HHS awarded CGI Federal $86M for IT services, with limited competition and a Time and Materials contract type

Contract Overview

Contract Amount: $86,020,363 ($86.0M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2004-09-23

End Date: 2010-12-31

Contract Duration: 2,290 days

Daily Burn Rate: $37.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: AUTOMATED INFORMATION SYSTEM SVCS

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $86.0 million to CGI FEDERAL INC. for work described as: AUTOMATED INFORMATION SYSTEM SVCS Key points: 1. The contract's Time and Materials (T&M) pricing structure can lead to cost overruns if not closely managed. 2. Limited competition raises concerns about potential overpayment and reduced incentive for cost efficiency. 3. The long duration of the contract (over 6 years) suggests a need for ongoing, critical IT support. 4. The 'Other Computer Related Services' NAICS code indicates a broad scope, potentially encompassing various IT functions. 5. The contract was awarded by the Centers for Medicare and Medicaid Services (CMS), a major health IT consumer. 6. The absence of a specific Product Service Code (PSC) might indicate a custom or unique service offering.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the services provided and comparable market rates. The Time and Materials (T&M) contract type, while flexible, often carries a higher risk of cost escalation compared to fixed-price contracts. The total value of over $86 million over its duration suggests significant IT support was required, but without performance metrics or detailed service descriptions, a definitive value-for-money assessment is difficult. Comparing it to similar T&M IT service contracts within HHS or other agencies would be necessary for a more robust evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (NAFC), which typically signifies a sole-source or limited competition scenario. The specific reasons for this limited competition are not detailed in the provided data. A lack of robust competition can lead to higher prices and reduced innovation as the contractor may face less pressure to offer competitive rates or superior service. It is crucial to understand why full and open competition was not pursued to ensure fair pricing and optimal use of taxpayer funds.

Taxpayer Impact: Limited competition can result in taxpayers paying a premium for services, as the government may not benefit from the cost savings and efficiencies typically driven by a competitive bidding process.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially millions of Americans relying on healthcare services managed through CMS systems. Services delivered likely involve the maintenance, development, or support of critical automated information systems essential for healthcare program administration. The geographic impact is primarily within the United States, supporting federal healthcare operations. Workforce implications include employment for IT professionals at CGI Federal and potentially indirectly within CMS for contract oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type increases risk of cost overruns without stringent oversight.
Limited competition may lead to inflated pricing and reduced contractor incentive for efficiency.
The broad 'Other Computer Related Services' category lacks specificity, making performance monitoring potentially challenging.
Long contract duration without clear performance benchmarks could mask inefficiencies.
Lack of a specific PSC code hinders direct comparison with similar IT service contracts.

Positive Signals

The significant contract value suggests the services provided were critical and sustained over a long period.
Award to CGI Federal, a known entity in government contracting, may indicate a level of trust or established relationship.
The contract supported a vital agency (CMS) within the Department of Health and Human Services.
The contract duration implies a stable and ongoing need for the IT services, suggesting a successful, albeit potentially expensive, relationship.

Sector Analysis

The IT services sector for the federal government is vast, with significant spending allocated to maintaining and modernizing complex information systems. This contract falls under the 'Other Computer Related Services' category, which is broad and can encompass a wide range of IT support functions. Comparable spending benchmarks would typically involve analyzing IT service contracts awarded by agencies like HHS, CMS, or other large federal departments for similar scope and duration. The market for these services is competitive, but specific niches or long-term support contracts can sometimes limit the number of viable bidders.

Small Business Impact

The data indicates that this contract was not awarded as a small business set-aside (ss=false, sb=false). Therefore, there are no direct subcontracting implications or specific benefits for small businesses stemming from this particular award. The primary contractor, CGI Federal, is a large business, and any subcontracting would likely be at the discretion of the prime contractor, potentially involving other large or small businesses depending on the nature of the services required.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS), specifically the Centers for Medicare and Medicaid Services (CMS). Accountability measures would be defined within the contract's terms and conditions, including performance standards, reporting requirements, and payment schedules. Transparency is often limited for specific contract details, but contract award information is generally publicly available through federal procurement databases. The Inspector General's office within HHS would have jurisdiction to investigate potential fraud, waste, or abuse related to this contract.

Related Government Programs

HHS IT Modernization Initiatives
CMS Health Information Technology Services
Federal Civilian IT Services Contracts
Large-Scale IT Support Services
Automated Information System Development and Maintenance

Risk Flags

Limited competition raises concerns about price fairness and contractor performance incentives.
Time and Materials contract type increases the risk of cost overruns without stringent oversight.
Broad service category ('Other Computer Related Services') may lack specificity for effective performance management.
Lack of detailed performance data in the provided summary hinders a comprehensive value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $86.0 million to CGI FEDERAL INC.. AUTOMATED INFORMATION SYSTEM SVCS

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 $86.0 million.

What is the period of performance?

Start: 2004-09-23. End: 2010-12-31.

What specific automated information systems did CGI Federal support under this contract, and what was their criticality to CMS operations?

The provided data identifies the contract as being for 'AUTOMATED INFORMATION SYSTEM SVCS' (d) with the 'Centers for Medicare and Medicaid Services' (sa). However, it does not specify which particular automated information systems were supported. Given CMS's mission, these systems likely relate to the administration of Medicare, Medicaid, and the Health Insurance Marketplace, potentially including claims processing, beneficiary enrollment, provider management, data analytics, and regulatory compliance systems. The criticality would be high, as disruptions to these systems could impact healthcare access, payments, and program integrity for millions of Americans. Further analysis would require accessing contract performance reports or statements of work.

How does the Time and Materials (T&M) pricing structure compare to industry standards for similar IT services, and what are the associated risks?

Time and Materials (T&M) contracts are common for IT services, especially when the scope of work is not clearly defined at the outset or is expected to evolve. They allow for flexibility but shift cost risk to the government. Industry standards vary, but T&M is generally considered riskier than fixed-price contracts. The primary risk is cost escalation, as the contractor is reimbursed for actual labor hours and material costs, plus a fee. Without robust oversight, including detailed tracking of hours, validation of work performed, and pre-negotiated labor rates, T&M contracts can become significantly more expensive than initially anticipated. Benchmarking requires comparing the negotiated labor rates and fee structures against market data for similar skill sets and services.

What were the specific reasons cited for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' basis, and were alternatives explored?

The data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (ct). This classification typically implies that full and open competition was not feasible or practical. Common justifications include the existence of only one responsible source, urgent and compelling needs where a delay would cause unacceptable loss, or specific circumstances like follow-on work to a previous contract where the original contractor possesses unique knowledge or capabilities. Without further details on the justification provided by CMS at the time of award, it's impossible to definitively state the reasons. Exploring alternatives would have been a requirement unless specific exceptions applied, such as proprietary technology or essential follow-on support.

What is the historical spending pattern for 'AUTOMATED INFORMATION SYSTEM SVCS' by CMS, and how does this $86M contract fit within that trend?

The provided data only details this single contract award. To understand historical spending patterns for 'AUTOMATED INFORMATION SYSTEM SVCS' by CMS, one would need to analyze procurement data over multiple fiscal years. This would involve querying federal spending databases for contracts within the same or similar service categories (e.g., NAICS 541519, IT services) awarded by CMS. The $86 million awarded over approximately six years represents a substantial investment, averaging over $14 million per year. Analyzing trends would reveal whether CMS spending in this area is increasing, decreasing, or remaining stable, and how this particular contract's value compares to other IT service procurements within the agency.

What performance metrics or key performance indicators (KPIs) were likely established for this contract to ensure service delivery and value?

While specific KPIs are not provided in the data, contracts of this magnitude and duration typically include detailed performance standards and Key Performance Indicators (KPIs) within the Statement of Work (SOW) or Performance Work Statement (PWS). For IT services, these might include metrics related to system uptime and availability, response times for issue resolution, successful completion of development milestones, adherence to security protocols, and user satisfaction. The Time and Materials nature of the contract would necessitate close monitoring of effort expended against defined deliverables or service levels to ensure value. Regular performance reviews and acceptance criteria for deliverables would be crucial oversight mechanisms.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Contractor Details

Parent Company: CGI Inc (UEI: 248513116)

Address: 12601 FAIR LAKES CIRCLE, FAIRFAX, VA, 11

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $86,020,363

Exercised Options: $86,020,363

Current Obligation: $86,020,363

Parent Contract

Parent Award PIID: GS35F4797H

IDV Type: FSS

Timeline