HHS awarded $27.1M for IT services, with OptumServe Technology Services Inc. securing a significant portion

Contract Overview

Contract Amount: $27,097,029 ($27.1M)

Contractor: Optumserve Technology Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2010-04-29

End Date: 2015-05-31

Contract Duration: 1,858 days

Daily Burn Rate: $14.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TAS::75 0510::TAS RECOVERY NLR TESTING ARRA::YES::ARRA

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $27.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: TAS::75 0510::TAS RECOVERY NLR TESTING ARRA::YES::ARRA Key points: 1. The contract's value of $27.1 million over its period of performance suggests a substantial investment in IT services. 2. The 'Computer Systems Design Services' category indicates a focus on complex IT solutions rather than simple hardware procurement. 3. The contract was awarded under 'Full and Open Competition', implying a broad market solicitation. 4. The 'Cost Plus Award Fee' payment structure incentivizes performance but can lead to less predictable final costs. 5. The duration of 1858 days (approximately 5 years) points to a long-term need for these services. 6. The contract was awarded as a Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract vehicle.

Value Assessment

Rating: fair

Benchmarking the value of this $27.1 million contract is challenging without specific details on the services rendered and comparable market rates for Computer Systems Design Services. The Cost Plus Award Fee (CPAF) structure, while offering performance incentives, can sometimes lead to higher overall costs compared to fixed-price contracts if not managed tightly. The contract's duration of over five years suggests a significant scope of work, and the final cost will depend heavily on the award fees achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition', indicating that all responsible sources were permitted to submit offers. This approach generally fosters a competitive environment, which can lead to better pricing and innovation. The presence of 4 bidders (as indicated by 'no': 4) suggests a reasonable level of competition for this specific delivery order.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it maximizes the pool of potential contractors, increasing the likelihood of receiving competitive bids and thus potentially lower prices.

Public Impact

The primary beneficiaries are likely the Centers for Medicare and Medicaid Services (CMS) and potentially other components within the Department of Health and Human Services (HHS), receiving advanced IT systems design and support. The services delivered fall under 'Computer Systems Design Services', which could encompass a wide range of activities from software development and integration to IT infrastructure planning and management. The contract was awarded to OptumServe Technology Services, Inc., a significant player in the health IT sector, indicating a focus on specialized expertise. The contract's duration and scope suggest a potential impact on the IT workforce, both within the contractor's organization and potentially through the need for specialized skills in the federal IT landscape.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Award Fee (CPAF) contract type can lead to cost overruns if not meticulously monitored, as the contractor is reimbursed for allowable costs plus a fee that is adjusted based on performance.
Without detailed service descriptions, it's difficult to ascertain if the $27.1 million represents optimal value for the IT services procured.
The contract's length of over five years necessitates ongoing vigilance to ensure continued alignment with evolving technological needs and agency priorities.

Positive Signals

The award was made under 'Full and Open Competition', suggesting a robust bidding process that likely yielded competitive pricing.
The contract was awarded to a known entity, OptumServe Technology Services, Inc., which may indicate a level of trust and proven capability.
The 'Delivery Order' award type implies it might be part of a larger, potentially pre-vetted, IDIQ contract, which can streamline procurement.

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 agencies constantly seeking to modernize systems, improve data management, and enhance cybersecurity. Contracts like this are crucial for agencies like HHS to maintain and upgrade the complex technological infrastructure that supports critical healthcare programs. Comparable spending benchmarks would typically involve analyzing other large-scale IT service contracts awarded by HHS or similar federal health agencies for system design and development.

Small Business Impact

The data indicates this contract was not set aside for small businesses ('sb': false) and does not explicitly mention subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem appears limited for this specific award. However, the prime contractor, OptumServe Technology Services, Inc., may engage small businesses as subcontractors, the extent of which is not detailed here. Further investigation into the contractor's subcontracting plan would be necessary to fully assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services (HHS), specifically the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. The 'Cost Plus Award Fee' structure necessitates close monitoring of costs and performance to ensure the award fee is justified. Transparency would be enhanced through contract reporting mechanisms, and the Inspector General's office for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

HHS IT Modernization Initiatives
Centers for Medicare and Medicaid Services (CMS) Technology Contracts
Federal Health IT Services
Governmentwide IT Acquisition Vehicles (e.g., GSA Schedules)

Risk Flags

Cost Plus Award Fee (CPAF) structure requires diligent oversight to manage costs and ensure performance.
Lack of specific service details makes value-for-money assessment difficult.
Contract duration necessitates long-term monitoring for continued relevance and effectiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $27.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. TAS::75 0510::TAS RECOVERY NLR TESTING ARRA::YES::ARRA

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 $27.1 million.

What is the period of performance?

Start: 2010-04-29. End: 2015-05-31.

What specific computer systems design services were rendered under this contract?

The provided data classifies this contract under NAICS code 541512 (Computer Systems Design Services) but does not detail the specific services performed. These services could range broadly from custom software development, system integration, IT infrastructure design, network architecture, to IT consulting and project management. Given the awarding agency (HHS) and its sub-agency (CMS), the services likely supported critical healthcare IT systems, such as those related to Medicare, Medicaid, electronic health records, data analytics platforms, or patient portals. A deeper dive into the contract's statement of work (SOW) or task orders would be necessary to understand the precise nature and scope of the design services provided.

How does the $27.1 million contract value compare to similar IT services contracts awarded by HHS or CMS?

Comparing the $27.1 million value requires context regarding the specific type and duration of services. For large-scale IT system design and development projects within HHS/CMS, this amount could represent a mid-to-large-sized contract, especially if it spans several years. For instance, major system overhauls or the development of new national healthcare IT infrastructure could easily run into tens or hundreds of millions of dollars. Conversely, for smaller, more defined IT support tasks or specific software enhancements, $27.1 million would be considered very substantial. Benchmarking against similar contracts awarded under the same NAICS code (541512) and for comparable durations (approx. 5 years) by HHS/CMS would provide a more precise comparison of its relative scale and value.

What are the potential risks associated with a Cost Plus Award Fee (CPAF) contract structure for these services?

The primary risk with a CPAF contract is the potential for costs to escalate beyond initial projections. While the 'Cost Plus' element means the contractor is reimbursed for allowable costs, the 'Award Fee' component introduces variability. The contractor earns a base fee plus an award amount determined by the government's subjective evaluation of performance against stated criteria. Risks include: 1) Difficulty in objectively measuring performance, leading to disputes over award fees. 2) Contractor focus shifting towards maximizing the award fee rather than strictly controlling costs or prioritizing the most critical project aspects. 3) Potential for 'scope creep' if not managed tightly, as the contractor is reimbursed for costs incurred. Effective oversight and clearly defined performance metrics are crucial to mitigate these risks and ensure value for money.

What was the historical spending pattern for similar computer systems design services at HHS/CMS prior to this award?

The provided data does not include historical spending patterns. To assess this, one would need to analyze historical contract databases (like FPDS or USASpending.gov) for HHS and CMS, filtering for NAICS code 541512 and potentially specific keywords related to system design over several preceding fiscal years. This analysis would reveal trends in contract values, number of awards, dominant contractors, and competition levels. Understanding historical spending helps contextualize the $27.1 million award, indicating whether it represents an increase, decrease, or continuation of previous investment levels in computer systems design services. It also helps identify if spending has been concentrated with specific vendors or spread across multiple sources.

How does the contractor, OptumServe Technology Services, Inc., perform on other federal contracts?

The provided data identifies OptumServe Technology Services, Inc. as the contractor but does not offer insights into their past performance on other federal contracts. A comprehensive assessment would require examining their contract history across various federal agencies, looking at metrics such as contract values, types (fixed-price, cost-reimbursable), performance reviews (if publicly available), on-time delivery rates, and any history of disputes or contract terminations. Resources like the Contractor Performance Assessment Reporting System (CPARS) might contain relevant performance data, although access can be restricted. Understanding their track record is crucial for evaluating the risk associated with this current award and predicting future performance.

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: 4

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: $34,838,042

Exercised Options: $27,097,029

Current Obligation: $27,097,029

Actual Outlays: $-398,520

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700024I

IDV Type: IDC

Timeline