HHS Spends $94M on ACA/ACO Testing via OptumServe, Raising Value Concerns
Contract Overview
Contract Amount: $94,098,417 ($94.1M)
Contractor: Optumserve Technology Services, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2012-01-17
End Date: 2016-02-29
Contract Duration: 1,504 days
Daily Burn Rate: $62.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 5
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: ACA/ACO TESTING
Place of Performance
Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $94.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: ACA/ACO TESTING Key points: 1. Significant spending on IT services for healthcare testing. 2. OptumServe holds the contract, but competition details are limited. 3. Potential value concerns due to cost-plus award fee structure. 4. Focus on computer systems design services within the healthcare sector.
Value Assessment
Rating: questionable
The contract's Cost Plus Award Fee (CPAF) structure can incentivize cost increases rather than savings. Benchmarking against similar IT system design contracts is difficult without more detailed cost breakdowns, but the fee structure warrants scrutiny.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific award mechanism (Delivery Order) and the CPAF structure may have influenced the final pricing and overall value achieved.
Taxpayer Impact: Taxpayer funds are being used for IT services related to healthcare reform testing. The effectiveness and efficiency of this spending will determine the ultimate taxpayer impact.
Public Impact
Impacts the implementation and testing of the Affordable Care Act (ACA). Affects the development of healthcare data systems and services. Potential for improved healthcare delivery through technology advancements.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee structure can lead to higher costs.
- Lack of detailed cost transparency for performance metrics.
- Contract duration is substantial, requiring ongoing oversight.
Positive Signals
- Awarded under full and open competition.
- Addresses critical healthcare IT needs for ACA/ACO.
- Supports government efforts in healthcare reform.
Sector Analysis
This contract falls within the IT sector, specifically focusing on computer systems design services for the healthcare industry. Spending benchmarks for similar government IT contracts vary widely, but large-scale system design and testing projects often represent significant investments.
Small Business Impact
The contract does not indicate any specific set-asides for small businesses. The prime contractor, OptumServe Technology Services, Inc., is a large entity, suggesting limited direct opportunities for small businesses on this specific award.
Oversight & Accountability
Oversight is crucial for Cost Plus Award Fee contracts to ensure performance objectives are met and costs are managed effectively. The Centers for Medicare and Medicaid Services (CMS) is responsible for monitoring this contract's progress and expenditures.
Related Government Programs
- Computer Systems Design Services
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Cost Plus Award Fee structure.
- Potential for cost creep.
- Limited transparency on performance metrics.
- Long contract duration requires sustained oversight.
Tags
computer-systems-design-services, department-of-health-and-human-services, md, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $94.1 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. ACA/ACO TESTING
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 $94.1 million.
What is the period of performance?
Start: 2012-01-17. End: 2016-02-29.
How effectively did the "ACA/ACO TESTING" services contribute to the goals of the Affordable Care Act?
The effectiveness of the testing services is directly tied to their ability to identify system flaws, validate functionality, and ensure compliance with ACA requirements. A thorough post-award review would be needed to assess if the testing met its objectives and contributed to the successful rollout and operation of ACA-related programs.
What were the primary risks associated with the Cost Plus Award Fee structure for this contract?
The primary risks included potential cost overruns, as the contractor is incentivized to incur costs to earn fees, and a lack of strong incentive for cost efficiency. There was also a risk that the award fee criteria might not perfectly align with the government's true priorities, leading to suboptimal performance outcomes despite meeting fee targets.
Was the $94 million expenditure a justifiable investment for the IT services provided?
Justification depends on the tangible outcomes achieved. If the testing services led to robust, reliable systems that facilitated ACA implementation and improved healthcare data management, the expenditure could be justified. However, without clear metrics on system performance and impact, the value proposition remains uncertain.
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: 5
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Optumserve Technology Services Inc.
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: $286,315,295
Exercised Options: $94,098,417
Current Obligation: $94,098,417
Actual Outlays: $-576,986
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HHSM500200700024I
IDV Type: IDC
Timeline
Start Date: 2012-01-17
Current End Date: 2016-02-29
Potential End Date: 2018-07-16 00:00:00
Last Modified: 2024-09-17
More Contracts from Optumserve Technology Services, Inc.
- Nitaac Cio-Sp3 Task Order for ONE PI — $175.8M (Department of Health and Human Services)
- Data Service HUB — $174.1M (Department of Health and Human Services)
- Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment and Vaccine Administration for the Uninsured — $169.1M (Department of Health and Human Services)
- Enterprise Identity Management Services — $150.1M (Department of Health and Human Services)
- Data Services HUB (DSH) Logical Follow-On — $103.6M (Department of Health and Human Services)
View all Optumserve Technology Services, Inc. federal contracts →
Other Department of Health and Human Services Contracts
- Contact Center Operations (CCO) — $5.5B (Maximus Federal Services, Inc.)
- TAS::75 0849::TAS Oper of Govt R&D Goco Facilities — $4.8B (Leidos Biomedical Research Inc)
- THE Purpose of This Contract IS to Provide the Full Complement of Services Necessary to Care for UC in ORR Custody Including Facilities Set-Up, Maintenance, and Support Internal and Perimeter (IF Applicable) Security, Direct Care and Supervision Inc — $3.5B (Rapid Deployment Inc)
- Contact Center Operations — $2.6B (Maximus Federal Services, Inc.)
- Federal Contract — $2.4B (Leidos Biomedical Research Inc)
View all Department of Health and Human Services contracts →