Battelle Memorial Institute's $19.3M contract for quality indicator support saw no competition, raising value-for-money questions

Contract Overview

Contract Amount: $19,337,411 ($19.3M)

Contractor: Battelle Memorial Institute

Awarding Agency: Department of Health and Human Services

Start Date: 2004-09-30

End Date: 2011-11-30

Contract Duration: 2,617 days

Daily Burn Rate: $7.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: SUPPORT FOR QUALITY INDICATORS II

Place of Performance

Location: COLUMBUS, FRANKLIN County, OHIO, 43201

State: Ohio Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $19.3 million to BATTELLE MEMORIAL INSTITUTE for work described as: SUPPORT FOR QUALITY INDICATORS II Key points: 1. The contract utilized a Cost Plus Award Fee structure, which can incentivize performance but also lead to higher costs if not closely managed. 2. Lack of competition suggests potential for overpayment or suboptimal service delivery compared to a more competitive environment. 3. The contract's duration of over 7 years (2617 days) indicates a long-term need for these administrative management services. 4. While the contractor is established, the absence of bidding limits the ability to benchmark pricing against market alternatives. 5. The contract's performance context is within the Agency for Healthcare Research and Quality (AHRQ), focusing on administrative support. 6. Sector positioning is within management consulting services, a broad category with varying competitive landscapes.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bids and the Cost Plus Award Fee structure. Without alternative proposals, it's difficult to ascertain if the $19.3 million spent represents a fair market price or if efficiencies could have been achieved through a more competitive process. The long duration also means that initial pricing assumptions may not reflect current market conditions. Further analysis would require comparing the specific services delivered against industry standards and similar government contracts, which are not readily available in this data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the unique capabilities or qualifications required for the service, or in specific emergency situations. The absence of competition limits the government's ability to leverage market forces to drive down costs and ensure the best possible value. It also raises questions about whether a competitive process was adequately explored.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without bids from other firms, there's no direct comparison to ensure the price was optimal.

Public Impact

The primary beneficiary is the Agency for Healthcare Research and Quality (AHRQ), which receives administrative support services. The services delivered likely involve supporting AHRQ's mission to improve the quality of healthcare in the United States. The geographic impact is primarily within the federal government's administrative functions, with potential downstream effects on healthcare quality research. Workforce implications are centered around the contractor's employees providing these specialized administrative and management consulting services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced incentive for cost efficiency.
The Cost Plus Award Fee structure, while performance-oriented, can lead to higher overall costs if not rigorously managed.
The extended contract duration (over 7 years) means that initial cost assumptions might not reflect current market realities.
Sole-source awards require strong justification to ensure taxpayer funds are used effectively.
Limited transparency into the specific performance metrics and award fee payouts makes a full value assessment difficult.

Positive Signals

The contractor, Battelle Memorial Institute, is a well-established research and development organization with a long history of government contracting.
The contract supported a critical government function within the Agency for Healthcare Research and Quality (AHRQ).
The long duration suggests a consistent need for the services provided, indicating a potentially stable and valuable relationship.
The award fee component, if managed effectively, could incentivize high performance and quality outcomes.

Sector Analysis

This contract falls within the Administrative Management and General Management Consulting Services sector (NAICS 541611). This is a broad category encompassing a wide range of advisory and assistance services. The market size for government consulting services is substantial, with numerous firms competing for federal contracts. However, specific niches like those supporting healthcare research quality indicators may have fewer specialized providers. Benchmarking spending in this specific sub-sector is difficult without more granular data on comparable AHRQ contracts or similar agency support services.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by the 'sb': false flag. There is no information provided regarding subcontracting plans or actual performance with small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Battelle Memorial Institute proactively engaged small businesses as subcontractors without it being a formal requirement of the contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS) and specifically the Agency for Healthcare Research and Quality (AHRQ). As a Cost Plus Award Fee contract, rigorous oversight of costs, performance metrics, and award fee determinations would be crucial. Transparency into these oversight activities and the specific metrics used for award fees would be important for accountability. The Inspector General for HHS would have jurisdiction for audits and investigations if any improprieties were suspected.

