VA awards $219M for medical disability exams, raising questions about competition and value

Contract Overview

Contract Amount: $218,968,921 ($219.0M)

Contractor: QTC Medical Services Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-12-13

End Date: 2019-11-05

Contract Duration: 692 days

Daily Burn Rate: $316.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: THE PURPOSE OF THIS ACTION IS TO ISSUE A TASK ORDER AGAINST AN IDIQ CONTRACT FOR MEDICAL DISABILITY EXAMS IN VARIOUS US LOCATIONS.

Place of Performance

Location: DIAMOND BAR, LOS ANGELES County, CALIFORNIA, 91765

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $219.0 million to QTC MEDICAL SERVICES INC for work described as: THE PURPOSE OF THIS ACTION IS TO ISSUE A TASK ORDER AGAINST AN IDIQ CONTRACT FOR MEDICAL DISABILITY EXAMS IN VARIOUS US LOCATIONS. Key points: 1. Contract awarded on a firm-fixed-price basis, suggesting predictable costs but potentially limiting flexibility. 2. Significant contract value indicates a substantial need for medical disability evaluations within the VA. 3. The 'Not Competed' status warrants scrutiny regarding the justification for sole-source procurement. 4. Performance period of nearly two years suggests a sustained requirement for these services. 5. The contract's focus on medical disability exams aligns with the VA's core mission to serve veterans. 6. The geographic scope across various US locations implies a broad reach for service delivery.

Value Assessment

Rating: fair

The contract's value of over $218 million for medical disability exams is substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively benchmark the value for money. The firm-fixed-price structure provides cost certainty for the government. However, the lack of competition raises concerns about whether the pricing reflects the best possible market rates. Further analysis would be needed to compare unit costs for specific exam types against industry benchmarks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'Not Competed,' indicating a sole-source procurement. The justification for this approach is not provided in the data. Typically, sole-source awards occur when only one vendor can meet the requirement, or in urgent situations. The absence of a competitive bidding process means that the VA did not explore potential cost savings or service enhancements that could have arisen from multiple vendors vying for the contract.

Taxpayer Impact: The lack of competition for a contract of this magnitude means taxpayers may not have received the most cost-effective solution. Without a competitive environment, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

Veterans requiring medical disability examinations are the primary beneficiaries, receiving essential services for their claims. The contract supports the delivery of medical evaluations across various locations in the United States. It ensures the VA has the capacity to process a high volume of disability claims efficiently. The services provided are critical for determining veteran eligibility for benefits and healthcare.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award requires strong justification to ensure fairness and value.
Limited transparency into the selection process for this large contract.

Positive Signals

Firm-fixed-price contract provides cost predictability for the VA.
Contract addresses a critical need for veteran disability evaluations.
Award supports a significant volume of essential services.

Sector Analysis

The healthcare services sector, specifically the provision of medical evaluations, is a critical component of the federal healthcare system. This contract falls under the 'Offices of Physicians (except Mental Health Specialists)' NAICS code. The market for medical disability exams is specialized, often involving contractors with established networks of healthcare providers capable of conducting comprehensive assessments. The VA is a major purchaser of such services to manage its large veteran population.

Small Business Impact

The data indicates that small business participation was not a stated factor in this award (ss: false, sb: false). As a sole-source award, there were likely no subcontracting opportunities specifically set aside for small businesses through a competitive process. The impact on the small business ecosystem is therefore minimal in the context of this specific award, as it did not leverage small business set-aside provisions.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. The firm-fixed-price nature provides some level of financial oversight by fixing costs. However, the lack of competition limits the ability to assess price reasonableness through market comparison. Transparency could be enhanced by publicly detailing the justification for the sole-source award and performance metrics.

Related Government Programs

Veterans Health Administration Medical Services
Disability Evaluation System
Veteran Benefits Administration Claims Processing

Risk Flags

Sole-source award requires justification
Potential for non-competitive pricing
Limited transparency into procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $219.0 million to QTC MEDICAL SERVICES INC. THE PURPOSE OF THIS ACTION IS TO ISSUE A TASK ORDER AGAINST AN IDIQ CONTRACT FOR MEDICAL DISABILITY EXAMS IN VARIOUS US LOCATIONS.

Who is the contractor on this award?

The obligated recipient is QTC MEDICAL SERVICES 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 $219.0 million.

What is the period of performance?

Start: 2017-12-13. End: 2019-11-05.

What is the specific justification provided by the VA for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'Not Competed' (CT: NOT COMPETED), which typically signifies a sole-source award. However, the specific justification for this sole-source determination is not included in the data snippet. Government agencies must provide a justification for sole-source procurements, often citing reasons such as urgency, unique capabilities of a single source, or the unavailability of other sources. Without this justification, it is impossible to assess whether the sole-source award was appropriate and in the best interest of the government and taxpayers. Further investigation into the contract file or agency procurement records would be necessary to obtain this critical information.

How does the per-exam cost under this contract compare to industry benchmarks or other VA contracts for similar services?

The provided data does not include specific per-unit costs for individual medical disability exams. The total award amount is $218,968,920.77 over a period of approximately two years (December 2017 to November 2019). To compare per-exam costs, one would need to know the total number of exams performed under this contract and the average cost per exam. Without this granular data, a direct comparison to industry benchmarks or other VA contracts is not possible. Such analysis would require access to detailed performance reports or cost data associated with the task orders issued against this IDIQ contract.

What is the track record of QTC Medical Services Inc. in performing similar large-scale medical examination contracts for the VA or other federal agencies?

QTC Medical Services Inc. is a known provider of medical examination services, including for the Department of Veterans Affairs. They have historically been a significant player in this market. Information regarding their specific track record on similar large-scale contracts would typically be found in past performance evaluations within the VA's procurement system or through publicly available contract award data. Assessing their performance would involve reviewing metrics such as on-time delivery, quality of reports, customer satisfaction, and adherence to contract terms on previous engagements. Given the size of this award, it suggests a level of confidence in their past performance by the awarding agency.

What are the potential risks associated with awarding a contract of this magnitude without full and open competition?

Awarding a contract of this magnitude ($219 million) without full and open competition presents several risks. Primarily, there is a risk of paying a higher price than might be achieved through a competitive process, as the lack of competing bids reduces downward price pressure. There's also a risk of suboptimal service quality or innovation, as the incumbent contractor may face less incentive to improve services or offer cost-saving efficiencies. Furthermore, a sole-source award can raise concerns about fairness and equal opportunity for other qualified vendors who might have been able to provide the services. It also limits the government's ability to leverage market dynamics for better terms and conditions.

How does this contract's spending compare to historical VA spending on medical disability exams?

The provided data represents a single task order or delivery order with a value of $218,968,920.77. To compare this to historical VA spending on medical disability exams, one would need to aggregate spending data for similar contracts over previous fiscal years. This specific award covers a period from December 2017 to November 2019. Analyzing historical data would reveal trends in VA's reliance on external providers for these services, fluctuations in contract values, and the prevalence of competitive versus sole-source awards in this category. Without access to broader historical spending reports from the VA, a direct comparison is not feasible based solely on this data point.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › NURSING, NURSING HOME, EVAL/SCREEN

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leidos Holdings, Inc. (UEI: 611641312)

Address: 21700 COPLEY DR STE 200, DIAMOND BAR, CA, 91765

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

Financial Breakdown

Contract Ceiling: $223,917,631

Exercised Options: $218,968,921

Current Obligation: $218,968,921

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X18D0013

IDV Type: IDC

Timeline