HHS awards $72.2M for Medicare enrollment and payment system support to CGI Federal

Contract Overview

Contract Amount: $72,205,672 ($72.2M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2021-08-01

End Date: 2026-03-31

Contract Duration: 1,703 days

Daily Burn Rate: $42.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THE MARX SYSTEM IS ONE OF THE MEDICARE ENROLLMENT AND PAYMENT SYSTEMS AND IS THE PRIMARY INTERFACE FOR PLAN SPONSOR ORGANIZATIONS AND IS THE SOURCE FOR THE ENROLLMENT AND DISENROLLMENT INFORMATION ON THE CME TABLES. THE MARX SYSTEM PROCESSES BENEFICI

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $72.2 million to CGI FEDERAL INC. for work described as: THE MARX SYSTEM IS ONE OF THE MEDICARE ENROLLMENT AND PAYMENT SYSTEMS AND IS THE PRIMARY INTERFACE FOR PLAN SPONSOR ORGANIZATIONS AND IS THE SOURCE FOR THE ENROLLMENT AND DISENROLLMENT INFORMATION ON THE CME TABLES. THE MARX SYSTEM PROCESSES BENEFICI Key points: 1. Contract focuses on the MARX system, critical for Medicare enrollment and payment processing. 2. CGI Federal Inc. is the incumbent contractor for these essential services. 3. The contract duration extends over five years, indicating a long-term need. 4. The award was made under full and open competition, suggesting a robust bidding process. 5. The primary service category is 'Other Computer Related Services', aligning with IT system support. 6. The contract value of $72.2 million over its term represents significant investment in Medicare's IT infrastructure.

Value Assessment

Rating: good

The contract value of $72.2 million over approximately five years averages to about $14.4 million annually. Benchmarking this against similar large-scale IT support contracts for federal health programs suggests this is within a reasonable range, considering the critical nature and complexity of the MARX system. The firm fixed-price structure provides cost certainty for the government, though it may limit flexibility if unforeseen requirements arise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 8 delivery orders suggests a structured procurement process. A competitive award generally leads to better price discovery and potentially more favorable terms for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by fostering a competitive environment that drives down prices and encourages innovation from multiple vendors.

Public Impact

Beneficiaries of the MARX system include Medicare beneficiaries who rely on accurate enrollment and payment processing. The contract delivers essential IT support services for the Centers for Medicare and Medicaid Services (CMS). The primary geographic impact is national, given Medicare's nationwide scope. Workforce implications include the need for specialized IT professionals to maintain and operate the MARX system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the long-term nature of the contract and specialized system knowledge.
Reliance on a single contractor for critical Medicare IT infrastructure could pose a risk if performance issues arise.
The firm fixed-price nature might disincentivize cost-saving innovations if not carefully managed through contract modifications.

Positive Signals

Award to CGI Federal, an established government contractor with a track record in IT services.
The contract is structured with multiple delivery orders, allowing for phased implementation and management of tasks.
The firm fixed-price contract type provides budget predictability for the agency.

Sector Analysis

This contract falls within the Information Technology and Computer Systems Design and Related Services sector. The federal government is a significant consumer of these services, particularly for managing complex legacy systems and developing new digital platforms. Spending in this area is driven by the need to modernize infrastructure, enhance cybersecurity, and improve data management for critical public services like Medicare. Comparable spending benchmarks would involve other large IT support contracts for federal agencies managing sensitive citizen data.

Small Business Impact

The data provided does not indicate any specific small business set-aside provisions or subcontracting goals for this contract. As a large IT services contract, there may be opportunities for small businesses to participate as subcontractors to CGI Federal, but this is not explicitly detailed in the award information. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), a division of HHS. Mechanisms likely include regular performance reviews, contract management personnel, and potentially Inspector General audits, given the significant federal funds involved. Transparency is facilitated through contract award databases like FPDS, though detailed performance metrics are typically internal.

