HHS awards $97M for Medicare Advantage & Part D system maintenance to CGI Federal

Contract Overview

Contract Amount: $96,971,654 ($97.0M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-03-01

End Date: 2015-01-31

Contract Duration: 2,162 days

Daily Burn Rate: $44.9K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY)

Sector: IT

Official Description: MEDICARE ADVANTAGE AND PART D SYSTEM MAINTENANCE

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $97.0 million to CGI FEDERAL INC. for work described as: MEDICARE ADVANTAGE AND PART D SYSTEM MAINTENANCE Key points: 1. Contract value represents a significant investment in maintaining critical healthcare IT infrastructure. 2. The competitive nature of this award suggests potential for favorable pricing, though detailed analysis is needed. 3. Long contract duration indicates a need for stable, long-term system support. 4. Performance context is crucial to understand if the system maintenance meets the evolving needs of Medicare. 5. This contract positions CGI Federal as a key IT service provider within the healthcare sector. 6. The award falls under computer systems design services, a broad category requiring specific performance metrics.

Value Assessment

Rating: fair

The total award of approximately $97 million over roughly six years for system maintenance suggests a moderate annual spend. Benchmarking against similar large-scale IT maintenance contracts within the federal government is necessary to fully assess value for money. Without specific performance metrics or comparison data, it's difficult to definitively state if this represents excellent or questionable value. The pricing structure and any potential for cost overruns would be key factors in a more detailed assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that it was subject to full and open competition. This process typically involves multiple bidders vying for the contract, which can lead to a more robust selection of the best value offer and potentially more competitive pricing. The number of bidders and the specific evaluation criteria would provide further insight into the strength of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and ensuring that the government receives services at a fair market price.

Public Impact

Beneficiaries of Medicare Advantage and Part D programs indirectly benefit from the reliable operation of these systems. The services delivered ensure the continued functionality of IT systems supporting critical healthcare program administration. The geographic impact is nationwide, as these systems support federal healthcare programs. Workforce implications include the need for skilled IT professionals to maintain and update complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in long-term IT maintenance contracts.
Risk of vendor lock-in if transition to a new vendor is complex or costly.
Dependence on a single contractor for critical system uptime.
Ensuring adequate cybersecurity measures are maintained throughout the contract lifecycle.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Contract duration implies a stable and predictable IT support environment.
Focus on system maintenance indicates a commitment to operational continuity for vital healthcare programs.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer systems design services. The federal IT market is vast, with significant spending allocated to maintaining and modernizing legacy systems as well as developing new digital capabilities. Comparable spending benchmarks for large-scale IT system maintenance contracts within agencies like HHS can range from tens to hundreds of millions of dollars, depending on the complexity and criticality of the systems involved.

Small Business Impact

Information regarding small business set-asides or subcontracting plans was not explicitly provided for this specific delivery order. However, for large IT contracts, agencies often have goals for small business participation. The prime contractor, CGI Federal, would typically be responsible for managing any subcontracting requirements, potentially creating opportunities for small businesses in specialized IT roles.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), a division of HHS. Accountability measures would be defined in the contract's performance work statement, with regular reviews and reporting requirements. Transparency is generally facilitated through contract award databases and public reporting, though specific operational details may be sensitive. The HHS Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Medicare Advantage Program IT Support
Part D Prescription Drug Program IT Systems
Healthcare IT Infrastructure Maintenance
Federal Health IT Modernization Efforts
CMS IT Service Contracts

Risk Flags

Long-term contract duration may require careful monitoring for scope creep.
Dependence on a single vendor for critical systems poses a risk.
Cybersecurity posture must be continuously assessed and maintained.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $97.0 million to CGI FEDERAL INC.. MEDICARE ADVANTAGE AND PART D SYSTEM MAINTENANCE

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL 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 $97.0 million.

What is the period of performance?

Start: 2009-03-01. End: 2015-01-31.

What is CGI Federal's track record with the Centers for Medicare and Medicaid Services (CMS) and similar government contracts?

CGI Federal has a substantial history of working with various U.S. government agencies, including significant engagements with CMS. Their portfolio includes IT services, system modernization, and support for large-scale federal programs. For CMS specifically, CGI has been involved in projects related to Medicare and Medicaid systems, data analytics, and program integrity. Analyzing their past performance on similar contracts, including any past performance evaluations or awards, would provide insight into their reliability and capability in delivering complex IT maintenance and support services. A review of contract databases and agency reports can reveal the scope and success of their previous work, highlighting any areas of concern or notable achievements.

How does the $97 million award compare to historical spending on Medicare Advantage and Part D system maintenance?

The $97 million award represents the total value over the contract's duration, approximately 2162 days or roughly six years. This equates to an average annual spend of approximately $15-16 million. To assess historical spending, one would need to examine prior contracts awarded for the maintenance and support of the Medicare Advantage and Part D systems. If previous contracts were of similar scope and duration, this award might represent a consistent level of investment. However, if previous spending was significantly higher or lower, it could indicate changes in system complexity, scope of services, or pricing trends. A comparative analysis of annual spending over several years would provide a clearer picture of the historical context for this award.

What are the key performance indicators (KPIs) used to measure the success of this system maintenance contract?

Key performance indicators for a contract of this nature typically focus on system availability, uptime, response times for issue resolution, and successful implementation of updates or patches. For the Medicare Advantage and Part D systems, critical KPIs would likely include metrics related to the reliability and performance of the platforms that manage beneficiary enrollment, claims processing, and prescription drug subsidies. Specific metrics might involve achieving a certain percentage of system uptime (e.g., 99.9%), meeting defined service level agreements (SLAs) for bug fixes and enhancements, and ensuring data integrity and security. The contract's Performance Work Statement (PWS) would detail these KPIs and the associated remedies or incentives for meeting or failing to meet them.

What are the potential risks associated with relying on a single contractor for the maintenance of critical healthcare IT systems?

Relying on a single contractor for critical IT systems like those supporting Medicare Advantage and Part D introduces several potential risks. One primary concern is vendor lock-in, where the government may become overly dependent on the contractor's proprietary knowledge and technology, making it difficult and costly to switch providers in the future. This dependence can reduce leverage in future negotiations. Another risk is the potential for service degradation if the contractor faces financial difficulties, staffing shortages, or a decline in expertise. Furthermore, a single point of failure exists; if the contractor experiences a major operational disruption, the critical government systems could be significantly impacted, potentially affecting millions of beneficiaries. Robust contract management, clear exit strategies, and contingency planning are essential to mitigate these risks.

How does this contract contribute to the overall modernization and efficiency of federal healthcare IT infrastructure?

This contract's primary focus is on maintenance, which is crucial for ensuring the stability and continued operation of existing systems. While maintenance itself doesn't directly equate to modernization, it provides the stable foundation upon which modernization efforts can be built. By ensuring the current systems are reliable, CMS can allocate resources more effectively towards upgrades, integrations, or the development of new capabilities. The efficiency gained from well-maintained systems translates to smoother processing of claims, accurate beneficiary data, and timely access to healthcare services. However, the contract's scope would need to be examined to determine if it includes any elements of proactive system improvement or technological refresh, which would more directly contribute to modernization goals.

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: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY) (2)

Evaluated Preference: NONE

Contractor Details

Parent Company: CGI Inc

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 22033

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $142,251,771

Exercised Options: $96,971,654

Current Obligation: $96,971,654

Actual Outlays: $-362,050

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline