VA awards $569M contract to Optum Public Sector Solutions for health and medical insurance carrier services

Contract Overview

Contract Amount: $569,090,233 ($569.1M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-09-01

End Date: 2023-09-30

Contract Duration: 29 days

Daily Burn Rate: $19.6M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R3 FY23 4TH QUARTER SEPTEMBER

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $569.1 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R3 FY23 4TH QUARTER SEPTEMBER Key points: 1. Contract value represents a significant investment in health and medical insurance services. 2. The contract was awarded through full and open competition, suggesting a competitive bidding process. 3. The short duration of the contract (29 days) may indicate a need for immediate or short-term services. 4. The firm-fixed-price contract type helps manage cost certainty for the government. 5. This award falls within the Direct Health and Medical Insurance Carriers NAICS code. 6. The contract is managed by the Department of Veterans Affairs, indicating a focus on veteran healthcare.

Value Assessment

Rating: good

The contract value of $569 million for a single month of service is substantial. Benchmarking this against similar, longer-term contracts for health and medical insurance services would be necessary for a precise value-for-money assessment. However, the firm-fixed-price structure provides cost predictability. The award amount of $19.6 million for the base period (though the provided data seems to represent a single delivery order within a larger contract) suggests a high per-unit cost or significant service volume.

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 a bid. This suggests a robust bidding environment, which typically leads to better price discovery and potentially more favorable terms for the government. The number of bidders is not specified, but the method of competition implies that multiple entities vied for this award.

Taxpayer Impact: A full and open competition process generally benefits taxpayers by fostering a competitive environment that can drive down costs and encourage innovation from multiple providers.

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 Department of Veterans Affairs' mission to provide healthcare to veterans. The primary geographic impact is likely within the United States, serving the veteran population. The contract supports the healthcare sector and potentially the insurance carrier industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The substantial dollar amount for a short duration raises questions about the efficiency and necessity of such a large, immediate expenditure.
Lack of detail on specific services rendered within this delivery order makes it difficult to assess performance against expectations.
The high value could indicate a critical, time-sensitive need, but also potential for overspending if not managed tightly.

Positive Signals

Awarded through full and open competition, suggesting a fair and competitive process.
Firm-fixed-price contract type provides cost certainty for the government.
Managed by the Department of Veterans Affairs, indicating alignment with a critical government mission.

Sector Analysis

This contract falls within the Direct Health and Medical Insurance Carriers sector, a critical component of the healthcare industry. This sector involves entities that provide health insurance and medical services, often through government contracts. The market size for health insurance and related services is vast, with significant government spending allocated to healthcare for beneficiaries, including veterans. This contract likely represents a portion of the VA's broader strategy to manage and deliver healthcare benefits.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a specific set-aside criterion for this particular award. Therefore, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. However, the prime contractor, Optum Public Sector Solutions, may engage small businesses as subcontractors as part of their overall business operations, though this is not mandated by the contract terms presented.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally facilitated through contract award databases and reporting requirements, though specific performance metrics and oversight activities are not detailed in this summary.

Related Government Programs

Department of Veterans Affairs Healthcare Services
Federal Health Insurance Contracts
Medical Services Procurement
Direct Health and Medical Insurance Carriers

Risk Flags

High value for short duration
Lack of specific service details
Potential for cost overruns or under-delivery if not managed properly

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $569.1 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R3 FY23 4TH QUARTER SEPTEMBER

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 $569.1 million.

What is the period of performance?

Start: 2023-09-01. End: 2023-09-30.

What specific health and medical insurance services were procured under this $569 million delivery order?

The provided data identifies the NAICS code as 524114 (Direct Health and Medical Insurance Carriers) and the awarding agency as the Department of Veterans Affairs. However, it does not specify the exact nature of the health and medical insurance services rendered under this particular $569 million delivery order. These services could range from processing claims, managing provider networks, administering health benefits, or providing specialized insurance products for veterans. Further details within the contract's statement of work would be required to ascertain the precise services delivered.

How does the $569 million value for a 29-day period compare to typical monthly spending for similar VA contracts?

A $569 million expenditure for a single 29-day period is exceptionally high and warrants further investigation. Typical monthly spending for health and medical insurance carrier services, even for large federal agencies, is unlikely to reach this magnitude unless it represents a massive, one-time payment for a critical service or a consolidation of multiple prior obligations. Without comparative data on similar short-term, high-value delivery orders within the VA or other agencies for comparable services, it is difficult to benchmark. This figure might represent a significant portion of a larger annual contract or a specific, urgent requirement.

What is Optum Public Sector Solutions' track record with the Department of Veterans Affairs and similar federal contracts?

Optum Public Sector Solutions, a subsidiary of UnitedHealth Group, has a significant history of contracting with federal agencies, including the Department of Veterans Affairs. They are known to provide a wide range of health services, IT solutions, and administrative support. Their track record generally includes managing large-scale health programs and IT systems. Specific performance details, past issues, or commendations related to their contracts with the VA would require a deeper dive into contract performance reports and historical award data.

What are the potential risks associated with a firm-fixed-price contract of this magnitude and short duration?

The primary risk with a firm-fixed-price contract of this magnitude and short duration is the potential for the contractor to incur losses if their cost estimates were inaccurate or if unforeseen circumstances significantly increase their expenses. Conversely, if the contractor's costs are substantially lower than anticipated, the government may have overpaid relative to the actual value received. For the government, risks include ensuring the contractor has the capacity to deliver the required services within the tight timeframe and that the fixed price adequately covers all necessary components without being excessively inflated. The short duration might also indicate a rushed procurement, potentially increasing the risk of inadequate planning or oversight.

How does this contract align with the VA's broader strategy for managing healthcare services for veterans?

This contract likely aligns with the VA's ongoing efforts to modernize and efficiently manage healthcare delivery for veterans. The VA utilizes a mix of in-house services and contracted support to meet the diverse needs of the veteran population. Awards to large, established health service providers like Optum suggest a strategy to leverage private sector expertise and capacity, potentially to address specific service gaps, manage administrative burdens, or implement new technological solutions. The scale of this award indicates it plays a significant role in a particular aspect of the VA's healthcare operations.

What historical spending patterns exist for Direct Health and Medical Insurance Carriers (NAICS 524114) by the Department of Veterans Affairs?

The Department of Veterans Affairs is a major purchaser of health-related services, and spending within the Direct Health and Medical Insurance Carriers sector (NAICS 524114) is substantial. Historically, the VA has contracted with various entities for services that include claims processing, health plan administration, and specialized medical insurance. Annual spending in this category can fluctuate based on legislative changes, healthcare demands, and strategic shifts in how the VA delivers care. Examining historical data would reveal trends in contract values, types of services procured, and the primary contractors utilized by the VA in this sector.

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: Optum Labs Topaz Inc

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: $569,090,233

Exercised Options: $569,090,233

Current Obligation: $569,090,233

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline