Pension Benefit Guaranty Corporation awards $22.8M actuarial valuation contract to Milliman, Inc

Contract Overview

Contract Amount: $22,755,377 ($22.8M)

Contractor: Milliman, Inc.

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2005-09-16

End Date: 2009-09-25

Contract Duration: 1,470 days

Daily Burn Rate: $15.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: LABOR HOURS

Sector: Other

Official Description: ACTUARIAL VALUATION

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20005

State: District of Columbia Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $22.8 million to MILLIMAN, INC. for work described as: ACTUARIAL VALUATION Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of 1470 days (approximately 4 years) indicates a long-term need for these services. 3. The contract was awarded by the Pension Benefit Guaranty Corporation (PBGC), a federal agency responsible for administering the nation's defined benefit pension insurance program. 4. The North American Industry Classification System (NAICS) code 541612 points to Human Resources Consulting Services, a specialized field. 5. The contract value of $22.8 million suggests a significant investment in actuarial services. 6. The contract was awarded under the 'Labor Hours' contract type, meaning payment is based on the time spent by personnel.

Value Assessment

Rating: good

The contract value of $22.8 million for actuarial valuation services over approximately four years appears reasonable given the specialized nature of the work. Benchmarking against similar large-scale actuarial contracts is difficult without more specific service details, but the PBGC's mission necessitates robust actuarial analysis. The award to Milliman, Inc., a well-established firm in this sector, suggests a degree of confidence in their ability to deliver value. Further analysis would require comparing the specific deliverables and pricing structure to other government or private sector contracts for similar actuarial services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of two bids (no: 2) suggests a moderate level of competition for this specialized service. While two bidders participated, the specific details of the bidding process, including the evaluation criteria and the number of proposals received, would provide a clearer picture of the competitive landscape. A higher number of bidders typically leads to more competitive pricing and a wider range of innovative solutions.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve service quality. The presence of multiple bidders suggests that taxpayer funds are being used efficiently, as the agency likely secured competitive pricing.

Public Impact

The primary beneficiary of this contract is the Pension Benefit Guaranty Corporation (PBGC), which relies on accurate actuarial valuations to manage its insurance program. The services delivered are critical for assessing the financial health of defined benefit pension plans and estimating potential liabilities. The geographic impact is national, as the PBGC oversees pension plans across the United States. The contract supports specialized actuarial and consulting roles within the workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) may not have yielded the absolute lowest price.
The 'Labor Hours' contract type can sometimes lead to cost overruns if not closely monitored.
Dependence on a single contractor for critical actuarial services could pose a risk if performance issues arise.

Positive Signals

Awarded through full and open competition, ensuring a fair process.
Contractor (Milliman, Inc.) is a recognized expert in actuarial services.
Long contract duration suggests a stable, ongoing need and potential for established working relationship.

Sector Analysis

Actuarial services fall within the broader professional, scientific, and technical services sector, specifically human resources consulting. This sector is characterized by specialized expertise and often involves long-term engagements. The market for actuarial services is relatively concentrated, with a few large firms dominating the landscape, particularly for large-scale government contracts. The PBGC's need for these services is driven by its mandate to protect defined benefit pension plans, making this a critical but niche area of government spending.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). Therefore, the primary contractor is likely a large business. There is no explicit information provided regarding subcontracting plans for small businesses. The absence of set-asides means that opportunities for small businesses to participate in this specific contract are limited unless they are part of a larger subcontracting effort by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Pension Benefit Guaranty Corporation's internal procurement and program management offices. The contract's performance would be monitored against the defined scope of work and deliverables. Transparency is generally maintained through federal procurement databases like FPDS-NG (where this data originates). Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Pension Plan Administration
Retirement Benefits
Financial Risk Management
Government Consulting Services

Risk Flags

Limited Competition
Labor Hour Contract Type

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $22.8 million to MILLIMAN, INC.. ACTUARIAL VALUATION

Who is the contractor on this award?

The obligated recipient is MILLIMAN, INC..

Which agency awarded this contract?

Awarding agency: Pension Benefit Guaranty Corporation (Pension Benefit Guaranty Corporation).

What is the total obligated amount?

The obligated amount is $22.8 million.

What is the period of performance?

Start: 2005-09-16. End: 2009-09-25.

What is Milliman, Inc.'s track record with government contracts, particularly with the PBGC?

Milliman, Inc. has a history of securing government contracts, often in specialized areas like actuarial services, risk management, and employee benefits consulting. While specific details on their performance with the PBGC for this particular contract (ID: DCA) are not fully elaborated in the provided data, their repeated engagement in such contracts suggests a satisfactory performance history and expertise recognized by federal agencies. A deeper dive into contract performance reports and past performance evaluations within government databases would offer a more comprehensive understanding of their track record. Generally, firms like Milliman are selected for their established reputation and demonstrated capabilities in complex financial and actuarial analyses required by agencies like the PBGC.

How does the $22.8 million contract value compare to similar actuarial valuation services procured by the government?

The $22.8 million contract value for actuarial valuation services over approximately four years is substantial, reflecting the complexity and critical nature of the PBGC's needs. Direct comparisons are challenging without granular data on the scope of work for other contracts. However, large federal agencies with significant pension liabilities, such as the Department of Defense or the Office of Personnel Management, may engage in contracts of similar magnitude for actuarial support. The value is likely influenced by the number of plans assessed, the complexity of plan structures, and the required frequency and depth of analysis. Milliman's position as a leading actuarial firm further supports the justification for this investment, assuming the pricing is competitive within the specialized market.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential inaccuracies in actuarial valuations, which could lead to misinformed financial decisions by the PBGC, and contractor performance issues. Mitigation strategies likely involve rigorous review processes by the PBGC, clear performance metrics within the contract, and potentially phased deliverables with interim reviews. The 'Labor Hours' contract type also introduces a risk of cost escalation if not managed effectively; this is typically mitigated through detailed reporting requirements and budget oversight. The PBGC's selection of an established firm like Milliman suggests a calculated approach to minimizing performance risk, relying on their expertise and established methodologies.

How effective is the Pension Benefit Guaranty Corporation in leveraging actuarial services to fulfill its mission?

The PBGC's consistent engagement with specialized actuarial firms like Milliman underscores the critical role these services play in its mission. Accurate actuarial valuations are fundamental to the PBGC's ability to assess the solvency of defined benefit pension plans, estimate potential insurance claims, and manage its own financial obligations. The effectiveness is demonstrated by the agency's continued operation and its capacity to provide pension insurance. The quality of the actuarial work directly impacts the PBGC's risk assessment capabilities and its strategic planning, making this a vital component of its operational effectiveness.

What are the historical spending patterns for actuarial valuation services by the PBGC or similar agencies?

Historical spending patterns for actuarial valuation services by the PBGC and similar agencies typically show consistent, long-term investments due to the ongoing nature of pension plan oversight. Agencies like the PBGC require continuous actuarial analysis to monitor plan health and anticipate future liabilities. Spending levels can fluctuate based on economic conditions affecting pension funds, changes in regulatory requirements, and the number or complexity of plans under the agency's purview. While specific historical dollar amounts for the PBGC are not detailed here, the recurring need for such specialized expertise suggests a stable, albeit potentially variable, budget allocation for these services over time.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Human Resources Consulting Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: PBGC01-RP-05-0007

Offers Received: 2

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 1921 GALLOWS ROAD, VIENNA, VA, 11

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $36,273,912

Exercised Options: $36,273,912

Current Obligation: $22,755,377

Timeline