VA awards $326M contract to OptumServe for physician services, highlighting a significant investment in healthcare delivery

Contract Overview

Contract Amount: $326,052,154 ($326.1M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-09-04

End Date: 2025-12-31

Contract Duration: 118 days

Daily Burn Rate: $2.8M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FY25 Q3 EXAMS R2

Place of Performance

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

State: Wisconsin Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $326.1 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: FY25 Q3 EXAMS R2 Key points: 1. The contract value of $326 million represents a substantial commitment to ensuring access to physician services. 2. Competition dynamics for this contract are favorable, indicating a robust market for healthcare providers. 3. Risk indicators appear manageable given the firm-fixed-price structure and defined performance period. 4. Performance context suggests a focus on delivering essential medical services to veterans. 5. Sector positioning places this contract within the critical healthcare services domain, supporting veteran well-being.

Value Assessment

Rating: good

The contract value of $326 million for physician services appears to be within a reasonable range for a large-scale federal healthcare contract. Benchmarking against similar contracts for comprehensive physician staffing and support would provide a clearer picture of value for money. The firm-fixed-price structure offers cost certainty for the government, but requires careful monitoring of service delivery to ensure quality and prevent scope creep.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified bidders had the opportunity to submit proposals. The presence of a competitive process is expected to drive favorable pricing and encourage innovation from the awarded contractor. The specific number of bidders is not provided, but the 'full and open' designation implies a healthy level of market interest.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to better pricing and higher quality services, maximizing the value of federal dollars.

Public Impact

Veterans across Wisconsin will benefit from enhanced access to physician services. Essential medical services, including general medical care and potentially specialized consultations, will be delivered. The geographic impact is focused on Wisconsin, ensuring localized support for the veteran population in that state. The contract will likely support a workforce of physicians and administrative staff, contributing to employment in the healthcare sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service delivery challenges if contractor staffing levels are not maintained.
Ensuring consistent quality of care across all contracted services requires diligent oversight.

Positive Signals

Award to a single, established provider can lead to streamlined service delivery.
Firm-fixed-price contract provides budget certainty for the VA.
Focus on a specific geographic region allows for tailored service provision.

Sector Analysis

The healthcare services sector is a significant area of federal spending, particularly for agencies like the Department of Veterans Affairs. This contract falls under the 'Offices of Physicians' NAICS code, indicating a focus on direct patient care. The market for healthcare services is large and competitive, with numerous providers capable of meeting federal requirements. Comparable spending benchmarks would involve looking at other large-scale physician staffing contracts awarded by the VA or other health-focused agencies.

Small Business Impact

The provided data indicates that small business participation (ss and sb flags are false) was not a primary set-aside consideration for this specific contract. While this contract may not directly benefit small businesses through a set-aside, the prime contractor, OptumServe, may engage small businesses as subcontractors for specialized services or support functions. The impact on the broader small business ecosystem would depend on OptumServe's subcontracting strategy.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs. Accountability measures will be embedded within the contract's performance standards and delivery requirements. Transparency is facilitated through the federal procurement data system, where contract awards are publicly reported. The Inspector General's office for the VA would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

VA Physician Staffing Contracts
Federal Healthcare Services
Medical Services for Veterans
OptumServe Health Contracts

Risk Flags

Potential for cost overruns if not managed tightly
Risk of contractor performance issues impacting service delivery
Dependence on contractor's ability to recruit and retain qualified personnel

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $326.1 million to OPTUMSERVE HEALTH SERVICES, INC.. FY25 Q3 EXAMS R2

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 $326.1 million.

What is the period of performance?

Start: 2025-09-04. End: 2025-12-31.

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

OptumServe Health Services, Inc. has a significant history of contracting with the Department of Veterans Affairs and other federal entities. They are known for providing a wide range of health services, including telehealth, medical staffing, and claims processing. Their experience often involves large-scale contracts aimed at improving healthcare access and efficiency for federal beneficiaries. Analyzing their past performance reviews, any past performance issues, and the types of services they have successfully delivered to the VA and other agencies would provide crucial context for this current award. Understanding their capacity to manage complex healthcare delivery networks and their history of meeting performance metrics is essential for assessing the reliability of this new contract.

How does the awarded amount of $326 million compare to similar physician service contracts awarded by the VA in recent years?

The $326 million award to OptumServe for physician services represents a substantial investment. To benchmark its value, one would compare it to other large-scale physician staffing or comprehensive medical service contracts awarded by the VA. For instance, similar contracts might involve providing primary care physicians, specialists, or telehealth services to various VA facilities or regions. Factors such as the duration of the contract (118 days in this case, which is relatively short for such a large sum, suggesting a high daily rate or a specific, intensive service period), the scope of services, the number of providers required, and the geographic coverage are critical for a fair comparison. If this contract is for a short, high-intensity period, the per-diem or per-provider cost might be higher than longer-term, broader contracts. A detailed analysis would involve examining the average cost per provider per day or per year across comparable VA contracts.

What are the primary risk indicators associated with this firm-fixed-price contract, and how are they being mitigated?

The primary risk indicator for a firm-fixed-price (FFP) contract is the potential for the contractor to cut corners on quality or service delivery to maintain profitability, especially if costs escalate unexpectedly. For OptumServe, risks could include challenges in recruiting and retaining qualified physicians within the specified timeframe and budget, or unforeseen operational difficulties in delivering services in Wisconsin. Mitigation strategies employed by the VA typically involve robust performance monitoring, clearly defined service level agreements (SLAs), and strong contract management. The VA would likely conduct regular performance reviews, track key performance indicators (KPIs), and maintain open communication channels with OptumServe to address any emerging issues proactively. The relatively short duration of this contract (ending Dec 31, 2025) might also suggest a focused scope, potentially limiting the duration of exposure to certain risks.

What is the expected effectiveness of these physician services in improving healthcare access for veterans in Wisconsin?

The effectiveness of these physician services in improving healthcare access for veterans in Wisconsin hinges on several factors. Primarily, it depends on how well OptumServe can recruit and deploy qualified physicians to meet the demand identified by the VA. If the contract successfully fills gaps in physician availability, reduces wait times for appointments, and provides necessary specialized care, then its effectiveness will be high. The specific services covered under the contract (e.g., primary care, specialty consultations, mental health) will determine the breadth of impact. Success will be measured by metrics such as patient satisfaction, appointment availability, and the reduction in referral times to external providers. The VA's ability to accurately forecast demand and manage the contractor's performance will be crucial in realizing the intended improvements in healthcare access.

How has federal spending on physician services through contracts like this evolved over the past five fiscal years?

Federal spending on physician services through contracts has generally seen an upward trend over the past five fiscal years, driven by increasing healthcare demands, particularly within agencies like the VA and DoD. This growth reflects a strategic decision by federal agencies to leverage external expertise and capacity to supplement government-employed medical staff, address shortages, and manage fluctuating patient loads. Factors contributing to this trend include the aging veteran population, the complexity of modern medicine requiring specialized skills, and the desire for greater flexibility in healthcare delivery. Analyzing historical spending data for similar NAICS codes (like 621111) and contract types across major health-focused agencies would reveal the magnitude of this increase and identify any specific periods of accelerated growth or shifts in contracting strategies. This particular contract, with its $326 million value over a short period, could represent a significant portion of annual spending for specific service lines or regions.

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: $326,052,154

Exercised Options: $326,052,154

Current Obligation: $326,052,154

Actual Outlays: $233,169,545

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X25D0002

IDV Type: IDC

Timeline