VA awards $36.3M to Milliman, Inc. for actuarial consulting, raising questions on value and competition

Contract Overview

Contract Amount: $36,274,218 ($36.3M)

Contractor: Milliman, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2014-06-01

End Date: 2019-09-30

Contract Duration: 1,947 days

Daily Burn Rate: $18.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: Other

Official Description: IGF::OT::IGF ACTUARIAL CONSULTING SUPPORT SERVICES

Place of Performance

Location: SEATTLE, KING County, WASHINGTON, 98101

State: Washington Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $36.3 million to MILLIMAN, INC. for work described as: IGF::OT::IGF ACTUARIAL CONSULTING SUPPORT SERVICES Key points: 1. Contract value appears high relative to the number of bids received, suggesting potential overpayment. 2. Limited competition may have inflated pricing and reduced the incentive for cost-efficiency. 3. Long contract duration (over 5 years) increases risk of cost overruns and performance degradation. 4. Performance context is unclear, making it difficult to assess the true value delivered. 5. Sector positioning within 'All Other Insurance Related Activities' is broad, lacking specific focus. 6. The contract type (Labor Hours) can lead to cost uncertainty if not managed tightly.

Value Assessment

Rating: questionable

The $36.3 million award to Milliman, Inc. for actuarial consulting services over a five-year period warrants scrutiny. While actuarial services are critical for insurance programs, the lack of detailed performance metrics and a single bid in a full and open competition raises concerns about value for money. Benchmarking against similar contracts is difficult without more specific service details, but the per-contract value is substantial. The 'Labor Hours' contract type, without a ceiling, adds to the potential for cost escalation if not rigorously managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which theoretically allows any interested contractor to bid. However, only one bid was received. This situation is concerning as it suggests that either the market for these specific actuarial services is extremely limited, or the solicitation requirements were structured in a way that deterred other potential bidders. A single bid in a full and open competition significantly weakens price discovery and negotiation leverage for the government.

Taxpayer Impact: A single bid limits the government's ability to secure the most competitive pricing, potentially leading to taxpayers paying more than necessary for these actuarial services.

Public Impact

Veterans Affairs (VA) benefits from actuarial expertise to manage its insurance programs. Services provided include actuarial analysis and consulting, crucial for financial planning and risk assessment. The geographic impact is national, supporting VA operations across the country. Workforce implications are minimal, as this is a consulting service rather than direct employment generation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition despite 'full and open' designation.
Potential for inflated pricing due to single bid.
Contract type (Labor Hours) can lead to cost uncertainty.
Long contract duration increases risk.
Limited transparency on specific deliverables and performance metrics.

Positive Signals

Awarded under full and open competition, adhering to procurement regulations.
Contractor (Milliman, Inc.) is a known entity in actuarial services.
Services are essential for managing complex insurance programs.

Sector Analysis

The actuarial consulting services fall under the broad category of 'All Other Insurance Related Activities.' This sector involves specialized financial analysis and risk management for insurance operations. The market size for highly specialized actuarial consulting can be concentrated among a few large firms. The VA's spending in this area is critical for the solvency and effective management of its various insurance programs, such as life insurance for veterans.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The nature of specialized actuarial consulting often favors large, established firms with extensive expertise and resources, potentially limiting the direct impact on the small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting officers and program managers. Accountability measures would be tied to the contract's performance clauses and deliverables. Transparency is moderate, with basic contract award data available, but detailed performance reports and cost breakdowns may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA Life Insurance Programs
Federal Insurance Administration
Government Actuarial Services
Risk Management Consulting

Risk Flags

Lack of competition
Potential for cost overruns
Limited performance transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $36.3 million to MILLIMAN, INC.. IGF::OT::IGF ACTUARIAL CONSULTING SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is MILLIMAN, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $36.3 million.

What is the period of performance?

Start: 2014-06-01. End: 2019-09-30.

What specific actuarial services were provided under this contract, and how were they measured for success?

The contract data indicates 'ACTUARIAL CONSULTING SUPPORT SERVICES' but lacks specific details on the exact services rendered. Success metrics are not publicly available, making it difficult to assess performance. Typically, actuarial services involve analyzing financial data, projecting future liabilities, assessing risk, and providing recommendations for insurance program management. Without defined deliverables and performance standards, evaluating the effectiveness and value of Milliman, Inc.'s contribution is challenging. The VA's internal program managers would be responsible for monitoring performance against contract requirements, but these details are not part of the public record for this award.

How does the $36.3 million contract value compare to similar actuarial consulting contracts awarded by the VA or other federal agencies?

Directly comparing the $36.3 million value is difficult without knowing the precise scope and duration of services. However, for a single contract spanning approximately five years, this represents a significant investment. Actuarial consulting is a specialized field, and major contracts can run into tens of millions of dollars, especially for large federal agencies managing complex insurance portfolios like the VA. Benchmarking requires identifying contracts with similar service descriptions, contract types (e.g., labor hour vs. fixed price), and agency size. The fact that this was the sole bid under full and open competition suggests either a unique service offering or a market that is not highly competitive, potentially inflating the cost compared to a more competitive scenario.

What are the risks associated with a 'Labor Hours' contract type for actuarial services, and how were they mitigated?

The 'Labor Hours' contract type, as used here, carries inherent risks of cost escalation if not managed diligently. Unlike fixed-price contracts, the total cost is determined by the actual hours worked multiplied by the agreed-upon labor rates. This can lead to cost overruns if the project scope expands, timelines are extended, or if the contractor's efficiency is lower than anticipated. Mitigation strategies typically involve robust oversight by the contracting officer, clear definition and monitoring of labor categories and hours, regular progress reviews, and potentially incorporating cost controls or ceilings within the contract terms. The absence of a stated ceiling on this contract increases the risk for the government, making diligent management crucial.

Given only one bid was received, what does this imply about the market for actuarial consulting services relevant to the VA?

Receiving only one bid under a 'full and open competition' solicitation suggests a highly specialized or limited market for the specific actuarial services required by the VA. This could be due to several factors: the technical expertise needed is rare, the contract requirements were overly restrictive, the contract duration or value was not attractive to a wider range of potential bidders, or incumbent contractors have a significant advantage. For taxpayers, this lack of competition means the government likely had less leverage to negotiate the lowest possible price, potentially resulting in higher costs than if multiple firms had competed. It also raises questions about whether the VA adequately solicited interest from the market.

What is Milliman, Inc.'s track record with federal contracts, particularly with the Department of Veterans Affairs?

Milliman, Inc. is a well-established global provider of actuarial and data analytics services. A review of federal procurement data indicates that Milliman has secured numerous contracts across various federal agencies, including the Department of Veterans Affairs. Their track record generally reflects experience in providing actuarial support for insurance and retirement programs. While specific performance details for individual contracts are often not public, their continued awards suggest a satisfactory performance history with the government. However, the context of each award, including competition levels and pricing, varies and requires individual assessment.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › All Other Insurance Related Activities

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: VA119-14-R-0033

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 1301 5TH AVE STE 3800, SEATTLE, WA, 98101

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

Financial Breakdown

Contract Ceiling: $40,605,087

Exercised Options: $36,674,218

Current Obligation: $36,274,218

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline