VA awards $714M contract for medical disability exams to OptumServe Health Services, Inc

Contract Overview

Contract Amount: $714,081,758 ($714.1M)

Contractor: Optumserve Health 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: $2.0M/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: LA CROSSE, LA CROSSE County, WISCONSIN, 54601

State: Wisconsin Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $714.1 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: FY26 FUNDING MEDICAL DISABILITY EXAMINATIONS Key points: 1. Contract aims to ensure timely and accurate medical disability evaluations for veterans. 2. OptumServe Health Services, Inc. is the sole awardee for this delivery order. 3. The contract is a Firm Fixed Price type, indicating predictable costs. 4. This award represents a significant investment in veteran healthcare support services. 5. The contract duration is one year, aligning with FY26 funding. 6. The North American Industry Classification System (NAICS) code 621111 points to physician offices.

Value Assessment

Rating: good

The contract value of $714 million for a one-year period for medical disability examinations appears substantial. Benchmarking against similar contracts for these services is crucial to assess value for money. Given the scale, it suggests a need for comprehensive nationwide coverage. The fixed-price nature provides cost certainty for the government, but the overall value will depend on the quality and efficiency of the services delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The number of bidders (4) indicates a moderate level of competition for this significant contract. This competitive process is expected to drive pricing towards market rates and encourage efficient service delivery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to better pricing and service quality, ensuring the government receives good value for its investment.

Public Impact

Veterans will benefit from timely and accurate medical disability examinations, crucial for determining eligibility for benefits. The services delivered will support the Department of Veterans Affairs' mission to care for veterans. The geographic impact is likely nationwide, given the scale of the contract. This contract supports a workforce of medical professionals and administrative staff involved in disability evaluations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service delivery bottlenecks if contractor capacity is exceeded.
Ensuring consistent quality of examinations across all providers.
Monitoring contractor performance to ensure adherence to timelines and standards.

Positive Signals

Awarded through full and open competition, suggesting a robust vetting process.
Firm Fixed Price contract provides cost predictability.
Contract duration aligns with annual federal budget cycles.

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 and the need for objective assessments. Comparable spending benchmarks would involve looking at other large-scale contracts for similar evaluation services, both within the VA and potentially other federal agencies like the Social Security Administration.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. While the prime contractor is OptumServe Health Services, Inc., it is important to assess if they have a subcontracting plan that includes opportunities for small businesses to participate in delivering these critical services.

Oversight & Accountability

Oversight will likely be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures would be embedded in the contract's performance standards and deliverables. Transparency is typically maintained through contract award databases and reporting requirements, though specific operational details may be sensitive.

Related Government Programs

Veterans Health Administration Medical Services
Disability Benefits Programs
Medical Evaluation Services Contracts
Federal Healthcare Procurement

Risk Flags

Potential for service delivery delays
Quality assurance of examinations
Contractor capacity management
Dependence on a single provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $714.1 million to OPTUMSERVE HEALTH SERVICES, INC.. FY26 FUNDING MEDICAL DISABILITY EXAMINATIONS

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 $714.1 million.

What is the period of performance?

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

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

Historical spending on medical disability examinations by the Department of Veterans Affairs (VA) has been significant and has seen fluctuations over the years, often driven by changes in veteran population, legislative mandates, and contractor performance. Prior to the current award, the VA has utilized various contracting mechanisms and entities to fulfill these crucial services. For instance, in previous years, the VA has awarded large contracts for similar services, sometimes facing challenges related to contractor capacity, quality control, and timeliness. Analyzing spending trends over the past 5-10 fiscal years would reveal the average annual expenditure, identify any major increases or decreases, and highlight the primary contractors or service providers utilized. This historical context is vital for understanding the trajectory of this spending category and assessing whether the current $714 million award represents an increase, decrease, or stable level of investment compared to previous periods.

How does the per-veteran cost of these examinations compare to industry benchmarks?

Determining the per-veteran cost requires knowing the total number of examinations anticipated under this $714 million contract for FY26. Without that specific volume, a precise per-veteran cost cannot be calculated. However, once the volume is known, it can be benchmarked against industry standards for medical disability evaluations. These benchmarks are influenced by factors such as the complexity of the examinations (e.g., general physical vs. specialized mental health), the geographic location of service delivery, and the specific requirements outlined in the contract. Industry averages can vary widely, but typically range from a few hundred to over a thousand dollars per examination. Comparing the calculated per-veteran cost to these benchmarks will indicate whether the VA is achieving cost-effective service delivery or if there are potential areas for negotiation or efficiency improvements with OptumServe Health Services, Inc.

What are the key performance indicators (KPIs) for this contract, and how will they be monitored?

Key Performance Indicators (KPIs) for this medical disability examination contract are critical for ensuring the quality, timeliness, and accuracy of services provided to veterans. While specific KPIs are detailed within the contract's Performance Work Statement (PWS), common metrics in such agreements include turnaround time for scheduling appointments and delivering examination reports, accuracy rates of diagnoses and assessments, veteran satisfaction scores, and compliance with VA protocols and standards. Monitoring these KPIs is typically the responsibility of the VA's Contracting Officer's Representative (COR) and their team. They will likely review regular performance reports submitted by OptumServe, conduct audits, and potentially hold periodic review meetings. Failure to meet agreed-upon KPIs can result in contractual remedies, such as performance improvement plans or financial penalties, ensuring accountability.

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

OptumServe Health Services, Inc. has a significant track record with the Department of Veterans Affairs, particularly in providing health services and claims processing. They have previously been awarded large contracts for medical disability examinations, sometimes taking over services previously handled by other entities. Their performance history with the VA has been subject to scrutiny, with both commendations for expanding capacity and criticisms regarding service delivery challenges, such as appointment backlogs and quality control issues in certain periods or locations. Understanding their past performance, including any challenges encountered and how they were addressed, is crucial for assessing the risk associated with this new $714 million award and for setting expectations for service delivery in FY26.

Are there any specific risks associated with relying on a single vendor for this critical service?

Relying on a single vendor, even one with extensive experience like OptumServe Health Services, Inc., for a critical service like medical disability examinations introduces several potential risks. Foremost among these is the risk of service disruption; if the contractor faces unforeseen operational issues, labor disputes, or financial difficulties, it could lead to significant delays in processing veteran claims, impacting thousands of individuals. Another risk is reduced leverage for the government in price negotiations or demanding service improvements, as there are fewer immediate alternatives. Furthermore, a sole awardee might face challenges in scaling services rapidly to meet unexpected surges in demand. While full and open competition was used for the award, the delivery order itself is to a single entity, necessitating robust contract management and contingency planning by the VA to mitigate these risks.

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

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: $714,081,758

Exercised Options: $714,081,758

Current Obligation: $714,081,758

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X25D0002

IDV Type: IDC

Timeline