Related Government Programs

Healthcare Quality Improvement Programs
Health Services Research Support
Management and Consulting Services
Federal Administrative Support Contracts
Agency for Healthcare Research and Quality (AHRQ) Operations

Risk Flags

Lack of Competition
Cost Plus Award Fee Structure
Long Contract Duration
Sole-Source Award Justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $19.3 million to BATTELLE MEMORIAL INSTITUTE. SUPPORT FOR QUALITY INDICATORS II

Who is the contractor on this award?

The obligated recipient is BATTELLE MEMORIAL INSTITUTE.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Agency for Healthcare Research and Quality).

What is the total obligated amount?

The obligated amount is $19.3 million.

What is the period of performance?

Start: 2004-09-30. End: 2011-11-30.

What specific services did Battelle Memorial Institute provide under this contract?

While the contract is broadly categorized under 'Administrative Management and General Management Consulting Services' (NAICS 541611) and titled 'SUPPORT FOR QUALITY INDICATORS II', the precise nature of the services is not detailed in the provided data. Typically, such contracts would involve research, analysis, development, and implementation support related to healthcare quality indicators. This could include data collection, statistical analysis, report generation, stakeholder engagement, and technical assistance to help the Agency for Healthcare Research and Quality (AHRQ) advance its mission of improving healthcare quality. The 'Quality Indicators' aspect suggests a focus on metrics and standards used to measure and improve healthcare performance.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types in terms of cost and performance?

Cost Plus Award Fee (CPAF) contracts are a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs plus a fee that consists of a fixed base amount and an award amount. The award amount is based on the contractor meeting or exceeding certain performance objectives. CPAF contracts are often used when the scope of work is not precisely defined or when performance outcomes are critical and difficult to pre-define. Compared to fixed-price contracts, CPAF can lead to higher costs for the government as it shifts cost risk to the government. However, it aims to incentivize superior performance through the award fee component, potentially leading to better quality outcomes than a simple cost-plus contract. It requires robust government oversight to manage costs and ensure award fees are justified.

What are the implications of a sole-source award for government contracting?

A sole-source award means that a contract was awarded to a specific contractor without competition. This is typically justified when only one responsible source can provide the required supplies or services, such as in cases of unique capabilities, urgent needs, or follow-on work where only one contractor can provide necessary compatibility. The primary implication for the government is the potential loss of cost savings and innovation that competition typically fosters. Without competing bids, the government cannot be certain it is receiving the best possible price or the most effective solution. Sole-source awards require strong justification and are subject to stricter scrutiny to ensure fair and reasonable pricing and to prevent potential abuses.

What is the typical duration for administrative management consulting contracts, and how does this contract's duration compare?

The duration of administrative management consulting contracts can vary significantly depending on the scope and nature of the services. Short-term projects might last a few months, while long-term strategic support or research initiatives can extend for several years. This contract, with a duration of 2617 days (approximately 7.17 years), is on the longer side for a consulting engagement. Such extended durations often indicate a continuous need for specialized expertise or support within the agency. While long-term contracts can provide stability and continuity, they also necessitate regular reviews to ensure continued relevance, cost-effectiveness, and alignment with evolving agency needs.

How does the $19.3 million contract value compare to other spending within the Agency for Healthcare Research and Quality (AHRQ)?

Without specific data on AHRQ's overall budget or other contract values, it is difficult to definitively benchmark the $19.3 million contract value. However, AHRQ's mission involves significant research and data analysis activities, suggesting that contracts of this magnitude are plausible for supporting key programmatic functions. The value represents a substantial investment in administrative and consulting support for quality indicators. To provide a more precise comparison, one would need to examine AHRQ's historical spending patterns, its total budget, and the distribution of funds across various contracts and programs to understand if this represents a significant portion of its operational expenditures.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Address: 505 KING AVE, COLUMBUS, OH, 43201

Business Categories: Category Business, Nonprofit Organization, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,617,411

Exercised Options: $19,617,411

Current Obligation: $19,337,411

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline