Army awarded $115M for administrative support services to Health Net, Inc. over five years

Contract Overview

Contract Amount: $25,448,144 ($25.4M)

Contractor: Health NET, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-04-01

End Date: 2010-09-30

Contract Duration: 2,008 days

Daily Burn Rate: $12.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 200507!500363!2100!W81K04!U.S. ARMY MEDICAL COMMAND !W81K0405D7001 !A!N! !Y!0001 ! !20050401!20100331!115205437!115205437!798330908!N!HEALTH NET, INC !21650 OXNARD STREET !WOODLAND HILLS !CA!91367!70000!053!53!TACOMA !PIERCE !WASHINGTON!+000001261278!N!N!000000000000!R699!OTHER ADMINISTRATIVE SUPPORT SERVICES !S1 !SERVICES !000 !* !561110!E! !5!B!M! !A! !20200930!B! ! !A! !A!U!J!2!010!B! !C!N!Z! ! !Y!C!N! ! ! !A!Z!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: TACOMA, PIERCE County, WASHINGTON, 98431

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $25.4 million to HEALTH NET, INC. for work described as: 200507!500363!2100!W81K04!U.S. ARMY MEDICAL COMMAND !W81K0405D7001 !A!N! !Y!0001 ! !20050401!20100331!115205437!115205437!798330908!N!HEALTH NET, INC !21650 OXNARD STREET !WOODLAND HILLS !CA!91367!70000!053!53!TACOMA !PIER… Key points: 1. The contract's value of $115.2 million over five years suggests a significant investment in administrative support. 2. Full and open competition was utilized, indicating a potentially competitive bidding process. 3. The contract was awarded to a single entity, Health Net, Inc., raising questions about the breadth of competition. 4. The duration of the contract (over five years) implies a need for stable, long-term administrative services. 5. The services provided fall under 'Other Administrative Support Services,' a broad category. 6. The contract's performance period spans from April 2005 to September 2010, providing historical context.

Value Assessment

Rating: fair

The contract value of $115.2 million over approximately five years averages to about $23 million annually. Benchmarking this against similar contracts for 'Other Administrative Support Services' would be necessary for a precise value-for-money assessment. However, the scale of the award suggests a substantial requirement. Without specific details on the scope of services, it's challenging to definitively assess pricing against market rates. The fixed-price nature of the contract provides some cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' suggesting that all responsible sources were permitted to submit bids. The data indicates there were 10 bids received. This level of competition is generally positive for price discovery, as multiple bidders are incentivized to offer competitive pricing to win the contract. The presence of 10 bidders implies a healthy interest in this type of government service contract.

Taxpayer Impact: A competitive bidding process with multiple offers generally leads to better pricing for taxpayers, as contractors vie to provide services at the most attractive rates.

Public Impact

Military personnel and civilian staff within the U.S. Army Medical Command likely benefited from enhanced administrative support. The contract delivered essential administrative services, contributing to the operational efficiency of the command. The geographic impact is primarily within Washington state, where the contractor is located, and potentially wherever the Army Medical Command operates. Workforce implications include the employment of individuals by Health Net, Inc. to fulfill the contract's requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the long-term nature of the contract.
Risk of scope creep if the definition of 'administrative support services' is not tightly managed.
Dependence on a single contractor for critical administrative functions could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The fixed-price contract type offers cost predictability for the government.
A significant number of bids (10) indicates market interest and potential for competitive pricing.

Sector Analysis

The 'Other Administrative Support Services' category (NAICS code 561110) encompasses a wide range of services that support the day-to-day operations of businesses and government agencies. This sector is characterized by a mix of large and small providers. Government spending in this area is substantial, reflecting the need for efficient operational support across various departments. Comparable spending benchmarks would typically involve analyzing other large-scale administrative support contracts awarded by federal agencies.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting plans related to small businesses. The contractor, Health Net, Inc., is a large entity. Therefore, the direct impact on the small business ecosystem through this specific award appears limited, unless Health Net, Inc. engaged small businesses as subcontractors, which is not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the U.S. Army Medical Command, with specific contracting officers and program managers responsible for monitoring performance and ensuring compliance. Accountability measures would be embedded in the contract terms, including performance standards and reporting requirements. Transparency is generally facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

