DoD awards $21.6M for clinical software, raising questions about competition and value

Contract Overview

Contract Amount: $21,615,797 ($21.6M)

Contractor: Solventum Health Information Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2023-09-29

End Date: 2026-09-29

Contract Duration: 1,096 days

Daily Burn Rate: $19.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 3M CLINICAL SOFTWARE

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84123

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $21.6 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC. for work described as: 3M CLINICAL SOFTWARE Key points: 1. The contract's value of $21.6 million over three years warrants scrutiny for cost-effectiveness. 2. A sole-source award limits competitive pressure, potentially impacting pricing and innovation. 3. The 'Other Computer Related Services' NAICS code suggests a broad scope, requiring clear performance metrics. 4. Fixed-price contracts can shift risk to the contractor, but require careful scope definition. 5. The award to Solvendum Health Information Systems, Inc. needs to be benchmarked against similar software solutions. 6. The lack of small business set-aside raises questions about broader economic participation.

Value Assessment

Rating: questionable

The $21.6 million contract for clinical software represents a significant investment. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively assess value for money. The fixed-price nature suggests a defined scope, but the broad NAICS code (541519) could encompass a wide range of services, making direct comparisons challenging. Benchmarking against similar clinical software solutions in the federal or commercial space would be necessary to determine if the pricing is competitive and if the government is receiving optimal value.

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 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, urgent needs), they inherently limit price discovery and can reduce the incentive for vendors to offer their most competitive pricing. The lack of competition means taxpayers do not benefit from the potential cost savings that a more open bidding process might yield.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no opportunity for multiple companies to compete for the contract. This can lead to higher overall spending for the government.

Public Impact

Military personnel and healthcare providers will benefit from the clinical software, potentially improving patient care and operational efficiency. The services delivered are related to computer system design and integration for healthcare applications. The geographic impact is likely nationwide, supporting the Department of Defense's healthcare infrastructure. The contract supports a firm in the IT services sector, contributing to the federal IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potential cost savings for taxpayers.
Broad NAICS code (541519) may indicate a lack of specificity in contract requirements, increasing risk.
Lack of transparency in the justification for a sole-source award.
No indication of small business participation or subcontracting opportunities.

Positive Signals

The contract is for essential clinical software, supporting critical healthcare functions.
Firm Fixed Price contract structure can provide cost certainty if scope is well-defined.
Longer contract duration (3 years) suggests a need for stable, ongoing support.

Sector Analysis

The IT services sector, particularly within healthcare, is a significant area of federal spending. This contract falls under the 'Other Computer Related Services' NAICS code, which encompasses a wide array of IT support and development. The federal government is a major consumer of such services, with spending often driven by the need for modernization, cybersecurity, and specialized application development. Comparable spending benchmarks would typically involve analyzing other large IT service contracts awarded to similar-sized companies within the defense or broader federal healthcare IT market.

Small Business Impact

The contract does not indicate any specific small business set-aside provisions. Furthermore, the award to a single, presumably larger, entity raises questions about subcontracting opportunities for small businesses. Without explicit requirements for small business participation, it is likely that small businesses will have limited direct involvement in fulfilling this contract, potentially impacting the broader small business ecosystem that supports federal IT initiatives.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Health Agency (DHA) and the Department of Defense. Accountability measures would be defined within the contract's terms and conditions, including performance standards and payment schedules. Transparency regarding the sole-source justification and the specific services rendered would be key to assessing oversight effectiveness. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

DoD Electronic Health Record (EHR) Systems
Federal Health IT Modernization Programs
Defense Health Information Management Systems

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed justification for sole-source award.
Broad NAICS code may indicate undefined scope or requirements.
No explicit small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.6 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC.. 3M CLINICAL SOFTWARE

Who is the contractor on this award?

The obligated recipient is SOLVENTUM HEALTH INFORMATION SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $21.6 million.

What is the period of performance?

Start: 2023-09-29. End: 2026-09-29.

What is the specific 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 contracts are awarded when only one responsible source can provide the required supplies or services, such as when there is a unique capability, a critical need that cannot be met by other sources, or in cases of urgent and compelling circumstances. Without the official justification document, it is impossible to verify the necessity of bypassing the competitive bidding process. This lack of transparency is a concern for ensuring fair and efficient use of taxpayer funds.

How does the $21.6 million contract value compare to similar clinical software solutions procured by the federal government?

Direct comparison of the $21.6 million contract value is challenging without more specific details on the software's functionality and scope. However, federal IT contracts, especially for specialized software in the healthcare domain, can range widely. Large-scale Electronic Health Record (EHR) system implementations can cost hundreds of millions or even billions over their lifecycle. Smaller, more niche clinical software solutions might range from a few million to tens of millions. The value of this contract appears to be in the mid-range for a significant software deployment, but its true value depends heavily on the specific services and capabilities it provides compared to market alternatives.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided data does not specify the key performance indicators (KPIs) or service level agreements (SLAs) for this contract. These are crucial elements that define the expected performance standards and quality of service from the contractor. For a clinical software contract, KPIs might include system uptime, response times, data accuracy, user satisfaction, and successful integration with other systems. SLAs would outline the remedies or penalties if these standards are not met. Without this information, it's difficult to assess how the government will measure the contractor's performance and ensure the software effectively meets its intended clinical purposes.

What is the track record of Solvendum Health Information Systems, Inc. with federal contracts, particularly in the healthcare IT sector?

Information regarding Solvendum Health Information Systems, Inc.'s specific track record with federal contracts, especially within the healthcare IT sector, is not provided in the data. A thorough analysis would require examining past performance on similar contracts, including their success in meeting deadlines, budget constraints, and performance requirements. Investigating any past performance issues, contract disputes, or awards would be essential to understanding their reliability and capability in delivering complex IT solutions for the Department of Defense.

What is the anticipated impact of this contract on the broader federal healthcare IT market and potential competitors?

The sole-source nature of this $21.6 million contract means that other potential competitors in the federal healthcare IT market were not given an opportunity to bid. This can limit market dynamism and potentially stifle innovation if successful vendors become entrenched without facing competitive pressure. For Solvendum Health Information Systems, Inc., this award represents a significant revenue stream and strengthens their position within the DoD's IT infrastructure. The broader impact depends on whether this software integrates with or replaces existing systems, and whether it sets a precedent for future sole-source awards in similar areas.

Industry Classification

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

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001523Q0081

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: 3M Company

Address: 575 W MURRAY BLVD, MURRAY, UT, 84123

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,397,485

Exercised Options: $21,615,797

Current Obligation: $21,615,797

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline