HHS awards $180M for IT infrastructure, with 4 bidders competing for this delivery order

Contract Overview

Contract Amount: $179,894,620 ($179.9M)

Contractor: National Government Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2014-02-13

End Date: 2023-11-30

Contract Duration: 3,577 days

Daily Burn Rate: $50.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF IT AND TELECOM- OTHER IT AND TELECOMMUNICATIONS

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46250

State: Indiana Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $179.9 million to NATIONAL GOVERNMENT SERVICES, INC. for work described as: IGF::OT::IGF IT AND TELECOM- OTHER IT AND TELECOMMUNICATIONS Key points: 1. Value for money appears reasonable given the long-term nature of the contract and the competitive bidding process. 2. The contract was competed fully and openly, suggesting a healthy level of competition. 3. Risk indicators are moderate, with a long performance period and a single awardee for this specific order. 4. Performance context is within IT infrastructure services, a critical but mature sector. 5. Sector positioning is in IT and Telecommunications, supporting essential government functions. 6. The contract's duration and fixed-price nature provide cost certainty for the government.

Value Assessment

Rating: good

This contract, a delivery order under a larger IDIQ, represents a significant investment in IT infrastructure. While a direct per-unit cost comparison is difficult without more granular data on services rendered, the total award amount of approximately $180 million over its lifespan suggests a substantial commitment. The firm fixed-price structure provides predictability. Benchmarking against similar large-scale IT infrastructure contracts would be necessary for a more precise value assessment, but the competitive nature of the award is a positive sign.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This specific delivery order was awarded under full and open competition, indicating that multiple qualified vendors were invited to bid. The presence of 4 bidders suggests a reasonable level of competition for this particular task order. A higher number of bidders generally leads to more competitive pricing and a wider range of innovative solutions. The fact that it was competed openly is a positive indicator for price discovery and achieving fair market value.

Taxpayer Impact: The full and open competition for this delivery order likely resulted in more favorable pricing for taxpayers compared to a sole-source or limited competition scenario. It ensures that the government explored the market to find the best value.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) benefits from reliable IT infrastructure, crucial for managing healthcare programs. Services delivered include computing infrastructure, data processing, and web hosting, supporting critical government operations. The geographic impact is national, as CMS operates across the United States. Workforce implications are indirect, primarily supporting the IT professionals managing and utilizing these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 10 years) could lead to potential for cost overruns if not managed effectively.
Reliance on a single awardee for this delivery order may limit flexibility in adapting to rapidly changing IT needs.
The broad scope of 'Other IT and Telecommunications' could mask specific areas where costs might be higher than market rates.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
Firm Fixed Price contract type provides cost certainty for the government.
The contract supports essential healthcare IT functions for CMS, a critical agency.

Sector Analysis

The IT and Telecommunications sector is a vast and essential component of government operations. This contract falls under the 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services' NAICS code, a segment characterized by significant market activity and ongoing technological advancements. Government spending in this area is consistently high, driven by the need for robust and secure digital infrastructure. Comparable spending benchmarks would typically involve analyzing other large-scale cloud hosting, data center, or managed IT service contracts awarded by federal agencies.

Small Business Impact

There is no indication that this contract included a small business set-aside. The awardee, National Government Services, Inc., is a large business. Subcontracting opportunities for small businesses may exist, but they are not explicitly mandated or highlighted in the provided data. The impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Transparency is facilitated through contract award databases like FPDS. Accountability measures are inherent in the firm fixed-price structure and performance requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

CMS IT Modernization
Federal Cloud Computing Strategy
Government Data Center Consolidation
Health Information Technology Services
IT Infrastructure Modernization Programs

Risk Flags

Long contract duration
Potential for technological obsolescence
Reliance on a single awardee for this delivery order

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $179.9 million to NATIONAL GOVERNMENT SERVICES, INC.. IGF::OT::IGF IT AND TELECOM- OTHER IT AND TELECOMMUNICATIONS

Who is the contractor on this award?

The obligated recipient is NATIONAL GOVERNMENT 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 $179.9 million.

What is the period of performance?

Start: 2014-02-13. End: 2023-11-30.

What is the track record of National Government Services, Inc. in performing similar IT infrastructure contracts for the federal government?

National Government Services, Inc. (NGS) has a substantial history of performing contracts for the federal government, particularly within the healthcare sector. While this specific award is for IT infrastructure, NGS is well-known for its role as a Medicare Administrative Contractor (MAC) for CMS. This involves extensive IT systems management, data processing, and claims processing. Their experience in managing large-scale, sensitive data environments for CMS suggests a capability to handle complex IT infrastructure requirements. However, a deeper dive into their specific IT infrastructure delivery performance, beyond their core MAC functions, would be beneficial for a comprehensive assessment. Reviewing past performance evaluations and any reported issues on similar IT infrastructure contracts would provide further insight into their reliability and effectiveness in this specific service area.

How does the pricing of this delivery order compare to similar IT infrastructure contracts awarded by HHS or other federal agencies?

Benchmarking the pricing of this $180 million delivery order against similar contracts is challenging without access to detailed service-level agreements and unit costs. The provided data indicates a 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services' NAICS code and a 'FIRM FIXED PRICE' contract type. To conduct a proper comparison, one would need to identify contracts with comparable scopes of work, performance periods, and service levels within HHS or across other agencies. Factors such as data storage volume, processing power, network bandwidth, security requirements, and service level agreements (SLAs) significantly influence pricing. A preliminary assessment suggests that for a nearly decade-long commitment to critical IT infrastructure supporting a major agency like CMS, the overall investment is substantial but potentially aligned with market rates for long-term, large-scale IT services, especially given the competitive award.

What are the primary risks associated with a long-duration contract like this for IT infrastructure services?

Long-duration contracts for IT infrastructure, such as this nearly 10-year delivery order, present several key risks. Technological obsolescence is a significant concern; IT evolves rapidly, and infrastructure that is cutting-edge today may be outdated in a few years, potentially leading to diminished performance or increased costs for upgrades. Vendor lock-in is another risk, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch vendors even if performance or pricing becomes unfavorable. Cost escalation, despite the fixed-price nature, can occur through change orders or the need for unforeseen modifications to keep pace with evolving requirements or security threats. Furthermore, maintaining consistent service quality and performance over an extended period requires diligent oversight and contract management to ensure the contractor remains responsive and effective.

How effective is the current IT infrastructure in supporting CMS's mission-critical operations, and what is the expected impact of this contract on that effectiveness?

This contract is fundamental to supporting CMS's mission-critical operations, which include managing Medicare, Medicaid, and the Health Insurance Marketplace. Reliable and robust IT infrastructure is the backbone for processing claims, managing beneficiary data, facilitating enrollment, and ensuring the security of sensitive health information. The expected impact of this contract is to provide a stable, scalable, and secure computing environment. By ensuring the availability of necessary computing infrastructure, data processing, and web hosting services, this award aims to maintain and potentially enhance the operational effectiveness of CMS. It mitigates risks associated with aging infrastructure or insufficient capacity, thereby supporting the agency's ability to serve millions of Americans efficiently and securely.

What has been the historical spending trend for similar IT infrastructure services at CMS or HHS over the past five years?

Analyzing historical spending trends for IT infrastructure services at CMS or HHS over the past five years would require access to detailed budget and contract databases. However, it is generally understood that federal agencies, particularly those managing large-scale public services like CMS, have seen increasing investments in IT infrastructure. This trend is driven by the need to modernize legacy systems, enhance cybersecurity, support growing data volumes, and adopt cloud-based solutions. Spending in areas like data processing, web hosting, and computing infrastructure is likely to have remained consistently high, potentially showing an upward trend as agencies migrate services to more efficient and scalable platforms. The $180 million award over its duration suggests a significant and sustained commitment to maintaining and upgrading these essential services, aligning with broader federal IT modernization initiatives.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related 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

Solicitation ID: RFPCMS20120007

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Elevance Health, Inc.

Address: 8115 KNUE RD, INDIANAPOLIS, IN, 46250

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

Financial Breakdown

Contract Ceiling: $179,894,620

Exercised Options: $179,894,620

Current Obligation: $179,894,620

Actual Outlays: $18,419,435

Subaward Activity

Number of Subawards: 57

Total Subaward Amount: $20,030,470

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500201300017I

IDV Type: IDC

Timeline