General Services Administration (GSA) Schedules
Department of Defense Administrative Support Contracts
Healthcare Administration Services
Professional and Management Support Services

Risk Flags

Long contract duration may increase risk of obsolescence or changing needs.
Broad service category could lead to ambiguity in scope and performance expectations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.4 million to HEALTH NET, INC.. 200507!500363!2100!W81K04!U.S. ARMY MEDICAL COMMAND !W81K0405D7001 !A!N! !Y!0001 ! !20050401!20100331!115205437!115205437!798330908!N!HEALTH NET, INC !21650 OXNARD STREET !WOODLAND HILLS !CA!91367!70000!053!53!TACOMA !PIERCE !WASHINGTON!+000001261278!N!N!000000000000!R699!OTHER ADMINISTRATIVE SUPPORT SERVICES !S1 !SERVICES !000 !* !561110!E! !5!B!M! !A! !202

Who is the contractor on this award?

The obligated recipient is HEALTH NET, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $25.4 million.

What is the period of performance?

Start: 2005-04-01. End: 2010-09-30.

What specific types of administrative support services were included in this contract?

The contract falls under NAICS code 561110, 'Office Administrative Services.' This broad category typically includes services such as facilities management, mail services, document preparation, scheduling, general office support, and potentially human resources or financial administrative tasks. Without the detailed statement of work (SOW) for contract W81K0405D7001, the precise scope of services provided by Health Net, Inc. remains unspecified. However, given the award to the U.S. Army Medical Command, these services were likely tailored to support medical and administrative operations within that organization, potentially including patient administration support, medical records management, or logistical support for medical facilities.

How does the $115.2 million contract value compare to other administrative support contracts awarded by the Department of Defense?

The $115.2 million awarded to Health Net, Inc. over approximately five years represents an average annual value of roughly $23 million. This is a substantial sum, indicating a significant requirement for administrative support. To benchmark this effectively, one would need to compare it against other large-scale administrative support contracts awarded by the Department of Defense (DoD) or other federal agencies for similar services and durations. Contracts for comprehensive administrative support can range widely, from a few million dollars for smaller agencies or specific functions to hundreds of millions for large, multi-year, enterprise-wide support. This particular award appears to be in the mid-to-high range for a single, large administrative support contract.

What were the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for contract W81K0405D7001. Typically, such details are outlined in the contract's Statement of Work (SOW) and are crucial for measuring the contractor's performance. For administrative support services, common KPIs might include response times for service requests, accuracy rates in document processing, uptime for administrative systems, adherence to deadlines, and customer satisfaction scores. The effectiveness of the contract's value and the quality of services delivered would be directly tied to the rigor and monitoring of these performance metrics.

What is the track record of Health Net, Inc. in performing similar government contracts?

Health Net, Inc. has a history of performing government contracts, particularly within the healthcare sector, often related to providing health insurance and managed care services to military personnel and veterans (e.g., TRICARE). While this specific contract (W81K0405D7001) was for administrative support services, Health Net's broader experience with government healthcare programs suggests familiarity with federal procurement processes and compliance requirements. A deeper analysis would involve reviewing their performance history on other administrative support contracts, including any past performance evaluations, awards, or disputes, to fully assess their track record in this specific service area.

Were there any notable risks or challenges identified during the performance of this contract?

The provided summary data does not explicitly detail any specific risks or challenges encountered during the performance of contract W81K0405D7001. However, contracts of this duration and value, especially those involving broad administrative support, often face potential risks such as scope creep, changes in government requirements, contractor performance issues, or budget fluctuations. The fact that it was a firm-fixed-price contract suggests that the contractor assumed most of the cost risk. Without access to contract performance reports or any associated modifications or disputes, it's difficult to identify specific challenges that may have arisen.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Office Administrative Services › Office Administrative Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 21650 OXNARD STREET, WOODLAND HILLS, CA, 32

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $24,552,799

Exercised Options: $41,628,214

Current Obligation: $25,448,144

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W81K0405D7001

IDV Type: IDC

Timeline