VA awards $941.7M contract to Optum for direct health and medical insurance carriers in April 2024

Contract Overview

Contract Amount: $941,727,421 ($941.7M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-04-01

End Date: 2024-04-30

Contract Duration: 29 days

Daily Burn Rate: $32.5M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R1 FY 24 3RD QTR APRIL

Place of Performance

Location: LA CROSSE, LA CROSSE County, WISCONSIN, 54603

State: Wisconsin Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $941.7 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R1 FY 24 3RD QTR APRIL Key points: 1. Significant contract value of over $941 million highlights substantial investment in health services. 2. Competition was full and open, suggesting a competitive bidding process for this large award. 3. Risk appears moderate given the established carrier sector, but contract specifics warrant review. 4. The IT sector is indirectly impacted through potential system integration and data management needs.

Value Assessment

Rating: good

The contract value of $941.7M for a single month's delivery order is substantial. Benchmarking against similar large-scale health insurance carrier 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: Taxpayers benefit from a competitive process that aims to secure cost-effective health insurance services for veterans.

Public Impact

Veterans will receive direct health and medical insurance services, improving access to care. The large contract award signifies a major commitment to healthcare delivery for the VA. Potential for improved health outcomes and patient satisfaction due to dedicated insurance carrier services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration is short (29 days), raising questions about long-term planning and potential for follow-on contracts.
Lack of specific Product Service Code (PSC) makes it difficult to assess precise service category.
Small business participation is not indicated (ss: false, sb: false).

Positive Signals

Awarded under full and open competition.
Firm Fixed Price contract type offers cost predictability.
Significant investment in healthcare services for veterans.

Sector Analysis

The healthcare sector, particularly direct health and medical insurance carriers, is a critical area for government spending. Benchmarks for contracts of this magnitude in this sector are typically in the hundreds of millions to billions annually, depending on scope and duration.

Small Business Impact

The data indicates no specific small business participation (ss: false, sb: false). Further investigation is needed to determine if subcontracting opportunities were offered or if small businesses were excluded from this large award.

Oversight & Accountability

The VA's oversight of this substantial contract is crucial to ensure service delivery meets quality standards and contractual obligations. Monitoring performance metrics and financial expenditures will be key accountability measures.

Related Government Programs

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

Risk Flags

Short contract duration (29 days) for a large award.
Lack of specific Product Service Code (PSC).
No indicated small business participation.
High contract value for a single month's service.
Potential for follow-on contract needs and associated risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $941.7 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R1 FY 24 3RD QTR APRIL

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 $941.7 million.

What is the period of performance?

Start: 2024-04-01. End: 2024-04-30.

What specific health and medical insurance services are covered under this $941.7M delivery order, and how do they align with VA's strategic healthcare goals?

The data identifies the NAICS code as 524114 (Direct Health and Medical Insurance Carriers), suggesting the services involve providing health insurance coverage. However, the specific benefits, provider networks, and coverage details are not provided. Understanding how these services integrate with existing VA healthcare infrastructure and contribute to broader veteran health objectives is essential for assessing true value beyond the monetary award.

Given the short 29-day duration, what is the risk of service disruption or the need for immediate, potentially costly, follow-on actions?

A 29-day contract duration is highly unusual for a $941.7M award, suggesting this may be a bridge contract or a very specific, short-term need. The primary risk is the potential for service gaps or the need for emergency procurement if a longer-term solution isn't secured promptly. This could lead to increased costs and reduced continuity of care for beneficiaries.

How effectively does the firm fixed-price structure manage the risk of cost overruns for such a large, short-term health insurance contract?

The firm fixed-price (FFP) structure is designed to transfer cost overrun risk to the contractor, OPTUM PUBLIC SECTOR SOLUTIONS, INC. For a short-term contract, FFP can be effective if the scope is well-defined and predictable. However, if unforeseen healthcare utilization or regulatory changes occur within the 29 days, the contractor might face losses, potentially impacting their willingness to bid competitively in the future or leading to disputes.

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: $941,727,421

Exercised Options: $941,727,421

Current Obligation: $941,727,421

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0004

IDV Type: IDC

Timeline