OptumServe Technology Services awarded $23M for CMS computer services, highlighting IT infrastructure needs

Contract Overview

Contract Amount: $23,067,662 ($23.1M)

Contractor: Optumserve Technology Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2011-01-21

End Date: 2015-01-20

Contract Duration: 1,460 days

Daily Burn Rate: $15.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: INDIVIDUALS AUTHORIZED ACCESS TO THE CMS COMPUTER SERVICES (IACS)

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21044

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $23.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: INDIVIDUALS AUTHORIZED ACCESS TO THE CMS COMPUTER SERVICES (IACS) Key points: 1. Contract value represents a significant investment in maintaining and enhancing critical healthcare IT systems. 2. The full and open competition suggests a robust market for these specialized IT services. 3. Performance period of four years indicates a need for sustained IT support and development. 4. The cost-plus-fixed-fee pricing structure may require close monitoring to ensure cost control. 5. This contract supports the operational integrity of the Centers for Medicare and Medicaid Services (CMS). 6. The Maryland location points to a concentration of federal IT support infrastructure in the region.

Value Assessment

Rating: good

The contract value of $23 million over four years for computer systems design services appears reasonable given the critical nature of CMS systems. Benchmarking against similar large-scale IT infrastructure contracts within federal health agencies would provide a more precise value-for-money assessment. The cost-plus-fixed-fee structure necessitates careful oversight to ensure costs remain within expected parameters and that the fixed fee adequately compensates the contractor for their services without excessive profit.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. With two bids received, the competition level was moderate. This suggests that while the market is aware of the opportunity, it may not be as broad as for more commoditized IT services, potentially influencing price discovery. The agency likely benefited from competitive proposals, but further analysis of the bidding process could reveal if the number of bidders was optimal for achieving the best possible pricing.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best value for IT services. A moderate level of competition can help prevent price inflation, ensuring that public funds are used efficiently for essential government functions.

Public Impact

Beneficiaries include CMS staff and, indirectly, millions of Americans who rely on Medicare and Medicaid services. Services delivered encompass computer systems design, crucial for the operation and modernization of healthcare IT infrastructure. Geographic impact is primarily focused on Maryland, where the contractor's operations are likely situated, supporting federal IT functions. Workforce implications include employment opportunities for IT professionals in systems design, development, and maintenance within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the cost-plus-fixed-fee structure if not rigorously managed.
Dependence on a single contractor for critical IT systems could pose a risk if performance falters.
Ensuring adequate cybersecurity measures are in place for sensitive healthcare data is paramount.

Positive Signals

Awarded through full and open competition, suggesting a fair and transparent procurement process.
Contract duration of four years provides stability for essential IT services.
The contractor, OptumServe Technology Services, likely possesses specialized expertise in healthcare IT.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer systems design and integration services. The federal IT market is substantial, with agencies continually investing in maintaining and upgrading their digital infrastructure to support mission-critical operations. Comparable spending benchmarks would involve analyzing other large IT service contracts awarded by agencies like HHS, CMS, or other health-focused federal entities, looking at contract values, durations, and service scopes to gauge market rates and typical investment levels.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract likely awarded to a prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on the prime contractor's commitment and the specific requirements outlined in the contract, which are not detailed here. Analysis of subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are embedded within the contract terms, including performance standards and reporting requirements. Transparency is generally facilitated through federal procurement databases like FPDS-NG, where contract awards are recorded. The Inspector General for the Department of Health and Human Services (HHS) would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

CMS IT Modernization
HHS Health Information Technology
Federal Health Data Management
Medicare/Medicaid IT Infrastructure

Risk Flags

Cost Overrun Risk (CPFF)
Performance Dependency
Cybersecurity Vulnerability

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $23.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. INDIVIDUALS AUTHORIZED ACCESS TO THE CMS COMPUTER SERVICES (IACS)

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 $23.1 million.

What is the period of performance?

Start: 2011-01-21. End: 2015-01-20.

What is the track record of OptumServe Technology Services, Inc. with federal contracts, particularly within the Department of Health and Human Services?

OptumServe Technology Services, Inc. has a significant history of federal contracting, particularly within the Department of Health and Human Services (HHS) and its sub-agencies like the Centers for Medicare and Medicaid Services (CMS). Their portfolio often includes large-scale IT services, health IT solutions, and data management. Analyzing their past performance ratings, any documented issues or successes on similar contracts, and their overall financial stability would provide a clearer picture of their reliability and capability. A review of their contract history might reveal patterns in contract types, values, and the agencies they primarily serve, indicating their specialization and experience level in supporting complex federal IT requirements.

How does the $23 million contract value compare to similar IT infrastructure contracts awarded by CMS or other federal health agencies?

The $23 million contract value for computer systems design services over four years is a substantial but not extraordinary figure for federal IT infrastructure projects, especially those supporting agencies like CMS. To benchmark effectively, one would compare this to other contracts for similar services (e.g., systems design, integration, maintenance) awarded by HHS, CMS, or agencies like the Veterans Affairs or National Institutes of Health. Factors such as contract duration, scope of work (e.g., cloud migration, data analytics platform development, legacy system modernization), and the specific IT environment being supported are crucial for a meaningful comparison. If similar contracts for comparable services are in the $5-10 million range annually, this $23 million over four years ($5.75 million annually) appears to be within a reasonable market range for complex federal IT support.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT services, and how are they mitigated?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns, as the contractor is reimbursed for allowable costs plus a fixed fee. If costs escalate beyond initial projections, the government may end up paying more than anticipated, even though the profit margin (the fixed fee) remains constant. Mitigation strategies are crucial and include rigorous cost accounting standards, detailed audits of incurred costs, strong project management oversight by the government, clearly defined performance metrics, and robust change control processes. The government must actively monitor expenditures, ensure all costs are reasonable and allocable to the contract, and manage scope creep effectively to keep the project within budget and achieve the desired value.

What is the expected impact of this contract on the operational effectiveness of CMS's computer systems?

This contract is expected to significantly enhance the operational effectiveness of CMS's computer systems by providing essential design, development, and potentially maintenance services. These systems are critical for managing Medicare and Medicaid programs, processing claims, and supporting healthcare policy initiatives. Improved system design can lead to greater efficiency, reduced downtime, enhanced data security, and better user experience for CMS staff. The investment suggests a focus on modernizing or maintaining robust IT infrastructure necessary for the agency's core mission, ultimately contributing to the smoother administration of healthcare services for millions of beneficiaries.

How has federal spending on computer systems design services evolved over the past five years, and where does this contract fit in?

Federal spending on computer systems design services has generally seen a steady increase over the past five years, driven by the ongoing digital transformation across government agencies. There's a growing emphasis on cloud computing, cybersecurity, data analytics, and modernizing legacy systems. This $23 million contract for CMS fits within this trend, representing a significant, albeit specific, investment in maintaining and potentially upgrading critical healthcare IT infrastructure. While overall federal IT spending is in the hundreds of billions, contracts of this size are common for specialized support within large agencies. Analyzing broader spending trends would show a continued demand for such services as agencies strive to improve efficiency and service delivery through technology.

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: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated (UEI: 112871561)

Address: 10025 GOVERNOR WARFIELD PKWY STE 401, 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: $23,067,662

Exercised Options: $23,067,662

Current Obligation: $23,067,662

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500200700024I

IDV Type: IDC

Timeline