HHS awarded $155.8M to Safeguard Services LLC for Zone Program Integrity Contractor services in Texas

Contract Overview

Contract Amount: $155,818,367 ($155.8M)

Contractor: Safeguard Services LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-30

End Date: 2015-10-31

Contract Duration: 2,587 days

Daily Burn Rate: $60.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: ZONE PROGRAM INTEGRITY CONTRACTOR - ZONE 7

Place of Performance

Location: PLANO, COLLIN County, TEXAS, 75024

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $155.8 million to SAFEGUARD SERVICES LLC for work described as: ZONE PROGRAM INTEGRITY CONTRACTOR - ZONE 7 Key points: 1. The contract utilized a Cost Plus Award Fee (CPAF) structure, incentivizing performance through award fees. 2. Awarded under full and open competition, indicating a broad market search. 3. The contract duration of 2587 days (approximately 7 years) suggests a long-term need for these services. 4. The North American Industry Classification System (NAICS) code 561440 points to collection agency services. 5. The contract was awarded as a Delivery Order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or a similar framework. 6. The geographic focus on Texas (ST: TX) highlights a regional concentration for these program integrity services.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics and award fee payouts. The Cost Plus Award Fee (CPAF) structure can lead to higher costs if not managed effectively, but also incentivizes strong performance. Comparing it to similar contracts for program integrity services across other states or regions would provide better context on pricing and efficiency. The raw dollar amount of $155.8 million over nearly seven years suggests a significant investment in ensuring program integrity within the specified region.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that the agency sought proposals from all responsible sources. The presence of 4 bidders (no: 4) suggests a reasonable level of competition for this service. This competitive process is generally expected to lead to better price discovery and potentially more favorable terms for the government compared to sole-source or limited competition awards.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs and encouraging innovation among bidders.

Public Impact

Beneficiaries include taxpayers through the efficient use of federal funds and program beneficiaries by ensuring the integrity of healthcare programs. Services delivered involve program integrity functions, likely related to preventing fraud, waste, and abuse in healthcare programs administered by CMS. The geographic impact is concentrated in Texas, suggesting a focus on program integrity within that state's healthcare landscape. Workforce implications may include the creation of jobs related to program integrity analysis, investigation, and administrative support, both within the contractor's organization and potentially within CMS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPAF structure requires careful monitoring to ensure award fees are justified by performance and do not inflate costs unnecessarily.
The long duration of the contract necessitates ongoing performance evaluation to ensure continued value and alignment with evolving program needs.
Reliance on a single contractor for a significant period in a specific region could create vendor lock-in risks if not managed proactively.

Positive Signals

Awarded under full and open competition, suggesting a robust market engagement.
The use of award fees incentivizes contractor performance and alignment with government objectives.
The contract's focus on program integrity directly supports the government's mission to prevent fraud, waste, and abuse.

Sector Analysis

This contract falls within the professional services sector, specifically related to government program integrity and potentially debt collection or claims processing. The market for such services is driven by the government's need to safeguard public funds and ensure compliance with regulations. Comparable spending benchmarks would involve analyzing other contracts for similar program integrity support services awarded by CMS or other federal agencies, considering factors like scope, duration, and geographic coverage.

Small Business Impact

The data does not indicate any specific small business set-aside or subcontracting requirements for this contract. As it was awarded under full and open competition, it's possible that small businesses could have participated as prime contractors or subcontractors. However, without further details on subcontracting plans or performance, the direct impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are built into the Cost Plus Award Fee structure, linking payment to performance. Transparency would be enhanced through contract reporting requirements and potential audits by the HHS Office of Inspector General (OIG), which has jurisdiction over HHS programs.

Related Government Programs

Medicare Program Integrity
Medicaid Program Integrity
Healthcare Fraud Prevention
Contractor Performance Management
Federal Debt Collection Services

Risk Flags

Potential for cost overruns under CPAF if not closely managed.
Long contract duration may lead to vendor lock-in.
Geographic concentration could limit flexibility if needs shift.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $155.8 million to SAFEGUARD SERVICES LLC. ZONE PROGRAM INTEGRITY CONTRACTOR - ZONE 7

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 $155.8 million.

What is the period of performance?

Start: 2008-09-30. End: 2015-10-31.

What specific services did Safeguard Services LLC provide under this contract?

While the NAICS code 561440 suggests 'Collection Agencies,' the contract title 'ZONE PROGRAM INTEGRITY CONTRACTOR' indicates a broader scope related to ensuring the integrity of healthcare programs, likely administered by CMS. This could encompass activities such as identifying and investigating potential fraud, waste, and abuse; reviewing claims; ensuring provider compliance; and potentially recovering improperly paid funds. The specific services would be detailed in the contract's Statement of Work (SOW), which outlines the precise deliverables, performance standards, and reporting requirements expected from Safeguard Services LLC.

How did the performance of Safeguard Services LLC compare to expectations under the Cost Plus Award Fee (CPAF) structure?

Assessing Safeguard Services LLC's performance requires access to the award fee determinations made by CMS throughout the contract's life. Under a CPAF contract, the contractor receives a base fee plus an award fee based on performance against defined criteria. To evaluate this, one would need to review CMS's performance evaluations, the awarded fee amounts, and any justifications provided for those awards. Without this specific performance data, it's impossible to definitively state how well the contractor performed relative to the potential maximum award fee.

What was the total amount paid to Safeguard Services LLC, considering the base fee and all awarded fees?

The provided data lists the 'awarded amount' as $155,818,366.59. In a CPAF contract, this figure typically represents the total potential value, encompassing the cost of performance, the fixed fee, and the maximum potential award fee. However, the actual amount paid could be less if the contractor did not achieve the highest performance levels to earn the full award fee. To determine the precise total paid, one would need to consult the contract's payment records or final obligation amounts.

Were there any significant challenges or disputes encountered during the performance of this contract?

Information regarding significant challenges or disputes is not present in the provided summary data. Such details would typically be found in contract performance reports, agency oversight records, or potentially in contract modification histories if disputes led to formal actions. Investigating contract modification logs, cure notices, or termination for default/cause records would be necessary to identify any major issues that arose during the contract's nearly seven-year duration.

How does the cost per day or per year for this contract compare to similar program integrity contracts?

To compare the cost per day or year, we first calculate the average annual cost: $155,818,366.59 / (2587 days / 365.25 days/year) ≈ $22.0 million per year. This figure represents the total potential value spread over the contract's life. A meaningful comparison would require identifying similar contracts awarded by CMS or other agencies for program integrity services, noting their scope, duration, geographic coverage, and contract type (e.g., FFP, T&M, CPAF). Without these comparable data points, it's difficult to benchmark whether $22 million annually is high, low, or average for this type of service.

What is the significance of the contract being a 'Delivery Order'?

The designation 'DELIVERY ORDER' suggests that this contract was issued under a broader indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar type of contract vehicle. IDIQs allow agencies to procure supplies or services over a period of time up to a specified maximum amount. A delivery order represents a specific task or order placed against that IDIQ, detailing the quantity, delivery schedule, and price for a particular requirement. This approach provides flexibility for the agency to order services as needed while establishing a pre-competed framework.

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

Offers Received: 4

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: $177,613,398

Exercised Options: $155,818,367

Current Obligation: $155,818,367

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200800030I

IDV Type: IDC

Timeline