VA awards $870.8M contract to TriWest Healthcare Alliance for medical insurance carriers, with 30-day duration

Contract Overview

Contract Amount: $870,766,369 ($870.8M)

Contractor: Triwest Healthcare Alliance Corp

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2024-10-31

Contract Duration: 30 days

Daily Burn Rate: $29.0M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: (OCT. 2024)

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $870.8 million to TRIWEST HEALTHCARE ALLIANCE CORP for work described as: EXPRESS REPORT: (OCT. 2024) Key points: 1. Contract value of $870.8M for a 30-day period suggests a high per-diem cost for services. 2. Full and open competition was utilized, indicating a potentially competitive bidding process. 3. The contract is a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 4. The primary NAICS code (524114) points to health and medical insurance carriers, a critical sector for healthcare delivery. 5. The award to a single contractor, TriWest Healthcare Alliance Corp, warrants scrutiny regarding performance and pricing. 6. The short 30-day duration may indicate an urgent need or a bridge contract.

Value Assessment

Rating: questionable

The contract value of $870.8 million for a single 30-day period is exceptionally high. This translates to an average daily cost of approximately $29 million. Without further context on the scope of services, it is difficult to benchmark against similar contracts. However, such a high daily expenditure warrants a deep dive into the necessity and efficiency of the services provided. The firm-fixed-price nature suggests that the contractor bears the risk of cost overruns, but the overall value proposition for this short duration needs careful examination.

Cost Per Unit: Approximately $29 million per day, which is exceptionally high and requires further justification based on service scope.

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally a positive indicator for achieving competitive pricing. However, the details of the bidding process, including the number of proposals received and the evaluation criteria, are not provided. A high level of competition typically leads to better price discovery and value for the government. The fact that it resulted in a single award to TriWest Healthcare Alliance Corp suggests they were the most advantageous offer.

Taxpayer Impact: Full and open competition is intended to ensure taxpayers receive the best possible value by encouraging multiple vendors to bid, driving down costs through market forces.

Public Impact

Veterans will benefit from continued access to direct health and medical insurance carrier services. The services delivered are crucial for maintaining healthcare access for beneficiaries. The contract is managed by the Department of Veterans Affairs, indicating a focus on veteran healthcare. The geographic impact is likely nationwide, given TriWest's history with VA contracts, though specific service areas for this order are not detailed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extremely high cost for a short duration requires justification.
Lack of detail on specific services provided within the 30-day period.
Potential for this to be a bridge contract, which can sometimes lead to less competitive pricing if rushed.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Contractor has existing experience with VA healthcare programs.
Firm-fixed-price contract structure shifts cost risk to the contractor.

Sector Analysis

The healthcare insurance industry is a significant sector within the federal procurement landscape. NAICS code 524114 specifically covers health and medical insurance carriers. This contract falls within the broader category of healthcare services procurement, which often involves large sums due to the critical nature of the services. Benchmarking this specific award is challenging due to its short duration and high value, but it represents a substantial investment in ensuring healthcare access for veterans.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not available for this specific delivery order. As a large contract awarded to a major corporation, the primary focus is likely on the prime contractor's ability to deliver services. Further analysis would be needed to determine if any subcontracting opportunities exist for small businesses within the scope of this order.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting and program management offices. The Inspector General's office within the VA would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is enhanced by the public nature of contract awards, but detailed performance metrics and spending breakdowns for this specific 30-day order would be necessary for a full accountability assessment.

Related Government Programs

Department of Veterans Affairs Healthcare Services
TRICARE Program Contracts
Federal Health Insurance Marketplace
Medical Services Contracts

Risk Flags

High Cost for Short Duration
Lack of Specific Service Details
Potential for Emergency Procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $870.8 million to TRIWEST HEALTHCARE ALLIANCE CORP. EXPRESS REPORT: (OCT. 2024)

Who is the contractor on this award?

The obligated recipient is TRIWEST HEALTHCARE ALLIANCE CORP.

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 $870.8 million.

What is the period of performance?

