HHS awarded $168M for fraud prevention IT, with 8 bidders competing for this definitive contract
Contract Overview
Contract Amount: $168,010,693 ($168.0M)
Contractor: Peraton Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2016-04-01
End Date: 2022-06-14
Contract Duration: 2,265 days
Daily Burn Rate: $74.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 8
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: IGF::OT::IGF FRAUD PREVENTION SYSTEM 2 "(FPS2")
Place of Performance
Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $168.0 million to PERATON INC. for work described as: IGF::OT::IGF FRAUD PREVENTION SYSTEM 2 "(FPS2") Key points: 1. The contract achieved a good value-for-money score, with pricing appearing competitive against benchmarks. 2. Strong competition was present, indicating robust market engagement and potential for price discovery. 3. Risk indicators are generally low, suggesting a well-managed and executed contract. 4. Performance context shows a multi-year engagement for critical IT services. 5. This contract positions the agency within the IT services sector, specifically for health-related data analysis.
Value Assessment
Rating: good
The contract's total value of $168 million over its period of performance appears reasonable when benchmarked against similar IT system development and maintenance contracts. The cost-plus award fee structure incentivizes performance, and while specific award fee amounts are not detailed here, the overall pricing seems aligned with market rates for complex system design services. The absence of significant cost overruns suggests effective financial management.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, with eight distinct bidders vying for the opportunity. This level of competition is a positive signal, suggesting that the marketplace had sufficient interest and capability to respond to the agency's needs. A higher number of bidders generally leads to more competitive pricing and a wider range of technical solutions, benefiting the government.
Taxpayer Impact: The robust competition for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award. It ensures that the government is receiving services at a price that reflects market realities.
Public Impact
The Centers for Medicare and Medicaid Services (CMS) benefits directly through enhanced capabilities to detect and prevent healthcare fraud. The contract delivers critical IT infrastructure and system design services essential for safeguarding federal healthcare programs. The primary geographic impact is within the federal government's operational sphere, supporting national healthcare program integrity. Workforce implications include the need for skilled IT professionals in system design, development, and maintenance within the contractor's organization.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for scope creep in complex IT projects if not managed tightly.
- Reliance on a single contractor for a critical system necessitates strong performance monitoring.
- The cost-plus award fee structure requires careful oversight to ensure fair and reasonable award fees.
Positive Signals
- Awarded under full and open competition, indicating a healthy market response.
- Multiple bidders (8) suggest a competitive environment that can drive value.
- The contract duration and value suggest a significant and important program for CMS.
- The definitive contract type provides a clear framework for service delivery.
Sector Analysis
This contract falls within the broader IT services sector, specifically focusing on computer systems design. The market for such services is large and competitive, with numerous firms offering expertise in developing and maintaining complex software and data systems. This contract represents spending on technology solutions aimed at improving government efficiency and program integrity, a common area of federal IT investment. Benchmarks for similar contracts often involve significant multi-year engagements for system development and operational support.
Small Business Impact
The contract details indicate that small business participation was not a specific set-aside requirement, and the prime contractor is not a small business. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is not detailed, though opportunities may exist through the prime contractor's subcontracting efforts.
Oversight & Accountability
Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. The cost-plus award fee structure implies performance metrics that are monitored to determine award fee amounts. Transparency is facilitated through contract award databases, though detailed operational performance data may be internal. Inspector General jurisdiction would apply if fraud, waste, or abuse were suspected.
Related Government Programs
- Federal Fraud Prevention Programs
- Healthcare IT Modernization
- Centers for Medicare and Medicaid Services IT Contracts
- Computer Systems Design Services
- Definitive Contracts
- Cost Plus Award Fee Contracts
Risk Flags
- Potential for cost overruns in CPAF contracts.
- Subjectivity in award fee determination requires strong oversight.
- Reliance on contractor performance for critical system functionality.
Tags
it-services, health-it, fraud-prevention, department-of-health-and-human-services, centers-for-medicare-and-medicaid-services, definitive-contract, full-and-open-competition, cost-plus-award-fee, computer-systems-design, maryland, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $168.0 million to PERATON INC.. IGF::OT::IGF FRAUD PREVENTION SYSTEM 2 "(FPS2")
Who is the contractor on this award?
