HHS awarded $23.5M for custom computer programming, with 1 vendor and firm fixed price terms

Contract Overview

Contract Amount: $23,561,739 ($23.6M)

Contractor: National Government Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-12-14

End Date: 2017-12-13

Contract Duration: 1,825 days

Daily Burn Rate: $12.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

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 $23.6 million to NATIONAL GOVERNMENT SERVICES, INC. for work described as: IGF::OT::IGF Key points: 1. The contract utilized a firm fixed-price structure, which shifts cost risk to the contractor. 2. With only one bid received, the level of competition was limited, potentially impacting price discovery. 3. The contract duration of 1825 days suggests a long-term need for the services provided. 4. The North American Industry Classification System (NAICS) code 541511 indicates a focus on custom software development. 5. The award was made to NATIONAL GOVERNMENT SERVICES, INC., a significant federal contractor. 6. The contract was awarded under full and open competition, despite the single bid. 7. The contract's value of over $23 million warrants scrutiny for cost-effectiveness over its lifespan.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data. However, a $23.5 million award over five years for custom computer programming suggests a substantial investment. The firm fixed-price nature implies that the contractor bears the risk of cost overruns, which can be a positive indicator for the government if the scope is well-defined. Without more information on the specific services rendered and their impact, a definitive value assessment is difficult, but the price appears within a reasonable range for complex IT development over a multi-year period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit an offer. However, only one bid was received. This limited competition could indicate several factors, such as a highly specialized service requirement, a lack of market interest, or potential barriers to entry for other firms. While the process allowed for broad participation, the outcome suggests that the government may not have achieved the most competitive pricing possible due to the limited number of proposals.

Taxpayer Impact: A single bid limits the government's ability to leverage competitive pressures to secure the best possible price for taxpayers. This could result in a higher overall cost compared to a scenario with multiple competing offers.

Public Impact

Beneficiaries include federal agencies within the Department of Health and Human Services requiring custom software solutions. The services delivered likely involve the development, maintenance, or enhancement of critical IT systems supporting healthcare and public health initiatives. The geographic impact is primarily national, supporting federal operations, though specific locations of service delivery are not detailed. Workforce implications may include the employment of software developers, programmers, and IT specialists by the contractor, NATIONAL GOVERNMENT SERVICES, INC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition resulting in a single bid raises concerns about potential overpayment and lack of innovative solutions.
The substantial contract value over a five-year period necessitates close monitoring to ensure continued value for money.
Lack of detailed performance metrics makes it difficult to assess the effectiveness and efficiency of the services provided.

Positive Signals

The firm fixed-price contract structure effectively transfers cost overrun risk to the contractor.
The contract was awarded under full and open competition, adhering to federal procurement principles.
The contractor, NATIONAL GOVERNMENT SERVICES, INC., is an established entity with experience in federal contracting.

Sector Analysis

The custom computer programming services sector is a vital component of the federal IT landscape, supporting a wide array of agency functions. This contract, valued at over $23 million, falls within the broader IT services market, which is characterized by rapid technological advancements and evolving requirements. Comparable spending benchmarks for custom software development can vary significantly based on complexity, duration, and specific technologies used. This contract's value is substantial for a single award, suggesting a significant project or a long-term service agreement within the healthcare IT domain.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Therefore, the primary contractor, NATIONAL GOVERNMENT SERVICES, INC., is likely a large business. There is no explicit information regarding subcontracting plans for small businesses. The absence of a set-aside or specific subcontracting goals means that the direct impact on the small business ecosystem for this particular contract is likely minimal, unless the prime contractor voluntarily engages small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) within HHS. Accountability measures are inherent in the firm fixed-price contract type, requiring the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or identified during the contract's performance or closeout.

Related Government Programs

Health Information Technology Services
Federal Health IT Modernization Programs
Custom Software Development Contracts
Centers for Medicare and Medicaid Services IT Support

Risk Flags

Limited Competition
Potential for Cost Overruns (if scope changes)
Technology Obsolescence Risk (over 5 years)

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $23.6 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 $23.6 million.

What is the period of performance?

Start: 2012-12-14. End: 2017-12-13.

What specific custom computer programming services were delivered under this contract?

The contract, NAICS code 541511, specifies 'Custom Computer Programming Services.' While the exact deliverables are not detailed in the provided data, this typically encompasses the design, development, modification, and testing of computer software tailored to the specific needs of the client. For the Centers for Medicare and Medicaid Services (CMS), these services could range from developing new modules for healthcare eligibility systems, enhancing data analytics platforms for population health management, creating user interfaces for provider portals, to maintaining and updating legacy software critical for healthcare operations. The firm fixed-price nature suggests a well-defined scope of work was established upfront to manage costs effectively over the contract's five-year duration.

How does the $23.5 million contract value compare to similar custom programming contracts within HHS?

Comparing the $23.5 million contract value requires context regarding the scope, duration, and complexity of the services. Over its five-year term (1825 days), this represents an average annual value of approximately $4.7 million. Within the vast IT spending of HHS, particularly CMS, this figure is substantial but not extraordinary for a definitive contract focused on custom development. Larger, more complex system overhauls or enterprise-wide software solutions can easily exceed this amount. However, for a single vendor award, it indicates a significant project. Benchmarking against other custom programming contracts within HHS would necessitate analyzing contracts with similar NAICS codes, durations, and specific service requirements to determine if the pricing is competitive.

What are the primary risks associated with a contract awarded to a single bidder?

The primary risks associated with a contract awarded to a single bidder, even under full and open competition, include limited price competition, potential for reduced innovation, and vendor lock-in. Without competing proposals, the government may not achieve the lowest possible price, as the single bidder faces less pressure to optimize their cost structure. Innovation can also be stifled, as the vendor may not feel compelled to offer cutting-edge solutions if they are the only option. Furthermore, a single-source award can create dependency, making it difficult and costly to switch vendors in the future if performance issues arise or needs change. This underscores the importance of robust contract management and performance monitoring.

What is the significance of the 'Firm Fixed Price' (FFP) contract type in this context?

The 'Firm Fixed Price' (FFP) contract type is significant because it places the majority of the financial risk on the contractor, NATIONAL GOVERNMENT SERVICES, INC. Under an FFP agreement, the contractor agrees to a set price for the defined scope of work, regardless of their actual costs incurred. This means that if the contractor's expenses are higher than anticipated, their profit margin will decrease. Conversely, if their costs are lower, their profit will increase. For the government, this provides cost certainty, as the total price is fixed, assuming the scope of work does not change. This structure is generally preferred for well-defined requirements where cost and performance risks can be reasonably estimated.

How does the contract's duration (1825 days) impact its overall value and risk?

A duration of 1825 days, equivalent to five years, indicates a long-term commitment for custom computer programming services. This extended period allows for the development and implementation of potentially complex systems and provides stability for both the government and the contractor. For the government, it ensures continuity of service and allows for a deeper integration of the developed solutions into agency operations. However, a longer duration also increases the risk of scope creep if not managed tightly, potential obsolescence of technology over time, and the possibility that the initial pricing may not remain competitive throughout the entire period. The firm fixed-price nature helps mitigate some cost risks, but the government must remain vigilant about managing the scope and ensuring the services remain relevant.

What does the NAICS code 541511 ('Custom Computer Programming Services') imply about the contract's focus?

The North American Industry Classification System (NAICS) code 541511 specifically identifies 'Custom Computer Programming Services.' This designation implies that the contract's primary objective is not the sale of off-the-shelf software or general IT support, but rather the creation of unique software solutions tailored to the specific operational needs of the Department of Health and Human Services (HHS), likely through its Centers for Medicare and Medicaid Services (CMS). This could involve developing new applications, significantly modifying existing ones, or integrating disparate software systems. The focus on custom development suggests a need for specialized technical expertise and a deep understanding of the agency's requirements, distinguishing it from broader IT services contracts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming 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: 1

Pricing Type: FIRM FIXED PRICE (J)

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $32,808,976

Exercised Options: $23,561,739

Current Obligation: $23,561,739

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $1,599,251

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline