HHS awarded $178.6M for IT management, with 6 bidders competing for this cost-plus award fee contract

Contract Overview

Contract Amount: $178,589,643 ($178.6M)

Contractor: Actionet Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2013-12-04

End Date: 2019-01-16

Contract Duration: 1,869 days

Daily Burn Rate: $95.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 6

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: IGF::CL::IGF CMMI CONSOLIDATED INNOVATION CENTER DEVELOPMENT AND IT MANAGEMENT (CICDIM)

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $178.6 million to ACTIONET INC for work described as: IGF::CL::IGF CMMI CONSOLIDATED INNOVATION CENTER DEVELOPMENT AND IT MANAGEMENT (CICDIM) Key points: 1. The contract's cost-plus award fee structure incentivizes performance but requires careful monitoring of costs against awarded fees. 2. With 6 bidders, the competition level suggests a reasonably contested market for these IT management services. 3. The contract duration of 1869 days indicates a long-term need for sustained IT support. 4. The primary agency, CMS, is a major health services administrator, implying critical IT infrastructure needs. 5. The contract's focus on 'Computer Systems Design Services' places it within a broad and dynamic IT services sector. 6. The 'ActionNet Inc.' awardee has a significant contract value, suggesting substantial past performance and capacity.

Value Assessment

Rating: good

The contract value of $178.6 million over approximately five years represents a substantial investment in IT management services. Benchmarking this against similar large-scale IT contracts within federal health agencies is crucial. While the cost-plus award fee (CPAF) structure allows for flexibility and performance incentives, it necessitates rigorous oversight to ensure costs remain reasonable and award fees are justified by demonstrable value. Without specific comparable per-unit costs or detailed performance metrics, a definitive value-for-money assessment is challenging, but the competitive nature suggests a market-driven price point.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating an initial intent for broad competition that was later refined. The presence of 6 bidders suggests a healthy level of interest and capability within the market for these specialized IT services. A higher number of bidders generally leads to more competitive pricing and a wider range of technical solutions, benefiting the government. The specific exclusion of sources might warrant further investigation into the rationale, but the initial competition indicates a deliberate effort to solicit multiple offers.

Taxpayer Impact: The robust competition for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario. It also increases the likelihood that the government secured the best available technical solution for its IT management needs.

Public Impact

Beneficiaries include CMS staff and potentially millions of healthcare beneficiaries who rely on the stability and efficiency of Medicare and Medicaid IT systems. Services delivered encompass critical IT management, system design, and development, ensuring the operational integrity of health programs. The geographic impact is primarily national, supporting federal health IT infrastructure, with potential localized impacts at CMS facilities. Workforce implications include the direct employment of IT professionals by the contractor and potential indirect impacts on federal IT staff managing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts can lead to cost overruns if not managed tightly.
The 'after exclusion of sources' clause requires scrutiny to ensure it did not unduly limit competition.
Long contract duration may require periodic re-evaluation of scope and pricing to ensure continued value.

Positive Signals

Award fee structure incentivizes contractor performance and alignment with government objectives.
Full and open competition, even with exclusions, suggests a commitment to market-based solutions.
The significant contract value indicates the contractor's capacity to handle complex, large-scale IT projects.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and IT management. The federal IT services market is vast, with significant spending allocated to system development, integration, and ongoing support for critical government functions. Comparable spending benchmarks would involve analyzing other large IT contracts awarded by agencies like HHS, particularly those for similar system design and management services. The market is characterized by a mix of large prime contractors and specialized subcontractors, with ongoing evolution in cloud computing, cybersecurity, and data analytics influencing contract requirements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large prime contract, it may offer subcontracting opportunities for small businesses, depending on the prime contractor's strategy and the specific requirements of the work. However, the absence of a small business set-aside means direct opportunities for small businesses to compete for the prime contract were not prioritized in this award. The impact on the small business ecosystem would largely depend on the subcontracting plan, if any, implemented by ActionNet Inc.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), the contracting agency. As a Cost Plus Award Fee (CPAF) contract, performance monitoring and fee determination are key oversight functions. The contract likely falls under the jurisdiction of the HHS Office of Inspector General (OIG) for audits and investigations related to fraud, waste, and abuse. Transparency would be facilitated through contract award databases and reporting requirements, though detailed performance metrics and fee justifications may not always be publicly accessible.

