VA awards $217M contract for non-VA healthcare services to Health Net Federal Services, LLC

Contract Overview

Contract Amount: $216,849,502 ($216.8M)

Contractor: Health NET Federal Services, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-10-01

End Date: 2017-12-31

Contract Duration: 91 days

Daily Burn Rate: $2.4M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: EXPRESS REPORT: FOR PC3/CHOICE NON VA HEALTHCARE

Place of Performance

Location: RANCHO CORDOVA, SACRAMENTO County, CALIFORNIA, 95742

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $216.8 million to HEALTH NET FEDERAL SERVICES, LLC for work described as: EXPRESS REPORT: FOR PC3/CHOICE NON VA HEALTHCARE Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Fixed Price Incentive contract type indicates shared risk between the government and contractor. 3. Short duration of 91 days for this delivery order. 4. The contract falls under the 'Offices of Physicians' NAICS code. 5. Awarded by the Department of Veterans Affairs, focusing on healthcare services. 6. The contract value is substantial, representing significant federal spending in healthcare.

Value Assessment

Rating: good

This contract, valued at approximately $217 million, was awarded for a short period of 91 days. While specific benchmarks for similar short-term, high-value healthcare service contracts are difficult to ascertain without more detailed scope, the fixed-price incentive structure suggests an attempt to control costs while incentivizing performance. The per-unit cost is not readily available from the provided data, making direct price assessment challenging.

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 presence of two bidders (no: 2) suggests a moderate level of competition for this specific delivery order. While more bidders would typically lead to better price discovery, full and open competition is generally a positive sign for achieving fair market value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and improve service quality.

Public Impact

Veterans will benefit from access to non-VA healthcare services, potentially improving timely access to care. The contract supports the delivery of physician services outside of traditional VA facilities. Services are geographically focused within California (sn: CALIFORNIA). The contract likely supports a network of healthcare providers and administrative staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Short contract duration may lead to continuity of care concerns for beneficiaries.
Fixed Price Incentive contracts can lead to cost overruns if not managed carefully.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
The contractor, Health Net Federal Services, LLC, is an established entity in federal healthcare contracting.
The contract aims to supplement VA healthcare capacity.

Sector Analysis

This contract falls within the Healthcare sector, specifically related to physician services. The U.S. healthcare market is vast, with significant federal spending directed towards providing care for veterans and other beneficiaries. This contract represents a portion of that spending, likely aimed at augmenting the VA's direct care capabilities by leveraging external provider networks. Comparable spending benchmarks would typically involve analyzing other large-scale healthcare service contracts awarded by the VA and other federal health agencies.

Small Business Impact

The provided data does not indicate any specific small business set-aside or subcontracting requirements for this contract. Therefore, the direct impact on the small business ecosystem is not evident from this information alone. Further analysis would be needed to determine if Health Net Federal Services, LLC has plans for small business subcontracting.

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 fixed-price incentive contract type, which links contractor payment to performance metrics. Transparency is generally facilitated through contract award databases, though detailed performance reports may not always be publicly available.

Related Government Programs

VA Community Care Network (CCN)
TRICARE contracts
Medicare/Medicaid administration contracts

Risk Flags

Short contract duration may indicate a stop-gap measure rather than a long-term solution.
Fixed Price Incentive contracts require careful monitoring to ensure cost containment.
Limited competition (2 bidders) could impact price optimization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $216.8 million to HEALTH NET FEDERAL SERVICES, LLC. EXPRESS REPORT: FOR PC3/CHOICE NON VA HEALTHCARE

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 $216.8 million.

What is the period of performance?

Start: 2017-10-01. End: 2017-12-31.

What is the historical spending pattern for Health Net Federal Services, LLC with the Department of Veterans Affairs?

Analyzing the historical spending patterns of Health Net Federal Services, LLC with the Department of Veterans Affairs requires access to comprehensive contract databases. While this specific award is for $217 million over 91 days, a broader review would involve examining all contracts awarded to this entity by the VA over several fiscal years. This would reveal trends in contract types, service areas, and overall dollar values. For instance, understanding if this is a recurring type of award or a one-off, and whether the company has a consistent track record of performance and successful contract completion with the VA, is crucial for assessing future reliability and value. Without access to that broader historical data, this single award provides limited insight into their overall relationship and performance with the VA.

How does the $217 million value compare to other VA healthcare service contracts?

The $217 million value for this 91-day contract is substantial, particularly for a short-term delivery order. To benchmark this effectively, one would need to compare it against similar contracts awarded by the VA for non-VA healthcare services, especially those involving physician services or network access. The VA's Community Care Network (CCN) program, for example, involves large-scale contracts to provide care in the community. If this $217 million represents a significant portion of the VA's budget for a specific region or service line over a short period, it might indicate a high per diem or per-service cost. Conversely, if it's part of a larger, ongoing effort to manage a vast network, the value might be more in line with expectations. A detailed comparison would require analyzing contract scope, duration, and the specific services procured.

What are the primary risks associated with a Fixed Price Incentive (FPI) contract of this magnitude?

The primary risks associated with a Fixed Price Incentive (FPI) contract of this magnitude, like the $217 million award to Health Net Federal Services, LLC, revolve around cost control and performance alignment. For the government, the risk is that the final cost could exceed the target price if the contractor incurs higher-than-expected costs, even with the incentive structure. The incentive mechanism aims to share the risk, but if targets are not met or if the contractor's costs escalate significantly, the government may end up paying more than initially anticipated. For the contractor, the risk lies in managing costs effectively to achieve the target price and potentially earn a higher profit through incentives, while avoiding penalties if performance falls short. Poorly defined performance metrics or cost accounting issues can exacerbate these risks, leading to disputes and potential cost overruns for the government.

What does the short duration (91 days) imply for the program's effectiveness and continuity of care?

The short duration of 91 days for this $217 million delivery order raises questions about the program's long-term effectiveness and the continuity of care for beneficiaries. Such a brief period suggests this might be an interim solution, a bridge contract, or a specific, time-limited initiative rather than a sustained healthcare provision strategy. For beneficiaries, receiving care under a short-term contract can lead to disruptions if providers change or if administrative processes are not seamless. It may also limit the ability to establish long-term treatment plans. From a program effectiveness standpoint, a 91-day window provides limited time to gather comprehensive performance data, assess outcomes, and make strategic adjustments. This could necessitate frequent re-competition or extensions, potentially increasing administrative burden and costs.

How does the NAICS code 621111 (Offices of Physicians) align with the contract's stated purpose of non-VA healthcare?

The NAICS code 621111, 'Offices of Physicians (except Mental Health Specialists),' directly aligns with the contract's purpose of providing non-VA healthcare services. This code specifically covers establishments primarily engaged in practicing medicine, as represented by physicians. When the Department of Veterans Affairs contracts for healthcare services outside its own facilities, it often procures services that fall under this classification. This includes physician consultations, diagnostic services, and treatment provided by medical professionals in private practice or group physician offices. Therefore, the selection of NAICS 621111 indicates that the contract is intended to fund physician-led medical services delivered by external healthcare providers to eligible VA beneficiaries.

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: 2

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: $216,849,502

Exercised Options: $216,849,502

Current Obligation: $216,849,502

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0053

IDV Type: IDC

Timeline