HHS Spends $182M on FFS Transition Costs with Safeguard Services LLC Over 10 Years

Contract Overview

Contract Amount: $181,957,485 ($182.0M)

Contractor: Safeguard Services LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-30

End Date: 2018-05-31

Contract Duration: 3,530 days

Daily Burn Rate: $51.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: ZPIC ZONE 5 - FFS TRANSITION COSTS

Place of Performance

Location: MIRAMAR, BROWARD County, FLORIDA, 33027

State: Florida Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $182.0 million to SAFEGUARD SERVICES LLC for work described as: ZPIC ZONE 5 - FFS TRANSITION COSTS Key points: 1. Significant 10-year contract duration for transition costs. 2. Safeguard Services LLC is the sole awardee. 3. Contract type is Cost Plus Award Fee, indicating performance-based incentives. 4. Spending falls under Collection Agencies (NAICS 561440).

Value Assessment

Rating: questionable

The Cost Plus Award Fee structure can lead to higher costs if not tightly managed. Without a clear benchmark for 'transition costs' and the award fee criteria, assessing value is difficult. The total award of $182M over 10 years suggests a substantial investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which is positive for price discovery. However, the long duration and specific nature of 'FFS transition costs' might limit the pool of truly competitive bidders over time.

Taxpayer Impact: The substantial $182M expenditure represents a significant allocation of taxpayer funds for a decade-long service, the ultimate value of which depends on the effectiveness of the transition.

Public Impact

Impacts Medicare beneficiaries by potentially affecting the efficiency of the Fee-For-Service (FFS) transition. Supports administrative functions within the Centers for Medicare and Medicaid Services (CMS). The large contract value suggests a critical operational need for these transition services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (10 years) increases risk of cost overruns and reduced flexibility.
Cost Plus Award Fee structure requires robust oversight to ensure cost control.
Lack of specific performance metrics makes value assessment challenging.
No indication of small business participation.

Positive Signals

Awarded through full and open competition, suggesting initial price consideration.
Focus on transition costs implies an effort to improve or modernize healthcare payment systems.

Sector Analysis

Spending in the Collection Agencies sector, particularly for large government contracts, often relates to administrative efficiency and revenue recovery. Benchmarks are difficult without specific service details, but $182M over 10 years is a significant investment for this sector.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (ss: false, sb: false). This suggests the contract was awarded to a larger entity, potentially missing opportunities for small business engagement.

Oversight & Accountability

The Cost Plus Award Fee structure necessitates strong oversight from CMS to ensure that Safeguard Services LLC meets performance expectations and manages costs effectively. The 10-year duration requires sustained vigilance to prevent scope creep or inefficiencies.

Related Government Programs

Collection Agencies
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Long contract duration (10 years).
Cost Plus Award Fee contract type.
Lack of specific performance metrics provided.
No small business participation indicated.
High total contract value ($182M).

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $182.0 million to SAFEGUARD SERVICES LLC. ZPIC ZONE 5 - FFS TRANSITION COSTS

Who is the contractor on this award?

The obligated recipient is SAFEGUARD SERVICES LLC.

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 $182.0 million.

What is the period of performance?

Start: 2008-09-30. End: 2018-05-31.

What specific transition activities were performed, and how were they measured to justify the award fees and overall cost?

The contract details do not specify the exact transition activities covered under 'FFS Transition Costs.' The Cost Plus Award Fee structure implies performance metrics were established, but their nature and effectiveness in driving value are not detailed. Understanding these metrics is crucial for assessing if the $182M expenditure yielded optimal results for the Medicare program and beneficiaries.

Given the 10-year duration and Cost Plus Award Fee structure, what mechanisms were in place to mitigate potential cost overruns and ensure continued cost-effectiveness?

The long contract term combined with a Cost Plus Award Fee structure inherently carries a risk of cost escalation. Robust government oversight, clear performance standards, and defined ceilings or incentive/disincentive clauses are critical mitigation strategies. Without specific details on these controls, it's difficult to definitively assess the risk mitigation effectiveness for this $182M contract.

How did the 'full and open competition' process ensure the best value was achieved for the government, considering the specialized nature of FFS transition costs?

Full and open competition theoretically allows all responsible sources to compete, fostering price competition and innovation. For specialized services like FFS transition costs, the effectiveness depends on the clarity of the solicitation and the ability of multiple qualified vendors to bid competitively. The $182M award suggests a significant market existed, but the long-term nature might have influenced bid strategies and ultimate value realization.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Collection Agencies

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 5400 LEGACY DRIVE, PLANO, TX, 75024

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $181,957,485

Exercised Options: $181,957,485

Current Obligation: $181,957,485

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500200800030I

IDV Type: IDC

Timeline