VA awards $356.6M for medical disability exams to OptumServe, highlighting a significant investment in veteran healthcare services

Contract Overview

Contract Amount: $356,623,262 ($356.6M)

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: $979.7K/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 $356.6 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: FY26 FUNDING MEDICAL DISABILITY EXAMINATIONS Key points: 1. The contract value represents a substantial commitment to ensuring veterans receive timely and accurate medical disability evaluations. 2. OptumServe's selection suggests a focus on established providers with demonstrated capacity for large-scale healthcare services. 3. The firm-fixed-price structure aims to provide cost certainty for the government, though it may limit flexibility. 4. The duration of the contract indicates a long-term need for these critical examination services. 5. This award is a key component of the VA's broader strategy to manage veteran healthcare claims efficiently. 6. The reliance on a single awardee for this significant scope warrants scrutiny of performance and potential risks.

Value Assessment

Rating: good

The contract value of $356.6 million for a one-year period for medical disability examinations appears substantial. Benchmarking against similar large-scale contracts for healthcare services is crucial. Given the scale and nature of the services, the pricing is likely competitive, but a detailed cost-per-examination analysis would provide a clearer picture of value for money. The VA's consistent use of OptumServe for these services suggests a level of satisfaction with their performance and pricing in previous engagements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The fact that it resulted in a single award suggests that OptumServe was the most advantageous offer based on the evaluation criteria. The level of competition, while initially broad, ultimately led to a single, highly capable provider being selected for this critical service.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve service quality. However, the concentration of such a large contract with one provider warrants ongoing monitoring to ensure continued value.

Public Impact

Veterans across the nation will benefit from access to medical disability examinations necessary for determining eligibility for VA benefits. The services delivered include comprehensive medical evaluations to support disability claims processing. The geographic impact is nationwide, as the VA serves veterans across all states and territories. This contract supports a significant healthcare workforce, including physicians, nurses, and administrative staff, involved in conducting and processing these examinations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for over-reliance on a single contractor for a critical service.
Risk of service degradation if contractor performance falters without immediate competitive alternatives.
Ensuring consistent quality and adherence to VA standards across all examinations.
Managing potential price increases in future contract renewals if competition diminishes.

Positive Signals

OptumServe has a demonstrated track record in providing large-scale healthcare services.
The firm-fixed-price contract provides budget certainty for the VA.
Full and open competition was utilized, suggesting a robust initial vetting of potential providers.
The contract duration allows for stable service delivery and planning.

Sector Analysis

The healthcare services sector is a significant area of federal spending, particularly for agencies like the Department of Veterans Affairs. This contract falls under the medical services sub-sector, specifically focusing on diagnostic and evaluation services. The market for these services is competitive, with several large healthcare providers capable of handling such contracts. The VA's spending in this area is substantial and consistent, reflecting the ongoing need to support veterans' healthcare claims.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific award, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. While OptumServe is a large entity, the contract does not appear to have a specific small business set-aside component. Subcontracting opportunities for small businesses may exist within OptumServe's operations, but this is not explicitly detailed in the provided data. The impact on the small business ecosystem is likely minimal directly from this award, but it highlights the dominance of large contractors in securing major federal healthcare service contracts.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs contracting officers and program managers. They are responsible for monitoring contractor performance, ensuring compliance with contract terms, and verifying the quality of services rendered. The VA's Office of Inspector General (OIG) also has jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency is maintained through contract award databases and performance reporting, though detailed operational oversight is internal to the agency.

Related Government Programs

Veterans Health Administration Medical Services
Disability Evaluation System
VA Benefits Administration
Healthcare Services Contracts
Medical Examination Services

Risk Flags

Potential for single-source dependency
Performance variability risk
Quality control challenges at scale

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $356.6 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 $356.6 million.

What is the period of performance?

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

What is OptumServe's track record with the VA for similar services?

OptumServe Health Services, Inc. has a significant history of contracting with the Department of Veterans Affairs, particularly for medical disability examinations. They have been a key provider in the VA's efforts to streamline and expedite the disability claims process. Their previous contracts have involved managing large networks of healthcare providers to conduct these examinations nationwide. While specific performance metrics from past contracts are not detailed here, the VA's continued reliance on OptumServe suggests a generally positive or at least acceptable performance history in fulfilling the requirements of these complex and high-volume service agreements. This ongoing relationship indicates a level of trust and established operational capacity.

How does the cost per examination compare to industry benchmarks or previous VA contracts?

The provided data does not include a specific cost per examination, making a direct benchmark difficult. The total award is $356.6 million for a 364-day period. To estimate a per-examination cost, one would need the projected number of examinations. Assuming a high volume, the average cost per exam would need to be compared against historical VA contracts for similar services and against private sector benchmarks for independent medical examinations. Factors such as the complexity of examinations, geographic location, and provider mix influence these costs. Without the volume data, a precise value-for-money assessment on a per-unit basis is not feasible from the given information.

What are the primary risks associated with awarding such a large contract to a single entity?

Awarding a contract of this magnitude ($356.6 million) to a single entity, OptumServe, introduces several risks. Firstly, there's a risk of vendor lock-in, where the VA becomes heavily dependent on OptumServe, potentially reducing leverage in future negotiations. Secondly, if OptumServe experiences performance issues, such as a decline in quality, delays, or staffing shortages, it could significantly disrupt the disability claims process for veterans nationwide, given the lack of immediate alternative providers for this specific contract scope. Thirdly, a single point of failure increases vulnerability to unforeseen events like cyberattacks or major operational disruptions affecting the contractor. Finally, reduced competition in subsequent procurements could potentially lead to higher costs over time.

How effective has OptumServe been in meeting the VA's objectives for medical disability examinations?

The effectiveness of OptumServe in meeting the VA's objectives for medical disability examinations is best assessed through VA's internal performance evaluations and feedback mechanisms, which are not publicly detailed in this data. However, the VA's continued awarding of substantial contracts to OptumServe suggests that the company has generally met or exceeded performance expectations in areas such as timeliness, accuracy, and provider network management. The VA aims to ensure timely processing of disability claims, and OptumServe's role is critical in providing the necessary medical evidence. Success would be measured by metrics like average time to complete an exam, veteran satisfaction, and the quality of medical reports submitted.

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

Historical spending data for medical disability examinations by the VA shows a consistent and significant investment in these services over multiple fiscal years. The VA has increasingly relied on external contractors like OptumServe to manage the high volume of examinations required to process disability claims efficiently. Spending in this category has generally trended upwards, reflecting an increase in the number of veterans seeking benefits and the complexity of medical conditions. The VA has strategically used full and open competition to award these large contracts, often resulting in multi-year agreements valued in the hundreds of millions of dollars, similar to the current award.

Are there specific performance standards or KPIs tied to this contract?

While specific Key Performance Indicators (KPIs) are not detailed in the provided summary data, federal contracts of this nature typically include stringent performance standards. These usually encompass metrics related to the timeliness of scheduling and completing examinations, the accuracy and completeness of medical reports, the geographic coverage and availability of qualified medical professionals, and veteran satisfaction. The VA contracting officers are responsible for monitoring these KPIs, and failure to meet them can result in penalties, corrective action plans, or even contract termination. The firm-fixed-price nature of the contract implies that the contractor is responsible for delivering the service within the agreed-upon price, regardless of the actual costs incurred.

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: $356,623,262

Exercised Options: $356,623,262

Current Obligation: $356,623,262

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 36C10X25D0002

IDV Type: IDC

Timeline