VA awards $690M contract to Optum for direct health and medical insurance carriers in January 2024

Contract Overview

Contract Amount: $690,323,092 ($690.3M)

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: $23.0M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R3 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 $690.3 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R3 FY 24 2ND QTR JAN Key points: 1. Significant contract value of $690M for a single month's activity. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Risk appears moderate given the established nature of insurance carriers. 4. Sector is healthcare, a critical area for government spending.

Value Assessment

Rating: good

The contract value is substantial, but without specific per-unit data or historical benchmarks for this exact service, a precise value assessment is difficult. However, the full and open competition suggests a reasonable price discovery process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically leads to more competitive pricing as multiple vendors vie for the award. This method allows for broad market participation and price discovery.

Taxpayer Impact: The full and open competition method is generally favorable for taxpayers as it aims to secure the best value through market forces.

Public Impact

Ensures continued access to essential health and medical insurance services for beneficiaries. Supports the Department of Veterans Affairs' mission to provide healthcare to veterans. Impacts a large number of veterans relying on these insurance carrier services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Monthly spending is high, requiring consistent monitoring.
Dependence on a single carrier for a large volume of services.

Positive Signals

Full and open competition utilized.
Clear contract type (Firm Fixed Price).

Sector Analysis

This contract falls within the healthcare sector, specifically focusing on direct health and medical insurance carriers. Spending in this area is consistently high due to the essential nature of healthcare services.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The primary awardee is Optum Public Sector Solutions, Inc., which is a large entity, suggesting limited direct impact on small businesses for this specific award.

Oversight & Accountability

The Department of Veterans Affairs is responsible for oversight. The firm fixed price contract type provides some cost certainty, but ongoing monitoring of service delivery and performance is crucial for accountability.

Related Government Programs

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

Risk Flags

High monthly expenditure requires diligent oversight.
Potential for scope creep if not managed tightly.
Dependence on a single vendor for critical services.
Need for robust performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $690.3 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R3 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 $690.3 million.

What is the period of performance?

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

What is the projected annual spending for this contract, given the monthly award amount?

The provided data reflects a single month's award of $690,323,091.63. If this monthly rate were sustained for a full year, the annual spending would approach $8.28 billion. However, contract awards can fluctuate based on demand and specific delivery orders, so this is an extrapolation rather than a guaranteed annual figure.

What are the key performance indicators (KPIs) used to measure the effectiveness of Optum's services?

The provided data does not specify the key performance indicators (KPIs) for this contract. Effective oversight would require the VA to establish and monitor metrics related to claims processing times, patient satisfaction, network adequacy, and adherence to service level agreements to ensure the carrier is meeting its obligations.

How does the pricing of this contract compare to similar contracts for direct health and medical insurance carriers within the federal government?

Benchmarking this contract's price is challenging without detailed service breakdowns and specific contract terms. However, given the full and open competition and the firm fixed price structure, it suggests a competitive pricing strategy was employed. Further analysis would require comparing unit costs for similar services across different agencies and contract vehicles.

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: $690,323,092

Exercised Options: $690,323,092

Current Obligation: $690,323,092

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline