VA Awards $565M to Optum for Health Insurance Services in May 2024

Contract Overview

Contract Amount: $565,166,716 ($565.2M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-05-01

End Date: 2024-05-31

Contract Duration: 30 days

Daily Burn Rate: $18.8M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R2 FY24 Q3 MAY

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $565.2 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R2 FY24 Q3 MAY Key points: 1. Significant contract value of $565M highlights substantial investment in health insurance. 2. Full and open competition suggests a competitive bidding process. 3. Potential risk related to reliance on a single carrier for critical health services. 4. Sector focus on health insurance carriers is a key area of government spending.

Value Assessment

Rating: good

The contract value of $565M for a one-month period is substantial. Benchmarking against similar large-scale health insurance contracts would be necessary to fully assess pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: The competitive nature of the award suggests taxpayers are likely benefiting from a price discovery process that drives efficiency.

Public Impact

Veterans will receive essential health insurance coverage through this contract. The award impacts the health insurance market, particularly for government contractors. Ensures continuity of care for beneficiaries relying on these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value for a short duration.
Potential for vendor lock-in if not managed effectively.
Dependence on a single provider for critical services.

Positive Signals

Awarded through full and open competition.
Clear contract type (Firm Fixed Price) for cost certainty.

Sector Analysis

This contract falls within the Health Insurance Carriers sector, a critical area for government spending, particularly for agencies like the VA serving large populations. Benchmarks for similar large-scale health insurance contracts are essential for evaluating cost-effectiveness.

Small Business Impact

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

Oversight & Accountability

The award was made via a delivery order under a larger contract, suggesting existing oversight mechanisms. However, the substantial value warrants diligent monitoring of performance and expenditures.

Related Government Programs

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

Risk Flags

High contract value.
Short contract duration relative to value.
Potential for single-source dependency.
Complexity of health insurance services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $565.2 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R2 FY24 Q3 MAY

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 $565.2 million.

What is the period of performance?

Start: 2024-05-01. End: 2024-05-31.

What is the historical cost performance of Optum Public Sector Solutions, Inc. on similar VA contracts?

Analyzing Optum's past performance on comparable contracts with the VA is crucial for assessing value. This includes examining their track record on cost control, adherence to budgets, and the overall efficiency of their service delivery. A history of successful, cost-effective contract execution would bolster confidence in this award.

What are the key performance indicators (KPIs) for this contract and how is performance being measured?

Understanding the specific KPIs and measurement methodologies is vital for evaluating effectiveness. This includes metrics related to claims processing times, member satisfaction, network adequacy, and quality of care. Robust oversight of these KPIs ensures the VA is receiving the intended benefits and that taxpayer funds are being used efficiently to meet veteran healthcare needs.

Are there any identified risks associated with Optum's ability to scale services if demand significantly increases?

Assessing Optum's capacity to scale services is a key risk consideration. While the contract is for a defined period, unforeseen surges in demand could strain resources. Evaluating their contingency plans, infrastructure, and historical ability to manage rapid growth is important to ensure uninterrupted service delivery and prevent potential disruptions to veteran care.

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: $565,166,716

Exercised Options: $565,166,716

Current Obligation: $565,166,716

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0005

IDV Type: IDC

Timeline