HHS awarded $61.8M in administrative management consulting services to Cognosante, LLC over four years

Contract Overview

Contract Amount: $61,763,398 ($61.8M)

Contractor: Cognosante, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2013-08-30

End Date: 2017-08-29

Contract Duration: 1,460 days

Daily Burn Rate: $42.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: IGF::OT::IGF

Place of Performance

Location: SCOTTSDALE, MARICOPA County, ARIZONA, 85250

State: Arizona Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $61.8 million to COGNOSANTE, LLC for work described as: IGF::OT::IGF Key points: 1. The contract value represents a significant investment in administrative management and general management consulting services. 2. Competition dynamics for this contract are assessed to understand pricing efficiency and potential for overpayment. 3. Risk indicators are evaluated based on contract type, performance period, and contractor history. 4. Performance context is established by comparing this award to similar contracts within the federal government. 5. The contract's positioning within the broader IT and healthcare consulting sector is analyzed. 6. The use of Time and Materials pricing warrants scrutiny for cost control and value realization.

Value Assessment

Rating: fair

The total award of $61.8 million over four years for administrative management consulting services appears substantial. Benchmarking against similar contracts is crucial to determine if the pricing is competitive. The Time and Materials (T&M) contract type, while offering flexibility, can sometimes lead to higher costs if not managed diligently, as it doesn't have a fixed ceiling on labor hours. Further analysis of the specific services rendered and the labor categories utilized would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bidders suggests a moderate level of competition. While full and open competition is generally preferred for ensuring fair pricing and access to a wide range of capabilities, the limited number of bidders (two) might suggest potential barriers to entry or a specialized market. This level of competition could still yield reasonable pricing, but a higher number of bidders typically drives prices down more effectively.

Taxpayer Impact: The full and open competition, despite having only two bidders, likely provided a degree of price discovery for taxpayers. However, with fewer than expected bidders for a contract of this size, there's a possibility that the competitive pressure was not as intense as it could have been, potentially impacting the final price paid by taxpayers.

Public Impact

The primary beneficiaries of this contract are the Centers for Medicare and Medicaid Services (CMS), which receives administrative management and consulting support. The services delivered are expected to enhance the efficiency and effectiveness of CMS operations. The geographic impact is primarily within the federal government's administrative functions, with potential downstream effects on healthcare program beneficiaries. Workforce implications may include support for federal employees and potentially contractors involved in the delivery of these consulting services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Time and Materials (T&M) pricing structure can lead to cost overruns if not closely monitored, as it directly compensates for hours worked and materials used.
A limited number of bidders (two) in a full and open competition might indicate a less competitive market, potentially leading to higher prices than if more vendors had participated.
The contract duration of four years provides a long-term engagement, which requires sustained oversight to ensure continued value and performance.

Positive Signals

The contract was awarded through full and open competition, suggesting a broad search for qualified vendors and a commitment to fair market practices.
The existence of a specific North American Industry Classification System (NAICS) code (541611) indicates a focused procurement for specialized administrative management and general management consulting services.
The contract was awarded to Cognosante, LLC, a known entity in the federal contracting space, potentially indicating a level of established performance.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on administrative and management consulting. This is a significant area of federal spending, supporting various agencies in optimizing their operations, implementing new policies, and managing complex programs. The market for such services is competitive, with numerous firms offering expertise in areas like strategic planning, process improvement, and organizational development. Comparable spending benchmarks would involve looking at other large-scale consulting contracts awarded by HHS and other federal agencies for similar services.

Small Business Impact

The data indicates that small business participation was not a primary focus for this contract, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. This suggests the contract was not specifically set aside for small businesses, and there is no explicit indication of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, unless Cognosante, LLC voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS). Mechanisms would include contract officer representatives (CORs) monitoring performance, regular progress reports from the contractor, and potentially audits by the HHS Office of Inspector General (OIG). Transparency is typically facilitated through contract award databases like FPDS-NG, where basic award details are publicly available. The effectiveness of oversight depends on the diligence of the CORs and the robustness of reporting requirements.

Related Government Programs

HHS Administrative Support Contracts
CMS Management Consulting Services
Federal IT and Management Consulting
Government-wide Acquisition Contracts (GWACs) for Consulting

Risk Flags

Time and Materials Pricing
Limited Competition (2 Bidders)
Long Contract Duration (4 Years)

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $61.8 million to COGNOSANTE, LLC. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is COGNOSANTE, 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 $61.8 million.

What is the period of performance?

Start: 2013-08-30. End: 2017-08-29.

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

Cognosante, LLC has a notable history of securing federal contracts, particularly within the health and human services sector. Their portfolio often includes work related to health IT, data analytics, and program management support for agencies like CMS and the Veterans Health Administration (VHA). Analyzing their past performance on similar contracts, including any past performance reviews or awards/debarments, would provide insight into their reliability and capability. Specific to HHS, their experience likely involves supporting complex healthcare initiatives and administrative functions, aligning with the nature of this $61.8 million award. A review of their contract history would reveal the scale and scope of their previous engagements, helping to contextualize their suitability for this role and assess any potential risks associated with their track record.

How does the $61.8 million award compare to other administrative management consulting contracts awarded by CMS or HHS?

The $61.8 million award to Cognosante, LLC over four years represents a significant, but not unprecedented, investment in administrative management and general management consulting services for CMS. To benchmark its value, one would compare it against the total contract values and durations of similar consulting engagements awarded by CMS and other HHS agencies over the past five to ten years. Factors to consider include the specific services procured (e.g., strategic planning, process optimization, IT strategy), the labor categories and rates involved, and the number of bidders. If similar contracts for comparable services have been awarded at lower total values or shorter durations, it might suggest this award is on the higher end. Conversely, if it aligns with or is lower than benchmarks for comparable scope and complexity, it could indicate reasonable value. The Time and Materials (T&M) nature of this contract also warrants comparison with fixed-price or cost-plus contracts for similar services to assess potential cost efficiencies.

What are the primary risks associated with a Time and Materials (T&M) contract of this magnitude and duration?

The primary risks associated with a Time and Materials (T&M) contract of this magnitude ($61.8 million over four years) revolve around cost control and potential for scope creep. Unlike fixed-price contracts, T&M contracts reimburse the contractor for direct labor hours at specified rates and for the cost of materials. This structure inherently carries a risk of cost overruns if the contractor's efficiency is low or if the project scope expands without adequate oversight. For taxpayers, the risk is paying for inefficient labor or unnecessary materials. Effective mitigation requires robust government oversight, including diligent monitoring of labor hours, verification of material costs, and clear definition and management of the work to be performed. Without strong government project management and surveillance, T&M contracts can become significantly more expensive than initially anticipated, potentially diminishing the overall value for money.

What does the limited number of bidders (two) in a full and open competition imply for price discovery and potential value for money?

A limited number of bidders, such as two in this full and open competition, can have mixed implications for price discovery and value for money. On one hand, full and open competition theoretically allows any qualified vendor to bid, suggesting a broad market was considered. However, with only two participants, the competitive pressure might be less intense than if there were, for example, five or more bidders. This could mean that the price discovered through the bidding process might not be as low as it could have been in a more crowded field. For taxpayers, this could translate to a potentially higher price paid for the services. While the government still receives proposals to compare, the lack of robust competition might reduce the incentive for bidders to offer their most aggressive pricing. Therefore, careful evaluation of the proposals and the final negotiated price becomes even more critical to ensure value for money is achieved.

How has federal spending on administrative management and general management consulting services evolved over the past decade, and where does this contract fit?

Federal spending on administrative management and general management consulting services has generally seen a steady increase over the past decade, driven by the government's need for specialized expertise to improve efficiency, manage complex programs, and adapt to evolving technological and policy landscapes. Agencies like HHS, particularly CMS, frequently engage consultants to navigate intricate healthcare regulations, optimize operational processes, and implement large-scale IT initiatives. This $61.8 million contract with Cognosante, LLC fits within this trend as a substantial award for such services. Its value and duration are indicative of the significant resources allocated to obtaining external expertise for critical administrative functions. Benchmarking this contract against historical spending patterns for similar services within HHS and across the federal government would reveal whether this award is consistent with, higher than, or lower than previous investments, providing context on its relative scale and potential implications for future spending.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Cognosante Holdings, LLC (UEI: 826974789)

Address: 3110 FAIRVIEW PARK DR STE 800, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $61,763,398

Exercised Options: $61,763,398

Current Obligation: $61,763,398

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS10F0579N

IDV Type: FSS

Timeline