VA awards $131.8M contract for Midwest medical disability exams, OptumServe Health Services to provide services

Contract Overview

Contract Amount: $131,802,481 ($131.8M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2021-10-01

End Date: 2022-09-30

Contract Duration: 364 days

Daily Burn Rate: $362.1K/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 3 (MIDWEST)

Place of Performance

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

State: Wisconsin Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $131.8 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 3 (MIDWEST) Key points: 1. Contract value of $131.8M for a 1-year period indicates significant investment in veteran healthcare services. 2. The contract was awarded under full and open competition, suggesting a robust bidding process. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. Services are geographically focused on Region 3 (Midwest), impacting a specific veteran population. 5. The North American Industry Classification System (NAICS) code 621111 points to physician services, a core healthcare function. 6. The award to OptumServe Health Services, Inc. represents a substantial single award for this service period.

Value Assessment

Rating: good

The contract value of $131.8 million for a one-year period for medical disability examinations in Region 3 appears to be within a reasonable range for large-scale healthcare service contracts. Benchmarking against similar large-scale VA or DoD contracts for medical services would provide a more precise value-for-money assessment. The firm fixed-price structure suggests that the contractor has assumed the risk for cost overruns, which is generally favorable for the government. However, without detailed service delivery metrics and cost breakdowns, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This suggests a competitive environment where multiple companies likely vied for the opportunity. The number of bidders is not specified, but the 'full and open' designation implies a healthy level of competition, which is generally expected to drive down prices and improve service quality.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining the best value through a competitive bidding process, potentially leading to lower overall costs for the government.

Public Impact

Veterans in the Midwest region (Region 3) will benefit from timely and accurate medical disability examinations. The contract supports the delivery of essential healthcare services, aiding in the determination of benefits for veterans. The services provided are crucial for the Department of Veterans Affairs' mandate to care for its service members. This contract has implications for the healthcare workforce, potentially creating or sustaining jobs for physicians and support staff involved in examinations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service delivery delays if contractor faces staffing shortages.
Ensuring consistent quality of examinations across all providers within the region.
Monitoring contractor performance to ensure adherence to VA examination protocols and standards.

Positive Signals

Awarded under full and open competition, suggesting a competitive market.
Firm fixed-price contract shifts cost risk to the contractor.
Focus on a specific region allows for tailored service delivery and oversight.

Sector Analysis

This contract falls within the healthcare services sector, specifically focusing on medical examinations for disability claims. The market for such services is substantial, driven by government mandates to assess veteran eligibility for benefits. Comparable spending benchmarks would involve looking at other large federal contracts for medical evaluations, particularly those issued by the VA or the Department of Defense, to understand the scale and pricing norms within this specialized area of healthcare provision.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, OptumServe Health Services, Inc., is likely a large business. There is no explicit information regarding subcontracting plans for small businesses within this award. The absence of a small business set-aside suggests that the focus was on obtaining the best overall value from the market, which may or may not involve significant small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures would be embedded in the contract's performance work statement, outlining specific service delivery standards and reporting requirements. Transparency is facilitated through contract award data, but detailed operational oversight mechanisms and inspector general jurisdiction would depend on the specific terms and conditions negotiated within the contract.

Related Government Programs

VA Medical Care Programs
VA Disability Compensation
Veterans Health Administration Services
Federal Healthcare Contracts

Risk Flags

Potential for service delivery delays.
Ensuring consistent quality of examinations.
Data security and privacy compliance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $131.8 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 3 (MIDWEST)

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 $131.8 million.

What is the period of performance?

Start: 2021-10-01. End: 2022-09-30.

What is the historical spending pattern for medical disability examinations in Region 3 by the VA?

Analyzing historical spending for medical disability examinations in Region 3 requires access to detailed VA procurement data over multiple fiscal years. Without specific historical data for this region and service type, it's difficult to establish a precise pattern. However, the current award of $131.8 million for a single year suggests a significant and ongoing need for these services. Trends in veteran populations, changes in disability criteria, and shifts in contracting strategies (e.g., moving from in-house to contracted services) would influence historical spending. Generally, federal spending on veteran healthcare services has been on an upward trend due to increasing veteran populations and expanded healthcare access.

How does the per-veteran cost of these examinations compare to similar contracts or internal VA costs?

A precise per-veteran cost comparison is challenging without knowing the exact number of examinations performed under this $131.8 million contract and the specific services included in each examination. If we assume, for illustrative purposes, that the contract supports 100,000 examinations annually, the average cost per examination would be approximately $1,318. This figure needs to be benchmarked against similar contracts awarded by the VA or other federal agencies for comparable services. Factors such as the complexity of examinations, geographic location, and overhead costs can significantly influence per-unit pricing. Internal VA costs for similar services, if available, would provide another crucial benchmark for assessing value for money.

What are the key performance indicators (KPIs) used to evaluate OptumServe Health Services, Inc.'s performance under this contract?

Key Performance Indicators (KPIs) for a contract of this nature typically focus on timeliness, accuracy, and quality of the medical disability examinations. Specific KPIs might include: 1) Average turnaround time for completing examinations from referral to report submission; 2) Accuracy rate of examination reports as validated by VA adjudicators; 3) Patient satisfaction scores from veterans undergoing examinations; 4) Compliance with established medical protocols and VA guidelines; and 5) Provider credentialing and ongoing training adherence. The contract's performance work statement (PWS) would detail these KPIs, along with acceptable performance levels and any associated incentive or disincentive clauses.

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

OptumServe Health Services, Inc. (now part of UnitedHealth Group) has a significant track record with the Department of Veterans Affairs, including large contracts for healthcare services and claims processing. They have been a major provider of services under various VA initiatives, including telehealth and medical examinations. Their experience extends to other federal agencies as well. A thorough review of their past performance, including any past performance evaluations, contract awards, and any documented issues or disputes, would be necessary to fully assess their suitability and reliability for this specific medical disability examination contract.

Are there any identified risks associated with OptumServe Health Services, Inc. as a contractor for this specific service?

Risks associated with any large federal contractor like OptumServe can include potential performance issues, such as delays in service delivery or quality control problems. Given the scale of this contract, challenges related to staffing, geographic coverage, and maintaining consistent quality across numerous providers are potential risks. Financial stability and cybersecurity posture are also critical considerations for any contractor handling sensitive veteran health information. While OptumServe has extensive experience, ongoing monitoring and robust oversight are essential to mitigate these inherent risks and ensure the contract objectives are met effectively.

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: $131,802,481

Exercised Options: $131,802,481

Current Obligation: $131,802,481

Actual Outlays: $127,442,960

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X19D0007

IDV Type: IDC

Timeline