Related Government Programs

Medicare Enrollment Systems
Healthcare IT Modernization
Federal Health IT Services
CMS IT Support Contracts
Payment Systems Modernization

Risk Flags

Critical System Dependency
Long-Term Contract Duration
Incumbent Contractor
Cybersecurity Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $72.2 million to CGI FEDERAL INC.. THE MARX SYSTEM IS ONE OF THE MEDICARE ENROLLMENT AND PAYMENT SYSTEMS AND IS THE PRIMARY INTERFACE FOR PLAN SPONSOR ORGANIZATIONS AND IS THE SOURCE FOR THE ENROLLMENT AND DISENROLLMENT INFORMATION ON THE CME TABLES. THE MARX SYSTEM PROCESSES BENEFICI

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL 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 $72.2 million.

What is the period of performance?

Start: 2021-08-01. End: 2026-03-31.

What is CGI Federal's track record with HHS and CMS for similar IT support contracts?

CGI Federal Inc. has a substantial history of contracting with the Department of Health and Human Services (HHS) and specifically the Centers for Medicare and Medicaid Services (CMS). They have been involved in various IT modernization and support efforts for Medicare and Medicaid programs. Their experience includes managing complex systems related to beneficiary enrollment, claims processing, and data management. This long-standing relationship suggests a level of familiarity and established processes for working within the agency's demanding environment. However, like many large contractors, their performance history may include both successes and areas for improvement, which would be detailed in past performance evaluations during the bidding process.

How does the $72.2 million contract value compare to previous spending on the MARX system?

To accurately compare the $72.2 million contract value to previous spending on the MARX system, historical data on prior contracts for this specific system would be required. The provided data indicates this is a delivery order under a larger contract framework, with an estimated completion date in March 2026. Without knowing the total ceiling value of the parent contract or the specific amounts obligated and spent on the MARX system in prior years, a direct comparison is difficult. However, the annual average of approximately $14.4 million suggests a significant and sustained investment, consistent with the critical operational role of the MARX system within Medicare.

What are the primary risks associated with the MARX system and its support contract?

Key risks associated with the MARX system and its support contract include operational disruptions due to system failures or cyber threats, given its critical role in Medicare enrollment and payments. There's also a risk of vendor lock-in, as CGI Federal likely possesses deep institutional knowledge of the system. Performance degradation or failure to adapt to evolving healthcare regulations and technological advancements could impact Medicare operations. Furthermore, the long duration of the contract (over five years) increases the risk of cost overruns if not managed tightly, or potential obsolescence if the system isn't adequately modernized.

How effective is the MARX system in supporting Medicare enrollment and payment processes?

The MARX system is described as the primary interface for plan sponsor organizations and the source for enrollment and disenrollment information on CME tables, indicating its fundamental importance to Medicare operations. Its effectiveness is directly tied to the accuracy and timeliness of Medicare enrollment and payment processing. While the contract award suggests continued reliance on the system, its overall effectiveness is best assessed through performance metrics, error rates in enrollment data, and feedback from CMS and plan sponsors. The fact that it remains a core system implies a baseline level of effectiveness, but continuous improvement and adaptation are crucial for sustained efficacy in the dynamic healthcare landscape.

What are the historical spending patterns for IT support services within CMS?

Historical spending patterns for IT support services within CMS are substantial and have generally trended upwards, reflecting the increasing complexity of healthcare programs, the need for data analytics, and the ongoing push for system modernization. CMS manages some of the largest and most complex IT systems in the government, including those related to Medicare and Medicaid. Major IT contracts often span multiple years and involve hundreds of millions, if not billions, of dollars in total value. Spending is allocated across various categories such as system development, maintenance, cybersecurity, data management, and cloud migration. The MARX system contract, valued at $72.2 million, represents a significant but not extraordinary portion of CMS's overall IT budget, consistent with the agency's extensive IT needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Timken Company

Address: 12601 FAIR LAKES CIR # 100, FAIRFAX, VA, 22033

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

Financial Breakdown

Contract Ceiling: $76,953,375

Exercised Options: $72,205,672

Current Obligation: $72,205,672

Actual Outlays: $67,068,354

Subaward Activity

Number of Subawards: 38

Total Subaward Amount: $16,281,656

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F281DA

IDV Type: FSS

Timeline