HHS's $167M contract for data processing services awarded to WESTAT, INC. shows fair value
Contract Overview
Contract Amount: $167,280,347 ($167.3M)
Contractor: Westat, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2012-09-07
End Date: 2018-12-31
Contract Duration: 2,306 days
Daily Burn Rate: $72.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: MEDICAL EXPENDITURE PANEL SURVEY - HOUSEHOLD COMPONENT
Place of Performance
Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $167.3 million to WESTAT, INC. for work described as: MEDICAL EXPENDITURE PANEL SURVEY - HOUSEHOLD COMPONENT Key points: 1. The contract's value appears reasonable when benchmarked against similar data processing and hosting services. 2. Full and open competition was utilized, suggesting a competitive bidding process that should drive favorable pricing. 3. The contract duration and cost-plus-fixed-fee structure present moderate financial risks. 4. Performance context indicates a long-term engagement for critical data infrastructure. 5. This contract positions WESTAT, INC. as a key provider within the healthcare data analytics sector. 6. The absence of small business set-asides warrants further examination of subcontracting opportunities.
Value Assessment
Rating: fair
The total award amount of $167.28 million over approximately six years for data processing and hosting services appears to be within a reasonable range for a contract of this scope and duration. Benchmarking against similar government contracts for IT infrastructure and data management services suggests that the pricing is competitive. The cost-plus-fixed-fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can be advantageous for complex projects where costs are difficult to predict, but it also carries inherent risks if costs escalate significantly.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. While the specific number of bidders is not provided, this procurement method generally fosters a competitive environment, which is expected to lead to better price discovery and potentially lower costs for the government. The use of full and open competition is a positive indicator for achieving value for taxpayer money.
Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive bids and securing services at the best possible price.
Public Impact
The primary beneficiaries are researchers and policymakers who rely on the Medical Expenditure Panel Survey (MEPS) data for insights into healthcare utilization and costs. The contract supports the collection, processing, and dissemination of critical healthcare expenditure data for the nation. The geographic impact is national, as the MEPS data covers households across the United States. Workforce implications include employment opportunities for data scientists, analysts, IT professionals, and survey researchers at WESTAT, INC. and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored, as the contractor is reimbursed for costs incurred plus a fixed fee.
- The long duration of the contract (over 6 years) increases the risk of scope creep or changes in technological requirements that may not be adequately addressed within the original contract terms.
- Lack of specific details on performance metrics and penalties makes it difficult to assess the contractor's incentive to perform optimally.
- The absence of small business participation goals or set-asides could limit opportunities for smaller firms in the data processing and IT services sector.
Positive Signals
- Awarded under full and open competition, suggesting a robust and fair bidding process that likely resulted in competitive pricing.
- The contractor, WESTAT, INC., has a track record in conducting large-scale surveys and data analysis, indicating relevant expertise.
- The contract supports a vital national survey (MEPS) that provides essential data for healthcare policy and research.
- The fixed fee component of the CPFF contract provides some level of cost predictability for the government, unlike pure cost-reimbursement contracts.
Sector Analysis
This contract falls within the broader IT services sector, specifically focusing on data processing, hosting, and related services. The market for these services is highly competitive, with numerous large and small companies offering cloud hosting, data management, and analytical platforms. Government spending in this area is substantial, driven by the need to manage vast amounts of data for various programs. Comparable spending benchmarks for similar data processing contracts often range from tens to hundreds of millions of dollars, depending on the scope, duration, and complexity of the services required.
Small Business Impact
The contract details indicate that small business participation was not a primary consideration, as it was not set aside for small businesses and there is no explicit mention of subcontracting requirements for small businesses. This suggests that opportunities for small businesses to participate in this specific contract may be limited, potentially impacting the small business ecosystem's ability to engage with large federal IT procurements. Further investigation into WESTAT, INC.'s subcontracting practices would be necessary to fully assess the impact on small businesses.
Oversight & Accountability
Oversight for this contract would primarily reside with the Agency for Healthcare Research and Quality (AHRQ) within the Department of Health and Human Services. Mechanisms likely include regular progress reports from WESTAT, INC., performance reviews, and potentially site visits or audits. The Inspector General's office for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to the contract. Transparency is facilitated through contract award databases, but detailed performance data and cost breakdowns may not be publicly available.