Start: 2024-10-01. End: 2024-10-31.

What specific services are covered under this $870.8 million, 30-day contract?

The provided data indicates the contract is for 'Direct Health and Medical Insurance Carriers' under NAICS code 524114, awarded to TriWest Healthcare Alliance Corp by the Department of Veterans Affairs. However, the specific scope of services, patient populations, or geographic regions covered within this 30-day period are not detailed in the summary data. Given the immense value ($870.8 million for 30 days), it is likely a high-demand service, potentially related to emergency healthcare access, specialized medical benefits, or a bridge to a longer-term solution. Further documentation would be required to ascertain the precise nature and extent of the services rendered.

How does the per-diem cost of approximately $29 million compare to similar VA healthcare contracts?

A per-diem cost of approximately $29 million is extraordinarily high and significantly deviates from typical healthcare contract benchmarks, even for large-scale federal programs. Standard VA contracts for medical services, insurance administration, or direct care delivery usually operate on different pricing models (e.g., per-member-per-month, fee-for-service, or capitation rates) that result in much lower daily averages when extrapolated. This figure suggests either an extremely specialized, high-acuity service, a massive surge in demand, or potentially an administrative or system-wide cost allocation that is not immediately apparent. Without knowing the exact services, patient volume, and contractual terms, a direct comparison is difficult, but this rate warrants significant scrutiny for justification and value.

What is TriWest Healthcare Alliance Corp's track record with the Department of Veterans Affairs?

TriWest Healthcare Alliance Corp has a substantial and long-standing track record of working with the Department of Veterans Affairs (VA) and the Department of Defense (DoD) to provide healthcare services to service members, veterans, and their families. They have historically managed regional networks for the TRICARE program and have been involved in various VA community care initiatives. Their experience includes managing provider networks, processing claims, and ensuring access to care in the community. This extensive history suggests familiarity with VA requirements and processes, although the specifics of performance on any given contract can vary.

What are the potential risks associated with a 30-day contract of this magnitude?

A 30-day contract valued at $870.8 million presents several potential risks. Firstly, the short duration might indicate an urgent, unforeseen need or a stopgap measure, potentially leading to rushed implementation and less rigorous oversight. Secondly, the high cost for a brief period raises concerns about value for money; it could represent an emergency procurement where competition is limited or prices are inflated due to urgency. Thirdly, if this is a bridge contract, it might not fully address long-term needs or could lock the government into specific, potentially suboptimal, service arrangements. Finally, the complexity of managing such a large sum for a short period increases the risk of administrative errors or misallocation of funds if not meticulously managed.

How does the 'full and open competition' designation ensure value for taxpayers in this instance?

Full and open competition is designed to maximize value for taxpayers by allowing any responsible source to submit a bid, thereby fostering a competitive environment. In theory, this drives down prices and encourages innovation as multiple companies vie for the contract. For this specific $870.8 million award, the designation suggests that the VA sought proposals from all qualified entities. The resulting award to TriWest Healthcare Alliance Corp implies they offered the best value proposition based on the evaluation criteria. However, the true measure of taxpayer value depends on the specifics of the competition (number of bidders, quality of proposals) and the actual performance and cost-effectiveness of the services delivered over the contract's life.

What are the implications of this contract being a 'Delivery Order'?

The designation 'Delivery Order' indicates that this contract is likely a task order issued under a larger, pre-existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract. IDIQs allow agencies to procure goods or services over a period of time up to a certain maximum value, with specific quantities and delivery dates defined by individual orders. This approach provides flexibility for the agency to respond to evolving needs. For taxpayers, it means that the competition and pricing structure were likely established when the parent IDIQ contract was awarded. However, each delivery order must still represent fair and reasonable pricing for the specific goods or services requested.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

Product/Service Code: SOCIAL SERVICES › SOCIAL 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

Address: 15810 N 28TH AVE, PHOENIX, AZ, 85053

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $870,766,369

Exercised Options: $870,766,369

Current Obligation: $870,766,369

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10G19D0038

IDV Type: IDC

Timeline