VA's $309M Contract with Optum Public Sector Solutions for Health Insurance Carriers in FY21

Contract Overview

Contract Amount: $3,088,852,520 ($3.1B)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-10-01

End Date: 2021-09-30

Contract Duration: 364 days

Daily Burn Rate: $8.5M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: CCN REGION THREE FY21 EXPRESS REPORT

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $3.09 billion to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: CCN REGION THREE FY21 EXPRESS REPORT Key points: 1. The contract awarded to Optum Public Sector Solutions, Inc. represents a significant investment in health insurance carrier services for the VA. 2. Competition was full and open, suggesting a robust market for these services. 3. The contract's fixed-price nature aims to control costs, but the specific value benchmark needs further analysis. 4. This spending falls within the broader IT and Healthcare sectors, requiring careful monitoring for efficiency and effectiveness.

Value Assessment

Rating: good

The contract's total award value is $308,885,2520.23. Without specific per-unit cost data or detailed service breakdowns, a precise pricing assessment against similar contracts is challenging. However, the existence of a benchmark of $8,485,859 suggests some level of cost comparison was performed.

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 had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives the best value.

Taxpayer Impact: The competitive nature of the award is expected to benefit taxpayers by driving down costs and improving service quality for healthcare insurance carriers.

Public Impact

Veterans will benefit from potentially improved access to health insurance carrier services. The large contract value could impact market dynamics for other health insurance providers. Transparency in contract execution is crucial for ensuring taxpayer funds are used effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed per-unit cost data for precise value assessment.
Potential for scope creep in long-term health insurance contracts.
Dependence on a single vendor for critical health insurance services.

Positive Signals

Awarded under full and open competition.
Firm fixed-price contract type helps control costs.
Clear delivery order structure for defined services.

Sector Analysis

This contract falls under the Direct Health and Medical Insurance Carriers (NAICS 524114) sector. Spending in this area is critical for the VA's mission to provide healthcare to veterans. Benchmarks for this specific NAICS code would be beneficial for a more granular comparison.

Small Business Impact

The provided data does not indicate any specific set-asides for small businesses in this contract. Further investigation would be needed to determine if small businesses were involved as subcontractors or if opportunities were missed.

Oversight & Accountability

The Department of Veterans Affairs is the contracting agency. Oversight would typically involve contract performance monitoring, financial audits, and ensuring compliance with terms and conditions to maintain accountability.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

High contract value requires diligent oversight.
Potential for vendor lock-in if competition is not sustained.
Need for detailed performance metrics to ensure service quality.
Clarity on the benchmark's scope is needed for accurate cost analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $3.09 billion to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. CCN REGION THREE FY21 EXPRESS REPORT

Who is the contractor on this award?

The obligated recipient is OPTUM PUBLIC SECTOR SOLUTIONS, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $3.09 billion.

What is the period of performance?

Start: 2020-10-01. End: 2021-09-30.

What specific health insurance services are covered under this contract, and how do they align with veteran needs?

The contract is for Direct Health and Medical Insurance Carriers. While the specific services aren't detailed, it likely encompasses a range of insurance functions such as claims processing, network management, and potentially policy administration. These services are crucial for enabling veterans to access necessary medical care through insurance mechanisms, supporting the VA's broader healthcare mission.

How does the benchmark cost of $8,485,859 compare to the total contract value, and what does this imply about potential cost savings or overspending?

The benchmark cost of $8,485,859 represents a small fraction of the total contract value ($308,885,2520.23). This suggests that either the benchmark is for a specific component or period, or the total contract value is significantly higher than the benchmarked amount. Without further context on what the benchmark represents, it's difficult to definitively conclude cost savings or overspending.

What mechanisms are in place to ensure the effectiveness and quality of the health insurance carrier services provided by Optum Public Sector Solutions?

As a firm fixed-price contract awarded through full and open competition, the primary driver for effectiveness is the vendor's incentive to meet contractual obligations to secure payment. The VA likely employs performance metrics, service level agreements (SLAs), and regular contract reviews to monitor quality and ensure services meet the needs of veterans.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 800 KING FARM BLVD STE 500, ROCKVILLE, MD, 20850

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

Financial Breakdown

Contract Ceiling: $3,088,852,520

Exercised Options: $3,088,852,520

Current Obligation: $3,088,852,520

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline