VA awards $498M contract to Optum for direct health and medical insurance carriers in Q1 FY24

Contract Overview

Contract Amount: $498,207,443 ($498.2M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-12-01

End Date: 2023-12-31

Contract Duration: 30 days

Daily Burn Rate: $16.6M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R2 FY24 1ST QTR DEC

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $498.2 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R2 FY24 1ST QTR DEC Key points: 1. The contract value of $498.2 million represents a significant investment in healthcare services. 2. Optum Public Sector Solutions, Inc. is the sole awardee, indicating a specific capability or market position. 3. The contract is a delivery order under a larger agreement, suggesting ongoing program needs. 4. The sector is Direct Health and Medical Insurance Carriers, a critical area for veteran healthcare.

Value Assessment

Rating: good

The contract value of $498.2 million for a 30-day period suggests a high per-diem or per-service cost. Benchmarking against similar large-scale health insurance carrier contracts would be necessary for a definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing. However, as a delivery order, the pricing is likely pre-negotiated under a broader contract vehicle.

Taxpayer Impact: The use of full and open competition aims to ensure taxpayer funds are used efficiently by leveraging market forces to achieve favorable pricing.

Public Impact

Ensures continued access to essential health and medical insurance services for veterans. Supports the Department of Veterans Affairs' mission to provide comprehensive care. Potential for improved healthcare outcomes through specialized insurance carrier services. Impacts the healthcare insurance market, particularly for government contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value for a short duration requires scrutiny of unit costs.
Delivery order structure may limit immediate price discovery compared to new solicitations.

Positive Signals

Awarded under full and open competition.
Supports critical veteran healthcare needs.

Sector Analysis

The Direct Health and Medical Insurance Carriers sector is vital for healthcare delivery. Spending in this area is consistently high, driven by demand for comprehensive health services and administrative support.

Small Business Impact

The data does not indicate any specific set-aside for small businesses. Further analysis would be needed to determine the extent of small business participation in the subcontracting chain.

Oversight & Accountability

As a delivery order under a larger contract, oversight would likely be managed through the parent contract's existing mechanisms. The VA's procurement oversight processes are crucial for ensuring compliance and performance.

Related Government Programs

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

Risk Flags

High value for a single month delivery order.
Potential for cost overruns if unit costs are not well-benchmarked.
Dependence on a single awardee for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $498.2 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R2 FY24 1ST QTR DEC

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 $498.2 million.

What is the period of performance?

Start: 2023-12-01. End: 2023-12-31.

What is the specific scope of services covered by this delivery order, and how does it align with the overall contract objectives?

The delivery order likely covers specific health and medical insurance carrier services for veterans during December 2023. Its alignment with the overall contract objectives would depend on the parent contract's purpose, which could range from providing comprehensive health plan administration to specialized insurance processing for VA beneficiaries.

How does the pricing structure of this delivery order compare to industry benchmarks for similar medical insurance carrier services, considering the firm-fixed-price nature?

Given the firm-fixed-price structure, the VA has locked in costs. However, without detailed service breakdowns and volume data, direct comparison to industry benchmarks is challenging. The $498.2 million value for one month suggests a high volume or complexity of services, necessitating a review of the underlying cost elements against comparable government or commercial contracts.

What mechanisms are in place to ensure the effectiveness and quality of services provided by Optum under this delivery order, especially given the short timeframe?

Effectiveness and quality are typically ensured through performance standards, service level agreements (SLAs), and regular monitoring outlined in the parent contract. For this delivery order, the VA would likely rely on established reporting requirements and quality assurance protocols to track Optum's performance and address any deficiencies promptly.

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: $498,207,443

Exercised Options: $498,207,443

Current Obligation: $498,207,443

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0005

IDV Type: IDC

Timeline