HHS awarded $47.8M for TAS Single Testing Contractor to Palmetto GBA, LLC over 5 years

Contract Overview

Contract Amount: $47,826,838 ($47.8M)

Contractor: Palmetto GBA, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2005-05-26

End Date: 2010-05-26

Contract Duration: 1,826 days

Daily Burn Rate: $26.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TAS::75 0511::TAS SINGLE TESTING CONTRACTOR

Place of Performance

Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29202

State: South Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $47.8 million to PALMETTO GBA, LLC for work described as: TAS::75 0511::TAS SINGLE TESTING CONTRACTOR Key points: 1. Contract value appears reasonable given the 5-year duration and scope of testing services. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. The contract type (Cost Plus Award Fee) can incentivize performance but requires careful oversight. 4. This contract supports critical Medicare and Medicaid testing functions. 5. Palmetto GBA, LLC has a significant presence in government healthcare contracting. 6. The contract's duration aligns with typical IT service contracts of this nature.

Value Assessment

Rating: good

The contract's total value of approximately $47.8 million over five years averages to about $9.56 million annually. This figure seems within a reasonable range for comprehensive testing services supporting major federal healthcare programs. Benchmarking against similar large-scale IT testing contracts for federal agencies suggests this pricing is competitive, especially considering the specialized nature of Medicare and Medicaid systems. The Cost Plus Award Fee structure allows for flexibility and performance incentives, which can be a value driver if managed effectively.

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 bids. The presence of two bids suggests a moderate level of competition for this specialized service. While more bidders could potentially drive prices lower, two bidders in a niche area like federal healthcare IT testing is not uncommon and still provides a basis for price discovery and selection of a qualified contractor.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more cost-effective solutions and better value for the government's investment.

Public Impact

Beneficiaries of this contract include the Centers for Medicare and Medicaid Services (CMS) and, indirectly, Medicare and Medicaid beneficiaries who rely on accurate and functional systems. The services delivered are crucial for ensuring the integrity and operational efficiency of critical healthcare IT systems. The geographic impact is national, as CMS systems serve beneficiaries across the United States. The contract supports IT professionals and testing specialists, contributing to the federal IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts require robust oversight to ensure costs are reasonable and award fees are justified.
The long duration of the contract (5 years) necessitates ongoing monitoring for performance degradation or scope creep.

Positive Signals

Awarded through full and open competition, indicating a fair and accessible bidding process.
The contract supports essential functions for major federal healthcare programs.
Palmetto GBA, LLC is an established contractor with experience in government healthcare administration.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT services and computer-related services. The market for federal IT services is substantial, with significant spending allocated to system development, maintenance, and testing. Comparable spending benchmarks for large-scale IT support contracts within federal agencies often run into tens of millions of dollars annually, making the $47.8 million over five years for this specialized testing role appear consistent with industry norms for government contracts of this scope and complexity.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded through full and open competition, it is unlikely to have significant direct subcontracting opportunities specifically targeted at small businesses unless mandated by the prime contractor. The primary focus is on the prime contractor's capabilities, and the impact on the broader small business ecosystem would be indirect, primarily through the prime's own procurement practices.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. As a Cost Plus Award Fee contract, performance metrics and cost justifications would be subject to rigorous review to determine award fee payments. Transparency is generally maintained through contract reporting mechanisms, and while specific Inspector General (IG) jurisdiction can vary, the HHS IG typically has oversight over CMS programs and contracts to ensure efficiency and prevent fraud, waste, and abuse.

Related Government Programs

Medicare IT Modernization
Medicaid Enterprise Systems
Healthcare.gov IT Services
CMS Quality Improvement Programs
Federal Health IT Initiatives

Risk Flags

Contract Duration
Cost Plus Award Fee Structure
Limited Competition (2 Bidders)

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $47.8 million to PALMETTO GBA, LLC. TAS::75 0511::TAS SINGLE TESTING CONTRACTOR

Who is the contractor on this award?

The obligated recipient is PALMETTO GBA, 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 $47.8 million.

What is the period of performance?

Start: 2005-05-26. End: 2010-05-26.

What is Palmetto GBA, LLC's track record with federal healthcare contracts, particularly with CMS?

Palmetto GBA, LLC has a substantial track record of working with the Centers for Medicare and Medicaid Services (CMS) and other federal health agencies. They are known for administering Medicare and Medicaid programs, including claims processing, data analysis, and IT support services. Their experience often involves managing complex systems and large datasets, which is critical for the TAS Single Testing Contractor role. Past performance reviews and contract histories with CMS would provide further insight into their reliability and effectiveness in delivering services similar to those required under this contract. Their long-standing presence suggests a generally positive relationship and capability in meeting federal healthcare IT needs.

How does the annual cost of this contract compare to similar federal IT testing services?

The annual cost of this contract, averaging approximately $9.56 million ($47.8M / 5 years), appears to be in line with, or potentially favorable for, large-scale federal IT testing services. Specialized testing for complex systems like those managed by CMS requires significant expertise and resources. Benchmarking against contracts for similar services, such as system integration testing, quality assurance, and performance testing for major federal IT programs, suggests that this rate is competitive. Factors influencing cost include the criticality of the systems being tested, the complexity of the testing required, and the specialized skills needed. Without direct comparisons of scope and complexity, it's difficult to provide an exact benchmark, but the annual average does not appear excessive for the described services.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for IT testing?

The primary risks associated with a Cost Plus Award Fee (CPAF) contract for IT testing revolve around cost control and performance measurement. For the government, there's a risk that costs could escalate beyond initial projections if not managed diligently, as the contractor is reimbursed for allowable costs. The 'award fee' component introduces subjectivity; ensuring that the criteria for earning award fees are objective, measurable, and aligned with desired outcomes is crucial. If award fee criteria are poorly defined or inconsistently applied, it can lead to either overpayment or under-motivation of the contractor. For the contractor, the risk lies in not meeting the performance targets required to earn the maximum award fee, impacting their overall profit margin. Effective oversight and clear performance metrics are essential to mitigate these risks.

How effective has Palmetto GBA, LLC been in managing similar large-scale IT contracts for the federal government?

Palmetto GBA, LLC has a history of successfully managing large-scale contracts, particularly within the healthcare domain for CMS. Their administration of Medicare and Medicaid programs involves extensive IT system management, data processing, and operational support, which are analogous to the requirements of an IT testing contract. While specific performance metrics for past IT testing contracts are not detailed here, their continued awards and long-term engagements with CMS suggest a generally effective performance record. Assessing effectiveness would involve reviewing past performance evaluations, on-time delivery rates, and the successful resolution of issues encountered during contract execution. Their established presence implies a capacity to handle the complexities and demands of such significant federal IT endeavors.

What is the historical spending trend for TAS Single Testing Contractor services at CMS?

Analyzing the historical spending trend for the TAS Single Testing Contractor services at CMS requires looking at this specific contract's lifecycle and potentially predecessor contracts. This contract, awarded in 2005 and ending in 2010, represented a significant investment of approximately $47.8 million over five years. Without data on prior or subsequent contracts specifically for 'TAS Single Testing Contractor,' it's challenging to establish a long-term trend. However, the consistent need for testing services for critical systems like those managed by CMS suggests that spending in this area is likely ongoing and substantial, adapting to system changes and evolving technological requirements. Future spending would depend on CMS's strategic IT plans and the evolution of its testing needs.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Blue Cross & Blue Shield of South Carolina

Address: 2501 FARAWAY DRIVE, COLUMBIA, SC, 29223

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $47,826,838

Exercised Options: $47,826,838

Current Obligation: $47,826,838

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline