VA's $114M PCCC Contract Renewal with Health Net Federal Services Faces Scrutiny

Contract Overview

Contract Amount: $114,154,949 ($114.2M)

Contractor: Health NET Federal Services, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2017-10-01

End Date: 2021-03-31

Contract Duration: 1,277 days

Daily Burn Rate: $89.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Healthcare

Official Description: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). OY4 RENEWAL

Place of Performance

Location: DENVER, DENVER County, COLORADO, 80209

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $114.2 million to HEALTH NET FEDERAL SERVICES, LLC for work described as: IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). OY4 RENEWAL Key points: 1. The contract, valued at $114.15M, is a renewal for patient-centered community care. 2. Health Net Federal Services, LLC is the sole awardee, raising questions about competition. 3. The fixed-price incentive contract type suggests efforts to control costs, but effectiveness is unclear. 4. The sector is healthcare services, specifically physician offices, with a significant dollar value.

Value Assessment

Rating: fair

The contract's value of $114.15M over its period is substantial. Benchmarking against similar physician office contracts is difficult without more granular data on services provided. The fixed-price incentive structure aims for cost control, but the overall value proposition needs further assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition. However, this specific award is a renewal (delivery order), implying the initial competition may have occurred earlier. The impact on price discovery depends on the rigor of the initial bidding process and subsequent negotiations.

Taxpayer Impact: Taxpayer funds are being used for healthcare services for veterans. The efficiency and effectiveness of this contract directly impact the value received for this significant expenditure.

Public Impact

Veterans receive community-based healthcare services, potentially improving access and convenience. The significant contract value indicates a substantial commitment of federal resources to healthcare. The renewal suggests a continued need for these services, but also raises questions about long-term strategy and cost-effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics for this renewal.
Potential for cost overruns with fixed-price incentive contracts if not managed closely.
Limited transparency on the competitive landscape for this specific delivery order.

Positive Signals

Awarded under full and open competition initially.
Contract aims to provide essential healthcare services to veterans.
Renewal indicates satisfaction with the service provider to some extent.

Sector Analysis

This contract falls within the healthcare sector, specifically physician office services. The $114M value is significant for this sub-sector, indicating a large-scale program. Benchmarking requires comparison with similar large-scale community care contracts for veteran populations.

Small Business Impact

There is no indication that small businesses were involved in this specific delivery order. The prime contractor is Health Net Federal Services, LLC, a large entity. Further analysis would be needed to determine if subcontracting opportunities were made available to small businesses.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight. The Inspector General's office (IGF) is mentioned, suggesting potential for audits and reviews. Accountability relies on performance metrics and adherence to contract terms.

Related Government Programs

Offices of Physicians (except Mental Health Specialists)
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Potential for lack of true competition in renewals.
Cost control effectiveness of fixed-price incentive contracts.
Transparency of performance metrics and value for money.
Dependence on a single contractor for a significant service area.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $114.2 million to HEALTH NET FEDERAL SERVICES, LLC. IGF::CT::IGF PATIENT CENTERED COMMUNITY CARE (PCCC). OY4 RENEWAL

Who is the contractor on this award?

The obligated recipient is HEALTH NET FEDERAL SERVICES, LLC.

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 $114.2 million.

What is the period of performance?

Start: 2017-10-01. End: 2021-03-31.

What specific performance improvements or cost savings were realized during the previous contract period that justified this renewal at $114M?

The provided data does not detail performance metrics or cost savings from the prior period. A thorough review would require access to performance reports, quality assessments, and financial data from the initial contract duration. Understanding these elements is crucial to assess if the renewal represents continued value for taxpayer investment.

How does the pricing structure of this fixed-price incentive contract compare to market rates for similar community care services, and what mechanisms are in place to prevent contractor overcharging?

The fixed-price incentive structure aims to share risk and reward between the government and contractor. However, without specific benchmarks for comparable services and detailed cost breakdowns, it's difficult to assess true market alignment. Robust oversight and clear incentive targets are essential to ensure the government pays a fair price and the contractor is motivated to control costs effectively.

What is the long-term strategy for providing patient-centered community care, and how does this $114M renewal fit into that broader plan to ensure efficient and effective veteran healthcare?

This renewal represents a continuation of existing services rather than a strategic shift. The long-term strategy's effectiveness depends on how well these community care contracts integrate with VA's direct care services, adapt to changing veteran needs, and leverage competition over time. Without a clear long-term vision, such renewals risk becoming perpetual without optimization.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centene Corporation (UEI: 809245525)

Address: 2025 AEROJET RD, RANCHO CORDOVA, CA, 95742

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

Financial Breakdown

Contract Ceiling: $114,154,949

Exercised Options: $114,154,949

Current Obligation: $114,154,949

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA79113D0053

IDV Type: IDC

Timeline