HHS awards $38.3M modification for Healthcare.gov testing, extending services for the ACA Marketplace

Contract Overview

Contract Amount: $38,270,408 ($38.3M)

Contractor: Optumserve Technology Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2014-10-23

End Date: 2015-10-31

Contract Duration: 373 days

Daily Burn Rate: $102.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: THE PURPOSE OF THIS MODIFICATION IS TO PREPARE NEW TO WORK UNDER ACA TESTING CONTRACT FOR GO FORWARD WORK ON THE HEALTHCARE.GOV MARKETPLACE.

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $38.3 million to OPTUMSERVE TECHNOLOGY SERVICES, INC. for work described as: THE PURPOSE OF THIS MODIFICATION IS TO PREPARE NEW TO WORK UNDER ACA TESTING CONTRACT FOR GO FORWARD WORK ON THE HEALTHCARE.GOV MARKETPLACE. Key points: 1. Contract modification extends services for critical Healthcare.gov testing. 2. Focus on preparing for go-forward work on the ACA Marketplace. 3. Awarded to OptumServe Technology Services, Inc., a known entity in federal IT. 4. Delivery order under a larger contract indicates phased service delivery. 5. Cost Plus Award Fee contract type allows for performance-based incentives. 6. The modification period spans over a year, ensuring continuity. 7. Services are categorized under Computer Systems Design, a key IT sector.

Value Assessment

Rating: good

The contract modification adds $38.3 million to the existing contract for Healthcare.gov testing services. While specific value-for-money metrics are not detailed in the provided data, the Cost Plus Award Fee (CPAF) structure suggests an intent to incentivize performance and achieve good value. Benchmarking against similar IT testing contracts would be necessary for a definitive assessment, but the extension of services for a critical platform like Healthcare.gov implies a recognized need and potentially competitive pricing for the ongoing work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for the work. The specific number of bidders is not provided, but the full and open nature suggests a competitive environment that should theoretically lead to fair pricing and selection of the most capable vendor. The fact that this is a delivery order under a larger contract implies that the initial competition was robust.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve service quality through vendor innovation.

Public Impact

Beneficiaries include millions of Americans who rely on Healthcare.gov for health insurance. Services delivered ensure the stability and functionality of the ACA Marketplace. Geographic impact is nationwide, covering all states using Healthcare.gov. Workforce implications include IT professionals involved in testing and system maintenance. The contract supports the operational continuity of a major federal health insurance exchange.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee contracts if not managed tightly.
Dependence on a single vendor for critical testing services could pose a risk if performance falters.

Positive Signals

Extension of services ensures continuity for a vital federal platform.
Cost Plus Award Fee structure incentivizes high performance.
Awarded under full and open competition, suggesting a competitive initial process.

Sector Analysis

This contract falls within the federal IT services sector, specifically focusing on computer systems design and testing. The market for IT services supporting government platforms is substantial, with agencies increasingly relying on specialized vendors for complex system development, maintenance, and testing. Comparable spending benchmarks would involve analyzing other large-scale IT contracts for federal marketplaces or similar critical infrastructure projects, often running into tens or hundreds of millions of dollars.

Small Business Impact

The provided data indicates that small business participation (ss and sb fields) is false for this specific award. This suggests that the prime contractor, OptumServe Technology Services, Inc., is not a small business, and there is no explicit small business set-aside. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within this contract, which could still provide some benefit to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would likely be managed by the Centers for Medicare and Medicaid Services (CMS) within HHS. The Cost Plus Award Fee structure implies performance metrics and evaluation criteria that CMS would monitor. Transparency is generally facilitated through contract award databases like FPDS.gov. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse related to the contract funds.

Related Government Programs

Healthcare.gov Operations
Affordable Care Act (ACA) IT Modernization
Federal Health IT Services
Centers for Medicare and Medicaid Services (CMS) Contracts
Computer Systems Design Services

Risk Flags

Potential for cost overruns with CPAF contract type.
Reliance on a single vendor for critical testing services.
Complexity of Healthcare.gov platform requires rigorous testing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $38.3 million to OPTUMSERVE TECHNOLOGY SERVICES, INC.. THE PURPOSE OF THIS MODIFICATION IS TO PREPARE NEW TO WORK UNDER ACA TESTING CONTRACT FOR GO FORWARD WORK ON THE HEALTHCARE.GOV MARKETPLACE.

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 $38.3 million.

What is the period of performance?

Start: 2014-10-23. End: 2015-10-31.

What is the historical spending on this contract vehicle prior to this modification?

The provided data indicates this is a delivery order with an award amount of $38,270,408.15 and a duration of 373 days. However, it does not detail the total historical spending on the parent contract vehicle from which this delivery order was issued. To understand the full historical spending, one would need to access the contract's award history and all modifications or prior delivery orders associated with the base contract. This information is typically available through federal procurement data systems.

How does the per-unit cost of testing services compare to industry benchmarks?

The provided data does not include specific details on the 'units' of testing services or their associated costs, making a direct per-unit cost comparison to industry benchmarks impossible. The contract type is Cost Plus Award Fee (CPAF), which bases payment on incurred costs plus a fee that is dependent on meeting performance objectives. To benchmark, one would need to identify the specific deliverables (e.g., test cases executed, defect reports generated, hours of testing) and their associated costs, then compare these to market rates for similar IT testing services in the federal or commercial sector.

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

OptumServe Technology Services, Inc. has a significant track record with federal IT contracts, particularly within the Department of Health and Human Services (HHS). They have been involved in large-scale health IT initiatives. Their experience often includes managing complex systems, providing IT support, and developing solutions for federal agencies. A deeper dive into their contract history would reveal the scope, value, and performance outcomes of their previous work, providing context for their capability in handling the Healthcare.gov testing contract.

What are the key performance indicators (KPIs) for this contract modification?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this specific contract modification. However, given the contract type is Cost Plus Award Fee (CPAF), it is highly probable that KPIs are defined within the contract's Statement of Work (SOW). These KPIs would likely relate to the quality, timeliness, and effectiveness of the testing services provided for the Healthcare.gov Marketplace, ensuring the platform's stability and functionality.

What is the potential risk associated with the 'Computer Systems Design Services' category for this contract?

The primary risk associated with 'Computer Systems Design Services' in a contract like this, which supports a critical federal platform like Healthcare.gov, revolves around system complexity, integration challenges, and the potential for unforeseen technical issues. Errors in design or testing could lead to system vulnerabilities, performance degradation, or failures in service delivery, impacting millions of users. Ensuring robust testing methodologies, clear design specifications, and effective change management processes are crucial to mitigating these risks.

How does this contract's value compare to overall HHS IT spending?

This contract modification is valued at approximately $38.3 million. To compare this to overall HHS IT spending, one would need data on the total IT budget allocated by HHS for the relevant fiscal year. HHS is a massive agency with a substantial IT footprint, encompassing numerous programs and systems beyond Healthcare.gov. While $38.3 million is a significant sum for a single contract modification, it likely represents a fraction of HHS's total annual IT expenditure, which can run into billions of dollars.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

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: $38,270,408

Exercised Options: $38,270,408

Current Obligation: $38,270,408

Actual Outlays: $213,740

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