Pharmacy Benefit Management Contract Awarded to SEVEN CORNERS INC for $78.9M

Contract Overview

Contract Amount: $78,953,799 ($79.0M)

Contractor: Seven Corners Inc

Awarding Agency: Corporation for National and Community Service

Start Date: 2005-01-11

End Date: 2008-09-24

Contract Duration: 1,352 days

Daily Burn Rate: $58.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46240

State: Indiana Government Spending

Plain-Language Summary

Corporation for National and Community Service obligated $79.0 million to SEVEN CORNERS INC for work described as: Key points: 1. Contract value of $78.9 million over its duration. 2. Awarded under full and open competition, suggesting market availability. 3. Risk of cost overruns due to Cost Plus Fixed Fee structure. 4. Sector: Healthcare services, specifically third-party administration.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee structure can incentivize contractor spending, potentially leading to higher costs than fixed-price contracts. Benchmarking against similar PBM contracts is necessary to assess value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating multiple vendors could bid. This method generally promotes competitive pricing and better value discovery.

Taxpayer Impact: The competitive award process aims to ensure taxpayer funds are used efficiently, though the CPFF structure warrants monitoring for cost control.

Public Impact

Ensures access to pharmacy benefits for a defined population. Potential for cost savings through negotiated drug prices. Administration of insurance and pension funds impacts beneficiaries' financial well-being.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure may lead to cost overruns.
Lack of specific performance metrics or KPIs mentioned.
Small business participation not indicated.

Positive Signals

Awarded via full and open competition.
Contract duration of over 3 years.
Clear agency and contractor identified.

Sector Analysis

This contract falls within the healthcare sector, specifically focusing on the administrative aspects of pharmacy benefits. Benchmarks for PBM contracts vary widely based on scope and services, but $78.9M over 3+ years suggests a significant scope.

Small Business Impact

The data indicates that this contract was not awarded to a small business (ss: false). Further analysis would be needed to determine if subcontracting opportunities were provided to small businesses.

Oversight & Accountability

The Corporation for National and Community Service is the awarding agency. Oversight would focus on ensuring the contractor meets the terms of the Cost Plus Fixed Fee agreement and delivers services effectively.

Related Government Programs

Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds
Corporation for National and Community Service Contracting
Corporation for National and Community Service Programs

Risk Flags

Cost Plus Fixed Fee structure.
Potential for undefined scope creep.
Lack of explicit small business subcontracting goals.
Limited information on performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Corporation for National and Community Service awarded $79.0 million to SEVEN CORNERS INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is SEVEN CORNERS INC.

Which agency awarded this contract?

Awarding agency: Corporation for National and Community Service (Corporation for National and Community Service).

What is the total obligated amount?

The obligated amount is $79.0 million.

What is the period of performance?

Start: 2005-01-11. End: 2008-09-24.

What specific pharmacy benefit management services are included in this contract?

The contract description 'Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds' is broad. Specific services could include formulary management, claims processing, drug utilization review, and negotiating rebates with manufacturers. Detailed contract documents would clarify the exact scope and deliverables.

How does the Cost Plus Fixed Fee structure impact the government's ability to control costs?

The CPFF structure reimburses the contractor for allowable costs plus a fixed fee. While the fee is fixed, the government bears the risk of cost overruns if actual costs exceed estimates. This can reduce the incentive for the contractor to control costs aggressively compared to fixed-price contracts.

What mechanisms are in place to ensure the effectiveness and quality of the PBM services provided?

Effectiveness and quality are typically ensured through performance standards, Service Level Agreements (SLAs), and regular performance reviews outlined in the contract. Without specific details on these, it's difficult to assess the oversight mechanisms. The agency's contract management team would be responsible for monitoring performance.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $78,953,799

Exercised Options: $78,953,799

Current Obligation: $78,953,799

Timeline