VA awards $2.11B contract to TriWest Healthcare Alliance for health services, with a 5-year duration

Contract Overview

Contract Amount: $2,110,778,409 ($2.1B)

Contractor: Triwest Healthcare Alliance Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-07-01

End Date: 2027-03-31

Contract Duration: 1,734 days

Daily Burn Rate: $1.2M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: QUARTER 4

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.11 billion to TRIWEST HEALTHCARE ALLIANCE CORP for work described as: EXPRESS REPORT: QUARTER 4 Key points: 1. Contract value of $2.11 billion over approximately 5 years suggests significant investment in healthcare services. 2. Full and open competition indicates a broad market search, potentially leading to competitive pricing. 3. The contract's duration and value present moderate performance and financial risks. 4. This award positions TriWest Healthcare Alliance as a key provider within the VA's healthcare network. 5. The fixed-price contract type shifts cost overrun risk to the contractor. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The contract value of $2.11 billion over nearly five years is substantial, indicating a significant commitment by the VA. Benchmarking against similar large-scale healthcare service contracts would be necessary for a precise value-for-money assessment. However, the firm fixed-price nature of the contract suggests that the contractor bears the risk of cost overruns, which can be a positive indicator for the government if managed effectively. The pricing structure will be a key factor in determining overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that the VA sought proposals from all responsible sources. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The number of bidders is not specified, but the open competition is a positive sign for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging innovation from a wider pool of potential contractors.

Public Impact

Veterans will benefit from continued access to direct health and medical insurance carrier services. The contract supports the delivery of essential healthcare services across a potentially wide geographic area. This award likely has implications for the healthcare workforce, potentially creating or sustaining jobs within the sector. The services provided are critical for maintaining the health and well-being of the veteran population.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if not managed tightly given the long duration and broad service area.
Reliance on a single large awardee for critical services could pose a risk if performance falters.
The absence of specific small business set-aside information raises concerns about broader economic impact.
Ensuring consistent quality of care across all service locations will be a key challenge.

Positive Signals

Firm fixed-price contract structure shifts financial risk to the contractor.
Full and open competition suggests a robust market evaluation process.
The contract duration allows for long-term planning and service stability for veterans.
The awardee, TriWest Healthcare Alliance, likely has prior experience in managing large-scale healthcare contracts.

Sector Analysis

This contract falls within the healthcare services sector, specifically focusing on direct 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 such services is highly competitive, with numerous large and small companies vying for government contracts. The size of this award, over $2 billion, indicates it is a significant contract within this sub-sector, likely covering a substantial portion of the VA's needs in its designated service area.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the competition was open to all responsible offerors, including large businesses. While this can lead to robust competition, it also means that direct opportunities for small businesses through set-asides are absent. However, there may be opportunities for small businesses to participate as subcontractors to TriWest Healthcare Alliance. Further analysis would be needed to determine the extent of small business subcontracting planned for this contract.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs contracting officers and program managers. The firm fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Transparency will depend on the VA's reporting practices and the availability of contract performance data. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

VA Community Care Network (CCN)
TRICARE contracts
Medicare administrative contracts
Medicaid managed care contracts

Risk Flags

Potential for performance issues given the scale and duration.
Lack of explicit small business subcontracting goals requires monitoring.
Ensuring consistent quality of care across a potentially large service area.
Contract duration may outpace rapid changes in healthcare technology or policy.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.11 billion to TRIWEST HEALTHCARE ALLIANCE CORP. EXPRESS REPORT: QUARTER 4

Who is the contractor on this award?

The obligated recipient is TRIWEST HEALTHCARE ALLIANCE CORP.

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 $2.11 billion.

What is the period of performance?

Start: 2022-07-01. End: 2027-03-31.

What is the historical spending pattern for similar healthcare services contracts awarded by the VA?

Historical spending on similar VA healthcare services contracts can vary significantly based on the scope, duration, and geographic coverage. Large-scale contracts, such as the one awarded to TriWest Healthcare Alliance, often represent a substantial portion of the VA's external healthcare spending. For instance, previous iterations of community care programs or regional healthcare service agreements have also commanded multi-billion dollar figures over their lifespans. Analyzing past awards within the VA's Community Care Network (CCN) or similar direct care initiatives would reveal trends in contract values, competition levels, and the types of services prioritized. Understanding these patterns helps contextualize the current $2.11 billion award, indicating whether it aligns with or deviates from historical investment levels in outsourced healthcare delivery for veterans.

How does the per-unit cost of services under this contract compare to market rates or other VA contracts?

Determining the precise per-unit cost comparison for this contract is challenging without access to detailed pricing breakdowns and specific service metrics. However, the contract's firm fixed-price nature aims to establish predictable costs. Benchmarking against other VA contracts, particularly those within the Community Care Network (CCN) or regional health agreements, would be the most relevant comparison. If this contract covers a broad range of services (e.g., primary care, specialty care, mental health), the average per-unit cost would need to be analyzed across these categories. Market rates from commercial insurance providers or other federal agencies (like DoD's TRICARE) could offer a secondary benchmark. A significant deviation from established benchmarks, either higher or lower, would warrant further investigation into the underlying cost drivers and the effectiveness of the competition.

What is TriWest Healthcare Alliance's track record with similar large-scale government healthcare contracts?

TriWest Healthcare Alliance has a significant track record of managing large-scale healthcare contracts, particularly for the Department of Defense's TRICARE program and previously for the VA's community care initiatives. They have experience in managing provider networks, processing claims, and ensuring access to care for military families and veterans across vast geographic regions. Their performance history with these complex programs provides a basis for assessing their capability to execute the current VA contract. Evaluating past performance reviews, contract modifications, and any reported issues or successes related to their previous federal contracts would offer insights into their operational strengths and potential challenges in fulfilling the current award.

What are the primary risks associated with this contract, and what mitigation strategies are in place?

Primary risks associated with this $2.11 billion VA contract include potential performance deficiencies in service delivery, challenges in maintaining network adequacy and quality of care across a wide area, and the possibility of cost overruns if the firm fixed-price structure is not managed effectively by the contractor. There's also a risk of scope creep if the contract's requirements are not clearly defined and controlled. Mitigation strategies likely involve robust contract oversight by the VA, including regular performance reviews, site visits, and data analysis of patient outcomes and access metrics. Clear performance standards, incentive clauses (if applicable), and defined procedures for addressing deficiencies are crucial. The contractor's own internal quality control and risk management processes are also key mitigation elements.

How does the geographic scope of this contract align with veteran population density and healthcare needs?

The geographic scope of this contract is a critical factor in its success and requires alignment with veteran population density and healthcare needs. If the contract covers specific regions, understanding the distribution of veterans within those areas and their prevalent health conditions is essential. A mismatch could lead to either underutilization of services in low-density areas or overwhelming demand in high-density regions. The VA typically bases these geographic allocations on demographic data, existing healthcare infrastructure, and strategic goals for improving veteran access. Analyzing veteran population data, healthcare utilization rates, and the availability of VA-owned facilities within the contract's defined service area would help assess the appropriateness of its geographic scope.

Industry Classification

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

Product/Service Code: SOCIAL SERVICES › SOCIAL 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

Address: 15810 N 28TH AVE, PHOENIX, AZ, 85053

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

Financial Breakdown

Contract Ceiling: $2,110,778,409

Exercised Options: $2,110,778,409

Current Obligation: $2,110,778,409

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10G19D0038

IDV Type: IDC

Timeline