DoD awards $76M for nurse advice line support, raising questions about competition and value

Contract Overview

Contract Amount: $76,143,100 ($76.1M)

Contractor: Optumhealth Care Solutions, LLC

Awarding Agency: Department of Defense

Start Date: 2024-03-17

End Date: 2025-09-17

Contract Duration: 549 days

Daily Burn Rate: $138.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: GLOBAL NURSE ADVICE LINE SUPPORT SERVICES

Place of Performance

Location: EDEN PRAIRIE, HENNEPIN County, MINNESOTA, 55344

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $76.1 million to OPTUMHEALTH CARE SOLUTIONS, LLC for work described as: GLOBAL NURSE ADVICE LINE SUPPORT SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Significant duration of 549 days suggests a need for sustained services. 3. High contract value indicates critical support for military health services. 4. Lack of competition may lead to suboptimal pricing and reduced innovation. 5. Performance context is crucial given the sensitive nature of healthcare advice. 6. Sector positioning within professional services highlights the demand for specialized support.

Value Assessment

Rating: questionable

The contract value of $76.1 million for nurse advice line support appears substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively assess value for money. The sole-source nature of the award further complicates benchmarking against market rates or competitive bids. However, given the critical nature of healthcare support services for the Department of Defense, the pricing will be scrutinized against industry standards for similar large-scale call center and advisory services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the required unique capabilities or in urgent situations, the lack of competition here raises concerns about whether the government secured the best possible price and terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the selected contractor's pricing reflects the most cost-effective solution available in the market.

Public Impact

Beneficiaries include military personnel and their families who rely on the nurse advice line for health guidance. Services delivered encompass providing crucial medical advice and directing individuals to appropriate care. Geographic impact is nationwide, supporting the health needs of a dispersed military population. Workforce implications include the potential reliance on a specific contractor's personnel for essential health support functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Extended contract duration may indicate a lack of readily available alternatives.
Absence of small business participation raises questions about broader economic impact.
Limited transparency due to sole-source nature makes value assessment challenging.

Positive Signals

Ensures continuity of essential healthcare advice services for military families.
Contract awarded to a known entity, potentially leveraging existing infrastructure and expertise.
Fixed-price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically related to healthcare support. The market for such services is robust, driven by government and private sector demand for specialized advisory and administrative functions. Comparable spending benchmarks would typically involve analyzing other large-scale call center operations and healthcare support contracts, particularly those serving large, geographically dispersed populations. The Defense Health Agency's spending in this area reflects the ongoing need to provide accessible health information to the military community.

Small Business Impact

The data indicates that small business participation was not a stated requirement or outcome for this contract (sb: false). This sole-source award, without specific set-aside provisions or subcontracting goals for small businesses, suggests that opportunities for small businesses within this specific contract are unlikely. This could mean a missed opportunity to leverage the agility and innovation of smaller firms in the healthcare support services market and potentially limits the broader economic impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Health Agency (DHA) and potentially the Department of Defense's Inspector General. Accountability measures would be defined by the contract's performance work statement and delivery requirements. Transparency is limited due to the sole-source nature of the award, making it harder for the public to scrutinize the process and outcomes. The DHA is responsible for ensuring the contractor meets all service level agreements and quality standards.

Related Government Programs

TRICARE Health Support Services
Military Health System Information Technology
Defense Health Agency Call Center Operations
Global Medical Support Contracts

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of transparency in the procurement process.
Potential for vendor lock-in due to the nature of the award.
Need for robust performance monitoring to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $76.1 million to OPTUMHEALTH CARE SOLUTIONS, LLC. GLOBAL NURSE ADVICE LINE SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is OPTUMHEALTH CARE SOLUTIONS, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $76.1 million.

What is the period of performance?

Start: 2024-03-17. End: 2025-09-17.

What is the track record of OptumHealth Care Solutions, LLC with the Department of Defense and similar healthcare support contracts?

OptumHealth Care Solutions, LLC, a subsidiary of UnitedHealth Group, has a significant presence in the healthcare sector, including extensive experience with government contracts. While specific details on their past performance with the DoD for nurse advice lines are not provided in this data snippet, their broader portfolio includes managing large-scale health information services, call centers, and care coordination programs for various government agencies and private entities. Their track record generally involves managing complex healthcare operations and leveraging technology to deliver health support. A deeper dive would require examining past performance evaluations, contract history, and any reported issues or successes on similar DoD or other federal contracts to fully assess their suitability and past performance in this specific domain.

How does the $76.1 million contract value compare to similar nurse advice line services for large organizations?

Benchmarking the $76.1 million contract value for nurse advice line support is challenging without more specific details on the scope of services, call volume, staffing levels, and technological infrastructure required. However, for large organizations, particularly those serving a dispersed population like the military, significant investments in such services are common. Industry estimates for large-scale call center operations can range from tens to hundreds of millions of dollars annually, depending on complexity and scale. Given that this is a sole-source award for a period of approximately 18 months (549 days), the annual run rate is roughly $50 million. This figure needs to be compared against the cost of comparable services provided by other federal agencies or large private healthcare providers, considering factors like 24/7 availability, specialized medical advice, and integration with existing health systems.

What are the primary risks associated with a sole-source award for critical healthcare support services?

The primary risks associated with a sole-source award for critical healthcare support services like a nurse advice line include: 1. **Lack of Price Competition:** The government may not achieve the lowest possible price because there is no competitive pressure from other bidders. This can lead to overpayment. 2. **Reduced Innovation:** Without the incentive of winning a competitive bid, the contractor may have less motivation to innovate or improve services beyond the minimum requirements. 3. **Vendor Lock-in:** The government becomes dependent on a single provider, making it difficult and potentially costly to switch vendors in the future, even if performance is subpar. 4. **Potential for Complacency:** The awarded contractor might become complacent, assuming their position is secure, which could impact service quality or responsiveness. 5. **Limited Transparency:** The justification for the sole-source award and the negotiation process are often less transparent, making it harder to assure the public of the best value being obtained.

What is the expected impact of these services on the overall effectiveness of the Defense Health Agency's support to military personnel and families?

The Global Nurse Advice Line Support Services are expected to have a significant positive impact on the Defense Health Agency's (DHA) ability to provide timely and accessible healthcare guidance to military personnel and their families. By offering a centralized point of contact for health-related inquiries, these services can help individuals make informed decisions about seeking medical care, potentially reducing unnecessary emergency room visits and improving the efficient utilization of healthcare resources. This support is crucial for maintaining the health and readiness of the force and ensuring that beneficiaries receive appropriate care advice, regardless of their geographic location. Effective nurse advice lines can also improve patient satisfaction and contribute to better health outcomes by providing prompt, professional, and reliable health information.

How does the $76.1 million spending compare to historical spending on similar nurse advice line or healthcare support services by the DoD?

To assess how the $76.1 million spending compares to historical patterns, one would need to analyze the DHA's and DoD's spending on nurse advice lines and related healthcare support services over previous fiscal years. This would involve looking at contract awards for similar services, noting any trends in contract values, durations, and the number of competitors. If historical data shows a consistent need for such services at similar price points, it might suggest this award is in line with established requirements. Conversely, a significant increase in spending or a shift from competitive to sole-source awards could indicate changes in program scope, market conditions, or procurement strategies that warrant further investigation into value and efficiency.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001124R0017

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 11000 OPTUM CIRCLE, EDEN PRAIRIE, MN, 55344

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $76,143,100

Exercised Options: $76,143,100

Current Obligation: $76,143,100

Actual Outlays: $8,592,533

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline