DoD's $1.9B contract with Sierra Military Health Services for healthcare services awarded via full and open competition

Contract Overview

Contract Amount: $1,901,146,467 ($1.9B)

Contractor: Sierra Military Health Services LLC

Awarding Agency: Department of Defense

Start Date: 1999-12-07

End Date: 2009-02-05

Contract Duration: 3,348 days

Daily Burn Rate: $567.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Place of Performance

Location: LAS VEGAS, CLARK County, NEVADA, 89114

State: Nevada Government Spending

Plain-Language Summary

Department of Defense obligated $1.90 billion to SIERRA MILITARY HEALTH SERVICES LLC for work described as: Key points: 1. Contract awarded for healthcare services, indicating a need for medical support within the Department of Defense. 2. The duration of the contract (3348 days) suggests a long-term requirement for sustained services. 3. Awarded under a Firm Fixed Price (FFP) contract type, which shifts cost risk to the contractor. 4. The contract was awarded to Sierra Military Health Services LLC, a specific entity within the defense contracting landscape. 5. The significant dollar value points to a large-scale operation or a critical service area. 6. The contract's completion date in 2009 suggests it is a historical award, useful for trend analysis.

Value Assessment

Rating: fair

The contract's total value of approximately $1.9 billion over its duration represents a substantial investment in healthcare services. Benchmarking this value is challenging without specific service details and comparable contracts from the same period. However, given the scale and the long duration, the per-year cost appears to be in the hundreds of millions, which is typical for large-scale military healthcare contracts. The firm fixed price structure suggests an attempt to control costs, but the overall value needs to be assessed against the quality and scope of services delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. This suggests a robust bidding process designed to solicit the best possible offers. The presence of two bids (no: 2) is noted, which, while indicating competition, might be on the lower side for a contract of this magnitude and duration. A higher number of bidders typically leads to more competitive pricing and a wider range of innovative solutions.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and improve service quality, ensuring the government receives good value for its expenditure.

Public Impact

Beneficiaries include military personnel and potentially their dependents who receive healthcare services under this contract. Services delivered encompass a broad range of medical care, likely including primary care, specialty services, and possibly medical readiness support. The geographic impact is likely concentrated around military installations where Sierra Military Health Services operates, potentially in Nevada (SN: NEVADA) given the 'NV' designation. Workforce implications include the employment of medical professionals, administrative staff, and support personnel by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) for a contract of this size could indicate potential barriers to entry or a concentrated market.
The long contract duration (3348 days) might lead to challenges in adapting to evolving healthcare needs or technologies over time.
Lack of specific details on performance metrics makes it difficult to assess the contractor's track record and the effectiveness of services provided.

Positive Signals

Awarded through full and open competition, suggesting a fair and transparent procurement process.
Firm Fixed Price contract type helps in budget predictability and cost control for the government.
The significant investment indicates a commitment to providing essential healthcare services to military members.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on providing medical services to a government entity. The market for healthcare services, particularly for the military, is substantial, with numerous large and small companies vying for these contracts. This specific award represents a significant portion of spending within a niche but critical segment of the defense healthcare market. Comparable spending benchmarks would involve analyzing other large-scale military healthcare support contracts awarded around the same period.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem through this specific contract might be limited unless subcontracting opportunities were mandated or voluntarily pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the awarding agency, the Department of Defense through Tricare Management Activity. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract award databases, though detailed operational oversight specifics are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

TRICARE
Military Health System
Defense Health Agency Contracts
Federal Healthcare Procurement

Risk Flags

Long contract duration may limit adaptability to evolving healthcare needs.
Limited number of bidders could indicate potential market concentration or barriers to entry.
Lack of detailed performance data makes objective assessment of value difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.90 billion to SIERRA MILITARY HEALTH SERVICES LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is SIERRA MILITARY HEALTH SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Tricare Management Activity).

What is the total obligated amount?

The obligated amount is $1.90 billion.

What is the period of performance?

Start: 1999-12-07. End: 2009-02-05.

What was the specific scope of healthcare services provided under this contract?

The provided data does not detail the specific scope of healthcare services. However, given the context of 'Sierra Military Health Services LLC' and the 'Department of Defense' as the agency, it is highly probable that the services included a comprehensive range of medical support for military personnel and potentially their families. This could encompass primary care, specialty medical and surgical services, diagnostic imaging, laboratory services, pharmacy support, and potentially health readiness programs. The contract's substantial value and long duration suggest it covered a broad spectrum of healthcare needs, possibly at multiple military installations or within a specific region.

How did the pricing of this contract compare to similar healthcare contracts awarded around the same time?

Direct comparison of pricing is difficult without access to detailed service line items and performance metrics for this specific contract, as well as data from comparable contracts. However, the contract was awarded under a Firm Fixed Price (FFP) structure, which aims to provide cost certainty for the government by shifting cost overrun risks to the contractor. The total award value of approximately $1.9 billion over nearly a decade indicates a significant annual expenditure. To benchmark effectively, one would need to analyze the cost per patient, cost per procedure, or cost per service unit against other TRICARE contracts or similar large-scale healthcare service agreements awarded by the DoD or other federal agencies during the late 1990s and early 2000s.

What were the primary risks associated with this contract, and how were they managed?

Key risks for a contract of this nature and duration include potential cost overruns (mitigated by FFP), contractor performance issues (requiring robust oversight and performance metrics), changes in healthcare needs or technology (requiring contract flexibility or modifications), and potential disruptions to service delivery. The management of these risks would have been addressed through the contract's terms and conditions, including defined service level agreements, reporting requirements, and potential penalties for non-performance. The limited number of bidders (2) might also suggest a risk of reduced competition impacting long-term value or innovation.

What was the historical spending pattern for this type of healthcare service by the Department of Defense prior to this award?

The data provided does not include historical spending patterns prior to this specific award. However, the Department of Defense has consistently been a major provider and purchaser of healthcare services for its personnel through the Military Health System (MHS). Awards like this one, totaling nearly $2 billion over a decade, reflect a sustained and significant investment in ensuring the health and readiness of the armed forces. Understanding historical spending would involve analyzing previous contracts for similar services, potentially from different contractors or through different procurement mechanisms, to identify trends in cost, scope, and duration of healthcare support.

What was the contractor's track record or experience prior to being awarded this significant contract?

The provided data does not include information on Sierra Military Health Services LLC's track record or experience prior to this award. To assess their capabilities, one would need to research their past performance on other government contracts, particularly those related to healthcare services, and evaluate client feedback or past performance ratings. Given the scale of this $1.9 billion contract, it implies that the contractor either had substantial prior experience and a proven track record, or that the procurement process allowed for new entrants with strong proposals and financial backing.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 111 MARKET PL STE 410, BALTIMORE, MD, 90

Business Categories: Category Business, Not Designated a Small Business

Timeline