DoD's $26.6M Magellan Federal contract for recovery care support services lacked competition, raising value concerns

Contract Overview

Contract Amount: $26,616,978 ($26.6M)

Contractor: Magellan Federal, Inc.

Awarding Agency: Department of Defense

Start Date: 2015-12-30

End Date: 2017-01-16

Contract Duration: 383 days

Daily Burn Rate: $69.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF RECOVERY CARE PROGRAM (RCP) SUPPORT SERV

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22206

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $26.6 million to MAGELLAN FEDERAL, INC. for work described as: IGF::OT::IGF RECOVERY CARE PROGRAM (RCP) SUPPORT SERV Key points: 1. The contract was awarded on a sole-source basis, limiting opportunities for competitive bidding and potentially impacting price. 2. The administrative management and general management consulting services sector is broad, making direct comparisons challenging without more specific service details. 3. A firm-fixed-price contract type suggests predictable costs, but the lack of competition hinders verification of fair pricing. 4. The contract duration of 383 days is relatively short, indicating a focused scope of work. 5. The absence of small business set-aside flags suggests this contract was not specifically targeted to support small businesses. 6. The contract was awarded by the Defense Health Agency, indicating a focus on healthcare support within the military.

Value Assessment

Rating: questionable

Benchmarking the value of this $26.6 million contract is difficult due to its sole-source nature and the broad category of administrative management and general management consulting services. Without competitive bids, it's hard to ascertain if Magellan Federal, Inc. provided services at a fair market price. The lack of transparency in pricing negotiations for sole-source awards makes it challenging to assess value for money compared to potentially competing offers. Further analysis would require access to detailed service delivery metrics and cost breakdowns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, Magellan Federal, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities or urgent needs), they inherently limit price discovery and can lead to higher costs for the government compared to a fully competed contract. The absence of competition means there's no direct market pressure to drive down prices.

Taxpayer Impact: For taxpayers, a sole-source award means there's a reduced likelihood of achieving the most cost-effective outcome. The government may have paid more than it would have in a competitive environment, as the benefits of bidding wars are absent.

Public Impact

Military personnel and their families receiving recovery care support services benefit from the contract's execution. The services provided likely contribute to the operational readiness and well-being of service members requiring specialized care. The geographic impact is primarily within the purview of the Department of Defense's healthcare facilities and operations. The contract supports administrative and management functions within the Defense Health Agency, indirectly impacting healthcare delivery to the armed forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced value for taxpayer funds.
The broad nature of 'Administrative Management and General Management Consulting Services' makes it difficult to assess the specific value and necessity of the services rendered.
Sole-source awards can set a precedent for future non-competitive procurements if not carefully justified.
Limited transparency into the pricing structure and negotiation process due to the non-competitive nature of the award.

Positive Signals

The contract was awarded on a firm-fixed-price basis, which helps to control costs and provides predictability.
The Defense Health Agency, a specialized entity, likely has specific needs that Magellan Federal, Inc. was uniquely positioned to meet.
The contract duration of 383 days suggests a defined period of performance, allowing for reassessment of needs upon completion.

Sector Analysis

The administrative management and general management consulting services sector is a significant part of the federal procurement landscape, encompassing a wide range of support functions for government agencies. This contract falls within a broad category that supports operational efficiency and strategic planning. Comparable spending benchmarks are difficult to establish without knowing the precise nature of the recovery care support services provided. However, the federal government consistently spends billions annually on consulting and management services across various departments.

Small Business Impact

There is no indication that this contract included a small business set-aside. The award to Magellan Federal, Inc., a single entity, does not provide direct subcontracting opportunities for small businesses through a set-aside mechanism. The impact on the small business ecosystem is neutral to negative, as opportunities were not specifically carved out for them. Further investigation into Magellan Federal's subcontracting plan, if any, would be needed to fully assess its impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Health Agency (DHA) contracting officers and program managers. As a definitive contract, it is subject to standard federal acquisition regulations and oversight. The Inspector General of the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this award. Transparency is limited due to the sole-source nature, but contract performance data and payment records would be subject to review.

