HHS awards $879M contract for beneficiary contact center operations to General Dynamics IT

Contract Overview

Contract Amount: $879,118,473 ($879.1M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-06-01

End Date: 2013-05-31

Contract Duration: 1,460 days

Daily Burn Rate: $602.1K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: BENEFICIARY CONTACT CENTER OPERATIONS

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $879.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: BENEFICIARY CONTACT CENTER OPERATIONS Key points: 1. Contract value represents a significant investment in citizen support infrastructure. 2. Sole-source award suggests limited market exploration or specific contractor capabilities. 3. Long contract duration may indicate a need for stable, long-term service provision. 4. Cost-plus award fee structure incentivizes performance but requires robust oversight. 5. Focus on telephone answering services highlights the importance of direct citizen engagement. 6. Contract awarded to a large, established federal contractor.

Value Assessment

Rating: fair

The total contract value of $879 million over four years is substantial for beneficiary contact center operations. Benchmarking this against similar large-scale call center contracts is challenging without more specific service metrics. The cost-plus award fee (CPAF) structure, while common for complex services, can lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fee that is tied to performance. The base contract value of $602 million suggests a significant portion of the total award is for core services, with the remainder allocated for potential award fees and option periods.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order, indicating that it was not openly competed. Sole-source awards typically occur when a specific contractor possesses unique capabilities, proprietary technology, or when urgent circumstances preclude a full and open competition. The lack of competition means that pricing and service levels were not tested against market alternatives, potentially limiting price discovery and the government's ability to secure the best possible value through competitive bidding.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially leading to a higher overall cost for these essential services.

Public Impact

Beneficiaries of Health and Human Services programs receive direct support through contact center operations. Services include telephone answering, providing information, and potentially assisting with program navigation. The contract supports a critical function for citizen interaction with federal health and human services. Workforce implications include jobs at General Dynamics Information Technology and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and suboptimal service.
Cost-plus award fee structure requires diligent oversight to control costs and ensure value.
Long-term nature of the contract could reduce flexibility to adapt to changing needs or technologies.

Positive Signals

Award to a large, experienced contractor like General Dynamics IT suggests a focus on reliability and established performance.
The contract aims to provide essential support services to a large beneficiary population.
The CPAF structure, if managed effectively, can incentivize high performance and quality service delivery.

Sector Analysis

The federal IT services market is vast, with significant spending on contact center operations, customer relationship management, and IT support. This contract falls within the broader IT services sector, specifically focusing on telecommunications and customer support. General Dynamics Information Technology is a major player in this space, competing with other large system integrators and specialized service providers. Spending on similar services across government agencies is substantial, reflecting the increasing reliance on digital and telephonic channels for citizen engagement.

Small Business Impact

This contract was awarded to General Dynamics Information Technology, a large business. There is no explicit indication of a small business set-aside. The contract's value and nature suggest potential subcontracting opportunities for small businesses, particularly in specialized areas of call center support or technology. However, the primary awardee is a large entity, and the extent of small business participation would depend on General Dynamics IT's subcontracting plan and execution.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services (CMS). As a Cost Plus Award Fee (CPAF) contract, robust financial and performance monitoring is crucial. This includes reviewing incurred costs, verifying performance against award fee criteria, and ensuring compliance with contract terms. The government contracting officer and their representatives (CORs) are responsible for day-to-day oversight, while potential audits by the HHS Office of Inspector General (OIG) could provide an additional layer of accountability.

Related Government Programs

HHS Beneficiary Services
CMS Contact Center Operations
Federal IT Support Services
Customer Relationship Management Systems
Telephone Answering Services Contracts

Risk Flags

Sole-source award limits price competition.
Cost-plus contract requires strong oversight to manage costs.
Long contract duration may reduce flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $879.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. BENEFICIARY CONTACT CENTER OPERATIONS

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $879.1 million.

What is the period of performance?

Start: 2009-06-01. End: 2013-05-31.

What is the track record of General Dynamics Information Technology in managing large-scale federal contact center operations?

General Dynamics Information Technology (GDIT) has a long history of providing IT services to the federal government, including extensive experience in managing large-scale contact centers and customer support operations for various agencies. They have been involved in significant contracts related to citizen services, help desks, and telecommunications infrastructure. Their track record includes managing complex programs with substantial budgets and large workforces. While specific performance metrics for past contracts are not detailed here, GDIT's sustained presence and numerous awards in this domain suggest a generally accepted capability to handle such requirements. However, as with any large contractor, performance can vary across individual contracts, and a detailed review of specific past performance evaluations would be necessary for a comprehensive assessment.

How does the awarded value compare to similar federal contact center contracts?

The awarded value of $879 million over approximately four years for beneficiary contact center operations is substantial, placing it among the larger contracts for such services. To provide a precise comparison, one would need to benchmark against contracts with similar scope, duration, number of beneficiaries served, and complexity of services (e.g., technical support, claims inquiries, general information). Contracts for large federal call centers can range from tens to hundreds of millions of dollars annually, depending on these factors. Given the sole-source nature and the specific agency (HHS/CMS), direct public comparisons might be limited. However, the scale suggests a significant operational footprint, likely serving millions of beneficiaries and handling a high volume of inquiries, which is consistent with the needs of CMS.

What are the primary risks associated with a sole-source award for this type of service?

The primary risks associated with a sole-source award for beneficiary contact center operations include: 1. **Price:** Without competition, the government may pay a higher price than if multiple bids were solicited. The contractor has less incentive to offer the lowest possible price. 2. **Innovation and Service Quality:** A lack of competitive pressure might reduce the contractor's incentive to innovate or continuously improve service quality beyond the minimum required by the contract. 3. **Limited Market Insight:** The government misses the opportunity to gain insights into market capabilities, new technologies, and alternative service delivery models that competition could reveal. 4. **Contract Lock-in:** If the sole-source justification is based on unique capabilities, it can create a dependency on that contractor, making future transitions potentially difficult and costly.

How effective is the Cost Plus Award Fee (CPAF) structure in ensuring value for money in this context?

The Cost Plus Award Fee (CPAF) structure aims to balance cost control with performance incentives. In the context of beneficiary contact center operations, it allows the government to reimburse the contractor for allowable costs while providing a performance-based fee. This can be effective if the award fee criteria are well-defined, measurable, and directly tied to key performance indicators (KPIs) such as call answer rates, resolution times, customer satisfaction, and accuracy. The 'award' portion incentivizes the contractor to exceed minimum performance standards. However, the effectiveness hinges on robust government oversight to scrutinize costs, ensure they are reasonable and allocable, and objectively evaluate performance against the award fee criteria. Without strong oversight, CPAF contracts can potentially lead to cost overruns if the fee structure is not managed diligently.

What are the implications of the contract's long duration (1460 days) for service delivery and adaptability?

A contract duration of 1460 days (approximately four years) provides stability and allows the contractor to make necessary investments in infrastructure, technology, and personnel for sustained operations. This long-term commitment can be beneficial for ensuring continuity of essential services like beneficiary support. However, it also presents challenges related to adaptability. Over four years, technology, beneficiary needs, and government priorities can evolve significantly. A long-term contract might make it more difficult and costly to incorporate new technologies, adjust service scope, or pivot to different service delivery models if required. The government must ensure contract flexibility mechanisms are in place or be prepared for potential modifications, which can be complex and time-consuming.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Telephone Answering Services

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3211 JERMANTOWN RD, FAIRFAX, VA, 22030

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

Financial Breakdown

Contract Ceiling: $879,118,473

Exercised Options: $879,118,473

Current Obligation: $879,118,473

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700001I

IDV Type: IDC

Timeline