Related Government Programs
- Medical Expenditure Panel Survey (MEPS)
- National Health Interview Survey (NHIS)
- Healthcare Cost and Utilization Project (HCUP)
- Centers for Medicare & Medicaid Services (CMS) Data Analytics
Risk Flags
- Cost Overruns Risk (CPFF)
- Scope Creep Potential
- Long-Term Contract Management
- Limited Small Business Participation
Tags
hhs, ahrq, data-processing, it-services, definitive-contract, cost-plus-fixed-fee, full-and-open-competition, westat-inc, maryland, healthcare-data, survey-support, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $167.3 million to WESTAT, INC.. MEDICAL EXPENDITURE PANEL SURVEY - HOUSEHOLD COMPONENT
Who is the contractor on this award?
The obligated recipient is WESTAT, INC..
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 $167.3 million.
What is the period of performance?
Start: 2012-09-07. End: 2018-12-31.
What is WESTAT, INC.'s track record with government contracts, particularly within the Department of Health and Human Services?
WESTAT, INC. has a significant history of performing work for federal agencies, including extensive experience with the Department of Health and Human Services (HHS) and its various components like the Agency for Healthcare Research and Quality (AHRQ). Their portfolio often includes large-scale survey design, data collection, statistical analysis, and data management services. For instance, they have been a long-standing contractor for the Medical Expenditure Panel Survey (MEPS) itself, which this contract supports. Their track record generally indicates a capacity to manage complex, long-term research and data-intensive projects, often involving sensitive health information. Past performance reviews and contract histories available through federal procurement databases would provide more granular detail on their success rates, adherence to timelines, and quality of deliverables across various projects.
How does the annual cost of this contract compare to other large federal IT service contracts?
The annual cost for this contract, averaging approximately $27.88 million ($167.28 million / 6 years), places it in the mid-to-large tier for federal IT service contracts. Many large-scale IT infrastructure, cloud hosting, and data processing contracts awarded by agencies like the Department of Defense, NASA, or the General Services Administration can range from tens to hundreds of millions of dollars annually. For example, major cloud service contracts or enterprise-wide software licenses often exceed this figure. However, compared to smaller, specialized IT support contracts or those with limited scope, this MEPS data processing contract represents a significant investment. Its value is best understood in the context of the specific services provided, the criticality of the data, and the duration of the engagement, rather than a direct dollar-for-dollar comparison without considering these factors.
What are the primary risks associated with the Cost Plus Fixed Fee (CPFF) contract type used here?
The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility for complex projects, introduces specific risks. For the government, the primary risk is that the contractor may not be sufficiently incentivized to control costs, as all allowable costs are reimbursed. If the contractor's cost estimates are inaccurate or if unforeseen issues drive up expenses, the government still pays the actual costs plus the pre-determined fixed fee. This can lead to the total contract cost exceeding initial projections. Another risk is potential scope creep, where the project expands beyond its original intent, leading to increased costs and potentially delays. Effective oversight, clear definition of allowable costs, and robust change management processes are crucial to mitigate these risks.
How effective has WESTAT, INC. been in managing the Medical Expenditure Panel Survey (MEPS) data processing historically?
WESTAT, INC. has been a primary contractor for the Medical Expenditure Panel Survey (MEPS) for many years, indicating a sustained level of effectiveness in managing its data processing. MEPS is a complex and vital survey providing critical insights into healthcare costs and utilization in the U.S. The continued awarding of contracts to WESTAT for this program suggests satisfactory performance in handling large datasets, ensuring data quality, and meeting reporting requirements. While specific performance metrics are not detailed here, the longevity of their involvement implies a successful partnership. Any issues or significant performance deviations would likely be documented in contract performance reports or reviews, which are not publicly detailed in this summary.
What are the historical spending patterns for data processing and IT services within the Agency for Healthcare Research and Quality (AHRQ)?
The Agency for Healthcare Research and Quality (AHRQ) consistently allocates significant portions of its budget towards data processing, IT infrastructure, and analytical services, reflecting its mission to produce evidence to make healthcare safer, higher quality, and more accessible. Historical spending patterns show a trend of increasing reliance on robust IT systems to manage and analyze vast amounts of health-related data, such as that generated by MEPS. Contracts for data management, hosting, statistical software, and analytical support are common. While the exact year-over-year spending fluctuates based on specific project needs and budget allocations, AHRQ's commitment to data-driven research necessitates continuous investment in these areas, making contracts like the one awarded to WESTAT, INC. a recurring and essential component of their operational strategy.
Industry Classification
NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 1600 RESEARCH BLVD, ROCKVILLE, MD, 20850
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $210,976,827
Exercised Options: $167,280,347
Current Obligation: $167,280,347
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $4,906,139
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-09-07
Current End Date: 2018-12-31
Potential End Date: 2018-12-31 00:00:00
Last Modified: 2020-09-28
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