CMS One Program Integrity System contract awarded to OptumServe for over $73.6 million

Contract Overview

Contract Amount: $73,650,915 ($73.7M)

Contractor: Optumserve Technology Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2012-04-01

End Date: 2017-09-29

Contract Duration: 2,007 days

Daily Burn Rate: $36.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: PERFORM DEVELOPMENT AND MAINTENANCE SERVIES ON THE CMS ONE PROGRAM INTEGRITY (PI) SYSTEM.

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $73.7 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: PERFORM DEVELOPMENT AND MAINTENANCE SERVIES ON THE CMS ONE PROGRAM INTEGRITY (PI) SYSTEM. Key points: 1. The contract focused on development and maintenance of a critical CMS system. 2. Awarded through full and open competition, suggesting a robust market. 3. The duration of the contract (over 5 years) indicates a long-term need for these services. 4. The Cost Plus Fixed Fee (CPFF) pricing structure can incentivize cost control by the contractor. 5. The specific NAICS code (541512) points to a specialized IT service requirement. 6. The contract was a delivery order, implying it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: good

The contract value of over $73.6 million for a 5-year period for IT system development and maintenance appears reasonable given the scope. While direct comparisons are difficult without knowing the specific functionalities and complexity of the CMS One Program Integrity (PI) system, IT system development and maintenance contracts of this duration and value are common within federal agencies. The CPFF pricing structure, if managed effectively, can lead to good value by aligning contractor incentives with cost efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 3 bidders suggests a competitive environment, which typically leads to better price discovery and potentially more favorable terms for the government. The government's ability to select from multiple qualified offerors is a positive sign for achieving value for money.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a market where contractors are incentivized to offer competitive pricing and innovative solutions to win government contracts.

Public Impact

The primary beneficiary is the Centers for Medicare and Medicaid Services (CMS), which relies on the PI system for program integrity. The services delivered include the development and ongoing maintenance of a crucial IT system. The geographic impact is national, as CMS operates nationwide. Workforce implications include the IT professionals employed by OptumServe Technology Services, Inc. to perform these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in CPFF contracts if not closely monitored.
Reliance on a single contractor for critical system maintenance could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, indicating a healthy market.
The contract duration suggests a stable and ongoing need, allowing for focused development and maintenance.
The CPFF structure can be advantageous if managed with strong oversight.

Sector Analysis

This contract falls within the broader IT services sector, specifically Computer Systems Design Services. The federal government is a significant consumer of these services, with substantial annual spending on IT modernization, system development, and maintenance. Comparable spending benchmarks for large-scale system development and maintenance contracts within federal agencies often run into tens or hundreds of millions of dollars over several years, depending on the complexity and criticality of the system.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded through full and open competition, it is unlikely that small businesses would be primary awardees unless they were part of a joint venture or subcontracting team. The focus on a large prime contractor suggests that subcontracting opportunities for small businesses may exist, but this would depend on the prime contractor's subcontracting plan and the specific needs of the project.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within CMS. The Cost Plus Fixed Fee (CPFF) structure necessitates robust financial oversight to ensure costs are reasonable and allocable. Transparency is generally maintained through contract reporting mechanisms, and while specific Inspector General (IG) jurisdiction isn't detailed here, the HHS OIG would have oversight authority over potential fraud, waste, and abuse related to this contract.

Related Government Programs

CMS IT Modernization Efforts
Federal Health IT Systems
Program Integrity Systems
Healthcare Fraud Prevention IT

Risk Flags

Potential for cost overruns in CPFF contracts.
Reliance on a single vendor for critical system maintenance.
Need for robust oversight to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $73.7 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. PERFORM DEVELOPMENT AND MAINTENANCE SERVIES ON THE CMS ONE PROGRAM INTEGRITY (PI) SYSTEM.

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 $73.7 million.

What is the period of performance?

Start: 2012-04-01. End: 2017-09-29.

What is the track record of OptumServe Technology Services, Inc. with similar federal IT contracts?

OptumServe Technology Services, Inc., as a subsidiary of UnitedHealth Group, has a significant presence in the federal contracting space, particularly within the Department of Health and Human Services (HHS). They have been awarded numerous contracts related to health IT, data analytics, and system modernization. Their track record often involves large-scale IT projects requiring complex integration and maintenance. Analyzing their past performance on similar CPFF contracts, especially those involving critical systems like program integrity, would provide insight into their ability to manage costs, deliver on time, and meet performance requirements. Specific contract performance reports (e.g., CPARS) would offer a more detailed assessment of their past successes and challenges.

How does the value of this contract compare to similar IT system development and maintenance contracts within CMS or HHS?

The contract value of over $73.6 million for a period of approximately 5 years (April 2012 - September 2017) for the CMS One Program Integrity (PI) system is substantial, reflecting the complexity and criticality of maintaining such a system. To benchmark this value, one would compare it to other large IT development and maintenance contracts awarded by CMS or HHS during a similar timeframe. Factors such as the number of users, the scope of data managed, the required uptime, and the specific functionalities (e.g., fraud detection algorithms, data analytics capabilities) are crucial for a precise comparison. Contracts for enterprise-wide systems or those involving significant data processing and security requirements often fall within this multi-million dollar range over several years.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT system maintenance?

The primary risks associated with a CPFF contract for IT system maintenance revolve around cost control and potential for contractor inefficiency. While the fixed fee provides the contractor with an incentive to control costs to maximize profit, the 'cost plus' element means the government ultimately bears the allowable costs. If oversight is weak, there's a risk of cost overruns or the contractor not being sufficiently incentivized to find the most cost-effective solutions. For system maintenance, risks also include potential for scope creep if requirements are not clearly defined and managed, leading to increased costs. Furthermore, a heavy reliance on a single contractor for critical system maintenance can pose operational risks if the contractor's performance declines or if they face financial instability.

How effective is the CMS One Program Integrity (PI) system in achieving its stated goals?

Assessing the effectiveness of the CMS One Program Integrity (PI) system requires specific performance metrics and data that are not provided in the basic contract award details. Program integrity systems are typically designed to detect, prevent, and investigate fraud, waste, and abuse within Medicare and Medicaid programs. Effectiveness would be measured by metrics such as the amount of improper payments identified and prevented, the success rate of fraud investigations initiated through the system, and the return on investment (ROI) in terms of dollars saved versus program costs. Without access to CMS's internal performance reports or GAO/OIG evaluations related to this specific system, a definitive statement on its effectiveness cannot be made based solely on the contract award.

What has been the historical spending trend for IT services related to program integrity at CMS?

Historical spending trends for IT services related to program integrity at CMS would likely show a consistent and potentially increasing investment over time. As healthcare programs grow and become more complex, the need for robust systems to ensure program integrity intensifies. Agencies like CMS face constant pressure to combat fraud and abuse, which necessitates ongoing investment in technology. Spending in this area would typically encompass system development, maintenance, data analytics, and specialized software. Analyzing historical data would reveal whether spending has been steady, increasing, or fluctuating, and could indicate shifts in strategy or technological adoption within CMS's program integrity efforts.

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 FIXED FEE (U)

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: $86,370,237

Exercised Options: $73,650,915

Current Obligation: $73,650,915

Actual Outlays: $-102,958

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