VA awards $599M contract to Optum Public Sector Solutions for health and medical insurance carrier services

Contract Overview

Contract Amount: $598,848,364 ($598.8M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-10-01

End Date: 2020-09-30

Contract Duration: 365 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT R2

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $598.8 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT R2 Key points: 1. Contract value represents significant investment in healthcare services for veterans. 2. Full and open competition suggests a potentially competitive bidding process. 3. Fixed-price contract type may offer cost certainty but could limit flexibility. 4. Contract duration of one year indicates a need for ongoing or recurring services. 5. The awardee is a major player in the government contracting space for health IT. 6. This contract falls within the broader category of health insurance carriers.

Value Assessment

Rating: good

The contract value of $599 million for a one-year period is substantial, reflecting the scale of services required by the VA. Benchmarking against similar large-scale health insurance carrier contracts within the federal government is challenging without more specific service details. However, the firm fixed-price nature suggests an expectation of defined costs. Further analysis would require comparing the specific deliverables and unit costs to industry standards and other VA contracts for comparable services to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, potentially leading to better pricing and service offerings for the government. The number of bidders is not specified, but the use of full and open competition suggests a robust process was intended.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a wide range of potential providers, driving down costs and improving service quality.

Public Impact

Veterans will benefit from the health and medical insurance carrier services provided under this contract. The services delivered are expected to support the VA's mission of providing healthcare to its beneficiaries. The geographic impact is likely nationwide, given the VA's extensive network of facilities and beneficiaries. This contract supports jobs within the healthcare administration and insurance sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if not managed tightly due to the broad nature of insurance carrier services.
Reliance on a single large contractor could create vendor lock-in if not carefully managed.
Ensuring consistent quality of service across all beneficiaries requires robust oversight.

Positive Signals

Award to a known entity with experience in public sector health solutions.
Firm fixed-price contract provides cost predictability.
Full and open competition suggests a commitment to market-driven pricing.

Sector Analysis

This contract falls within the Health Care sector, specifically focusing on health and medical insurance carriers. This is a critical area for the Department of Veterans Affairs, which manages one of the largest healthcare systems in the nation. The market for health insurance carriers is highly competitive, with numerous private and public entities offering a wide range of services. The VA's spending in this area is substantial, reflecting the ongoing need to provide comprehensive healthcare coverage to its veteran population.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. Therefore, direct subcontracting opportunities for small businesses would depend on the prime contractor's subcontracting plan, which is not detailed here. Without specific set-aside provisions, the direct impact on the small business ecosystem is likely limited unless the prime contractor actively engages small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. Accountability measures would be defined within the contract's terms and conditions, including performance standards and reporting requirements. Transparency is facilitated through contract award databases, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA Health Care Services
Federal Health Insurance Programs
Medical Supplies and Services Contracts
TRICARE Contracts

Risk Flags

Potential for vendor lock-in
Data security and privacy concerns
Performance variability risk
Scope management challenges

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $598.8 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT R2

Who is the contractor on this award?

The obligated recipient is OPTUM PUBLIC SECTOR SOLUTIONS, 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 $598.8 million.

What is the period of performance?

Start: 2019-10-01. End: 2020-09-30.

What specific health and medical insurance carrier services are being provided under this contract?

The provided data identifies the contract as being for 'Direct Health and Medical Insurance Carriers' (NAICS 524114). However, it does not detail the specific services. These could range from claims processing, network management, eligibility verification, to potentially offering specific health insurance plans or administrative services for existing VA healthcare programs. Understanding the precise scope is crucial for a comprehensive value assessment, as the nature of the services significantly impacts cost drivers and performance expectations. Without this detail, it's difficult to benchmark against specific service categories.

How does the $599 million award compare to previous VA spending on similar health and medical insurance carrier services?

To compare this $599 million award to previous VA spending, one would need to access historical contract data for similar services. The provided data indicates this is a single delivery order with an end date of September 30, 2020, suggesting it might be part of a larger contract vehicle or a standalone award for a specific period. Analyzing prior years' spending on NAICS code 524114 by the VA, or specifically on health insurance carrier services, would reveal trends. A higher or lower award compared to historical averages could indicate changes in program scope, market pricing, or the number of beneficiaries served. Without that historical context, the $599 million figure stands as a significant, but isolated, investment.

What is the track record of OPTUM PUBLIC SECTOR SOLUTIONS, INC. in delivering similar federal health contracts?

Optum Public Sector Solutions, Inc. is a well-established entity with a significant presence in the federal health IT and services market. They have a history of working with various government agencies, including the Department of Veterans Affairs and the Department of Defense, on contracts related to health information technology, data analytics, and administrative services. Their experience often includes managing large-scale healthcare data and supporting government health programs. A detailed review of their past performance on similar contracts, including client feedback, past performance evaluations, and any documented issues or successes, would be necessary to fully assess their capability and reliability for this specific $599 million award.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. Typically, for health and medical insurance carrier services, KPIs would focus on areas such as claims processing timeliness, accuracy rates, member satisfaction scores, network adequacy, and compliance with regulatory requirements (e.g., HIPAA). The effectiveness of the contract is measured by the contractor's ability to meet or exceed these predefined metrics. The Department of Veterans Affairs would establish these KPIs within the contract's Performance Work Statement (PWS) to ensure the services meet the needs of veterans and align with VA's healthcare objectives.

Are there any identified risks associated with this contract, and how are they being mitigated?

Potential risks associated with a contract of this magnitude and nature include data security and privacy breaches, service delivery disruptions, cost overruns (though mitigated by fixed-price), and contractor performance issues. Mitigation strategies would typically involve robust security protocols, contingency planning, regular performance reviews, clear communication channels between the VA and Optum, and defined remedies for non-performance. The firm fixed-price structure itself acts as a risk mitigation tool against cost escalation for the government. Specific risk assessments and mitigation plans are usually detailed in the contract's documentation and oversight processes.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 800 KING FARM BLVD STE 500, ROCKVILLE, MD, 20850

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

Financial Breakdown

Contract Ceiling: $598,848,364

Exercised Options: $598,848,364

Current Obligation: $598,848,364

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0005

IDV Type: IDC

Timeline