VA Awards $788M to Optum for Direct Health Insurance in FY25 Q3

Contract Overview

Contract Amount: $787,910,969 ($787.9M)

Contractor: Optum Public Sector Solutions, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-06-01

End Date: 2025-06-30

Contract Duration: 29 days

Daily Burn Rate: $27.2M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: EXPRESS REPORT: R3 FY25 3RD QTR JUNE

Place of Performance

Location: FREDERICKSBURG, SPOTSYLVANIA County, VIRGINIA, 22408

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $787.9 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC. for work described as: EXPRESS REPORT: R3 FY25 3RD QTR JUNE Key points: 1. Significant contract value of $788 million highlights substantial VA reliance on external health insurance carriers. 2. Full and open competition was utilized, suggesting a competitive bidding process for this large award. 3. The contract is a delivery order under a larger agreement, indicating potential for future task orders. 4. The sector is Direct Health and Medical Insurance Carriers, a critical area for healthcare services.

Value Assessment

Rating: good

The $788 million award for a single month's delivery order appears high, but context from the parent contract is needed for a definitive assessment. Benchmarking against similar large-scale health insurance contracts would be beneficial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition is positive, indicating that multiple vendors had the opportunity to bid. This method generally promotes price discovery and potentially better pricing for the government.

Taxpayer Impact: The competitive nature of the award suggests taxpayers are likely receiving fair value, though the overall cost-effectiveness depends on the services delivered and the terms of the parent contract.

Public Impact

Veterans will continue to receive direct health and medical insurance services through this contract. The large contract value indicates a significant portion of VA healthcare needs are being met by this provider. This award impacts the healthcare insurance sector, particularly companies serving government agencies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High single-month award value warrants scrutiny of underlying service utilization and pricing.
Delivery order structure requires monitoring to ensure alignment with overall contract objectives.

Positive Signals

Full and open competition utilized.
Clear contract type (Firm Fixed Price) provides cost certainty.

Sector Analysis

The Direct Health and Medical Insurance Carriers sector is vital for government healthcare provision. Spending benchmarks for similar large-scale insurance contracts are typically in the hundreds of millions, making this award significant but potentially within range for major federal health programs.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. Given the large contract value and the nature of the services, it is likely that larger, established carriers were the primary bidders.

Oversight & Accountability

Oversight will be crucial to ensure the delivery order meets performance expectations and remains within the scope of the parent contract. The Department of Veterans Affairs is responsible for monitoring this award.

Related Government Programs

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

Risk Flags

High single-month award value.
Potential for cost overruns if not closely managed.
Dependence on a single carrier for significant health services.
Lack of specific performance metrics in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $787.9 million to OPTUM PUBLIC SECTOR SOLUTIONS, INC.. EXPRESS REPORT: R3 FY25 3RD QTR JUNE

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 $787.9 million.

What is the period of performance?

Start: 2025-06-01. End: 2025-06-30.

What is the total value and duration of the parent contract from which this delivery order was issued?

The provided data only details a single delivery order for June 2025 with a value of $787,910,969.46. To fully assess the value and long-term implications, information on the overarching contract, including its total ceiling value and period of performance, is essential. This context would clarify if this large monthly award is representative of the entire contract's scope or an anomaly.

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

Without specific service details and unit cost breakdowns, a direct comparison is not possible. However, the substantial value of this single delivery order suggests a high volume of services or high-cost procedures. A detailed analysis comparing the unit costs against established benchmarks for direct health and medical insurance carriers serving federal agencies is necessary to determine cost-effectiveness and identify potential areas for savings.

What performance metrics are in place to ensure the effectiveness of the health and medical insurance services provided under this contract?

The contract is a Firm Fixed Price delivery order, which helps control costs. However, effectiveness hinges on specific performance standards and quality metrics related to claims processing, network adequacy, patient satisfaction, and adherence to VA healthcare guidelines. Robust oversight and regular performance reviews by the VA are critical to ensure these services are delivered effectively and meet the needs of veterans.

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: $787,910,969

Exercised Options: $787,910,969

Current Obligation: $787,910,969

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C79119D0006

IDV Type: IDC

Timeline