VA awards $5.06B contract to Optum for health insurance services in FY22

Contract Overview

Contract Amount: $5,059,292,057 ($5.1B)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-10-01

End Date: 2022-09-30

Contract Duration: 364 days

Daily Burn Rate: $13.9M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT FOR FY22 REGION 2

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $5.06 billion to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT FOR FY22 REGION 2 Key points: 1. Significant contract value of over $5 billion for health insurance. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Risk is moderate due to the large contract value and duration. 4. Sector is healthcare, specifically direct health and medical insurance carriers.

Value Assessment

Rating: good

The contract value of $5.06 billion is substantial. Benchmarking against similar large-scale health insurance contracts is difficult without more specific service details, but the firm fixed-price structure provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing. The delivery order structure within this framework allows for flexibility while maintaining a competitive environment.

Taxpayer Impact: Taxpayer funds are being used for essential health insurance services, with competition aiming to ensure value for money.

Public Impact

Ensures continued access to health insurance services for veterans. Supports the Department of Veterans Affairs' mission to provide healthcare. Potential for improved health outcomes through consistent insurance coverage.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Full and open competition
Firm fixed price contract

Sector Analysis

This contract falls within the healthcare sector, specifically for direct health and medical insurance carriers. Spending in this area is critical for government healthcare provision, with benchmarks varying widely based on service scope and beneficiary population.

Small Business Impact

The data does not indicate any specific provisions or awards made to small businesses under this contract. Further analysis would be needed to determine if small business participation was encouraged or required.

Oversight & Accountability

The contract is managed by the Department of Veterans Affairs. Oversight would focus on service delivery, quality of care, and adherence to contract terms to ensure accountability for taxpayer funds.

Related Government Programs

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

Risk Flags

Large contract value may present execution risks.
Dependence on a single carrier for a significant portion of services.
Potential for scope creep if not managed tightly.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $5.06 billion to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT FOR FY22 REGION 2

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 $5.06 billion.

What is the period of performance?

Start: 2021-10-01. End: 2022-09-30.

What specific health insurance services are covered under this $5.06 billion contract, and how do they align with veteran healthcare needs?

The contract is for direct health and medical insurance carriers. While the specific services are not detailed here, they likely encompass a broad range of medical treatments, prescription drugs, and potentially specialized care programs designed to meet the diverse healthcare requirements of the veteran population.

Given the full and open competition, what was the range of bids received, and how did Optum's proposal stand out?

Information on the range of bids is not provided in this summary. However, full and open competition suggests multiple entities were eligible to bid. Optum's selection implies their proposal met or exceeded the government's requirements at a competitive price point, potentially offering superior value or specific capabilities.

What mechanisms are in place to ensure the effectiveness and quality of healthcare services provided through this contract?

Effectiveness and quality are typically ensured through performance metrics, service level agreements, and regular performance reviews conducted by the contracting agency (Department of Veterans Affairs). Mechanisms may include audits, patient satisfaction surveys, and adherence to clinical best practices.

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: Optum Labs Topaz Inc

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: $5,059,292,057

Exercised Options: $5,059,292,057

Current Obligation: $5,059,292,057

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0005

IDV Type: IDC

Timeline