Palmetto GBA, LLC awarded $41.6M contract for administrative management services by HHS

Contract Overview

Contract Amount: $41,554,578 ($41.6M)

Contractor: Palmetto GBA, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2006-09-29

End Date: 2012-03-31

Contract Duration: 2,010 days

Daily Burn Rate: $20.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: CBIC

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 $41.6 million to PALMETTO GBA, LLC for work described as: CBIC Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns. 3. The duration of the contract spans over five years, indicating a long-term need. 4. The North American Industry Classification System (NAICS) code 541611 points to management consulting services. 5. The contract was awarded to a single vendor, Palmetto GBA, LLC. 6. The base contract value is substantial, reflecting significant service requirements.

Value Assessment

Rating: fair

The contract's value of $41.6 million over its period of performance appears significant for administrative management consulting services. Benchmarking this against similar contracts for large-scale government administrative support would be necessary for a precise value-for-money assessment. The Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost escalation, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure requires robust oversight to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for the services rendered without excessive profit.

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 a bid. The fact that it was competed suggests that the agency sought to leverage market forces to obtain the best value. The number of bidders is not specified, but the open competition framework is a positive sign for price discovery and potentially competitive pricing.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and the assurance that the agency sought multiple offers, which can lead to more efficient use of public funds.

Public Impact

Beneficiaries include federal agencies requiring administrative management and general management consulting services. Services delivered likely encompass strategic planning, operational efficiency improvements, and management support. Geographic impact is national, supporting federal operations across various departments. Workforce implications may involve the need for skilled consultants and administrative personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure can lead to cost overruns if not closely monitored.
Long contract duration may reduce flexibility to adapt to changing needs or technologies.
Reliance on a single contractor for a significant duration could pose a risk if performance issues arise.

Positive Signals

Awarded through full and open competition, suggesting a robust and fair bidding process.
The contract addresses critical administrative management needs for federal agencies.
The fixed fee component provides some level of cost predictability for the agency.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically management consulting. This sector is a significant component of federal spending, supporting a wide array of government functions. The market for these services is competitive, with numerous firms offering expertise in administrative and general management. The $41.6 million award is substantial and indicates a large-scale engagement, likely involving complex operational or strategic support for the Centers for Medicare and Medicaid Services (CMS).

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While the primary award went to Palmetto GBA, LLC, the implications for small businesses would depend on subcontracting opportunities. Without specific subcontracting plans or goals detailed in the award, it's difficult to assess the direct impact on the small business ecosystem. However, large prime contracts often create opportunities for small businesses as subcontractors, provided such arrangements are encouraged or mandated.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services. Accountability measures would be embedded in the contract's performance work statement and reporting requirements. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Administrative Management Services
Management and Consulting Services
Federal IT Consulting Contracts
Healthcare Administration Support
Government Operations Support

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Long contract duration may limit adaptability to evolving needs.
Potential for contractor to lack incentive for cost control.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $41.6 million to PALMETTO GBA, LLC. CBIC

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 $41.6 million.

What is the period of performance?

Start: 2006-09-29. End: 2012-03-31.

What is the track record of Palmetto GBA, LLC with federal contracts, particularly within HHS?

Palmetto GBA, LLC has a significant history of federal contracting, particularly with the Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS). They have been a major Medicare Administrative Contractor (MAC) for many years, responsible for processing Medicare claims and performing other administrative functions. Their extensive experience in managing large-scale healthcare administrative contracts suggests a deep understanding of government healthcare programs and operational requirements. This specific contract, awarded in 2006 and ending in 2012, represents a substantial engagement for administrative management and consulting services, aligning with their core competencies in managing complex healthcare-related administrative tasks. Their long-standing presence and repeated awards indicate a generally positive performance history, though specific performance metrics for this particular contract would require deeper analysis of contract performance reports and any associated award or termination actions.

How does the $41.6 million contract value compare to similar administrative management contracts awarded by HHS?

The $41.6 million contract value for administrative management and general management consulting services awarded to Palmetto GBA, LLC by HHS is substantial. To benchmark this effectively, one would need to compare it against other large-scale contracts for similar services within HHS or other federal agencies. For instance, contracts for managing large government programs, providing strategic consulting to federal departments, or overseeing complex administrative operations often reach tens or even hundreds of millions of dollars over their performance periods. Given that this contract spans over five years (from 2006 to 2012), the annual value is approximately $8.3 million. This figure is significant but may be within the expected range for a major contractor supporting a critical agency like CMS. A detailed comparison would involve analyzing the scope of work, duration, and specific services provided in comparable contracts to determine if the pricing is competitive and reflects fair market value for the services rendered.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude, like the $41.6 million award to Palmetto GBA, LLC, revolve around cost control and contractor incentives. In a CPFF structure, the government reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee. The main risk is that the contractor may have less incentive to control costs rigorously, as they are guaranteed reimbursement for expenses. If the 'cost' portion of the contract is not meticulously monitored and audited, there's a potential for cost overruns, exceeding the initially estimated total project cost. The fixed fee, while providing some predictability, could become disproportionately large if costs escalate significantly. Effective risk mitigation requires robust government oversight, detailed cost accounting standards, regular audits, and clear performance metrics to ensure the contractor remains focused on efficiency and value delivery.

What was the intended purpose and expected outcome of this contract for the Centers for Medicare and Medicaid Services?

The intended purpose of this $41.6 million contract awarded to Palmetto GBA, LLC by the Centers for Medicare and Medicaid Services (CMS) was to secure administrative management and general management consulting services. Given CMS's role in administering the Medicare and Medicaid programs, these services likely supported critical operational functions, strategic planning, and efficiency improvements within the agency. The expected outcomes would include enhanced program administration, better resource allocation, improved operational processes, and potentially the development or refinement of management strategies to ensure the effective delivery of healthcare services to beneficiaries. The contract's duration of over five years suggests a need for sustained support in managing the complexities of federal healthcare programs, aiming for long-term improvements in efficiency and effectiveness.

How has federal spending on administrative management and consulting services evolved since this contract was awarded?

Federal spending on administrative management and consulting services has generally seen fluctuations but has remained a significant area of expenditure since this contract was awarded in 2006. Post-2006, particularly following the 2008 financial crisis and subsequent stimulus measures, government spending on consulting and management support services saw increases as agencies sought expertise for program implementation, efficiency improvements, and navigating complex policy changes. In more recent years, there has been a continued emphasis on leveraging external expertise for digital transformation, cybersecurity, and program modernization. While specific figures vary annually and by agency, the demand for these services persists, driven by the need for specialized skills, project management, and strategic advice that may not be available in-house. The trend indicates a sustained reliance on the private sector for these critical support functions, with evolving areas of focus such as data analytics, AI integration, and agile methodologies.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,554,578

Exercised Options: $41,554,578

Current Obligation: $41,554,578

Actual Outlays: $327,245

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline