HHS awarded $130.9M for IT services, with National Government Services Inc. securing the contract

Contract Overview

Contract Amount: $130,939,365 ($130.9M)

Contractor: National Government Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-09-28

End Date: 2019-03-27

Contract Duration: 2,371 days

Daily Burn Rate: $55.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46250

State: Indiana Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $130.9 million to NATIONAL GOVERNMENT SERVICES, INC. for work described as: IGF::OT::IGF Key points: 1. The contract value of $130.9 million over its duration suggests a significant investment in IT services. 2. Competition dynamics for this contract were characterized by full and open competition, indicating a broad market approach. 3. The use of a Time and Materials pricing structure warrants scrutiny for potential cost overruns. 4. Performance context is provided by the contract's duration of approximately 6.5 years, allowing for sustained service delivery. 5. The contract falls within the 'Other Computer Related Services' NAICS code, positioning it within the broader IT services sector. 6. The award to a single entity, National Government Services, Inc., highlights the concentration of large-scale IT service providers.

Value Assessment

Rating: fair

The total award of $130.9 million over nearly seven years averages to approximately $19 million annually. Benchmarking this against similar large-scale IT service contracts within the federal government is challenging without more specific service details. However, the Time and Materials pricing model, while flexible, can present risks for cost control compared to fixed-price contracts. Further analysis would be needed to compare the specific rates and labor categories to market standards.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The data indicates one award, but the 'full and open' designation implies a competitive process was initiated. The number of bidders is not specified, which limits a detailed assessment of the competitive intensity. However, a broad competition generally fosters better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages a wider range of offers, potentially leading to lower prices and better value for the government's investment.

Public Impact

The primary beneficiaries are likely the Centers for Medicare and Medicaid Services (CMS) within HHS, receiving essential IT support. The services delivered are categorized under 'Other Computer Related Services,' implying a broad range of IT functions. The geographic impact is centered in Indiana (SN: INDIANA), where the contractor is located, but the services likely support national CMS operations. Workforce implications include potential job creation or utilization within National Government Services, Inc., supporting federal IT infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials (T&M) pricing can lead to cost overruns if not closely monitored and managed.
The long contract duration (over 6 years) may reduce flexibility to adapt to rapidly changing technology needs.
Lack of specific details on the 'Other Computer Related Services' makes it difficult to assess the precise scope and potential risks.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
The contract duration allows for sustained support and potential for building contractor expertise.
The award to a single entity implies a focused relationship for delivering specific IT services.

Sector Analysis

The IT services sector is vast and highly competitive, encompassing a wide array of specialized services. This contract, under NAICS code 541519 (Other Computer Related Services), falls into a broad category that can include everything from IT consulting and system integration to custom software development and IT support. Federal spending in this area is substantial, driven by the need to maintain and modernize complex government IT systems. Comparable spending benchmarks would depend heavily on the specific services rendered, but the $130.9 million award indicates a significant contract size within the federal IT landscape.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (SS: false, SB: false). Therefore, there are no direct subcontracting implications or specific benefits for the small business ecosystem stemming from a set-aside provision. The award to a large entity suggests that the scope of work was likely beyond the capacity or specialization of many small businesses, or that the competition was geared towards larger prime contractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its respective contracting officers and program managers. The Centers for Medicare and Medicaid Services (CMS) would also have a vested interest in ensuring the services meet their operational needs. Transparency is facilitated by contract databases like FPDS, which provide award details. The Inspector General's office for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

HHS IT Modernization Initiatives
CMS Health IT Services
Federal Civilian IT Contracts
IT Professional Services
Government IT Support Contracts

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Broad scope of 'Other Computer Related Services' may lead to ambiguity.
Long contract duration could limit adaptability to technological changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $130.9 million to NATIONAL GOVERNMENT SERVICES, INC.. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is NATIONAL GOVERNMENT 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 $130.9 million.

What is the period of performance?

Start: 2012-09-28. End: 2019-03-27.

What specific IT services were provided under this contract?

The contract falls under NAICS code 541519, 'Other Computer Related Services.' This is a broad category that can encompass a wide range of IT functions, including but not limited to IT consulting, system integration, custom software development, IT support, and network management. Without more specific details on the Statement of Work (SOW) or task orders issued under this contract, it is difficult to pinpoint the exact services rendered. However, given the awarding agency (CMS) and the substantial value, it likely involved critical IT infrastructure support, system maintenance, or development projects essential for CMS operations.

How does the Time and Materials (T&M) pricing structure compare to other contract types for similar IT services?

Time and Materials (T&M) contracts are often used when the scope of work is not clearly defined or is expected to change, allowing for flexibility. However, they carry a higher risk of cost overruns compared to fixed-price contracts because the government pays for the actual time and materials used. For IT services where requirements can evolve rapidly, T&M can be suitable, but it necessitates stringent oversight, detailed tracking of labor hours and material costs, and clear ceiling limitations. Fixed-price contracts, conversely, offer greater cost certainty but may be less adaptable to evolving technical requirements. The choice between T&M and fixed-price often depends on the predictability of the work and the government's risk tolerance.

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

National Government Services, Inc. (NGS) is a significant contractor, particularly within the health sector, often involved in administering Medicare benefits. While their primary role has historically been in claims processing and benefits administration, they also engage in IT services supporting these functions. Their extensive experience with government contracts, particularly with CMS, suggests a familiarity with federal requirements and operational environments. Assessing their specific track record for 'Other Computer Related Services' would require a deeper dive into past performance evaluations and contract completion data beyond this single award. However, their long-standing relationship with CMS indicates a level of established capability.

How does the annual average cost of this contract compare to industry benchmarks for similar IT services?

The contract's total value of $130.9 million over approximately 2,371 days (roughly 6.5 years) averages to about $55,225 per day, or roughly $19 million annually. Benchmarking this figure accurately requires detailed knowledge of the specific IT services provided, the labor categories involved, and their corresponding market rates. General IT services can vary widely in cost. For instance, basic IT support might be significantly cheaper than complex system integration or cybersecurity services. Without a defined scope of work and specific labor rates, a precise comparison to industry benchmarks is not feasible. However, $19 million annually for comprehensive IT services to a major agency like CMS is within the expected range for large-scale federal contracts.

What are the potential risks associated with the 'Other Computer Related Services' category?

The 'Other Computer Related Services' category (NAICS 541519) is inherently broad, which presents a risk of scope creep and unclear deliverables if not managed meticulously. Potential risks include the contractor providing services outside the intended scope, difficulties in measuring performance against vaguely defined objectives, and challenges in ensuring the services align with evolving technological needs. Furthermore, the rapid pace of technological change in IT means that services defined today might become obsolete quickly, posing a risk if the contract doesn't allow for adaptation. Effective contract management, clear performance metrics, and regular communication are crucial to mitigate these risks.

What historical spending patterns exist for 'Other Computer Related Services' at CMS or HHS?

Historical spending data for 'Other Computer Related Services' at CMS and HHS would reveal trends in IT service procurement. Analyzing past contracts within this NAICS code would indicate whether spending has been increasing, decreasing, or remaining stable. It would also highlight the typical contract values, durations, and the primary contractors involved. Such analysis could reveal if CMS relies heavily on external vendors for a broad range of IT functions or if there's a shift towards in-house capabilities or different service categories. Understanding these patterns provides context for the $130.9 million award, indicating whether it represents a typical investment or an outlier.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Elevance Health, Inc. (UEI: 037955940)

Address: 8115 KNUE RD, INDIANAPOLIS, IN, 46250

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $130,939,365

Exercised Options: $130,939,365

Current Obligation: $130,939,365

Subaward Activity

Number of Subawards: 356

Total Subaward Amount: $73,930,356

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS35F0674T

IDV Type: FSS

Timeline