HHS awards $22.8M for enterprise systems development, with OptumServe Technology Services Inc. securing the contract
Contract Overview
Contract Amount: $22,876,632 ($22.9M)
Contractor: Optumserve Technology Services, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2009-09-14
End Date: 2014-09-30
Contract Duration: 1,842 days
Daily Burn Rate: $12.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: ENTERPRISE SYSTEMS DEVELOPMENT
Place of Performance
Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20878
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $22.9 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: ENTERPRISE SYSTEMS DEVELOPMENT Key points: 1. Value for money assessed through comparison to similar contracts and market rates. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators are evaluated based on contract type and performance history. 4. Performance context is framed by the contract duration and delivery order structure. 5. Sector positioning places this contract within IT services, specifically computer systems design. 6. The contract was awarded as a delivery order under a larger IDIQ, suggesting a phased approach to enterprise systems development.
Value Assessment
Rating: fair
The contract's value of $22.8 million over approximately five years for enterprise systems development appears moderate. Benchmarking against similar IT services contracts for systems design is challenging without more granular data on the specific services rendered. The Cost Plus Award Fee (CPAF) structure introduces variability in the final cost, making a precise value-for-money assessment difficult without insight into the award fee criteria and performance outcomes. However, the duration and scope suggest a significant undertaking.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of 3 bidders suggests a reasonable level of competition for this specific delivery order. A competitive process generally allows for price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios.
Taxpayer Impact: The full and open competition ensures that taxpayer dollars are likely being used more efficiently by leveraging market forces to obtain competitive pricing for essential IT services.
Public Impact
Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially healthcare providers and beneficiaries who rely on improved enterprise systems. Services delivered encompass computer systems design and development, crucial for modernizing government IT infrastructure. Geographic impact is primarily within Maryland, where the contract is managed, but the systems developed will have national reach. Workforce implications may include the need for specialized IT professionals to develop and maintain these enterprise systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee (CPAF) contracts can lead to cost overruns if not managed diligently, as contractor incentives are tied to performance metrics.
- The long duration of the contract (over 1800 days) increases the risk of scope creep and potential for outdated technology by completion.
- Reliance on a single delivery order for a significant amount of enterprise systems development could concentrate risk if the contractor faces performance issues.
Positive Signals
- Awarding under full and open competition suggests a robust vetting process and potential for competitive pricing.
- The contract's focus on enterprise systems development addresses critical IT modernization needs within CMS.
- The delivery order structure may allow for phased development and better management of complex IT projects.
Sector Analysis
This contract falls within the Information Technology (IT) sector, specifically in computer systems design services. The federal IT services market is substantial, with agencies continually investing in modernizing their systems to improve efficiency and service delivery. Comparable spending benchmarks for enterprise systems development vary widely based on complexity, scope, and duration, but this $22.8 million award represents a significant investment in a critical area for CMS.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a result, large businesses likely dominated the bidding process. There is no explicit information on subcontracting plans, but for contracts of this nature and size, it is common for prime contractors to engage small businesses for specialized services, potentially creating subcontracting opportunities within the small business ecosystem.
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 (CPAF) structure necessitates close monitoring of performance against established criteria to ensure the government receives the intended value. Transparency is generally facilitated through contract award databases, but detailed performance reports and award fee determinations are typically internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- CMS Health IT Modernization Programs
- Federal Enterprise Architecture Initiatives
- IT Services for Healthcare Agencies
- Large-Scale Systems Integration Contracts
Risk Flags
- Potential for cost overruns due to CPAF structure.
- Risk of scope creep over the contract's long duration.
- Dependency on a single contractor for critical enterprise systems development.
- Need for robust performance monitoring to ensure value for money.
Tags
it-services, computer-systems-design, enterprise-systems-development, cost-plus-award-fee, full-and-open-competition, delivery-order, department-of-health-and-human-services, centers-for-medicare-and-medicaid-services, maryland, large-contract, it-modernization
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $22.9 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. ENTERPRISE SYSTEMS DEVELOPMENT
Who is the contractor on this award?
The obligated recipient is OPTUMSERVE TECHNOLOGY SERVICES, 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 $22.9 million.
What is the period of performance?
Start: 2009-09-14. End: 2014-09-30.
What is the track record of OptumServe Technology Services, Inc. with federal contracts, particularly in systems development?
OptumServe Technology Services, Inc. has a significant history of federal contracting, particularly within the Department of Health and Human Services (HHS). Their experience often spans large-scale IT modernization, health IT solutions, and administrative support services. For enterprise systems development, their track record would be assessed based on the successful delivery of similar complex projects, adherence to schedules and budgets, and the quality of systems implemented. Past performance reviews and contract close-outs would provide crucial insights into their capabilities and reliability in handling contracts like this one, including their proficiency with various contract types such as Cost Plus Award Fee (CPAF).
How does the $22.8 million value compare to similar enterprise systems development contracts awarded by HHS or other agencies?
The $22.8 million value for enterprise systems development over approximately five years is a substantial but not extraordinary figure for a federal contract of this nature. Comparable contracts within HHS and other large agencies for similar scope (e.g., developing or modernizing core IT systems) can range from tens to hundreds of millions of dollars, depending on the complexity, duration, and specific technologies involved. For instance, contracts for electronic health record (EHR) system development or large-scale data management platforms often exceed this amount. The value here suggests a significant project, likely involving core business functions for CMS, but it is within the typical range for major IT system overhauls.
What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for enterprise systems development?
The primary risks with a CPAF contract for enterprise systems development revolve around cost control and performance management. While CPAF incentivizes contractors to meet or exceed performance objectives through award fees, it also allows for costs to exceed the base fee if performance warrants it, potentially leading to higher overall expenditures than initially anticipated. For the government, effective oversight is critical to ensure that award fees are justified by demonstrable performance improvements and that the contractor remains focused on delivering value within reasonable cost parameters. Poorly defined performance metrics or inadequate monitoring can lead to inflated costs without commensurate benefits, making diligent program management essential.
How effective are delivery orders under Indefinite Delivery/Indefinite Quantity (IDIQ) contracts for managing large IT development projects?
Delivery orders (DOs) under IDIQ contracts can be an effective mechanism for managing large IT development projects by allowing agencies to procure services incrementally. This phased approach enables better control over project scope, budget, and timelines, especially for complex or evolving requirements. It allows the government to adapt to changing needs and test contractor performance on smaller task orders before committing to larger ones. However, the success of DOs hinges on clear task order definitions, robust competition for each DO (if applicable), and effective oversight to ensure alignment with the overall IDIQ contract objectives. For enterprise systems development, this structure can mitigate risks associated with large, monolithic projects.
What is the historical spending trend for computer systems design services at CMS?
Historical spending trends for computer systems design services at the Centers for Medicare and Medicaid Services (CMS) generally reflect a consistent and significant investment in IT modernization and support. Agencies like CMS, which manage vast and complex healthcare programs, rely heavily on sophisticated IT systems for operations, data analysis, and beneficiary services. Spending in this category has typically seen an upward trend over the years, driven by the need to upgrade legacy systems, implement new technologies (like cloud computing and data analytics), enhance cybersecurity, and comply with evolving federal mandates. Analyzing specific historical data for CMS would reveal the scale and nature of their IT investments, including the proportion allocated to systems design and development versus maintenance or other IT services.
What are the implications of this contract being awarded in Maryland (st: MD, sn: MARYLAND)?
The contract being awarded and likely performed in Maryland has several implications. Maryland is a hub for federal contracting, particularly for IT and defense-related work, meaning there is a strong ecosystem of skilled labor and supporting businesses. For the contractor, proximity to federal agencies in the Washington D.C. metropolitan area can facilitate communication and oversight. For the government, having the contractor located nearby can simplify site visits, meetings, and direct oversight of project progress. It also means that a portion of the federal spending will likely flow into the Maryland economy through employment and local procurement by the contractor and its subcontractors.
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: 3
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Unitedhealth Group Incorporated
Address: 10480 LITTLE PATUXENT PKWY SUITE 310, COLUMBIA, MD, 21044
Business Categories: 8(a) Program Participant, Category Business, Minority Owned Business, Not Designated a Small Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Indian (Subcontinent) American Owned Business
Financial Breakdown
Contract Ceiling: $24,085,049
Exercised Options: $22,876,632
Current Obligation: $22,876,632
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: HHSM500200700024I
IDV Type: IDC
Timeline
Start Date: 2009-09-14
Current End Date: 2014-09-30
Potential End Date: 2023-02-01 00:00:00
Last Modified: 2023-02-01
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