CMS awards $95.3M contract to Peraton Inc. for MEPBS application modernization and automation
Contract Overview
Contract Amount: $95,304,191 ($95.3M)
Contractor: Peraton Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2019-03-01
End Date: 2024-02-29
Contract Duration: 1,826 days
Daily Burn Rate: $52.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: CMS IS SEEKING TO MAINTAIN AND ALSO MODERNIZE MEPBS APPLICATIONS. IN ADDITION, CMS IS AUTOMATING MANUAL BUSINESS PROCESSES AND REPLACING BATCH FILE SUBMISSIONS AND DATA DISSEMINATION.
Place of Performance
Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $95.3 million to PERATON INC. for work described as: CMS IS SEEKING TO MAINTAIN AND ALSO MODERNIZE MEPBS APPLICATIONS. IN ADDITION, CMS IS AUTOMATING MANUAL BUSINESS PROCESSES AND REPLACING BATCH FILE SUBMISSIONS AND DATA DISSEMINATION. Key points: 1. Contract focuses on modernizing and automating critical Medicare and Medicaid Enterprise Business System (MEPBS) applications. 2. The shift from manual processes to automation aims to improve efficiency and reduce errors in data handling. 3. This contract represents a significant investment in the foundational IT infrastructure supporting major federal health programs. 4. The chosen contractor, Peraton Inc., has a substantial presence in government IT services. 5. The contract's duration of 1826 days indicates a long-term commitment to application maintenance and development. 6. Performance is structured as Cost Plus Award Fee, incentivizing contractor performance beyond basic requirements.
Value Assessment
Rating: good
The contract's value of $95.3 million over approximately five years for comprehensive IT modernization and automation services appears reasonable given the scope. Benchmarking against similar large-scale federal IT modernization efforts suggests this is within expected cost ranges. The Cost Plus Award Fee structure allows for flexibility and incentivizes performance, which can lead to better value if managed effectively. However, detailed cost breakdowns and comparisons to specific, comparable projects would be needed for a more precise value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This competitive process is designed to foster price discovery and ensure the government receives the best possible value. The fact that it was competed openly suggests a healthy market for these types of IT services.
Taxpayer Impact: A full and open competition generally benefits taxpayers by driving down costs through market forces and encouraging innovation among bidders.
Public Impact
Beneficiaries include Medicare and Medicaid beneficiaries who rely on the efficient operation of these systems for their healthcare services. The services delivered include modernization of existing applications, automation of manual processes, and improved data dissemination. The geographic impact is national, as MEPBS systems support federal health programs across the United States. Workforce implications include potential shifts in IT roles within CMS and its contractors, with a focus on modern development and automation skills.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns in a Cost Plus Award Fee contract if performance metrics are not tightly managed.
- Risk of vendor lock-in if the modernized systems become highly proprietary and difficult to transition.
- Dependence on Peraton Inc. for critical IT infrastructure could pose a risk if performance falters.
Positive Signals
- Awarded through full and open competition, suggesting a competitive pricing environment.
- Focus on modernization and automation indicates a forward-looking approach to IT infrastructure.
- Cost Plus Award Fee structure incentivizes high performance and successful project outcomes.
Sector Analysis
This contract falls within the Computer Systems Design Services sector, a critical component of the broader Information Technology industry. The federal government is a major consumer of these services, particularly for maintaining and modernizing complex legacy systems like those supporting Medicare and Medicaid. The market for such services is large and competitive, with numerous firms capable of undertaking large-scale IT modernization projects. Comparable spending benchmarks for federal IT modernization projects often run into hundreds of millions or billions of dollars, making this $95.3 million award a significant, but not exceptionally large, investment in this domain.
Small Business Impact
While this contract was awarded under full and open competition and does not appear to have a specific small business set-aside, the prime contractor, Peraton Inc., may engage small businesses for subcontracting. The nature of IT modernization and application development often involves specialized skills that can be sourced from smaller, niche firms. The extent of small business participation will depend on Peraton's subcontracting plan and the specific requirements of the work packages.
Oversight & Accountability
Oversight for this contract is likely managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. The Cost Plus Award Fee structure implies performance metrics and award criteria that will be monitored to determine contractor bonuses. Transparency is generally maintained through contract award notices and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Medicare IT Modernization Efforts
- Medicaid Enterprise Systems
- Federal Health IT Infrastructure
- CMS Application Development and Maintenance
- Government IT Modernization Contracts
Risk Flags
- Potential for scope creep in modernization projects.
- Risk of underestimation of complexity in legacy system integration.
- Dependency on contractor performance for critical system uptime.
- Challenges in ensuring data integrity during migration and automation.
Tags
it, health-it, cms, medicare, medicaid, application-modernization, automation, cost-plus-award-fee, full-and-open-competition, maryland, computer-systems-design-services, federal-health
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $95.3 million to PERATON INC.. CMS IS SEEKING TO MAINTAIN AND ALSO MODERNIZE MEPBS APPLICATIONS. IN ADDITION, CMS IS AUTOMATING MANUAL BUSINESS PROCESSES AND REPLACING BATCH FILE SUBMISSIONS AND DATA DISSEMINATION.
Who is the contractor on this award?
The obligated recipient is PERATON INC..
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).
What is the total obligated amount?
The obligated amount is $95.3 million.
What is the period of performance?
Start: 2019-03-01. End: 2024-02-29.
What is Peraton Inc.'s track record with similar large-scale federal IT modernization contracts, particularly within the healthcare sector?
Peraton Inc. has a significant history of performing IT services for the federal government, including within the Department of Defense and intelligence agencies. While specific details on their track record with large-scale IT modernization within the healthcare sector for CMS are not fully detailed in the provided data, their broader experience suggests a capability to handle complex projects. The company has been involved in various IT modernization, cybersecurity, and cloud migration efforts for government clients. A deeper dive into their past performance evaluations and contract history, especially for projects with similar scope and complexity to MEPBS, would provide a more comprehensive understanding of their suitability and past success rates in this specific domain.
How does the $95.3 million cost compare to other federal IT modernization contracts of similar scope and complexity?
The $95.3 million contract value for modernizing and automating MEPBS applications over approximately five years is within the typical range for significant federal IT modernization efforts. Large-scale projects involving core systems for agencies like CMS often require substantial investment due to the complexity, scale, and criticality of the systems. For instance, other federal agencies have awarded contracts in the hundreds of millions or even billions for similar IT overhauls. While this specific award is substantial, it is not an outlier when compared to the overall federal IT spending landscape for critical infrastructure modernization. The value proposition is further influenced by the Cost Plus Award Fee structure, which aims to optimize value through performance incentives.
What are the primary risks associated with modernizing and automating legacy systems like MEPBS, and how are they mitigated in this contract?
Primary risks in modernizing legacy systems include technical challenges in integrating new technologies with old ones, potential for data migration errors, user adoption issues, and project delays or cost overruns. For MEPBS, risks also involve ensuring continuity of critical healthcare services during the transition. This contract attempts to mitigate these risks through a Cost Plus Award Fee (CPA) structure, which incentivizes Peraton Inc. to perform efficiently and effectively. The contract's duration allows for phased implementation. CMS oversight, clear performance metrics, and potentially phased rollouts are crucial mitigation strategies. However, the inherent complexity of such systems means risks will always be present and require continuous management.
What is the expected impact of this contract on the efficiency and effectiveness of Medicare and Medicaid operations?
The expected impact is significant. By automating manual business processes and replacing batch file submissions with more direct data dissemination, this contract aims to streamline operations, reduce the potential for human error, and speed up data processing. This can lead to more accurate reporting, faster decision-making, and improved service delivery for beneficiaries. Modernizing the MEPBS applications should enhance system reliability, security, and scalability, ensuring these critical platforms can meet future demands. Ultimately, the goal is to improve the overall efficiency and effectiveness of CMS's core functions, supporting the administration of Medicare and Medicaid programs more robustly.
How has CMS's spending on IT modernization and application development evolved over the past several years, and does this contract align with those trends?
CMS has consistently invested heavily in IT modernization and application development to manage the complexities of Medicare and Medicaid. Over the past several years, there has been a clear trend towards cloud adoption, automation, and enhancing data analytics capabilities across federal agencies, including CMS. This $95.3 million contract for MEPBS modernization and automation aligns directly with these trends. It reflects CMS's strategic focus on updating its core IT infrastructure to improve efficiency, security, and service delivery, moving away from outdated legacy systems towards more agile and modern solutions. This investment is part of a broader, ongoing effort to ensure the sustainability and effectiveness of its critical health programs.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: RFPMS2016SPARC
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 12975 WORLDGATE DR STE 7322, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $95,304,191
Exercised Options: $95,304,191
Current Obligation: $95,304,191
Actual Outlays: $51,350,414
Subaward Activity
Number of Subawards: 150
Total Subaward Amount: $231,457,899
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HHSM500201600023I
IDV Type: IDC
Timeline
Start Date: 2019-03-01
Current End Date: 2024-02-29
Potential End Date: 2024-02-29 00:00:00
Last Modified: 2024-10-15
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