Related Government Programs

Defense Health Agency Contracts
Management and Consulting Services
Healthcare Support Services
Recovery Care Programs
Sole-Source Procurements

Risk Flags

Sole-source award lacks competitive justification.
Potential for overpayment due to lack of competition.
Ambiguity in service scope hinders value assessment.
Limited transparency in pricing and negotiation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.6 million to MAGELLAN FEDERAL, INC.. IGF::OT::IGF RECOVERY CARE PROGRAM (RCP) SUPPORT SERV

Who is the contractor on this award?

The obligated recipient is MAGELLAN FEDERAL, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $26.6 million.

What is the period of performance?

Start: 2015-12-30. End: 2017-01-16.

What specific recovery care support services did Magellan Federal, Inc. provide under this contract?

The contract data indicates the services fall under NAICS code 541611 (Administrative Management and General Management Consulting Services). While the contract title mentions 'RECOVERY CARE PROGRAM (RCP) SUPPORT SERV', the specific deliverables are not detailed in the provided data. These services could range from program management, operational support, administrative assistance, to strategic planning related to recovery care for military personnel. Without a detailed statement of work or contract line item numbers (CLINs), the precise nature of the services remains ambiguous. This lack of specificity makes it challenging to evaluate the necessity and effectiveness of the awarded services.

How does the $26.6 million cost compare to similar recovery care support contracts awarded competitively?

Direct comparison to competitively awarded contracts is not feasible because this $26.6 million contract was sole-sourced. Competitive awards typically result in lower prices due to market forces and multiple bidders vying for the contract. To benchmark this cost, one would need to identify similar recovery care support services procured through full and open competition and compare their total contract values, duration, and scope. The absence of competition for this Magellan Federal contract means its cost cannot be definitively stated as high or low relative to market alternatives without further, detailed analysis of comparable services and pricing structures.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of $26.6 million include: 1. Inflated Pricing: Without competition, the contractor may not have had the incentive to offer the lowest possible price, potentially leading to overpayment. 2. Lack of Innovation: A competitive environment often fosters innovation as contractors seek to differentiate themselves. A sole-source award might miss out on potentially better or more efficient solutions. 3. Reduced Accountability: While oversight exists, the lack of competitive pressure can sometimes lead to complacency in performance. 4. Justification Scrutiny: Sole-source awards require strong justification; if the justification was weak or flawed, it represents a procedural risk and potential waste of funds.

What was the justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in the Federal Acquisition Regulation (FAR), such as when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without access to the Justification for Other Than Full and Open Competition (JOFOC) document, it is impossible to determine the official rationale. This lack of transparency regarding the justification is a significant concern for assessing the propriety of the award.

What is the track record of Magellan Federal, Inc. in performing similar government contracts?

Information on Magellan Federal, Inc.'s track record with similar government contracts is not detailed in the provided data. To assess their performance, one would need to review their contract history, including past performance evaluations, any contract disputes, and the successful completion of prior engagements, particularly those involving administrative management, general management consulting, or healthcare support services. A review of federal procurement databases and past performance information repositories would be necessary to form a comprehensive view of their capabilities and reliability.

How does the contract duration of 383 days align with the typical lifecycle of recovery care programs?

A contract duration of 383 days (approximately 1 year and 1 month) suggests a defined, medium-term engagement for the recovery care support services. The typical lifecycle of recovery care programs can vary significantly depending on the nature of the conditions being treated, the patient population, and the specific goals of the program. Some recovery efforts might be short-term, while others could extend over several years. A 383-day contract might represent a specific phase of a larger program, a pilot initiative, or a period where specialized support was needed before transitioning to another solution or internal capability.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001116R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2800 S SHIRLINGTON RD STE 350, ARLINGTON, VA, 22206

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $26,616,978

Exercised Options: $26,616,978

Current Obligation: $26,616,978

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline