VA awards $618.6M contract to Optum for Direct Health and Medical Insurance Carriers in Q1 FY24

Contract Overview

Contract Amount: $618,574,898 ($618.6M)

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: $20.6M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R3 FY 24 1ST QTR DEC

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $618.6 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R3 FY 24 1ST QTR DEC Key points: 1. The contract value of $618.6 million is substantial, indicating significant program scope. 2. Optum Public Sector Solutions, Inc. is the sole awardee, raising questions about competition. 3. The contract is a delivery order under a larger award, suggesting potential for follow-on work. 4. The sector is healthcare insurance, a critical area for government services.

Value Assessment

Rating: questionable

The contract value is high, but without specific benchmarks for similar direct health and medical insurance carrier services, a precise pricing assessment is difficult. The fixed-price nature suggests a defined scope, but the overall value warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, as a delivery order, the specific competition details for this order are not fully detailed, and the impact on price discovery for this particular award is unclear.

Taxpayer Impact: The full and open competition method aims to ensure taxpayer funds are used efficiently, but the ultimate impact on cost savings for this specific $618.6 million award requires further analysis of the bidding process.

Public Impact

Veterans will receive direct health and medical insurance services, impacting their access to care. The significant contract value suggests a large number of beneficiaries will be served. The award to Optum Public Sector Solutions, Inc. could influence the competitive landscape for healthcare services within the VA.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific per-unit cost benchmarks.
Limited insight into the competition for this specific delivery order.
Potential for vendor lock-in if this is part of a larger strategy.

Positive Signals

Awarded under full and open competition.
Fixed-price contract type can provide cost certainty.
Delivery order structure allows for phased execution.

Sector Analysis

The Department of Veterans Affairs operates within the healthcare sector, a significant area of federal spending. Benchmarks for direct health and medical insurance carrier services are highly variable, but a $618.6 million award indicates a large-scale program.

Small Business Impact

The provided data does not indicate any specific set-asides for small businesses. Further analysis would be needed to determine if small businesses had an opportunity to participate in this contract, either as prime contractors or subcontractors.

Oversight & Accountability

The Department of Veterans Affairs is responsible for overseeing this contract. The effectiveness of oversight will depend on the agency's ability to monitor performance, manage costs, and ensure compliance with contract terms, especially given the large award value.

Related Government Programs

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

Risk Flags

High contract value requires robust oversight.
Limited detail on competition for this specific delivery order.
Potential for unstated follow-on work or contract modifications.
Dependence on a single awardee for critical healthcare services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $618.6 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R3 FY 24 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 $618.6 million.

What is the period of performance?

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

What specific services are included under this $618.6 million delivery order, and how do they align with the VA's strategic healthcare goals?

The contract falls under NAICS code 524114 (Direct Health and Medical Insurance Carriers). This suggests services related to the administration and provision of health insurance plans and benefits to eligible veterans. The alignment with strategic goals would depend on the VA's specific initiatives for expanding healthcare access, managing costs, and improving the quality of care for its beneficiaries.

Given the 'full and open competition' designation, what was the competitive landscape for this specific delivery order, and were there any significant price differences between bids?

While the overarching award mechanism was full and open competition, the details of competition for this specific delivery order are not provided. Understanding the number of bids received and the price spread among them is crucial to assessing if the government achieved optimal value. Without this, it's difficult to definitively state the impact on price discovery for this particular $618.6 million award.

What is the projected taxpayer impact of this contract, considering the fixed-price nature and the duration of the delivery order?

The fixed-price contract type provides a degree of cost certainty for taxpayers, as the total cost is predetermined. However, the significant value of $618.6 million means that even with a fixed price, the expenditure is substantial. The 30-day duration of this specific delivery order suggests it might be for a defined period or a specific task, and its overall taxpayer impact will be influenced by the efficiency and effectiveness of the services delivered.

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: $618,574,898

Exercised Options: $618,574,898

Current Obligation: $618,574,898

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline