VA awards $235M task order to OptumServe for physician services in Wisconsin

Contract Overview

Contract Amount: $235,355,825 ($235.4M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2025-09-30

Contract Duration: 364 days

Daily Burn Rate: $646.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FY25 FUNDING 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 $235.4 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: FY25 FUNDING TASK ORDER Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The firm-fixed-price contract type aims to control costs by setting a predetermined price. 3. This task order represents a significant portion of the overall contract value for physician services. 4. The duration of the order is one year, aligning with annual budget cycles. 5. The North American Industry Classification System (NAICS) code 621111 indicates a focus on physician office services. 6. The award is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: good

The contract value of $235.4 million for one year of physician services appears substantial. Benchmarking against similar contracts for physician staffing within the VA or other federal agencies would be necessary for a precise value-for-money assessment. However, the firm-fixed-price structure provides cost certainty for the government. The award to a single contractor, OptumServe, suggests they were the most competitive bidder under the established criteria.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but the competitive nature of the award suggests that multiple companies likely vied for this opportunity. This process is designed to foster price discovery and ensure the government receives competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price for essential physician services, reducing the risk of overpayment.

Public Impact

Veterans in Wisconsin will benefit from continued access to physician services. The contract ensures the delivery of medical services under NAICS code 621111. The geographic impact is focused on the state of Wisconsin. The contract supports the operational needs of the Department of Veterans Affairs healthcare system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for contractor performance issues if not adequately managed, despite fixed-price structure.
Reliance on a single contractor for a significant service delivery may pose a risk if the contractor faces operational challenges.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Firm-fixed-price contract type provides cost predictability.
Contract duration aligns with typical federal fiscal year planning.

Sector Analysis

This contract falls within the Healthcare sector, specifically the provision of physician services. The market for healthcare services, particularly to government entities like the VA, is substantial and highly competitive. OptumServe is a known provider in this space, often competing for large-scale health service contracts. Benchmarking would involve comparing this award to other large physician staffing contracts within the federal government and the broader healthcare industry.

Small Business Impact

The provided data indicates that small business participation (ss and sb fields) is false for this specific award. This suggests that the prime contract was not set aside for small businesses, nor does it appear to have explicit subcontracting requirements for small businesses detailed in this specific award notice. Further investigation into the parent IDIQ contract might reveal broader small business subcontracting goals.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver services at the agreed-upon price. Transparency is facilitated by the public nature of federal contract awards, though detailed performance metrics are usually internal.

Related Government Programs

Department of Veterans Affairs Medical Services Contracts
Federal Physician Services Contracts
Healthcare Staffing Contracts

Risk Flags

Potential for performance issues
Reliance on a single large contractor
Need for robust oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $235.4 million to OPTUMSERVE HEALTH SERVICES, INC.. FY25 FUNDING 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 $235.4 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-09-30.

What is OptumServe Health Services, Inc.'s track record with the Department of Veterans Affairs?

OptumServe Health Services, Inc. has a significant history of contracting with the Department of Veterans Affairs. They have been awarded numerous contracts for various health services, including telehealth, medical staffing, and claims processing. For instance, they were a major player in the VA's Community Care Network (CCN) program, awarded substantial contracts to manage healthcare services for veterans in specific regions. Their involvement often spans large-scale initiatives aimed at improving veteran access to care. Analyzing their past performance, including any past performance issues or commendations, would provide crucial context for this current task order. The sheer volume of their VA awards suggests a deep familiarity with VA requirements and processes, but also highlights the importance of robust oversight to ensure consistent quality and value.

How does the $235.4 million value compare to similar physician service contracts awarded by the VA?

The $235.4 million value for a one-year task order for physician services is substantial and indicates a significant scope of work. To benchmark this, one would need to compare it against other large delivery orders or task orders issued by the VA for similar physician staffing or medical group services. The VA often utilizes large IDIQ contracts to procure these services, with individual task orders varying widely in value. For example, contracts supporting the VA's Community Care Network (CCN) or specific medical center staffing needs can range from tens to hundreds of millions of dollars annually. Without knowing the exact services covered (e.g., primary care, specialists, administrative physicians) and the specific geographic region's market rates, a precise comparison is difficult. However, this award suggests a significant need for physician resources in Wisconsin.

What are the primary risks associated with this contract for the VA?

The primary risks associated with this contract include potential contractor performance deficiencies, where OptumServe may not meet the required quality or quantity of physician services. Despite the firm-fixed-price structure, cost overruns could still occur if unforeseen issues arise that require additional resources or modifications. There's also a risk of physician shortages or high turnover within the contractor's workforce, impacting service continuity. Furthermore, reliance on a single large contractor for critical services can create vendor lock-in and reduce the VA's leverage in future negotiations. Ensuring adequate oversight and performance monitoring is crucial to mitigate these risks and ensure veterans receive timely and quality care.

How effective is the firm-fixed-price (FFP) contract type in managing costs for physician services?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and the risks of performance are relatively low. For physician services, FFP provides the VA with cost certainty, as the contractor assumes the risk of cost overruns. This incentivizes the contractor to manage their resources efficiently to maintain profitability. However, if the scope of services needs to change significantly or unforeseen circumstances arise, contract modifications might be necessary, potentially leading to price adjustments. The effectiveness also depends on the clarity of the performance standards and deliverables outlined in the contract. If these are ambiguous, disputes over scope and cost can arise, diminishing the cost-control benefits of FFP.

What are the historical spending patterns for physician services by the VA in Wisconsin?

Historical spending patterns for physician services by the VA in Wisconsin would require a detailed analysis of past VA contracts specifically for that state. This would involve querying federal procurement databases (like USASpending.gov or FPDS) for contracts awarded to various entities providing physician services within Wisconsin over several fiscal years. Key metrics to examine would include the total annual spending on physician services, the primary contractors receiving these funds, the types of services procured (e.g., primary care, specialty care, locum tenens), and the average value of contracts. Understanding these patterns can reveal trends in demand, identify key service providers, and highlight any significant increases or decreases in spending, which could inform future budgeting and procurement strategies.

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: $235,355,825

Exercised Options: $235,355,825

Current Obligation: $235,355,825

Actual Outlays: $204,455,559

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X19D0004

IDV Type: IDC

Timeline