VA awards $707M contract to Optum for direct health and medical insurance carriers in FY24 Q1

Contract Overview

Contract Amount: $707,063,526 ($707.1M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-10-01

End Date: 2023-10-31

Contract Duration: 30 days

Daily Burn Rate: $23.6M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: FY24 1ST QTR OCT

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $707.1 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: FY24 1ST QTR OCT Key points: 1. Significant contract value of $707M highlights substantial investment in healthcare services. 2. Competition was full and open, suggesting a competitive bidding process. 3. Risk appears moderate given the established nature of insurance carrier services. 4. The sector is healthcare, a critical area for government spending.

Value Assessment

Rating: good

The contract value of $707M for a single month's delivery order is substantial. Benchmarking against similar large-scale health insurance contracts would be necessary to fully assess pricing, but the firm-fixed-price structure provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple bidders participated. This method generally promotes competitive pricing and ensures the government receives the best value.

Taxpayer Impact: The competitive nature of this award is expected to yield favorable pricing for taxpayers, ensuring efficient use of public funds for essential healthcare services.

Public Impact

Veterans will benefit from continued access to direct health and medical insurance services. The large contract value suggests a significant impact on the healthcare insurance market. Transparency in the full and open competition process assures public trust in the award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in long-term health service contracts.
Dependence on a single vendor for critical healthcare services.

Positive Signals

Full and open competition ensures market-driven pricing.
Firm-fixed-price contract provides budget predictability.
Awarded to a known entity in the public sector solutions space.

Sector Analysis

This contract falls within the healthcare sector, specifically focusing on direct health and medical insurance carriers. Government spending in this area is consistently high due to the demand for comprehensive health services for beneficiaries.

Small Business Impact

While the award itself is large, the data does not indicate whether small businesses were involved as subcontractors. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight of this contract. The firm-fixed-price structure and full and open competition suggest a degree of accountability in the award process.

Related Government Programs

Direct Health and Medical Insurance Carriers
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Potential for vendor lock-in if competition is not sustained in future procurements.
Complexity of managing large-scale healthcare contracts requires diligent oversight.
Reliance on a single awardee for critical health services.
Ensuring equitable access to care for all eligible veterans.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $707.1 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: FY24 1ST QTR OCT

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 $707.1 million.

What is the period of performance?

Start: 2023-10-01. End: 2023-10-31.

What is the historical performance of Optum Public Sector Solutions, Inc. with the VA on similar contracts?

Assessing Optum's past performance with the VA on comparable contracts is crucial for evaluating future success. This includes examining their track record for service delivery, adherence to timelines, and ability to manage costs effectively. Positive historical data would increase confidence in the current award's value and reduce perceived risks associated with service continuity.

How does the per-unit cost of services under this contract compare to industry benchmarks for similar insurance carriers?

Benchmarking the per-unit cost against industry standards for direct health and medical insurance carriers is essential to determine if the government is receiving a fair price. A thorough analysis would involve comparing rates for specific services, administrative fees, and overall plan costs. Deviations from benchmarks could indicate either exceptional value or potential overspending, necessitating further investigation.

What mechanisms are in place to ensure the effectiveness and quality of healthcare services provided under this contract?

Ensuring the effectiveness and quality of healthcare services requires robust oversight and performance metrics. The VA should have clear performance standards, regular reviews, and mechanisms for addressing any deficiencies. Understanding these oversight procedures, including patient satisfaction surveys and clinical outcome tracking, is key to confirming the contract's value and its positive impact on veteran healthcare.

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: $707,063,526

Exercised Options: $707,063,526

Current Obligation: $707,063,526

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline