VA awards $566M for medical disability exams, with VETERANS EVALUATION SERVICES, INC. securing the largest portion

Contract Overview

Contract Amount: $566,164,541 ($566.2M)

Contractor: Veterans Evaluation Services, Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2026-01-01

End Date: 2026-12-31

Contract Duration: 364 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: FY26 FUNDING MEDICAL DISABILITY EXAMINATIONS

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77008

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $566.2 million to VETERANS EVALUATION SERVICES, INC for work described as: FY26 FUNDING MEDICAL DISABILITY EXAMINATIONS Key points: 1. Contract value represents a significant investment in veteran healthcare services. 2. Competition dynamics for this contract are crucial for ensuring fair pricing. 3. Performance history of the incumbent contractor will be a key risk indicator. 4. The contract duration and delivery order structure warrant close monitoring. 5. This spending falls within the broader healthcare sector's support services. 6. Fixed-price contract type aims to control costs, but scope creep is a risk.

Value Assessment

Rating: good

The total award of $566,164,541.23 for FY26 medical disability examinations is substantial. Benchmarking against similar large-scale healthcare support contracts is necessary to fully assess value. The firm fixed-price structure suggests an attempt to control costs, but the sheer volume of services required means that any inefficiencies could lead to overspending relative to the expected value. Further analysis of the per-unit cost for examinations would provide a clearer picture of cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. With 4 bidders identified, this suggests a reasonably competitive environment. The level of competition is generally positive for price discovery, as it incentivizes bidders to offer competitive pricing to win the contract. However, the specific market dynamics for these specialized services would determine if this competition was robust enough to drive optimal pricing.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that should lead to more cost-effective service delivery for veteran disability examinations.

Public Impact

Veterans requiring medical disability examinations will receive essential services. The contract supports healthcare providers and administrative staff involved in the examination process. Services are primarily delivered within Texas, impacting the regional healthcare infrastructure. The contract ensures the continuity of critical healthcare support for veterans nationwide, even if delivery is geographically concentrated. This spending supports the operational capacity of the Department of Veterans Affairs in processing disability claims.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if service delivery is less efficient than anticipated.
Risk of service quality degradation due to high volume demands.
Dependence on a single contractor for a critical service could lead to vulnerabilities.
Changes in veteran population needs could strain contract scope.
Incumbent contractor performance history needs careful review to mitigate risks.

Positive Signals

Full and open competition suggests a healthy market and potential for competitive pricing.
Firm fixed-price contract type provides cost certainty for the government.
The contract duration allows for stable service provision over a defined period.
Awarding to a known entity (VETERANS EVALUATION SERVICES, INC.) may indicate a track record of successful performance.
The large award signals significant investment in veteran healthcare infrastructure.

Sector Analysis

The healthcare support services sector is a critical component of the broader healthcare industry, encompassing a wide range of services that enable the delivery of patient care and administrative functions. This contract, focused on medical disability examinations, falls under the sub-sector of specialized medical assessment services. The market for such services is often characterized by a mix of large, established providers and smaller, niche players. Spending in this area is driven by government mandates and the need to efficiently process claims and provide care to specific populations, such as veterans. Comparable spending benchmarks would typically look at per-examination costs across different government agencies and private healthcare systems.

Small Business Impact

The data indicates that small business participation is not a primary focus for this specific contract, as the award is not designated as a small business set-aside (ss: false, sb: false). This suggests that the primary contractor, VETERANS EVALUATION SERVICES, INC., is likely a large business. There is no explicit information on subcontracting requirements for small businesses within this award. The impact on the small business ecosystem would therefore be indirect, potentially through competition for smaller, related service contracts or by observing the subcontracting practices of the prime contractor.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs (VA). The VA's contracting officers and program managers are responsible for monitoring performance, ensuring compliance with contract terms, and managing payments. Given the significant dollar amount, it is likely that the VA's Office of Inspector General (OIG) may conduct audits or investigations into the contract's execution and financial management to ensure accountability and prevent fraud. Transparency would be enhanced through regular performance reporting by the contractor and public availability of contract award data.

Related Government Programs

Veterans Health Administration Medical Services
Disability Claims Processing
Medical Examination Services
Healthcare Support Contracts
Federal Healthcare Spending

Risk Flags

Potential for service quality issues due to high volume.
Risk of cost overruns if contractor efficiency is lower than projected.
Dependence on a limited number of bidders may impact price competitiveness.
Geographic concentration of services could pose accessibility challenges for some veterans.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $566.2 million to VETERANS EVALUATION SERVICES, INC. FY26 FUNDING MEDICAL DISABILITY EXAMINATIONS

Who is the contractor on this award?

The obligated recipient is VETERANS EVALUATION 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 $566.2 million.

What is the period of performance?

Start: 2026-01-01. End: 2026-12-31.