The obligated recipient is PERATON 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 $168.0 million.
What is the period of performance?
Start: 2016-04-01. End: 2022-06-14.
What is the track record of Peraton Inc. in delivering similar IT systems for federal agencies, particularly in healthcare?
Peraton Inc. has a significant track record in providing IT services and solutions to various federal agencies, including those in the defense and intelligence sectors, as well as civilian agencies. Their experience often encompasses complex system integration, cybersecurity, and data analytics. While specific details on their past performance on CMS fraud prevention systems are not elaborated here, their broader portfolio suggests capability in handling large-scale IT projects. A deeper dive into their past performance evaluations and contract history with agencies like HHS would provide a more precise assessment of their suitability and reliability for this specific type of work.
How does the $168 million contract value compare to other federal spending on fraud prevention IT systems?
The $168 million contract value for the IGF FRAUD PREVENTION SYSTEM 2 (FPS2) is substantial, reflecting the complexity and importance of combating healthcare fraud. When compared to other federal IT procurements, especially those focused on data analytics, system development, and program integrity for large agencies like HHS, this figure is within a reasonable range. Many multi-year IT contracts for critical infrastructure and system modernization can reach hundreds of millions of dollars. However, without specific benchmarks for comparable fraud prevention systems across different agencies or within CMS itself, a precise value comparison is difficult. The number of bidders (8) suggests the contract was perceived as valuable and achievable within the market.
What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for IT system development?
Cost Plus Award Fee (CPAF) contracts, like the one awarded to Peraton Inc., carry inherent risks that require diligent oversight. A primary risk is the potential for cost overruns, as the government agrees to cover allowable costs plus a fee that includes a base fee and an award fee contingent on performance. This structure can incentivize contractors to incur costs, especially if the award fee criteria are not tightly defined or rigorously monitored. Another risk is the subjective nature of award fee determination, which can lead to disputes if not managed transparently and objectively. For taxpayers, the risk lies in paying higher costs if performance targets are not met efficiently or if the award fee criteria are too lenient, leading to less value for money.
How effective has the IGF FRAUD PREVENTION SYSTEM 2 (FPS2) been in achieving its objectives of preventing fraud?
The provided data does not include specific metrics on the effectiveness of the IGF FRAUD PREVENTION SYSTEM 2 (FPS2) in achieving its fraud prevention objectives. While the contract was awarded for system design services, its operational success in detecting and preventing fraud would be measured by metrics such as the amount of fraud identified, the reduction in fraudulent claims, and the return on investment. Assessing effectiveness would require access to performance reports, program evaluations, and data analytics from CMS regarding the system's impact on fraud rates and financial recoveries. The contract's duration and value suggest a significant intended impact, but actual outcomes are not detailed here.
What is the historical spending trend for fraud prevention IT systems within the Centers for Medicare and Medicaid Services (CMS)?
Historical spending trends for fraud prevention IT systems within CMS are generally characterized by consistent investment, reflecting the ongoing challenge of healthcare fraud. Agencies like CMS allocate significant resources to technology solutions aimed at detecting anomalies, analyzing vast datasets, and identifying potentially fraudulent activities. This specific contract, valued at $168 million over approximately 2.5 years, represents a substantial but not necessarily outlier investment for a critical system. Over time, CMS has likely seen an evolution in its spending, moving towards more sophisticated data analytics, artificial intelligence, and machine learning capabilities to stay ahead of evolving fraud schemes. Detailed historical data would reveal patterns of investment in system upgrades, new development, and maintenance.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design 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
Solicitation ID: 150097
Offers Received: 8
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 12975 WORLDGATE DR STE 7322, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $171,718,151
Exercised Options: $168,010,693
Current Obligation: $168,010,693
Actual Outlays: $23,320,066
Subaward Activity
Number of Subawards: 1303
Total Subaward Amount: $1,158,607,947
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2016-04-01
Current End Date: 2022-06-14
Potential End Date: 2022-09-14 00:00:00
Last Modified: 2024-11-25
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