VA awards $107M+ for health insurance carriers in Wisconsin, with Optum Public Sector Solutions as the primary contractor

Contract Overview

Contract Amount: $1,073,795,459 ($1.1B)

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: $37.0M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R2 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 $1.07 billion to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R2 FY 24 3RD QTR APRIL Key points: 1. Contract value exceeds $100 million, indicating a significant investment in healthcare services. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process. 3. The short duration (29 days) for this delivery order may indicate a need for immediate or short-term services. 4. The fixed-price contract type aims to control costs and provide predictability for the government. 5. This award falls within the Direct Health and Medical Insurance Carriers NAICS code, highlighting its specific focus. 6. The contractor, Optum Public Sector Solutions, Inc., is a major player in the health IT and services sector.

Value Assessment

Rating: good

The award of over $107 million for direct health and medical insurance carriers is substantial. While specific performance metrics for this delivery order are not detailed, the firm fixed-price nature suggests an expectation of cost control. Benchmarking against similar large-scale health insurance contracts would be necessary for a more precise value assessment, but the scale itself implies a significant market presence and capability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. This suggests a robust bidding environment where multiple companies likely vied for the opportunity. The presence of full and open competition generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Taxpayers benefit from a competitive process that is designed to yield the best value and price for the services rendered, reducing the risk of overpayment.

Public Impact

Veterans in Wisconsin are the primary beneficiaries, receiving direct health and medical insurance services. The contract supports the delivery of essential healthcare coverage and administrative services. The geographic impact is focused on Wisconsin, ensuring services are available to veterans in that state. This contract likely supports a workforce involved in healthcare administration, claims processing, and potentially direct patient support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The short duration of the delivery order (29 days) raises questions about the long-term strategy and potential for service disruption if not managed effectively.
Without detailed performance data for this specific order, it's difficult to assess the contractor's effectiveness in meeting VA's needs.
The large dollar amount for a short-term order could warrant scrutiny to ensure efficient use of funds.

Positive Signals

The award was made under full and open competition, indicating a competitive marketplace and potentially good value.
The firm fixed-price contract type provides cost certainty for the government.
Optum Public Sector Solutions, Inc. is a known entity in the federal health sector, suggesting established capabilities.

Sector Analysis

The healthcare sector, particularly within government contracting, is characterized by large, complex awards. This contract falls under the 'Direct Health and Medical Insurance Carriers' category, which is a critical component of healthcare delivery systems. The market for such services is substantial, with numerous private and public entities vying for these contracts. The VA's spending in this area is consistent with its mission to provide comprehensive healthcare to veterans.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, the primary focus is on large business capabilities. While there's no direct indication of subcontracting requirements for small businesses within this specific award notice, large prime contractors are often encouraged or required to engage small businesses in their overall subcontracting plans for broader VA contracts.

Oversight & Accountability

The Department of Veterans Affairs has established oversight mechanisms for its contracts, including program management reviews and contract performance monitoring. The Inspector General's office provides an additional layer of oversight to detect and prevent fraud, waste, and abuse. Transparency is generally maintained through contract databases and reporting requirements, though specific details of this delivery order's oversight are not provided in the summary data.

Related Government Programs

VA Health Care Services
Federal Health Insurance Programs
Medical Support and Services Contracts
TRICARE Contracts

Risk Flags

Short contract duration for a large award
Lack of detailed performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $1.07 billion to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R2 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 $1.07 billion.

What is the period of performance?

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

What is the historical spending pattern of the VA with Optum Public Sector Solutions, Inc. for similar services?

Analyzing the historical spending between the Department of Veterans Affairs (VA) and Optum Public Sector Solutions, Inc. is crucial for understanding the contractor's track record and the government's reliance on their services. A review of past contracts would reveal the frequency, value, and duration of awards for direct health and medical insurance carrier services. This historical data can highlight trends in spending, identify any significant increases or decreases in contract values, and provide context for the current $107 million award. It would also help assess whether this is a routine renewal or a significant expansion of services. Furthermore, examining past performance reviews or any disputes associated with previous contracts would offer insights into the contractor's reliability and effectiveness in fulfilling VA requirements.

How does the value of this delivery order compare to other VA contracts for similar health insurance services in Wisconsin?

To benchmark the value of this $107 million delivery order, a comparative analysis with other VA contracts for similar direct health and medical insurance carrier services, particularly within Wisconsin or the surrounding region, is necessary. This comparison should consider the scope of services, the number of beneficiaries covered, and the contract duration. If this delivery order represents a significant portion of the VA's spending in this category for the state, it could indicate a concentrated relationship with Optum Public Sector Solutions, Inc. or a substantial increase in demand for these services. Conversely, if similar contracts have historically been of comparable or greater value, it suggests this award is within the expected range for large-scale federal health insurance procurements. Understanding these comparisons provides context on whether the pricing is competitive and reflects fair market value for the services procured.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The specific Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) for this $107 million delivery order are not detailed in the provided summary. However, for contracts involving direct health and medical insurance carriers, typical KPIs often include metrics related to claims processing timeliness, accuracy rates, member enrollment and disenrollment processes, customer service response times, and adherence to privacy regulations (like HIPAA). SLAs would define the acceptable performance thresholds for these KPIs, often with associated remedies or penalties for non-compliance. The VA would typically establish these to ensure efficient and effective delivery of healthcare services to veterans. Without access to the full contract document, a precise assessment of these critical performance measures is not possible.

What is the potential impact of this contract on the broader healthcare market in Wisconsin?

This $107 million award to Optum Public Sector Solutions, Inc. for direct health and medical insurance carrier services in Wisconsin could have a notable impact on the regional healthcare market. As a significant contract, it may influence resource allocation, provider networks, and potentially competition among other insurance carriers operating within the state. The scale of the award suggests that Optum will be a major player in managing healthcare benefits for a substantial number of veterans. This could lead to increased business opportunities for healthcare providers who contract with Optum, as well as potentially shape pricing and service standards. The long-term effects will depend on the specific services rendered and how effectively Optum integrates with the existing healthcare infrastructure in Wisconsin.

Are there any known risks or challenges associated with Optum Public Sector Solutions, Inc. in fulfilling federal contracts of this magnitude?

While Optum Public Sector Solutions, Inc. is a significant entity in the federal health sector, large-scale contracts always carry inherent risks. Potential challenges could include managing the complexity of a large member base, ensuring seamless integration with VA systems, maintaining high levels of service quality and responsiveness, and navigating evolving healthcare regulations. Past performance data, if available, would be the best indicator of specific risks. However, general risks for contracts of this magnitude often revolve around scope creep, budget overruns (though mitigated by fixed-price), and ensuring consistent service delivery across a broad geographic area. The VA's oversight mechanisms are designed to mitigate these risks, but vigilance and proactive contract management are essential.

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: $1,073,795,459

Exercised Options: $1,073,795,459

Current Obligation: $1,073,795,459

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0005

IDV Type: IDC

Timeline