VA awards $44.3M contract to Optum for health insurance services in January 2024

Contract Overview

Contract Amount: $443,011,568 ($443.0M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-01-01

End Date: 2024-01-31

Contract Duration: 30 days

Daily Burn Rate: $14.8M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R1 FY 24 2ND QTR JAN

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $443.0 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R1 FY 24 2ND QTR JAN Key points: 1. Contract value of $44.3M for a single month's service. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Risk appears moderate given the fixed-price contract type. 4. Sector is healthcare, specifically direct health and medical insurance carriers.

Value Assessment

Rating: questionable

The contract value of $44.3M for a single month of service appears high. Benchmarking against similar contracts for direct health and medical insurance carriers is needed to assess value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically allows for competitive pricing. However, the high monthly cost warrants further investigation into the pricing structure and services rendered.

Taxpayer Impact: Taxpayer funds are being utilized for health insurance services. The significant monthly expenditure necessitates scrutiny to ensure cost-effectiveness and value for money.

Public Impact

Veterans receive essential health insurance coverage through this contract. The large sum allocated highlights the significant cost of healthcare services for the VA. Transparency in how this $44.3M is utilized is crucial for public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High monthly expenditure
Lack of detailed service breakdown

Positive Signals

Full and open competition
Fixed price contract

Sector Analysis

The Department of Veterans Affairs operates within the healthcare sector, specifically focusing on direct health and medical insurance. Spending benchmarks for similar services are essential to evaluate the $44.3M monthly award.

Small Business Impact

The provided data does not indicate whether small businesses were involved in this contract award. Further analysis would be required to determine small business participation.

Oversight & Accountability

Oversight is critical to ensure the $44.3M monthly expenditure aligns with the services provided and delivers value to veterans. Regular audits and performance reviews are recommended.

Related Government Programs

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

Risk Flags

High monthly expenditure
Potential for uncompetitive pricing despite open competition
Lack of detailed service scope in summary data
Need for robust performance monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $443.0 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R1 FY 24 2ND QTR JAN

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 $443.0 million.

What is the period of performance?

Start: 2024-01-01. End: 2024-01-31.

What specific health and medical insurance services are covered by this $44.3M monthly award, and how do these services compare to industry standards in terms of scope and cost?

The contract is for direct health and medical insurance carriers. Without a detailed breakdown of services, it's difficult to compare costs. However, $44.3 million for a single month suggests a broad scope of coverage or a high volume of beneficiaries. Further investigation into the specific benefits, provider networks, and administrative costs is necessary to benchmark against industry standards and ensure fair pricing.

What are the primary risks associated with this contract, considering the substantial monthly expenditure and the nature of health insurance services?

Key risks include potential overpayment if services are not fully utilized or priced competitively, and the risk of inadequate coverage or quality of care if vendor performance is subpar. The large monthly outlay also presents a financial risk if the contract is not managed efficiently. Ensuring robust performance metrics and regular vendor evaluations are crucial to mitigate these risks.

How effective is the full and open competition method in ensuring cost-effectiveness for this specific health insurance contract, given the high monthly award?

While full and open competition is generally the most effective method for achieving competitive pricing, the high monthly award of $44.3M warrants scrutiny. It suggests that either the scope of services is exceptionally large, or there may be opportunities for further price negotiation. Continuous monitoring of market rates and vendor performance is essential to confirm the ongoing effectiveness of the competition.

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: 3237 AIRPORT RD, LA CROSSE, WI, 54603

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

Financial Breakdown

Contract Ceiling: $443,011,568

Exercised Options: $443,011,568

Current Obligation: $443,011,568

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0004

IDV Type: IDC

Timeline