of the contract (over 3 years) requires sustained oversight to ensure continued value.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Contract supports a critical government function of the Pension Benefit Guaranty Corporation.
The contractor, SERCO INC, has a significant presence in government contracting, suggesting experience.

Sector Analysis

This contract falls within the administrative and support services sector for financial and insurance entities. The market for third-party administration and pharmacy benefit management is specialized, often involving complex regulatory compliance and large-scale data processing. Comparable spending benchmarks would typically be found within other government agencies or large private pension funds managing similar benefit programs. The total contract value of $37.8 million over its term places it as a significant, but not exceptionally large, award within this niche.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside (ss). This suggests the contract was not specifically targeted towards small businesses. Consequently, the primary impact on the small business ecosystem would be through potential subcontracting opportunities, which are not detailed here. Without specific subcontracting plans, it's difficult to assess the broader impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily reside with the Pension Benefit Guaranty Corporation (PBGC) contracting officers and program managers. As a federal contract, it is subject to standard government oversight mechanisms, including audits and reviews by the agency's Inspector General. Transparency is facilitated through contract award databases like FPDS, though detailed performance reports are typically internal. The effectiveness of oversight hinges on the PBGC's internal controls and diligence in monitoring the T&M contract.

Related Government Programs

Pension Benefit Administration Services
Pharmacy Benefit Management Contracts
Third-Party Administrator Contracts
Federal Employee Health Benefits Program (FEHBP) Administration
Government Employee Health Insurance Contracts

Risk Flags

Time and Materials Contract Type
Potential for Cost Overruns
Limited Transparency on Specific Performance Metrics

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $37.8 million to SERCO INC. TASK ORDER #2 FOR FOSS

Who is the contractor on this award?

The obligated recipient is SERCO INC.

Which agency awarded this contract?

Awarding agency: Pension Benefit Guaranty Corporation (Pension Benefit Guaranty Corporation).

What is the total obligated amount?

The obligated amount is $37.8 million.

What is the period of performance?

Start: 2020-11-19. End: 2024-07-18.

What is the historical spending pattern for pharmacy benefit management and third-party administration by the Pension Benefit Guaranty Corporation?

Analyzing historical spending requires access to detailed PBGC procurement data beyond this single task order. However, the Pension Benefit Guaranty Corporation (PBGC) is responsible for administering defined benefit pension plans in the private sector. Its operational budget, and thus its spending on administrative services like pharmacy benefit management and third-party administration, is influenced by the number of covered plans, the financial health of those plans, and the complexity of claims processing. Historically, agencies like the PBGC rely on contractors to manage specialized functions efficiently. Without specific historical data for PBGC's PBM/TPA spending, it's difficult to establish a precise pattern. However, it's reasonable to assume that spending in this area would fluctuate based on legislative changes affecting pensions, economic conditions impacting plan solvency, and the agency's strategic decisions regarding outsourcing versus in-house management. The current $37.8M task order suggests a significant, ongoing investment in these services.

How does the contractor, SERCO INC, perform on similar government contracts, particularly those involving pharmacy benefit management?

Serco Inc. is a large government contractor with a broad portfolio across various federal agencies. While specific performance data for their pharmacy benefit management (PBM) contracts is not publicly detailed in this context, Serco has extensive experience in managing complex administrative and technical services for government clients. Their track record includes work in areas such as healthcare administration, IT services, and operational support. Performance on PBM contracts would depend on their established infrastructure, expertise in managing formularies, negotiating with pharmacies, processing claims, and ensuring compliance with healthcare regulations. A review of their past performance evaluations, if available through sources like the Contractor Performance Assessment Reporting System (CPARS), would provide a more granular understanding of their capabilities and reliability in delivering PBM services. Given their size and scope, they are generally considered a capable provider, but specific contract performance can vary.

What are the key performance indicators (KPIs) used to measure the success of this pharmacy benefit management contract?

Key Performance Indicators (KPIs) for a pharmacy benefit management (PBM) contract typically focus on cost savings, efficiency, quality of service, and compliance. For this specific contract with the Pension Benefit Guaranty Corporation (PBGC), potential KPIs could include: 1. **Drug Cost Savings:** Measured by the percentage reduction in drug costs achieved through formulary management, generic substitution, and negotiated rebates. 2. **Claims Processing Accuracy and Timeliness:** Ensuring a high percentage of claims are processed accurately and within a defined timeframe (e.g., 95% accuracy, 98% processed within 3 days). 3. **Member/Provider Satisfaction:** Measured through surveys assessing ease of access to medications, clarity of information, and responsiveness of customer service. 4. **Formulary Compliance:** Tracking adherence to the approved drug formulary by prescribers and pharmacies. 5. **Rebate Achievement:** Monitoring the successful collection of rebates from pharmaceutical manufacturers. 6. **Audit Compliance:** Ensuring adherence to all relevant healthcare regulations (e.g., HIPAA). The specific KPIs would be detailed in the contract's Performance Work Statement (PWS).

What is the potential impact of the Time and Materials (T&M) contract type on overall cost and project management for this task order?

The Time and Materials (T&M) contract type, used for this task order, allows the government to pay the contractor for direct labor hours at specified fixed hourly rates and for the actual cost of materials. While T&M offers flexibility, especially when the scope of work is not fully defined at the outset, it carries a significant risk of cost escalation. Unlike fixed-price contracts, there is no ceiling on the total cost unless a contract ceiling is explicitly stated and managed. This places a heavy burden on the government's project management and oversight functions to diligently track labor hours, material costs, and ensure that work performed is necessary and efficient. Without robust monitoring, T&M contracts can become significantly more expensive than anticipated, potentially exceeding the initial $37.8 million estimate if not managed tightly. The contractor also has less incentive to control costs compared to fixed-price arrangements.

How does this contract align with the Pension Benefit Guaranty Corporation's overall mission and strategic objectives?

This task order directly supports the Pension Benefit Guaranty Corporation's (PBGC) core mission of protecting the retirement security of millions of Americans in private-sector defined benefit pension plans. By outsourcing pharmacy benefit management and third-party administration, the PBGC can leverage specialized expertise and potentially achieve greater efficiencies and cost savings in managing these complex functions. This allows the PBGC to focus its internal resources on its primary responsibilities, such as plan oversight, financial management, and ensuring timely payment of benefits. Effective PBM and TPA services contribute to the overall financial health and operational effectiveness of the pension plans the PBGC oversees, thereby aligning with its strategic objective of safeguarding participants' benefits.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 16PBGC21Q0005

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 12930 WORLDGATE DR STE 600, HERNDON, VA, 20170

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

Financial Breakdown

Contract Ceiling: $45,119,605

Exercised Options: $45,119,605

Current Obligation: $37,817,298

Actual Outlays: $37,817,298

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $8,266,670

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 16PBGC19D0009

IDV Type: IDC

Timeline