What is the historical spending trend for medical disability examinations by the Department of Veterans Affairs over the past five fiscal years?

Analyzing historical spending for medical disability examinations by the VA is crucial for understanding trends and identifying potential anomalies. While specific data for this exact contract line item over five years isn't provided, general VA healthcare spending has seen consistent increases, driven by growing veteran populations and expanding healthcare benefits. For instance, VA medical care spending has risen significantly year-over-year. To provide a precise trend for disability examinations, one would need to access detailed historical contract awards or budget allocations specifically for this service category. This would reveal if the current $566M award represents a significant increase, a decrease, or a stable level of investment compared to previous years, helping to contextualize the current award's scale and potential future trajectory.

How does the per-examination cost under this contract compare to industry benchmarks for similar medical disability evaluations?

A key aspect of assessing value for money is comparing the per-examination cost to industry benchmarks. Without the total number of examinations anticipated under this $566 million contract, a precise per-unit cost cannot be calculated. However, the nature of medical disability examinations involves physician time, administrative overhead, and potentially specialized diagnostic services. Industry benchmarks for such services can vary widely based on complexity, geographic location, and the specific medical specialties involved. If the average cost per examination falls significantly above or below typical rates charged by private healthcare providers or other government contractors for comparable services, it would indicate either exceptional value or potential overpricing. Further analysis would require breaking down the contract to estimate the average cost per exam and comparing it to data from sources like the Medical Cost Group or other government healthcare contract databases.

What is the track record of VETERANS EVALUATION SERVICES, INC. in managing large federal healthcare contracts, particularly those involving medical examinations?

VETERANS EVALUATION SERVICES, INC. (VES) has a significant track record in providing medical disability evaluation services, primarily to the Department of Veterans Affairs. They have been a major contractor for the VA for many years, handling a substantial volume of examinations. Their performance history is generally characterized by their capacity to manage large-scale operations and meet high demand. However, like any large contractor, there have been instances where performance has faced scrutiny, often related to turnaround times, quality control, or administrative processes. Analyzing past contract performance metrics, any past performance reviews, or contract termination data associated with VES would provide a clearer picture of their reliability and efficiency in fulfilling obligations similar to this current award. This assessment is critical for understanding the risk associated with their incumbency.

What are the primary risks associated with the firm fixed-price contract type for this extensive medical examination service?

The firm fixed-price (FFP) contract type aims to provide cost certainty for the government by establishing a set price for the work. For this $566 million medical disability examination contract, the primary risk associated with FFP is that the contractor may face unforeseen cost increases in labor, supplies, or operational expenses that are not adequately accounted for in the fixed price. If these costs exceed the contractor's estimates, it could lead to reduced profit margins, potentially impacting service quality or the contractor's willingness to perform additional work outside the original scope. Conversely, if the contractor is highly efficient and manages costs effectively, they could realize significant profit. The government's risk is primarily that the fixed price may not reflect the true cost of services if market conditions change drastically or if the initial cost estimates were inaccurate, potentially leading to a less-than-optimal value proposition.

How does the geographic concentration of service delivery in Texas potentially impact the overall effectiveness and accessibility of these examinations for veterans nationwide?

While the contract specifies Texas (ST: TX, SN: TEXAS) as a primary location, the nature of medical disability examinations for veterans often implies a nationwide need. If the contract is structured such that VES is primarily operating within Texas but serving veterans from across the country (perhaps through telehealth or by bringing veterans to Texas), it could create accessibility challenges and increase travel burdens for veterans residing far from Texas. Alternatively, if this award is for services specifically within Texas to support veterans in that region, then the impact on nationwide accessibility is limited. The effectiveness hinges on whether VES has the infrastructure and network to conduct these examinations efficiently, regardless of the veteran's origin, or if this award is part of a larger, multi-award strategy to cover different geographic regions. Without further clarification on the service delivery model, the nationwide impact remains a point for consideration.

What are the potential implications of having only 4 bidders for a contract of this magnitude in the specialized field of medical disability evaluations?

Having 4 bidders for a contract valued at over $566 million in the specialized field of medical disability evaluations suggests a moderately competitive market. While 4 bidders are better than a sole-source or limited competition scenario, it may not represent the highest level of competition achievable. In highly specialized fields, the number of capable vendors can be limited. This level of competition could mean that pricing might not be as aggressively driven down as it would be with, say, 8-10 bidders. However, it does indicate that there are multiple established entities capable of performing this complex service. The key takeaway for taxpayers is that while competition exists, further analysis would be needed to determine if it was sufficient to secure the best possible price and value, or if market consolidation limits true price discovery.

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: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2707 NORTH LOOP W STE 1000, HOUSTON, TX, 77008

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

Financial Breakdown

Contract Ceiling: $566,164,541

Exercised Options: $566,164,541

Current Obligation: $566,164,541

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X25D0004

IDV Type: IDC

Timeline