VA awarded $311.8M in FY17 Q4 for physician services, with Health Net Federal Services as the primary contractor

Contract Overview

Contract Amount: $311,842,945 ($311.8M)

Contractor: Health NET Federal Services, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-07-01

End Date: 2017-09-30

Contract Duration: 91 days

Daily Burn Rate: $3.4M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: IGF::CT::IGF FY17 4TH QTR EXPRESS REPORT:

Place of Performance

Location: RANCHO CORDOVA, SACRAMENTO County, CALIFORNIA, 95742

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $311.8 million to HEALTH NET FEDERAL SERVICES, LLC for work described as: IGF::CT::IGF FY17 4TH QTR EXPRESS REPORT: Key points: 1. The contract's value of over $311 million for a single quarter indicates a significant investment in healthcare services. 2. Competition dynamics for this contract are not detailed, but the 'FULL AND OPEN COMPETITION' designation suggests a broad bidding process. 3. The fixed-price incentive contract type suggests a focus on performance and cost control, with potential for shared savings. 4. This contract falls within the 'Offices of Physicians' NAICS code, highlighting a specific focus on direct medical care provision. 5. The short duration of 91 days for this delivery order suggests it may be part of a larger, ongoing contract vehicle. 6. The award amount of $311.8M for a 91-day period translates to a substantial daily expenditure on physician services.

Value Assessment

Rating: fair

The award of $311.8 million for a 91-day period represents a high per-diem cost for physician services. Benchmarking against similar contracts is difficult without more specific service details, but this quarterly expenditure is substantial. The fixed-price incentive structure aims to manage costs, but the overall value proposition depends heavily on the quality and efficiency of the services delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit a bid. The number of bidders is not specified, but this type of competition generally promotes price discovery and encourages contractors to offer competitive terms. The VA's approach suggests an effort to secure the best possible value through a broad solicitation.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it increases the likelihood of receiving competitive pricing and encourages a wider range of providers to participate, potentially leading to cost savings.

Public Impact

Veterans are the primary beneficiaries, receiving direct medical care from physicians. The services delivered are likely a range of general and specialized physician services essential for healthcare. The geographic impact is focused on California, as indicated by the 'SN' field. This contract supports a workforce of physicians and potentially other medical support staff within the Health Net Federal Services network.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High quarterly expenditure raises questions about cost-effectiveness over longer periods.
Lack of detail on specific services provided makes it hard to assess true value.
Short contract duration might indicate a stop-gap measure or a need for more agile contracting.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Fixed-price incentive contract type can incentivize cost efficiency.
Contractor Health Net Federal Services is a known entity in government contracting.

Sector Analysis

This contract falls within the Healthcare sector, specifically related to physician services. The NAICS code 621111 covers offices of physicians. The federal government, particularly the Department of Veterans Affairs, is a major purchaser of healthcare services. Spending in this category is consistently high, driven by the need to provide comprehensive care to service members and veterans. Comparable spending benchmarks would typically involve analyzing other large-scale physician service contracts within the VA or other federal health agencies.

Small Business Impact

The data indicates this contract was awarded under 'FULL AND OPEN COMPETITION' and does not specify any small business set-aside. There is no explicit information regarding subcontracting plans for small businesses. Without further details, it's difficult to assess the direct impact on the small business ecosystem, though large prime contracts often have subcontracting goals.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse. Transparency is facilitated by public contract databases, but detailed performance metrics and internal oversight processes are not publicly disclosed.

Related Government Programs

Department of Veterans Affairs Medical Care Programs
TRICARE Contracts
Federal Employee Health Benefits Program

Risk Flags

High quarterly expenditure requires scrutiny for cost-effectiveness.
Lack of specific service details hinders comprehensive value assessment.
Fixed Price Incentive contracts can be complex to manage and monitor.
Geographic focus on California may not address national VA physician needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $311.8 million to HEALTH NET FEDERAL SERVICES, LLC. IGF::CT::IGF FY17 4TH QTR EXPRESS REPORT:

Who is the contractor on this award?

The obligated recipient is HEALTH NET FEDERAL SERVICES, LLC.

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 $311.8 million.

What is the period of performance?

Start: 2017-07-01. End: 2017-09-30.

What specific physician services were procured under this contract?

The provided data identifies the NAICS code as 621111 (Offices of Physicians (except Mental Health Specialists)), indicating general physician services. However, the specific types of services (e.g., primary care, specialist consultations, surgical support) are not detailed in this summary. Understanding the exact services is crucial for a thorough value assessment, as different specialties and service levels have vastly different cost structures and market rates. Without this granularity, it's challenging to benchmark effectively against other contracts or market prices.

How does the $311.8 million quarterly expenditure compare to historical VA spending on physician services?

The $311.8 million expenditure for a single 91-day period is substantial. To provide historical context, one would need to analyze the VA's spending trends for NAICS code 621111 or similar physician service contracts over previous fiscal years. This would involve looking at average quarterly or annual spending, identifying any significant increases or decreases, and understanding if this award represents a new program, an expansion of existing services, or a standard contract renewal. A year-over-year comparison would reveal if this represents a surge in demand or a consistent level of investment in physician services.

What are the key performance indicators (KPIs) and incentive structures within this Fixed Price Incentive (FPI) contract?

A Fixed Price Incentive (FPI) contract structure implies that the final negotiated price is based on the contractor's actual cost and a share of any savings achieved below a target cost. Key performance indicators would likely relate to patient outcomes, access to care, provider availability, and potentially patient satisfaction scores. The incentive mechanism encourages Health Net Federal Services to manage costs effectively while meeting or exceeding performance targets. The specific KPIs and the sharing ratio for cost savings or overruns are critical details not present in the summary data, but they are central to assessing the contractor's motivation and the overall value achieved.

What is the track record of Health Net Federal Services in delivering similar physician services for the VA or other federal agencies?

Health Net Federal Services, LLC is a known entity within federal healthcare contracting. Assessing their track record would involve reviewing past performance evaluations, contract history, and any documented issues or successes in delivering physician services, particularly for the Department of Veterans Affairs. This includes examining their ability to meet performance standards, manage costs, and comply with federal regulations. A review of their past performance on similar contracts would provide insight into their reliability and capability to fulfill the requirements of this $311.8 million award.

What is the potential impact of this contract on physician availability and wait times for veterans in California?

This significant contract award suggests a substantial investment aimed at improving or maintaining physician service levels for veterans in California. If managed effectively, it could lead to increased physician capacity, potentially reducing wait times for appointments and improving access to care. However, the actual impact depends on how well the contract is executed, whether it brings in new providers or reallocates existing ones, and if it addresses specific shortages. Monitoring patient outcomes and access metrics would be key to evaluating its success in this regard.

Industry Classification

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

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centene Corporation (UEI: 809245525)

Address: 2025 AEROJET RD, RANCHO CORDOVA, CA, 95742

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

Financial Breakdown

Contract Ceiling: $311,842,945

Exercised Options: $311,842,945

Current Obligation: $311,842,945

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0053

IDV Type: IDC

Timeline