Railroad Retirement Board Awards $181.8M Contract to Palmetto GBA for Medicare Administrative Services
Contract Overview
Contract Amount: $181,762,745 ($181.8M)
Contractor: Palmetto GBA, LLC
Awarding Agency: Railroad Retirement Board
Start Date: 2012-09-28
End Date: 2023-03-31
Contract Duration: 3,836 days
Daily Burn Rate: $47.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: IGF::OT::IGF FUNDS FOR SPECIALTY MEDICARE ADMINISTRATIVE CONTRACTOR (SMAC) TO PROVIDE SPECIFIED HEALTH INSURANCE BENEFIT ADMINISTRATION SERVICES.
Place of Performance
Location: COLUMBIA, RICHLAND County, SOUTH CAROLINA, 29203
Plain-Language Summary
Railroad Retirement Board obligated $181.8 million to PALMETTO GBA, LLC for work described as: IGF::OT::IGF FUNDS FOR SPECIALTY MEDICARE ADMINISTRATIVE CONTRACTOR (SMAC) TO PROVIDE SPECIFIED HEALTH INSURANCE BENEFIT ADMINISTRATION SERVICES. Key points: 1. The contract, valued at $181.8 million, is for Medicare Administrative Contractor (SMAC) services. 2. Palmetto GBA, LLC is the incumbent contractor, suggesting potential for continuity but also a need to assess ongoing value. 3. The contract's duration of over 10 years (3836 days) indicates a significant long-term commitment of taxpayer funds. 4. The 'Administration of Public Health Programs' sector highlights the critical nature of these services for beneficiaries.
Value Assessment
Rating: fair
The contract type is Cost Plus Award Fee, which can incentivize performance but may lead to higher costs if not managed carefully. Benchmarking against similar SMAC contracts is needed to assess if the award fee structure is driving optimal value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the long duration and potential for incumbent advantage warrant scrutiny to ensure competitive pricing was achieved throughout the period.
Taxpayer Impact: The significant value of this contract means that ensuring cost-effectiveness and efficient service delivery is crucial for maximizing taxpayer value.
Public Impact
Ensures continued administration of health insurance benefits for Medicare beneficiaries. Supports the operational efficiency of the Railroad Retirement Board's healthcare programs. Potential impact on beneficiary access to healthcare services if administration is not optimal.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration may limit flexibility and opportunities for cost savings through competition.
- Cost Plus Award Fee structure requires robust oversight to prevent cost overruns.
- Lack of specific small business participation noted.
Positive Signals
- Awarded under full and open competition.
- Incumbent contractor may bring efficiency and expertise.
- Critical service for beneficiary health.
Sector Analysis
This contract falls within the Healthcare sector, specifically public health program administration. Spending benchmarks for similar Medicare Administrative Contractor (SMAC) services are typically high due to the complexity and scale of managing health insurance benefits for a large population.
Small Business Impact
The data indicates that small business participation was not a factor in this award (ss: false, sb: false). Further analysis would be needed to determine if opportunities for small businesses were overlooked or if the nature of the services inherently limits their involvement.
Oversight & Accountability
The long-term nature of this contract necessitates strong oversight from the Railroad Retirement Board to ensure Palmetto GBA, LLC meets performance standards and manages costs effectively. Regular performance reviews and audits are essential for accountability.
Related Government Programs
- Administration of Public Health Programs
- Railroad Retirement Board Contracting
- Railroad Retirement Board Programs
Risk Flags
- Potential for cost overruns due to Cost Plus Award Fee structure.
- Long contract duration may lead to reduced flexibility and missed cost-saving opportunities.
- Lack of explicit small business participation.
- Need for robust oversight to ensure performance and value.
Tags
administration-of-public-health-programs, railroad-retirement-board, sc, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Railroad Retirement Board awarded $181.8 million to PALMETTO GBA, LLC. IGF::OT::IGF FUNDS FOR SPECIALTY MEDICARE ADMINISTRATIVE CONTRACTOR (SMAC) TO PROVIDE SPECIFIED HEALTH INSURANCE BENEFIT ADMINISTRATION SERVICES.
Who is the contractor on this award?
The obligated recipient is PALMETTO GBA, LLC.
Which agency awarded this contract?
Awarding agency: Railroad Retirement Board (Railroad Retirement Board).
What is the total obligated amount?
The obligated amount is $181.8 million.
What is the period of performance?
Start: 2012-09-28. End: 2023-03-31.
How does the cost-plus award fee structure compare to fixed-price contracts for similar SMAC services in terms of overall cost-effectiveness and administrative burden?
Cost-plus award fee contracts offer flexibility and can incentivize high performance by rewarding contractors for exceeding targets. However, they carry a higher risk of cost overruns compared to fixed-price contracts. For SMAC services, the complexity and evolving nature of healthcare regulations might justify the flexibility, but rigorous oversight is paramount to ensure the 'award' component doesn't inflate costs unnecessarily and that the total expenditure remains competitive against fixed-price alternatives.
What are the specific performance metrics and award fee criteria used in this contract, and how are they monitored to ensure optimal value for taxpayer money?
The contract details do not specify the performance metrics or award fee criteria. Effective oversight requires the Railroad Retirement Board to have clearly defined, measurable metrics tied to service quality, timeliness, accuracy, and beneficiary satisfaction. Regular monitoring and transparent reporting of these metrics are crucial to justify award fees and ensure the contractor is delivering value commensurate with the cost, preventing potential waste or inefficiency.
Given the 10+ year duration, what mechanisms are in place to ensure the contract remains relevant and cost-effective as healthcare regulations and technologies evolve?
Long-duration contracts require built-in flexibility and review mechanisms. The Railroad Retirement Board should have provisions for contract modifications to adapt to regulatory changes and technological advancements. Periodic re-evaluations of the contract's scope, pricing, and performance against evolving industry standards are essential. Without such mechanisms, the contract risks becoming outdated and inefficient, failing to provide optimal value over its extended term.
Industry Classification
NAICS: Public Administration › Administration of Human Resource Programs › Administration of Public Health Programs
Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: RRB11R001
Offers Received: 3
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 17 TECHNOLOGY CIR, COLUMBIA, SC, 29203
Business Categories: Category Business, Limited Liability Corporation, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $207,475,293
Exercised Options: $189,614,434
Current Obligation: $181,762,745
Actual Outlays: $34,423,301
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-09-28
Current End Date: 2023-03-31
Potential End Date: 2023-03-31 00:00:00
Last Modified: 2025-09-24
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