HHS awards $500M contract for telephone answering services to General Dynamics IT

Contract Overview

Contract Amount: $499,959,526 ($500.0M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2006-10-30

End Date: 2009-05-31

Contract Duration: 944 days

Daily Burn Rate: $529.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 8

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: TAS::75 0511::TAS

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $500.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TAS::75 0511::TAS Key points: 1. Contract value of nearly $500 million over its period of performance. 2. Awarded as a competitive delivery order, indicating multiple bids were considered. 3. The contract duration of 944 days suggests a significant, ongoing need for these services. 4. The contractor, General Dynamics Information Technology, Inc., is a large, established entity in the federal contracting space. 5. The services provided fall under Telephone Answering Services, a critical support function for government agencies. 6. The contract was awarded by the Centers for Medicare and Medicaid Services (CMS), a major health agency.

Value Assessment

Rating: good

The total award amount of $499,959,526.17 for telephone answering services over approximately 2.5 years appears substantial. Benchmarking this against similar contracts for large-scale government call center operations would be necessary for a precise value-for-money assessment. However, the competitive nature of the award suggests that pricing was subject to market forces, which generally supports a reasonable valuation. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can be effective for services where costs are difficult to estimate upfront but requires careful oversight to manage expenses.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order under a larger contract vehicle, implying that multiple vendors had the opportunity to bid. The fact that it was competed suggests a healthy level of market interest and potential for price discovery. The presence of 8 bids (as indicated by 'no': 8) further supports the notion of robust competition, which is generally favorable for obtaining competitive pricing and innovative solutions.

Taxpayer Impact: A competitive award process means taxpayer dollars are more likely to be spent efficiently, as vendors vie to offer the best value. This reduces the risk of overpayment and encourages cost-effective service delivery.

Public Impact

Beneficiaries include Medicare and Medicaid enrollees who may require assistance via telephone. Services delivered include telephone answering and potentially related customer support functions for CMS. The geographic impact is likely national, supporting CMS operations across the United States. Workforce implications include employment opportunities for call center agents, supervisors, and support staff, primarily within General Dynamics Information Technology, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize higher spending if not closely monitored.
The large contract value necessitates robust performance monitoring to ensure service quality and cost control.
Reliance on a single large contractor for critical communication services could pose a risk if performance falters.

Positive Signals

Awarded through a competitive process, indicating potential for good value.
General Dynamics Information Technology, Inc. is an experienced federal contractor with a significant presence.
The contract duration suggests a stable, long-term need being met.

Sector Analysis

The federal IT services market is vast, with significant spending allocated to support functions like call centers and customer service. This contract for telephone answering services falls within the broader IT and administrative support sectors. Comparable spending benchmarks for similar large-scale call center operations within government agencies would provide further context on the efficiency of this award. The market for these services is competitive, with numerous large and small businesses capable of providing such solutions.

Small Business Impact

The data indicates this contract was awarded competitively and does not specify any small business set-aside provisions (ss: false, sb: false). While the prime contractor is a large business, there may be opportunities for small businesses to participate as subcontractors. Further analysis would be needed to determine the extent of small business subcontracting planned or achieved under this award.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services (CMS). As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and the fixed fee is earned. Transparency is typically managed through contract reporting mechanisms and performance reviews. The Inspector General for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this award.

Related Government Programs

HHS Call Center Contracts
CMS Customer Support Services
Federal Telecommunications Services
Government IT Support Contracts
Large-Scale Contact Center Operations

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight.
Large contract value necessitates robust performance monitoring.
Potential for vendor lock-in if not managed effectively.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $500.0 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TAS::75 0511::TAS

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $500.0 million.

What is the period of performance?

Start: 2006-10-30. End: 2009-05-31.

What is the historical spending pattern for telephone answering services at CMS?

Analyzing historical spending for telephone answering services at CMS is crucial for understanding trends and identifying potential anomalies. Without specific historical data for this exact service category, we can infer that CMS, as a large agency managing complex health programs, likely has consistent needs for public-facing communication channels. Past contracts for similar services would reveal spending levels, contractor performance, and the evolution of service requirements. A review of prior solicitations and awards for call center operations or telephone support within CMS could indicate whether this $500 million award represents an increase, decrease, or stable level of investment in such capabilities. It would also highlight any shifts in contract types or service scopes over time, providing context for the current award's value and structure.

How does the performance of General Dynamics Information Technology, Inc. on similar federal contracts compare?

General Dynamics Information Technology, Inc. (GDIT) is a major federal contractor with a long history of performance across various agencies and service areas. To assess their track record for this specific contract, one would examine their past performance evaluations (e.g., CPARS reports) on contracts involving IT support, call center operations, and customer service. Key metrics to consider include timeliness of delivery, quality of service, cost control, and overall customer satisfaction. GDIT's extensive experience suggests a capacity to handle large, complex contracts like this one. However, a detailed review of their specific performance on analogous contracts would reveal any recurring issues or areas of excellence that might inform the risk assessment for this particular award.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude?

The primary risks associated with a CPFF contract of this magnitude ($500 million) revolve around cost control and potential for scope creep. While the fixed fee provides a ceiling for the contractor's profit, the 'cost plus' element means the government reimburses allowable costs. This structure can incentivize the contractor to incur higher costs if oversight is not rigorous, as their fee is fixed regardless of the total cost. For the government, the risk is that the final cost could exceed initial projections significantly. Effective risk mitigation requires robust government oversight of all incurred costs, detailed performance metrics, and clear definitions of allowable expenses. Regular audits and performance reviews are essential to ensure the contractor operates efficiently and within the spirit of the contract's objectives.

What is the typical market rate or benchmark for telephone answering services for a federal agency of CMS's size?

Determining the precise market rate for telephone answering services for an agency like CMS is complex due to the variability in service scope, volume, and required expertise. However, industry benchmarks for large-scale contact center operations often consider factors like cost per call, cost per agent hour, and technology infrastructure investment. Given the $500 million award over roughly 2.5 years, this equates to an average annual spend of approximately $200 million. This figure suggests a very high volume of interactions and potentially complex service requirements, such as handling sensitive health information or intricate program inquiries. Benchmarking would involve comparing this annual spend against data from similar large federal or commercial call center contracts, considering factors like staffing levels, technology used, and service level agreements (SLAs) to assess value for money.

How does the duration of this contract (944 days) align with typical federal contracts for similar services?

A contract duration of 944 days, approximately 2.5 years, is fairly typical for large-scale federal service contracts, especially those involving ongoing operational support like telephone answering services. Such durations provide stability for both the government agency and the contractor, allowing for efficient resource planning and service continuity. Shorter contracts might lead to frequent re-procurement costs and potential disruptions, while excessively long contracts could reduce flexibility and potentially lock the government into outdated technologies or higher-than-market prices if not structured with appropriate review periods or options. This duration suggests a recognized, sustained need for the services provided by CMS.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Telephone Answering Services

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 8

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3211 JERMANTOWN RD, FAIRFAX, VA, 22030

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

Financial Breakdown

Contract Ceiling: $499,959,526

Exercised Options: $499,959,526

Current Obligation: $499,959,526

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700001I

IDV Type: IDC

Timeline