HHS awarded $12.9M for IT services, with 3 bidders competing for this delivery order

Contract Overview

Contract Amount: $12,926,954 ($12.9M)

Contractor: Optumserve Technology Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2006-09-25

End Date: 2011-09-24

Contract Duration: 1,825 days

Daily Burn Rate: $7.1K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: OTHER MANAGEMENT SUPPORT SERVICES

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20878

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $12.9 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: OTHER MANAGEMENT SUPPORT SERVICES Key points: 1. The contract's value appears reasonable given the duration and scope of IT services. 2. Competition was present, with three bidders vying for this order, suggesting some price discovery. 3. The time-and-materials pricing structure introduces some cost risk if not closely managed. 4. This contract falls within the custom computer programming services category. 5. The spending is concentrated in Maryland, indicating a specific geographic focus. 6. The contractor has a history of performing IT services for the federal government.

Value Assessment

Rating: good

The $12.9 million award over five years for custom computer programming services represents an average annual spend of approximately $2.58 million. This is a moderate level of spending for IT services of this nature. Benchmarking against similar contracts for custom programming services suggests that the pricing structure, while time-and-materials, is within a typical range, provided that labor rates and hours are well-managed and justified. The presence of multiple bidders also supports the notion that the pricing was subject to competitive pressure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that it was competed among multiple vendors. With three bidders participating, there was a reasonable level of competition. This suggests that the Centers for Medicare and Medicaid Services (CMS) leveraged a competitive process to solicit proposals and select a vendor, which typically leads to better price discovery and potentially more favorable terms compared to sole-source or limited competition awards.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers as it likely resulted in a more competitive price for the services rendered. The presence of multiple bidders increases the likelihood that the government received a fair market price.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially healthcare providers and beneficiaries who rely on the IT systems supported by these services. Services delivered include custom computer programming, essential for maintaining and enhancing critical healthcare IT infrastructure. The geographic impact is concentrated in Maryland, where the contractor's operations are likely based. Workforce implications include the creation or maintenance of skilled IT jobs within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time-and-materials contract type can lead to cost overruns if not diligently monitored.
The specific nature of 'custom computer programming' requires clear scope definition to avoid scope creep.
Dependence on a single contractor for critical IT services can pose a risk if performance issues arise.

Positive Signals

The contract was competitively awarded, indicating a degree of market validation.
The duration of the contract (5 years) suggests a stable, ongoing need for these services.
The award falls under a standard IT service category, suggesting alignment with government IT needs.

Sector Analysis

This contract falls within the broader Information Technology (IT) sector, specifically under Custom Computer Programming Services (NAICS 541511). This sub-sector involves developing, creating, and modifying software. The federal government is a significant consumer of these services to maintain and upgrade its vast IT infrastructure, support agency missions, and improve citizen services. Comparable spending benchmarks for custom programming services vary widely based on complexity, duration, and labor rates, but this $12.9 million award over five years represents a moderate investment for a federal agency like HHS.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award went to OptumServe Technology Services, Inc., a large entity. Therefore, this particular award does not directly contribute to the small business contracting ecosystem through set-asides. However, the prime contractor may engage small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Centers for Medicare and Medicaid Services (CMS). Performance monitoring, invoice review, and adherence to contract terms are standard oversight mechanisms. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Centers for Medicare and Medicaid Services IT Modernization
Federal Health IT Services
Custom Software Development Contracts
Department of Health and Human Services IT Procurement

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Scope creep risk in custom programming services.
Contractor performance dependency.
Need for robust government oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $12.9 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. OTHER MANAGEMENT SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is OPTUMSERVE TECHNOLOGY SERVICES, 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 $12.9 million.

What is the period of performance?

Start: 2006-09-25. End: 2011-09-24.

What is the track record of OptumServe Technology Services, Inc. in performing federal IT contracts?

OptumServe Technology Services, Inc. has a significant history of performing federal IT contracts, particularly within the Department of Health and Human Services. Their experience spans various IT services, including custom computer programming, IT management, and support services. Analyzing their past performance on similar contracts would involve reviewing contract award data, performance evaluations (if publicly available), and any documented issues or successes. A deeper dive would assess their ability to meet deadlines, manage budgets, and deliver quality technical solutions, which is crucial for understanding their reliability on this current $12.9 million award.

How does the $12.9 million total award value compare to similar custom computer programming contracts within HHS?

The $12.9 million total award value for custom computer programming services over five years, averaging approximately $2.58 million annually, is a moderate figure within the context of HHS. HHS manages a vast and complex IT infrastructure, often requiring substantial investments in software development and maintenance. Compared to very large-scale system modernizations or enterprise-wide software implementations, this contract's value is less significant. However, for specific custom programming tasks or support for particular systems, it represents a substantial commitment. Benchmarking against contracts with similar scope, duration, and technical requirements would provide a more precise comparison, but generally, this falls within a typical range for specialized IT development services.

What are the primary risks associated with the 'Time and Materials' pricing structure for this contract?

The primary risk associated with a 'Time and Materials' (T&M) pricing structure, as used in this contract, is the potential for cost overruns if not managed effectively. Unlike fixed-price contracts, T&M contracts reimburse the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. This can lead to increased costs if the project scope expands unexpectedly, if labor hours are not efficiently utilized, or if material costs escalate. Effective oversight by the government, including detailed tracking of hours, rigorous justification of tasks, and clear definition of the statement of work, is essential to mitigate these risks and ensure value for money.

How effective has the competitive process been in ensuring value for money on this specific contract?

The competitive process, involving three bidders for this delivery order, suggests a positive initial step towards ensuring value for money. Competition generally drives down prices and encourages vendors to offer their best technical solutions and pricing. However, the ultimate effectiveness depends on the specifics of the solicitation, the evaluation criteria, and the negotiation process. While the presence of multiple bidders is a good indicator, a thorough assessment would require analyzing the bid proposals, the final negotiated price against initial estimates, and the contractor's performance throughout the contract lifecycle. The T&M structure also means ongoing vigilance is needed to ensure continued value.

What is the historical spending trend for custom computer programming services at CMS?

Analyzing historical spending trends for custom computer programming services at CMS is crucial for contextualizing this $12.9 million award. While specific historical data for this exact contract isn't provided, CMS, as a major component of HHS, consistently invests heavily in IT to manage Medicare, Medicaid, and other health programs. Spending in this category typically fluctuates based on agency priorities, system modernization initiatives, and evolving healthcare regulations. A review of past FPDS data would reveal whether spending on custom programming has been increasing, decreasing, or remaining stable, and identify major vendors and contract types utilized. This context helps determine if the current award aligns with historical patterns or represents a shift in strategy.

Are there any specific performance concerns or positive indicators documented for OptumServe Technology Services, Inc. on similar federal contracts?

Without access to specific contract performance reports (like CPARs) for OptumServe Technology Services, Inc. on similar federal contracts, it's difficult to provide a definitive assessment of performance concerns or positive indicators. However, federal agencies maintain performance records for contractors. A comprehensive analysis would involve reviewing these records to identify any patterns of delays, cost overruns, quality issues, or conversely, consistent on-time delivery, budget adherence, and high-quality outcomes. The fact that they were awarded this competitive delivery order suggests they met the basic qualifications and likely had an acceptable performance record on prior engagements, but specific details would require deeper investigation into performance documentation.

Industry Classification

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

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 10480 LITTLE PATUXENT PKWY SUITE 310, COLUMBIA, MD, 21044

Business Categories: 8(a) Program Participant, Category Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Financial Breakdown

Contract Ceiling: $12,926,954

Exercised Options: $12,926,954

Current Obligation: $12,926,954

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F0308L

IDV Type: FSS

Timeline