HHS awarded $85M to NHIC, CORP for direct health and medical insurance carrier services under a cost-plus award fee contract

Contract Overview

Contract Amount: $85,055,002 ($85.1M)

Contractor: Nhic, Corp

Awarding Agency: Department of Health and Human Services

Start Date: 2006-01-06

End Date: 2011-08-05

Contract Duration: 2,037 days

Daily Burn Rate: $41.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: Healthcare

Official Description: TAS::75 0511::TAS

Place of Performance

Location: HINGHAM, PLYMOUTH County, MASSACHUSETTS, 02043

State: Massachusetts Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $85.1 million to NHIC, CORP for work described as: TAS::75 0511::TAS Key points: 1. The contract's cost-plus award fee structure incentivizes performance but requires careful monitoring to ensure cost control. 2. With a duration of 2037 days, this represents a significant, long-term commitment to the contractor. 3. The award was made under full and open competition, suggesting a robust marketplace for these services. 4. The contract's value of $85 million indicates a substantial investment in health insurance carrier operations. 5. The specific Product Service Code (PSC) is not detailed, making direct comparisons to similar IT services challenging. 6. The contractor, NHIC, CORP, has a substantial contract value, suggesting significant experience in this domain.

Value Assessment

Rating: fair

The contract value of $85 million over approximately 5.6 years averages to about $15 million annually. Benchmarking this against similar contracts for direct health and medical insurance carrier services is difficult without more specific details on the services rendered. The cost-plus award fee (CPAF) structure allows for flexibility but can lead to higher costs if not managed tightly. Without detailed performance metrics and award fee determinations, assessing the true value for money is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 4 bidders suggests a competitive environment. This level of competition is generally favorable for price discovery and can lead to more favorable terms for the government.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices and encouraging innovation among bidders, leading to better service at a potentially lower cost.

Public Impact

Beneficiaries include individuals and entities utilizing health insurance services managed or facilitated by the contract. Services delivered likely encompass administrative, operational, and potentially claims processing functions for health insurance programs. The geographic impact is likely national, given the scope of federal health insurance programs. Workforce implications may include employment opportunities within NHIC, CORP and its subcontractors, as well as within the federal agencies overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts can sometimes lead to cost overruns if performance incentives are not carefully aligned with budget constraints.
The long contract duration (2037 days) necessitates robust ongoing oversight to ensure continued value and performance.
Lack of specific service details within the provided data makes it difficult to assess the efficiency and effectiveness of the awarded services.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
The contractor, NHIC, CORP, has secured a significant contract, suggesting a level of trust and capability.
The contract aims to provide essential health and medical insurance carrier services, which are critical for public health programs.

Sector Analysis

This contract falls within the Health Information Technology and Services sector, specifically focusing on the operational aspects of health insurance carriers. The market for such services is substantial, driven by government programs like Medicare and Medicaid, as well as private insurance. Comparable spending benchmarks would typically involve analyzing the administrative costs of other large health insurance providers or government contractors performing similar functions, often measured as a percentage of total claims processed or premiums managed.

Small Business Impact

The provided data does not indicate any specific small business set-asides for this contract. Analysis of subcontracting opportunities for small businesses would require further investigation into the contractor's subcontracting plan and actual performance. Without this information, the direct impact on the small business ecosystem remains unclear, though large contracts can sometimes create indirect opportunities.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) within HHS. Accountability measures are likely tied to the performance metrics and award fee criteria outlined in the contract. Transparency is generally facilitated through contract award databases, but detailed operational oversight and Inspector General jurisdiction would depend on the specific nature of the services and any associated risks.

Related Government Programs

Medicare Administrative Contractors (MACs)
Medicaid Information Technology Architecture (MITA)
Health Insurance Portability and Accountability Act (HIPAA) compliance services
Federal Health Insurance Marketplace operations

Risk Flags

Cost-plus award fee contracts require diligent oversight to manage costs.
Long contract durations can potentially limit future competition.
Lack of detailed service description hinders granular performance assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $85.1 million to NHIC, CORP. TAS::75 0511::TAS

Who is the contractor on this award?

The obligated recipient is NHIC, CORP.

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 $85.1 million.

What is the period of performance?

Start: 2006-01-06. End: 2011-08-05.

What is the historical spending pattern for NHIC, CORP with the Department of Health and Human Services?

Analyzing the historical spending pattern for NHIC, CORP with HHS requires access to comprehensive contract databases beyond the single award provided. However, the current award of $85,055,001.56 indicates a significant financial relationship. To understand the full pattern, one would need to examine prior awards, task orders, and contract modifications over several fiscal years. This would reveal trends in contract types (e.g., cost-plus, fixed-price), the specific agencies within HHS they contract with (e.g., CMS, NIH), and the evolution of contract values. A consistent award of this magnitude suggests a long-standing and potentially critical role for NHIC, CORP within HHS operations, possibly related to specific health insurance processing or administrative functions.

How does the cost-plus award fee (CPAF) structure compare to other contract types for similar health insurance carrier services?

The Cost-Plus Award Fee (CPAF) structure used for this contract is common when the scope of work is not precisely defined or when performance outcomes are difficult to predict. It allows the contractor to recover allowable costs plus a base fee, with the potential for an additional award fee based on meeting or exceeding performance objectives. Compared to Fixed-Price contracts, CPAF offers more flexibility for the government to incentivize specific outcomes but carries a higher risk of cost growth if performance targets are aggressively set or if the contractor's efficiency is low. Compared to Cost-Plus-Incentive-Fee (CPIF), CPAF places more emphasis on subjective performance evaluations for the award fee component, whereas CPIF typically uses more objective metrics tied to cost, schedule, or performance targets. For health insurance carrier services, where administrative efficiency and program compliance are key, CPAF can be effective if performance standards are clearly defined and measurable.

What are the key performance indicators (KPIs) typically associated with Direct Health and Medical Insurance Carrier contracts?

Key performance indicators (KPIs) for Direct Health and Medical Insurance Carrier contracts often revolve around operational efficiency, accuracy, compliance, and customer service. For administrative functions, KPIs might include claims processing timeliness (e.g., average days to process claims), claims accuracy rates (e.g., percentage of claims processed without error), and call center metrics like average handle time and first-call resolution rates. Compliance KPIs would focus on adherence to regulations such as HIPAA, Medicare, and Medicaid rules, measured through audit results and error rates. Member satisfaction scores, provider network adequacy, and timely payment of providers are also critical. For a CPAF contract, these KPIs would form the basis for determining the award fee, incentivizing the contractor to excel in these critical areas.

What is the potential impact of a 2037-day contract duration on market competition and innovation?

A contract duration of 2037 days (approximately 5.6 years) represents a significant, long-term commitment. For the incumbent contractor, it provides stability and a predictable revenue stream, allowing for strategic investment in infrastructure and personnel. However, such long durations can potentially stifle market competition by creating high barriers to entry for new or smaller firms who may lack the resources or track record to compete for such extended periods. It can also reduce the incentive for the incumbent to innovate aggressively if they feel secure in their position. Conversely, if the contract includes provisions for regular performance reviews and potential re-competition or modification based on technological advancements, it can still foster innovation. The government must balance the benefits of contractor stability with the need to ensure ongoing access to the best available solutions and competitive pricing.

How does the 'MASSACHUSETTS' location detail relate to this federal contract?

The detail 'MASSACHUSETTS' listed as 'sn' (State Name) likely indicates the state where the contractor, NHIC, CORP, is headquartered or has a significant operational presence related to this contract. Federal contracts are awarded to companies regardless of their physical location, but the state of operation can be relevant for various reasons. It might influence state-level tax implications, workforce sourcing, or proximity to specific government facilities or regional offices. In the context of health insurance carriers, a strong presence in a particular state could be linked to specific state-based health programs or a concentration of beneficiaries in that region. However, for a contract of this national scope, the Massachusetts location is more likely an administrative detail about the contractor's base rather than a direct operational constraint or focus of the services themselves.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › DEPENDENT MEDICARE SERVICES

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

Parent Company: DXC Technology Company

Address: 75 SGT WILLIIAM B TERRY DRIVE, HINGHAM, MA, 02043

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $85,055,002

Exercised Options: $85,055,002

Current Obligation: $85,055,002

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline