VA's $121.4M contract for medical disability exams in Region 2 awarded to OptumServe Health Services, Inc

Contract Overview

Contract Amount: $121,431,803 ($121.4M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-11-28

End Date: 2020-11-27

Contract Duration: 365 days

Daily Burn Rate: $332.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDICAL DISABILITY EXAMINATIONS (MDES) UNDER SECTION 504 OF THE VETERANS BENEFITS IMPROVEMENTS ACT OF 1996 (PUBLIC LAW 104 275 38 U.S.C. 5101), REGION 2 (SOUTHEAST)

Place of Performance

Location: LA CROSSE, LA CROSSE County, WISCONSIN, 54601

State: Wisconsin Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $121.4 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: MEDICAL DISABILITY EXAMINATIONS (MDES) UNDER SECTION 504 OF THE VETERANS BENEFITS IMPROVEMENTS ACT OF 1996 (PUBLIC LAW 104 275 38 U.S.C. 5101), REGION 2 (SOUTHEAST) Key points: 1. Contract value of $121.4M for a one-year period indicates significant investment in veteran healthcare services. 2. The award to a single contractor suggests a focus on specialized service delivery or a competitive bidding process that favored one offeror. 3. The firm-fixed-price structure aims to control costs and provide predictability for the Department of Veterans Affairs. 4. This contract supports the VA's mandate to provide accurate medical disability evaluations for veterans. 5. The geographic scope (Region 2 - Southeast) highlights the localized nature of specific service delivery contracts. 6. The contract's duration of 365 days allows for a defined period of service provision and performance evaluation.

Value Assessment

Rating: good

The contract value of $121.4 million for a one-year period for medical disability examinations appears substantial, reflecting the scale of veteran healthcare needs in Region 2. Benchmarking against similar large-scale contracts for medical services would be necessary for a precise value-for-money assessment. However, the firm-fixed-price contract type suggests an effort to manage costs effectively. The absence of specific performance metrics in the provided data makes a detailed assessment of service quality challenging, but the contract's existence implies a recognized need and a structured approach to fulfilling it.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The fact that OptumServe Health Services, Inc. was the selected contractor suggests they offered the best value proposition among the bidders. The specific number of bidders is not provided, which limits a deeper analysis of the competitive intensity. However, full and open competition generally fosters a more robust price discovery process and encourages competitive pricing.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically drives down costs through market forces. This process ensures that the government is not overpaying for services and that funds are used efficiently.

Public Impact

Veterans in Region 2 (Southeast) benefit from timely and accurate medical disability examinations, crucial for determining eligibility for benefits. The services delivered are essential for the Department of Veterans Affairs' adjudication process for disability claims. The geographic impact is concentrated in the Southeast region, addressing the healthcare needs of veterans in that area. The contract supports a workforce of medical professionals, including physicians and support staff, involved in conducting these examinations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the quality and timeliness of examinations beyond the contract award.
The substantial contract value raises questions about potential for cost overruns if not managed tightly, despite the fixed-price structure.
Limited insight into the number of bidders and the competitive landscape prevents a full understanding of price discovery effectiveness.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely yielded a fair price.
Firm-fixed-price contract type provides cost certainty for the VA and taxpayers.
The contract addresses a critical need for medical disability examinations for veterans, supporting their benefits claims.

Sector Analysis

The healthcare services sector, particularly within government contracting, is characterized by significant spending on medical services, equipment, and research. This contract falls under the 'Offices of Physicians (except Mental Health Specialists)' NAICS code (621111), indicating a focus on direct medical examination services. The market for such services is competitive, with numerous providers vying for government contracts. The VA is a major procurer of healthcare services, and contracts like this are essential for its mission. Comparable spending benchmarks would typically involve analyzing other large-scale contracts for similar medical examination services awarded by the VA or other federal agencies.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The prime contractor, OptumServe Health Services, Inc., is likely a large entity, and any subcontracting would be at their discretion to fulfill the contract requirements.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs, specifically the contracting officer and program managers responsible for the Medical Disability Examinations (MDES) program. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver services at an agreed-upon price. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or identified within the contract's execution.

Related Government Programs

Veterans Health Administration (VHA) Medical Services
VA Disability Compensation Program
TRICARE Medical Services
Federal Employee Health Benefits Program (FEHBP) Medical Services

Risk Flags

Potential for inconsistent quality of examinations across different providers/locations.
Risk of increased demand for services impacting contractor capacity and VA timelines.
Need for robust VA oversight to ensure contract compliance and value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $121.4 million to OPTUMSERVE HEALTH SERVICES, INC.. MEDICAL DISABILITY EXAMINATIONS (MDES) UNDER SECTION 504 OF THE VETERANS BENEFITS IMPROVEMENTS ACT OF 1996 (PUBLIC LAW 104 275 38 U.S.C. 5101), REGION 2 (SOUTHEAST)

Who is the contractor on this award?

The obligated recipient is OPTUMSERVE HEALTH SERVICES, 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 $121.4 million.

What is the period of performance?

Start: 2019-11-28. End: 2020-11-27.

What is the historical spending pattern for Medical Disability Examinations (MDES) in Region 2 by the VA?

Historical spending data for MDES in Region 2 by the VA is not directly available in the provided snippet. However, the current contract value of $121.4 million for a one-year period suggests a significant and ongoing investment in these services. To understand historical patterns, one would need to access multi-year contract award data for similar services within Region 2 from sources like the Federal Procurement Data System (FPDS). Analyzing past contract values, durations, and awarded contractors would reveal trends in spending, potential increases or decreases in demand, and the evolution of service providers over time. This context is crucial for assessing the current contract's scale and ensuring fiscal responsibility.

How does the per-unit cost of these disability examinations compare to similar contracts or market rates?

The provided data does not include specific details on the number of examinations performed or the breakdown of costs per examination, making a direct per-unit cost comparison impossible. The contract is a firm-fixed-price award valued at $121.4 million for a 365-day duration. To assess the per-unit cost, we would need to know the total number of examinations conducted under this contract and the total contract value. Benchmarking against similar contracts would involve identifying other VA or DoD contracts for medical disability evaluations, noting their scope, geographic region, and pricing structures. Market rates could be estimated by researching what private healthcare providers charge for comparable diagnostic and evaluative services. Without these specific figures, the value-for-money at a per-unit level remains undetermined.

What is OptumServe Health Services, Inc.'s track record with the VA for similar services?

OptumServe Health Services, Inc. has a significant track record with the Department of Veterans Affairs, particularly in providing health services. They have been awarded large contracts for various healthcare-related services, including telehealth and medical examinations. Their experience with the VA suggests familiarity with the agency's requirements, processes, and veteran population needs. A detailed review of their past performance on VA contracts, including any quality ratings, past performance evaluations, and history of contract modifications or disputes, would provide a comprehensive understanding of their capabilities and reliability in fulfilling this specific MDES contract. Their ability to secure a large, full-and-open competitive contract indicates a strong standing.

What are the primary risks associated with this contract, and how are they being mitigated?

Primary risks associated with this contract include potential variations in the volume of disability claims, which could impact the contractor's resource allocation and the VA's ability to meet demand. Ensuring the quality and consistency of medical evaluations across different examiners and locations is another key risk. Furthermore, the large contract value presents a financial risk if services are not delivered efficiently or if unforeseen issues arise. Mitigation strategies likely involve robust contract management by the VA, including performance monitoring, quality assurance protocols, and clear communication channels with OptumServe. The firm-fixed-price structure itself acts as a mitigation for cost overruns, placing the financial risk on the contractor for scope within the contract.

How does the geographic scope (Region 2 - Southeast) influence the contract's execution and oversight?

The designation of Region 2 (Southeast) as the service area for this contract means that OptumServe Health Services, Inc. must establish and manage a network of medical providers and facilities capable of serving veterans across this specific geographic territory. This influences execution by requiring logistical planning for examiner availability, travel, and potentially establishing new examination sites if existing infrastructure is insufficient. Oversight by the VA will need to ensure consistent service delivery and quality standards are maintained across all locations within the region. The VA may employ regional contract managers or utilize remote monitoring tools to oversee operations effectively across the diverse geographic spread of the Southeast.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › NURSING, NURSING HOME, EVAL/SCREEN

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 328 FRONT ST S, LA CROSSE, WI, 54601

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

Financial Breakdown

Contract Ceiling: $121,431,803

Exercised Options: $121,431,803

Current Obligation: $121,431,803

Actual Outlays: $19,141,052

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X19D0004

IDV Type: IDC

Timeline