HHS awards $185M contract to CVS Pharmacy for health services, with 11 bidders indicating strong competition

Contract Overview

Contract Amount: $185,307,164 ($185.3M)

Contractor: CVS Pharmacy, Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2022-06-14

End Date: 2025-05-31

Contract Duration: 1,082 days

Daily Burn Rate: $171.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: ICATT

Place of Performance

Location: WOONSOCKET, PROVIDENCE County, RHODE ISLAND, 02895

State: Rhode Island Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $185.3 million to CVS PHARMACY, INC for work described as: ICATT Key points: 1. Contract value of $185.3M over its period of performance suggests significant investment in health services. 2. The presence of 11 bidders points to a competitive market for these types of services. 3. A firm fixed-price contract type generally offers cost certainty for the government. 4. The contract's duration of over 1000 days indicates a long-term need for the services. 5. The specific NAICS code (621999) covers 'All Other Miscellaneous Ambulatory Health Care Services,' a broad category. 6. The award to a single contractor, CVS Pharmacy, Inc., highlights the consolidation or specialization within this service area.

Value Assessment

Rating: good

Benchmarking the value of this $185.3 million contract requires detailed comparison to similar ambulatory health care service contracts. Given the firm fixed-price structure, the government has a degree of cost certainty. However, without specific performance metrics or unit cost data, a definitive assessment of value for money is challenging. The number of bidders suggests a healthy market, which typically drives more competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 11 distinct bidders participating. This level of competition is generally considered robust and suggests that the solicitation attracted significant interest from various entities capable of providing the required services. A higher number of bidders typically leads to a more thorough price discovery process and potentially better pricing for the government.

Taxpayer Impact: The strong competition for this contract is beneficial for taxpayers as it likely resulted in a more favorable price than if it had been awarded through a less competitive process. It also signals that government funds are being utilized in a market where multiple providers are vying for the business.

Public Impact

Beneficiaries of this contract are likely individuals receiving ambulatory health care services, potentially across various demographic groups. The services delivered fall under 'All Other Miscellaneous Ambulatory Health Care Services,' which could encompass a wide range of medical support and treatment. The contract is geographically focused on Rhode Island (SN: RHODE ISLAND), indicating a specific regional need. The contract may have implications for the healthcare workforce in Rhode Island, potentially creating or sustaining jobs for medical professionals and support staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The broad nature of 'Miscellaneous Ambulatory Health Care Services' could lead to scope creep if not clearly defined and managed.
Reliance on a single large provider like CVS Pharmacy, Inc. might limit flexibility if service needs change rapidly.
Ensuring equitable access to services across Rhode Island, especially in underserved areas, will be critical.
The long contract duration necessitates ongoing performance monitoring to ensure continued value and quality.

Positive Signals

The firm fixed-price contract type provides budget predictability for the agency.
The high number of bidders (11) suggests a competitive environment that should drive quality and efficiency.
The contract's focus on a specific geographic area (Rhode Island) allows for tailored service delivery.
The award to a well-established provider like CVS Pharmacy, Inc. may indicate a reliable source for essential health services.

Sector Analysis

The healthcare services sector is vast and complex, with ambulatory care forming a significant component. This contract falls within the 'All Other Miscellaneous Ambulatory Health Care Services' category, which is broad and can include services not easily classified elsewhere. The market for such services is often characterized by a mix of large providers, specialized clinics, and retail health operations. Government spending in this area supports public health initiatives and ensures access to care, often through large, competitively bid contracts to manage costs and ensure quality.

Small Business Impact

The data indicates this contract was awarded under 'full and open competition' and does not specify any small business set-aside (SS: false, SB: false). Therefore, there is no direct analysis of small business set-aside implications. However, the presence of 11 bidders suggests that a range of companies, potentially including small businesses as subcontractors, could have participated or been considered. The extent of subcontracting opportunities for small businesses would depend on the prime contractor's strategy and the specific requirements of the contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its specific agency, the Centers for Disease Control and Prevention (CDC). As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is generally maintained through contract award databases like FPDS. Accountability measures would be embedded in the contract's performance standards and reporting requirements. The specific Inspector General for HHS would have jurisdiction over any investigations related to fraud, waste, or abuse.

Related Government Programs

Medicare Services
Medicaid Services
Public Health Programs
Ambulatory Surgical Centers
Community Health Centers
Pharmacy Benefit Management

Risk Flags

Potential for scope creep in 'miscellaneous' service category.
Long contract duration may reduce flexibility.
Reliance on a single large provider could impact market dynamics.
Ensuring equitable service access across the specified region.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $185.3 million to CVS PHARMACY, INC. ICATT

Who is the contractor on this award?

The obligated recipient is CVS PHARMACY, INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).

What is the total obligated amount?

The obligated amount is $185.3 million.

What is the period of performance?

Start: 2022-06-14. End: 2025-05-31.

What is the historical spending pattern for 'All Other Miscellaneous Ambulatory Health Care Services' by the Centers for Disease Control and Prevention?

Analyzing historical spending for NAICS code 621999 by the CDC requires accessing detailed federal procurement data over several fiscal years. Typically, miscellaneous ambulatory health care services spending can fluctuate based on specific public health needs, disease outbreaks, or targeted health initiatives. A review of past contract awards would reveal if this $185.3 million contract represents a significant increase or decrease in this category of spending for the CDC. It's also important to note if similar large-scale contracts have been awarded to single providers or if the services have historically been fragmented across multiple smaller contracts or providers. Understanding these patterns provides context for the current award's scale and strategic importance.

How does the per-unit cost of services under this contract compare to industry benchmarks for similar ambulatory health care services?

Determining the per-unit cost requires specific data on the services rendered and their associated costs, which is not fully detailed in the provided summary. The contract is a firm fixed-price award for 'All Other Miscellaneous Ambulatory Health Care Services.' To benchmark, one would need to identify the specific services provided (e.g., number of patient visits, types of procedures, duration of care) and compare the price per unit to market rates for comparable services in Rhode Island or nationally. Given the competitive nature (11 bidders), it is plausible that the pricing is market-aligned, but a definitive comparison necessitates granular service and cost data. Without this, the assessment remains qualitative, relying on the competitive process to imply reasonable pricing.

What is CVS Pharmacy, Inc.'s track record in delivering large-scale federal health service contracts?

CVS Pharmacy, Inc. is a major player in the healthcare and pharmacy sector, with extensive experience in providing a wide range of health services, including pharmacy benefits management, retail health clinics, and potentially broader healthcare support services. Their track record in federal contracting would involve reviewing past awards, performance evaluations, and any reported issues or successes with government agencies. Given their size and scope, it's likely they have managed numerous large contracts. The CDC's choice suggests confidence in CVS's ability to meet the requirements of this specific $185.3 million contract, which covers miscellaneous ambulatory health care services in Rhode Island. A deeper dive would involve examining specific past performance metrics and client feedback.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. However, for a contract involving 'Miscellaneous Ambulatory Health Care Services,' typical KPIs would likely focus on patient outcomes, access to care, service timeliness, patient satisfaction, adherence to clinical protocols, and potentially cost-efficiency metrics. For a firm fixed-price contract, the government's primary concern is ensuring the contractor meets all defined service requirements and quality standards. The CDC would establish specific metrics within the contract's statement of work to monitor performance and ensure the $185.3 million investment yields the intended public health benefits in Rhode Island.

Are there any specific risks associated with awarding a large, long-term contract for health services to a single entity like CVS Pharmacy?

Yes, there are potential risks associated with awarding a large, long-term contract for health services to a single entity. One primary risk is vendor lock-in, where the government becomes heavily reliant on one provider, potentially reducing leverage for future negotiations or service adjustments. Another risk is a decline in service quality or innovation over time if competition is perceived as minimal post-award. Furthermore, if the contractor faces financial difficulties, operational issues, or significant negative publicity, it could severely disrupt the delivery of essential health services. The long duration (over 1000 days) amplifies these risks, necessitating robust oversight and contingency planning by the CDC to ensure continuity and quality of care.

Industry Classification

NAICS: Health Care and Social Assistance › Other Ambulatory Health Care Services › All Other Miscellaneous Ambulatory Health Care Services

Product/Service Code: MEDICAL SERVICES › SPECIALIZED TECHNICAL/ MEDICAL SUPPORT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75D301-22-R-72298

Offers Received: 11

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 CVS DR, WOONSOCKET, RI, 02895

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

Financial Breakdown

Contract Ceiling: $185,307,164

Exercised Options: $185,307,164

Current Obligation: $185,307,164

Actual Outlays: $177,561,675

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $165,607,488

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline