VA awards $749M contract to Optum for direct health and medical insurance carriers in November 2024

Contract Overview

Contract Amount: $749,361,474 ($749.4M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-11-01

End Date: 2024-11-30

Contract Duration: 29 days

Daily Burn Rate: $25.8M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R3 FY25 1ST QTR NOVEMBER

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $749.4 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R3 FY25 1ST QTR NOVEMBER Key points: 1. Significant contract value of $749.36 million awarded. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Contract is a delivery order under a larger award, indicating a specific need. 4. Sector is Direct Health and Medical Insurance Carriers, a critical area for VA.

Value Assessment

Rating: good

The contract value of $749.36 million for a single month's delivery order is substantial. Benchmarking against similar large-scale health insurance 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, which typically fosters competitive pricing and allows for a broad range of qualified vendors to bid. This method is generally effective in achieving fair market value.

Taxpayer Impact: The significant award amount suggests a substantial investment of taxpayer funds, but the competitive nature of the award aims to ensure value for money.

Public Impact

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

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

High contract value for a single month's delivery order.
Potential for scope creep or increased demand beyond initial estimates.

Positive Signals

Full and open competition utilized.
Firm fixed-price contract type.
Delivery order under an existing award.

Sector Analysis

The Direct Health and Medical Insurance Carriers sector is vital for government healthcare providers like the VA. Spending in this area is consistently high due to the demand for healthcare services and insurance administration.

Small Business Impact

The 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.

Oversight & Accountability

The contract is a delivery order under a larger award, suggesting that initial oversight and vetting have already occurred. Ongoing monitoring by the VA will be crucial to ensure performance and adherence to terms.

Related Government Programs

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

Risk Flags

High dollar value for a single month's delivery order.
Lack of specific per-unit cost data for benchmarking.
Absence of detailed performance metrics in the provided summary.
Potential for significant taxpayer expenditure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $749.4 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R3 FY25 1ST QTR NOVEMBER

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 $749.4 million.

What is the period of performance?

Start: 2024-11-01. End: 2024-11-30.

What is the total value of the parent contract under which this delivery order was issued?

The provided data specifies a delivery order value of $749,361,473.91. However, it does not disclose the total value or details of the parent contract. Understanding the parent contract's scope, duration, and original competition is essential for a complete assessment of this award's context and potential long-term implications.

How does the per-unit cost of services under this contract compare to industry benchmarks for similar VA healthcare contracts?

A precise per-unit cost benchmark is not available from the provided data. The contract is for direct health and medical insurance carriers, which can encompass a wide range of services. A detailed cost analysis comparing specific service units (e.g., per member per month, per claim processed) against industry standards and other VA contracts would be required to assess cost-effectiveness.

What performance metrics are in place to ensure the effectiveness of the services provided by Optum Public Sector Solutions, Inc.?

The provided data does not detail specific performance metrics or service level agreements (SLAs) for this delivery order. Effective oversight would require the VA to establish clear, measurable performance standards related to claims processing, network access, patient satisfaction, and other critical aspects of health insurance carrier services.

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: $749,361,474

Exercised Options: $749,361,474

Current Obligation: $749,361,474

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline