DoD's $23.35B Humana Contract: Direct Health Insurance Carrier Services in Kentucky
Contract Overview
Contract Amount: $23,352,182,729 ($23.4B)
Contractor: Humana Government Business Inc
Awarding Agency: Department of Defense
Start Date: 2003-08-27
End Date: 2012-03-31
Contract Duration: 3,139 days
Daily Burn Rate: $7.4M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Healthcare
Place of Performance
Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40202
State: Kentucky Government Spending
Plain-Language Summary
Department of Defense obligated $23.35 billion to HUMANA GOVERNMENT BUSINESS INC for work described as: Key points: 1. Significant contract value of $23.35 billion over its duration. 2. Competition was full and open, suggesting a competitive bidding process. 3. Contract type is Cost Plus Incentive Fee, which can incentivize cost control but also carries risk. 4. The sector is direct health and medical insurance carriers, a critical area for government services.
Value Assessment
Rating: good
The contract value is substantial, and the Cost Plus Incentive Fee structure aims to balance cost and performance. Benchmarking against similar large-scale health insurance contracts would be necessary for a precise value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Full and open competition was utilized, which typically leads to better price discovery and potentially lower costs for the government. The existence of multiple bidders would have driven competitive pricing.
Taxpayer Impact: The competitive nature of this contract likely resulted in favorable pricing for taxpayers, although the Cost Plus Incentive Fee structure requires careful monitoring to ensure efficiency.
Public Impact
Ensures healthcare coverage for military personnel and their families. Impacts the healthcare industry and insurance providers in Kentucky. Represents a significant portion of the Defense Health Agency's budget for medical insurance.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- Cost Plus Incentive Fee structure requires diligent oversight to prevent cost overruns.
- Long contract duration (2003-2012) may not reflect current market rates or needs.
Positive Signals
- Full and open competition indicates a robust bidding process.
- Contract addresses a critical need for military healthcare services.
Sector Analysis
This contract falls within the Healthcare sector, specifically direct health and medical insurance carriers. Spending in this area is substantial government-wide, supporting millions of beneficiaries. Benchmarks would focus on per-member-per-month costs for similar government health plans.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as the 'sb' field is false. Large prime contractors often subcontract to small businesses, but direct award analysis shows no small business participation at the prime level.
Oversight & Accountability
The contract's long duration and Cost Plus Incentive Fee structure necessitate strong oversight from the Defense Health Agency to ensure performance standards are met and costs are managed effectively. Audits and performance reviews would be key accountability mechanisms.
Related Government Programs
- Direct Health and Medical Insurance Carriers
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Potential for cost overruns due to CPIF structure.
- Lack of specific performance metrics in provided data.
- Contract duration may exceed optimal period for market competitiveness.
- No indication of small business subcontracting opportunities.
Tags
direct-health-and-medical-insurance-carr, department-of-defense, ky, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $23.35 billion to HUMANA GOVERNMENT BUSINESS INC. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is HUMANA GOVERNMENT BUSINESS INC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $23.35 billion.
What is the period of performance?
Start: 2003-08-27. End: 2012-03-31.
What was the average per-member-per-month cost under this contract compared to other TRICARE regions or private insurance benchmarks?
Determining the exact per-member-per-month cost requires access to detailed financial data and beneficiary enrollment numbers. However, comparing this to other TRICARE contracts and private insurance plans would reveal if the $23.35 billion expenditure provided competitive value for the services rendered. Variations in healthcare needs and regional costs can influence these figures.
How effectively did the Cost Plus Incentive Fee structure incentivize Humana to control costs while maintaining service quality?
The effectiveness of the CPIF structure hinges on the specific incentive targets and the agency's oversight. If targets were well-defined and achievable, it could have driven efficiency. However, without detailed performance reports and cost variance analysis, it's difficult to definitively assess its success in controlling costs versus the potential for scope creep or inflated expenses.
What was the impact of this contract on the availability and quality of healthcare services for beneficiaries in Kentucky?
This contract was crucial for providing direct health and medical insurance services to a significant population in Kentucky. Its long duration suggests a sustained impact. Evaluating the impact would involve analyzing beneficiary satisfaction surveys, network adequacy, access to care metrics, and overall healthcare outcomes within the region covered by Humana.
Industry Classification
NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers
Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Humana Inc.
Address: 500 W MAIN ST STE 300, LOUISVILLE, KY, 40202
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $19,971,859,454
Exercised Options: $18,804,312,452
Current Obligation: $23,352,182,729
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2003-08-27
Current End Date: 2012-03-31
Potential End Date: 2018-11-21 00:00:00
Last Modified: 2022-05-27
More Contracts from Humana Government Business Inc
- Federal Contract — $51.3B (Department of Defense)
- T3 Managed Care Support Contract for South Region — $20.5B (Department of Defense)
- Tricare Managed Care Support Services Contract, 5TH Generation East Region — $5.9B (Department of Defense)
- 199712!9700!0134!ZD06 !tricare Support Office !mda90696c0002 !A!*!P00065 !19970304!19971231!805349198!805349198!049944143!n!050s0!humana Military Healthcare SER!500 W Main ST STE 300 !louisville !ky!40202!48000!111!21!louisville !jefferson !kentucky !0001!+000000711183!n!n!000000000000!q201!general Health Care Services !S1 !services !1000!NOT Discernable or Classified !8099!3!*!*!a!b!a!*!a !U!J!2!004!B!* !C!N!Z!* !* !n!c!*!c!c!a!a!a!*!* !*!n!a!c!n!*!*!*!*!*! — $3.0B (Department of Defense)
- Patient Appointing Services for Puget Sound Multi-Service Market — $18.5M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)