VA's Southeast Region MDES contract nears $365M, with OptumServe Health Services Inc. as the sole awardee

Contract Overview

Contract Amount: $365,335,497 ($365.3M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-10-01

End Date: 2023-09-30

Contract Duration: 364 days

Daily Burn Rate: $1.0M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDICAL DISABILITY EXAMINATIONS (MDES) UNDER SECTION 504 OF THE VETERANS BENEFITS IMPROVEMENTS ACT OF 1996 (PUBLIC LAW 104 275 38 U.S.C. 5101), REGION 2 (SOUTHEAST) - OPTION YEAR 4 TASK ORDER

Place of Performance

Location: LA CROSSE, LA CROSSE County, WISCONSIN, 54601

State: Wisconsin Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $365.3 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: MEDICAL DISABILITY EXAMINATIONS (MDES) UNDER SECTION 504 OF THE VETERANS BENEFITS IMPROVEMENTS ACT OF 1996 (PUBLIC LAW 104 275 38 U.S.C. 5101), REGION 2 (SOUTHEAST) - OPTION YEAR 4 TASK ORDER Key points: 1. The contract represents a significant investment in medical disability examinations for veterans. 2. OptumServe Health Services, Inc. has been the incumbent provider for this region. 3. The contract's duration and value suggest a substantial ongoing need for these services. 4. Performance context is crucial to assess the effectiveness of these examinations. 5. The 'Offices of Physicians' NAICS code indicates a focus on core medical assessment services.

Value Assessment

Rating: fair

The total value of $365.3 million over its period of performance (Option Year 4) indicates a substantial commitment. Benchmarking this against similar large-scale medical examination contracts is challenging without more specific service delivery metrics. However, the consistent award to a single vendor over multiple option years suggests a stable, albeit potentially less competitive, pricing environment. Further analysis would require comparing per-examination costs and service quality metrics against regional or national averages for similar VA contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the data provided pertains to an option year task order, and the history of competition across all option years is not detailed. The fact that it is a single task order award suggests that while competition was available, OptumServe Health Services, Inc. was selected as the most advantageous offer.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to better pricing and service quality. It ensures that the government explores various options before committing funds.

Public Impact

Veterans in Region 2 (Southeast) will benefit from continued access to medical disability examinations. These examinations are critical for determining eligibility and benefit levels for veterans. The services support the Department of Veterans Affairs' mission to provide comprehensive care and benefits. The contract likely impacts a significant number of healthcare professionals and administrative staff involved in conducting and processing these examinations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to long-term relationship and specialized service delivery.
Need for ongoing performance monitoring to ensure quality and timeliness of examinations.
Reliance on a single vendor for a critical veteran service could pose a risk if performance degrades.

Positive Signals

Consistent service delivery over multiple option years suggests a reliable performance history.
Award under full and open competition indicates a structured procurement process.
The large contract value may reflect economies of scale and efficient service provision.

Sector Analysis

The healthcare services sector, particularly within government contracting, is characterized by significant demand for specialized medical services. This contract falls under the 'Offices of Physicians' NAICS code, indicating a focus on direct medical assessment. The market for such services is substantial, driven by the ongoing needs of federal agencies like the VA. Comparable spending benchmarks would involve analyzing other large-scale contracts for medical evaluations, disability assessments, and related healthcare support services across different federal agencies.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a specific set-aside requirement for this particular contract award. While the prime contractor is OptumServe Health Services, Inc., analysis of their subcontracting plans and actual utilization of small businesses would be necessary to fully assess the impact on the small business ecosystem. Larger prime contractors often have established subcontracting programs, but the extent to which this contract contributes to small business growth requires further investigation.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. Accountability measures are typically embedded within the contract terms, including performance standards, reporting requirements, and potential penalties for non-compliance. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise concerning the contract's execution.

Related Government Programs

VA Disability Compensation Program
VA Healthcare Services Contracts
Medical Examination Services for Federal Agencies
Veterans Benefits Administration Programs

Risk Flags

Long-term sole-source award history (potential)
High contract value requires robust performance monitoring
Dependence on a single provider for critical veteran services

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $365.3 million to OPTUMSERVE HEALTH SERVICES, INC.. MEDICAL DISABILITY EXAMINATIONS (MDES) UNDER SECTION 504 OF THE VETERANS BENEFITS IMPROVEMENTS ACT OF 1996 (PUBLIC LAW 104 275 38 U.S.C. 5101), REGION 2 (SOUTHEAST) - OPTION YEAR 4 TASK ORDER

Who is the contractor on this award?

The obligated recipient is OPTUMSERVE HEALTH 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 $365.3 million.

What is the period of performance?

Start: 2022-10-01. End: 2023-09-30.

What is the historical spending trend for Medical Disability Examinations (MDES) in Region 2 under OptumServe Health Services, Inc.?

The provided data focuses on Option Year 4, with a value of $365,335,496.92. To understand the historical trend, one would need to examine the contract's award history across all previous option years. This would involve querying the Federal Procurement Data System (FPDS) or similar databases for prior task orders or contract modifications issued to OptumServe Health Services, Inc. for MDES in Region 2. Analyzing these past expenditures would reveal whether the spending has been consistent, increasing, or decreasing, providing context for the current option year's significant value and indicating the long-term commitment to this service provider and region.

How does the per-veteran cost for these MDES compare to similar contracts or VA initiatives?

Determining the per-veteran cost requires knowing the total number of examinations conducted under this contract during Option Year 4. Without this specific metric, a direct comparison is impossible. However, if the number of examinations were available, it could be benchmarked against per-examination costs from other VA regions, contracts with different providers, or even private sector medical evaluation services. Factors such as the complexity of examinations, geographic dispersion of veterans, and required turnaround times significantly influence per-unit costs. A higher per-unit cost might be justified by superior service quality or efficiency, but requires careful evaluation against contract performance metrics.

What are the key performance indicators (KPIs) used to evaluate OptumServe Health Services, Inc.'s performance on this contract?

Key Performance Indicators (KPIs) for a contract like the Medical Disability Examinations (MDES) typically focus on timeliness, accuracy, and quality of the examinations. Specific KPIs might include the average turnaround time from referral to examination completion, the percentage of examinations completed within a target timeframe, the rate of appeals or remands related to the examinations, and patient satisfaction scores. The contract documents themselves would detail these KPIs, along with the acceptable performance thresholds and any associated award fees or penalties. Regular performance reviews by the VA would assess OptumServe's adherence to these KPIs.

What is the potential impact of OptumServe Health Services, Inc. being the sole awardee on competition and pricing for future MDES contracts?

While this specific task order was awarded under full and open competition, the fact that OptumServe Health Services, Inc. has been a long-term provider, potentially holding multiple option years, could influence future competition. If OptumServe has developed significant efficiencies, infrastructure, and institutional knowledge specific to the VA's MDES requirements in Region 2, it may present a competitive advantage in future procurements. This could potentially lead to fewer bidders or higher proposed costs from competitors trying to match OptumServe's established position. However, a strong incumbent performance and a well-structured re-competition process can still foster competitive pricing.

Are there any specific risks associated with the 'Offices of Physicians (except Mental Health Specialists)' NAICS code in the context of this large federal contract?

The NAICS code 621111, 'Offices of Physicians (except Mental Health Specialists),' primarily categorizes businesses providing direct medical services. In the context of this large federal contract for Medical Disability Examinations (MDES), the primary risks are not inherent to the NAICS code itself but rather to the scale and nature of the service delivery. Risks could include ensuring a sufficient network of qualified physicians across the Southeast region, maintaining consistent quality standards for examinations, managing the administrative burden of processing a high volume of claims, and adapting to evolving VA guidelines or medical best practices. The potential for physician burnout or turnover could also impact service continuity.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 328 FRONT ST S, LA CROSSE, WI, 54601

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

Financial Breakdown

Contract Ceiling: $365,335,497

Exercised Options: $365,335,497

Current Obligation: $365,335,497

Actual Outlays: $365,335,497

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X19D0004

IDV Type: IDC

Timeline