HHS awarded $17.75M for multi-carrier system support, with a significant portion spent on IT services

Contract Overview

Contract Amount: $17,753,382 ($17.8M)

Contractor: HP Enterprise Services, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2010-07-01

End Date: 2018-08-31

Contract Duration: 2,983 days

Daily Burn Rate: $6.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: TAS::75 0511::TAS MULTI CARRIER SYSTEM

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $17.8 million to HP ENTERPRISE SERVICES, LLC for work described as: TAS::75 0511::TAS MULTI CARRIER SYSTEM Key points: 1. The contract focused on computer systems design, a critical area for healthcare IT infrastructure. 2. The duration of the contract (nearly 8 years) suggests a need for long-term system stability and support. 3. The award was made under full and open competition, indicating a broad market solicitation. 4. The use of a Cost Plus Fixed Fee (CPFF) pricing structure can incentivize contractor efficiency while managing costs. 5. The contract's value is moderate within the context of large federal IT procurements. 6. The primary agency, CMS, relies heavily on such systems for managing healthcare programs.

Value Assessment

Rating: good

The contract value of $17.75 million over nearly 8 years averages to approximately $2.27 million per year. This is a moderate annual spend for a complex IT system support contract. Benchmarking against similar large-scale IT system design and integration contracts within federal agencies suggests this pricing is within a reasonable range, especially considering the specialized nature of healthcare IT systems managed by CMS. The CPFF structure, while requiring careful oversight, allows for flexibility in addressing evolving technical requirements.

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 offers. This approach typically fosters a competitive environment, encouraging multiple bidders to present their best technical solutions and pricing. The presence of multiple bidders, even if the exact number isn't specified here, generally leads to better price discovery and a higher likelihood of selecting the most cost-effective solution for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for receiving competitive pricing and innovative solutions, thereby ensuring government funds are used efficiently.

Public Impact

Beneficiaries include healthcare providers and beneficiaries of Medicare and Medicaid programs who rely on the stability and functionality of the underlying systems. The services delivered were crucial for the design and support of multi-carrier systems essential for healthcare data management. The geographic impact is national, as CMS operates nationwide, and the systems supported are integral to federal healthcare operations. Workforce implications include IT professionals and support staff involved in system design, development, and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in CPFF contracts if not closely monitored.
System complexity could lead to unforeseen technical challenges and delays.
Dependence on a single contractor for critical system support over an extended period.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Long contract duration indicates successful performance and ongoing need for services.
Focus on computer systems design aligns with modernization efforts in federal IT.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The federal IT market is vast, with significant spending allocated to system design, development, integration, and maintenance. Contracts like this are crucial for agencies like HHS and CMS, which manage complex, mission-critical systems that underpin national healthcare programs. Comparable spending benchmarks in this area would involve looking at other large federal IT system support contracts, often valued in the tens to hundreds of millions of dollars annually.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large IT services contract, it is likely that the prime contractor, HP Enterprise Services, LLC, would engage small businesses as subcontractors to fulfill specific requirements or to meet small business subcontracting goals. However, without specific subcontracting plans or data, the direct impact on the small business ecosystem is not fully discernible from this award alone.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous financial and performance oversight to ensure costs are reasonable and allocable, and that the fixed fee is earned. Transparency is generally maintained through contract reporting mechanisms, and potential issues could be addressed by CMS's internal oversight bodies or potentially the HHS Office of Inspector General (OIG) if significant concerns arise.

Related Government Programs

Healthcare IT Modernization Programs
Federal Health Information Exchange (HIE) Initiatives
Centers for Medicare & Medicaid Services (CMS) IT Support Contracts
Health Insurance Portability and Accountability Act (HIPAA) Compliance Systems

Risk Flags

Cost Overrun Risk
Scope Creep Potential
Contractor Performance Monitoring
System Integration Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $17.8 million to HP ENTERPRISE SERVICES, LLC. TAS::75 0511::TAS MULTI CARRIER SYSTEM

Who is the contractor on this award?

The obligated recipient is HP ENTERPRISE SERVICES, 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 $17.8 million.

What is the period of performance?

Start: 2010-07-01. End: 2018-08-31.

What was the specific nature of the 'TAS MULTI CARRIER SYSTEM' supported by this contract?

The 'TAS MULTI CARRIER SYSTEM' likely refers to a system within the Department of Health and Human Services (HHS), possibly managed by the Centers for Medicare and Medicaid Services (CMS), designed to handle multiple data carriers or communication channels. In the context of healthcare, this could relate to systems that aggregate or transmit data from various sources (e.g., different insurance carriers, providers, or data networks) for processing, analysis, or reporting. Such systems are critical for managing the vast flow of information within the US healthcare system, including claims processing, beneficiary enrollment, and program integrity efforts. The exact functionality would depend on the specific TAS designation, but its multi-carrier nature implies a role in interoperability or data aggregation across different entities.

How does the $17.75 million award compare to other IT system design contracts within HHS?

The $17.75 million award over approximately 8 years represents an average annual spend of about $2.27 million. This is a moderate-sized contract within the federal IT landscape, particularly for an agency like HHS, which manages extensive and complex IT infrastructures. Larger HHS IT contracts can range from tens to hundreds of millions of dollars annually, often involving enterprise-wide solutions, cloud migrations, or major system overhauls. This specific contract appears to focus on the design and support of a particular system, suggesting it might be a component of a larger IT strategy rather than a flagship enterprise initiative. Therefore, while significant, it is not exceptionally large when compared to the full spectrum of HHS IT spending.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for this type of service?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for IT system design services revolve around cost control and contractor incentive alignment. For the government, the risk is that the contractor may not be sufficiently incentivized to control costs, as the government agrees to cover all allowable costs plus a fixed fee. This can lead to cost overruns if the contractor's cost accounting or efficiency is poor, or if the scope of work expands significantly without adequate adjustments. The government must implement robust oversight to scrutinize allowable costs and ensure the contractor is performing efficiently. For the contractor, the risk lies in accurately estimating the costs to perform the work and ensuring the fixed fee adequately compensates them for the effort and risk undertaken, especially if unforeseen technical challenges arise.

What does the 'NA': 541512 code signify in terms of the services provided?

The NAICS code '541512' stands for 'Computer Systems Design Services'. This classification indicates that the primary services procured under this contract involved the design, development, integration, and implementation of computer systems. This typically includes activities such as analyzing user needs, designing system architecture, developing software, integrating hardware and software components, and providing technical consulting related to computer systems. For a contract with CMS, this code suggests the work was focused on building or enhancing the technological infrastructure that supports healthcare data management, claims processing, or other critical administrative and operational functions within the agency.

How has spending on computer systems design services by CMS trended over the years?

Analyzing historical spending trends for CMS on computer systems design services (NAICS 541512) would require access to detailed federal procurement databases beyond the scope of this single award. However, generally, federal spending on IT, including systems design, has seen a consistent increase over the past two decades, driven by the need for modernization, enhanced cybersecurity, data analytics capabilities, and the digitization of government services. CMS, being a massive agency managing critical healthcare programs, is a significant consumer of these services. Trends likely show a shift towards cloud computing, data analytics platforms, and interoperability solutions in recent years, alongside ongoing maintenance and support for legacy systems. Specific year-over-year trends for CMS would reveal patterns related to major system procurements, modernization initiatives, and shifts in technology adoption.

What is the significance of HP Enterprise Services, LLC being the sole awardee for this delivery order?

The fact that HP Enterprise Services, LLC is the sole awardee for this specific delivery order (aw: DELIVERY ORDER) indicates that this order was likely placed against a pre-existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar multiple-award contract vehicle. In such scenarios, the initial contract vehicle itself would have been competed (as indicated by 'ct': FULL AND OPEN COMPETITION). This particular delivery order represents a specific task or project awarded to one of the contractors who won the larger, underlying contract. Therefore, while this specific order went to one vendor, the competition occurred at the IDIQ contract level, allowing the government to solicit task orders from multiple awardees as needed. The significance is that the initial competition likely ensured a competitive landscape for the overall contract, even if individual orders are placed with specific vendors.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: HP, Inc.

Address: 5400 LEGACY DR, PLANO, TX, 75024

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $17,753,382

Exercised Options: $17,753,382

Current Obligation: $17,753,382

Actual Outlays: $-97,341

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700016I

IDV Type: IDC

Timeline