HHS awards $11.3M for Grouper maintenance to Solvuentum Health, raising concerns over lack of competition
Contract Overview
Contract Amount: $11,313,479 ($11.3M)
Contractor: Solventum Health Information Systems, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2021-09-01
End Date: 2026-08-31
Contract Duration: 1,825 days
Daily Burn Rate: $6.2K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST SHARING
Sector: Healthcare
Official Description: MAINTENANCE OF THE GROUPERS
Place of Performance
Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84123
State: Utah Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $11.3 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC. for work described as: MAINTENANCE OF THE GROUPERS Key points: 1. Significant contract value for specialized technical services. 2. Sole-source award limits competitive pricing and innovation. 3. Potential for overpayment due to restricted market access. 4. IT services sector with critical healthcare data implications.
Value Assessment
Rating: questionable
The contract value of $11.3 million over five years for maintenance services is substantial. Without competitive bidding, it's difficult to assess if this price is aligned with market rates for similar technical services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded sole-source, meaning no other vendors were considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers as competition is bypassed.
Taxpayer Impact: The lack of competition in this sole-source award may result in higher costs for taxpayers compared to a competitively bid contract.
Public Impact
Impacts the accuracy and efficiency of healthcare claims processing. Ensures continued operation of critical Medicare and Medicaid systems. Potential for increased healthcare costs if maintenance is overpriced.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
Positive Signals
- Ensures continuity of essential services
- Experienced vendor potentially provides stable maintenance
Sector Analysis
This contract falls under 'All Other Professional, Scientific, and Technical Services' and specifically relates to IT maintenance within the healthcare sector. Spending benchmarks for similar sole-source IT maintenance contracts are difficult to establish without competitive data.
Small Business Impact
The data indicates no specific set-aside for small businesses, and the sole-source nature of the award further limits opportunities for small business participation in this contract.
Oversight & Accountability
The sole-source justification for this significant contract requires thorough review to ensure it was appropriate and that taxpayer funds are being used efficiently. Oversight should focus on performance and cost justification.
Related Government Programs
- All Other Professional, Scientific, and Technical Services
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Lack of competitive bidding
- Potential for cost overruns
- Limited transparency in pricing
- Risk of vendor lock-in
- Absence of small business participation
Tags
all-other-professional-scientific-and-te, department-of-health-and-human-services, ut, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $11.3 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC.. MAINTENANCE OF THE GROUPERS
Who is the contractor on this award?
The obligated recipient is SOLVENTUM HEALTH INFORMATION SYSTEMS, 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 $11.3 million.
What is the period of performance?
Start: 2021-09-01. End: 2026-08-31.
What is the specific technical function of the 'Grouper' system, and how critical is its maintenance to CMS operations?
The 'Grouper' system is crucial for the Centers for Medicare and Medicaid Services (CMS) as it translates healthcare diagnosis and procedure codes into standardized payment classifications. Its accurate and efficient maintenance is vital for correct reimbursement processing, ensuring the financial integrity of Medicare and Medicaid programs and preventing payment errors or fraud.
What are the risks associated with a sole-source award for critical IT maintenance, particularly concerning cost and vendor lock-in?
Sole-source awards for critical IT maintenance pose risks of inflated costs due to the absence of competitive pressure. This can lead to vendor lock-in, where the government becomes dependent on a single provider, potentially facing higher prices and less flexibility for future upgrades or transitions. It also limits opportunities for innovation from other market players.
How can CMS ensure the effectiveness and value for money of this sole-source contract over its duration?
CMS can ensure effectiveness and value by implementing rigorous performance metrics and regular reviews. This includes closely monitoring service delivery against defined standards, benchmarking costs against industry averages where possible, and maintaining open communication channels to address any issues promptly. Periodic re-evaluation of the sole-source justification is also advisable.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST SHARING (T)
Evaluated Preference: NONE
Contractor Details
Parent Company: 3M Company
Address: 575 W MURRAY BLVD, MURRAY, UT, 84123
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $11,313,479
Exercised Options: $11,313,479
Current Obligation: $11,313,479
Actual Outlays: $6,391,840
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2021-09-01
Current End Date: 2026-08-31
Potential End Date: 2026-08-31 00:00:00
Last Modified: 2025-12-04
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