Related Government Programs

HHS IT Modernization Centers of Excellence
CMS Health Insurance Marketplace Technology
Federal Health IT Services
Governmentwide IT Acquisition Contracts
Centers for Medicare & Medicaid Services IT Support

Risk Flags

Potential for cost overruns in CPAF contracts.
Adequacy of competition given 'exclusion of sources'.
Long-term performance and value realization.
Cybersecurity risks associated with critical health IT systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $178.6 million to ACTIONET INC. IGF::CL::IGF CMMI CONSOLIDATED INNOVATION CENTER DEVELOPMENT AND IT MANAGEMENT (CICDIM)

Who is the contractor on this award?

The obligated recipient is ACTIONET 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 $178.6 million.

What is the period of performance?

Start: 2013-12-04. End: 2019-01-16.

What is the track record of ActionNet Inc. in managing large federal IT contracts, particularly those with a Cost Plus Award Fee structure?

ActionNet Inc. has a history of securing and performing on federal contracts, including significant awards within the Department of Health and Human Services. The $178.6 million value of this contract suggests a demonstrated capability to manage complex IT projects. For Cost Plus Award Fee (CPAF) contracts specifically, their success would be measured by the ability to meet performance objectives that result in favorable award fees, while controlling costs. Analyzing past performance reviews, award fee determinations, and any contract disputes or modifications related to their CPAF contracts would provide a clearer picture of their track record in this area. Without access to detailed CPAF performance data, it's difficult to definitively assess their proficiency, but the continued awarding of substantial contracts implies a generally satisfactory performance history.

How does the awarded price compare to market rates for similar Computer Systems Design Services?

Benchmarking the $178.6 million contract value against market rates for similar Computer Systems Design Services is complex due to the contract's duration (1869 days) and its Cost Plus Award Fee (CPAF) structure. A direct price comparison is difficult without breaking down the costs into labor categories, overhead, and profit margins, which are often not fully public. However, the fact that the contract was awarded under 'Full and Open Competition After Exclusion of Sources' with 6 bidders suggests that the pricing was deemed competitive within the market. To perform a more precise comparison, one would need access to detailed cost proposals, labor rate data for comparable roles in the Maryland region (where the contract is managed), and data from similar large-scale federal IT contracts. Industry reports on IT service pricing and consultant rates could offer a general benchmark, but the specific nature of government contracts, including compliance and overhead, can lead to variations.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks for this contract include potential cost overruns inherent in CPAF contracts, performance deficiencies impacting critical CMS IT systems, and contractor lock-in due to the long duration. Mitigation strategies likely involve robust performance monitoring by CMS, clear definition and tracking of award fee criteria, regular technical reviews, and strong contract management practices. The competitive award process itself serves as a risk mitigation tool by selecting a capable contractor. Additionally, the HHS OIG provides oversight to detect and prevent fraud, waste, and abuse. The contract's structure may also include clauses for termination for convenience or default, providing recourse if performance issues become severe. The specific nature of the 'exclusion of sources' in the competition also presents a potential risk if it unduly limited the pool of qualified bidders.

How effective has this contract been in achieving its stated objectives for IT management and system development at CMS?

Assessing the effectiveness of this contract requires access to specific performance metrics, user satisfaction data, and system uptime/reliability reports that are typically internal to CMS. As a contract focused on 'Computer Systems Design Services,' its effectiveness would be measured by the successful development, implementation, and maintenance of IT systems supporting CMS operations. Positive indicators might include improved system performance, enhanced security, successful rollout of new functionalities, and cost savings achieved through efficient IT management. Conversely, indicators of ineffectiveness could be system failures, security breaches, project delays, or cost overruns. Without direct access to these performance evaluations, a definitive judgment on effectiveness cannot be made, though the contract's renewal or continuation would suggest a level of satisfaction.

What are the historical spending patterns for similar IT management services at CMS or HHS?

Historical spending patterns for IT management services at CMS and HHS are substantial, reflecting the critical role of technology in administering federal health programs. CMS, in particular, manages vast and complex IT infrastructures for Medicare and Medicaid. Spending in this category typically includes system development, integration, cybersecurity, data management, and ongoing operational support. Over the years, there has been a trend towards modernizing these systems, increasing investment in cloud solutions, and enhancing data analytics capabilities. Comparing the $178.6 million awarded here to previous contract values for similar services, such as system design, IT support, or infrastructure management, would reveal trends in contract size, duration, and potentially the types of services prioritized by the agency. This specific contract represents a significant, but not necessarily anomalous, investment within the context of ongoing federal health IT expenditures.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: NIHJT20120002

Offers Received: 6

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 2600 PARK TOWER DR STE 1000, VIENNA, VA, 22180

Business Categories: Asian Pacific American Owned Business, Category Business, Minority Owned Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $391,383,144

Exercised Options: $191,103,073

Current Obligation: $178,589,643

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200202W

IDV Type: GWAC

Timeline