HHS awards $126M+ for WTC Health Program services, with limited competition

Contract Overview

Contract Amount: $126,091,188 ($126.1M)

Contractor: Karna LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2021-11-29

End Date: 2026-11-30

Contract Duration: 1,827 days

Daily Burn Rate: $69.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: BRIDGE CONTRACT - WTC HEALTH PROGRAM

Place of Performance

Location: ATLANTA, DEKALB County, GEORGIA, 30345

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $126.1 million to KARNA LLC for work described as: BRIDGE CONTRACT - WTC HEALTH PROGRAM Key points: 1. The contract's value of over $126 million over its duration indicates a significant investment in specialized health services. 2. The 'NOT COMPETED' status raises questions about the extent of market engagement and potential for cost savings through broader competition. 3. The Cost Plus Fixed Fee (CPFF) contract type suggests that costs are reimbursed, with a fixed fee for profit, which can incentivize cost control but also requires robust oversight. 4. The contract duration of approximately five years (1827 days) allows for sustained service delivery but also necessitates long-term performance monitoring. 5. The primary service category, 'All Other Professional, Scientific, and Technical Services,' is broad and requires clear performance metrics to ensure value. 6. The award to KARNA LLC, without a competitive process, highlights the importance of understanding the rationale for sole-source or limited-source awards.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics and a competitive baseline. The CPFF structure means costs are reimbursed, making direct value-for-money assessment dependent on the efficiency of the contractor and the oversight applied. Comparing this to similar contracts for specialized health program administration would be necessary to determine if the pricing is reasonable. The absence of competition limits the ability to assess if market rates were achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. The rationale for this approach is not provided in the data, but it typically occurs when only one vendor possesses the necessary qualifications, or in urgent situations. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The government did not leverage market dynamics to ensure cost-effectiveness.

Public Impact

The primary beneficiaries are individuals eligible for the World Trade Center (WTC) Health Program, including responders and survivors of the 9/11 attacks. The services delivered are professional, scientific, and technical in nature, supporting the administration and operation of the WTC Health Program. The contract's geographic impact is national, as the WTC Health Program serves eligible individuals across the United States. Workforce implications include the employment of personnel by KARNA LLC to fulfill the contract requirements, potentially including healthcare professionals, administrative staff, and technical experts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
CPFF contract type requires diligent oversight to manage costs effectively.
Broad service category necessitates clear performance standards and monitoring.
Sole-source award justification needs to be transparent to ensure accountability.

Positive Signals

Contract ensures continued support for the critical WTC Health Program.
Long-term contract duration provides stability for program operations.
Award to a single entity can streamline management and coordination.

Sector Analysis

This contract falls within the Professional, Scientific, and Technical Services sector, specifically under 'All Other Professional, Scientific, and Technical Services.' This broad category encompasses a wide range of support functions. The market for such services is competitive, but specific expertise for specialized programs like the WTC Health Program might be concentrated among a few providers. Comparable spending benchmarks would involve looking at other large-scale health program administration contracts, particularly those with a public health or specialized medical focus.

Small Business Impact

The data indicates that small business participation (sb) is false, and there was no small business set-aside (ss). This suggests that the contract was not specifically targeted towards small businesses, and KARNA LLC is likely a larger entity. There is no information provided on subcontracting plans, so the impact on the small business ecosystem is unclear, but it is unlikely to be a primary focus of this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Disease Control and Prevention (CDC) within the Department of Health and Human Services (HHS). As a sole-source award, particularly with a CPFF structure, robust oversight mechanisms are crucial to ensure cost control, performance quality, and adherence to program objectives. Transparency would depend on HHS's reporting practices regarding sole-source justifications and performance reviews. Inspector General jurisdiction would apply if any concerns regarding fraud, waste, or abuse arise.

Related Government Programs

WTC Health Program
September 11th Victim Compensation Fund
Public Health Services
Health Program Administration
Federal Health Contracts

Risk Flags

Sole-source award lacks competitive pricing.
CPFF contract requires stringent cost oversight.
Broad service category may obscure performance issues.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $126.1 million to KARNA LLC. BRIDGE CONTRACT - WTC HEALTH PROGRAM

Who is the contractor on this award?

The obligated recipient is KARNA LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).

What is the total obligated amount?

The obligated amount is $126.1 million.

What is the period of performance?

Start: 2021-11-29. End: 2026-11-30.

What is the specific justification for awarding this contract on a sole-source basis to KARNA LLC?

The provided data does not include the specific justification for the sole-source award to KARNA LLC. Typically, sole-source awards are made when a unique capability is required, there is an urgent need, or only one responsible source exists. For a contract of this magnitude and duration, the agency (CDC/HHS) would have a documented rationale, often involving market research to confirm the lack of competition or the unique suitability of the contractor. Without this documentation, it's impossible to definitively assess the necessity of the sole-source approach.

How does the Cost Plus Fixed Fee (CPFF) structure impact cost control and value for money in this contract?

The CPFF structure reimburses the contractor (KARNA LLC) for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure can incentivize the contractor to control costs, as the fee remains constant regardless of the final cost. However, it also places a significant burden on the contracting agency (CDC/HHS) to meticulously monitor and audit all incurred costs to ensure they are reasonable, allocable, and necessary. Effective oversight is paramount to achieving value for money with a CPFF contract, as there is less inherent price competition compared to fixed-price contracts.

What are the key performance indicators (KPIs) used to measure the success of KARNA LLC in administering the WTC Health Program?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. However, for a contract supporting the WTC Health Program, KPIs would likely focus on aspects such as timely processing of claims and applications, quality of medical services provided or facilitated, patient satisfaction, adherence to program eligibility criteria, and efficient management of program resources. The broad nature of the 'All Other Professional, Scientific, and Technical Services' NAICS code necessitates clearly defined performance standards within the contract's Statement of Work (SOW) to ensure accountability.

What is the historical spending pattern for WTC Health Program administration services, and how does this award compare?

Historical spending data for WTC Health Program administration is not provided. However, this $126 million contract over approximately five years represents a substantial, ongoing investment in the program's operational support. To compare, one would need to examine prior contracts awarded for similar services, noting any changes in scope, duration, contractor, and total cost. Understanding past spending trends, especially if previous awards were competed, would provide context for the current sole-source award's value and pricing.

What are the potential risks associated with a sole-source award of this magnitude and duration?

The primary risk of a sole-source award of this magnitude is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, there is less assurance that the government is receiving the most economical price. Other risks include vendor lock-in, where the agency becomes dependent on a single provider, potentially limiting future flexibility. Furthermore, if the sole-source justification is weak or becomes outdated, it could lead to perceptions of impropriety or inefficiency. Robust contract management and oversight are critical to mitigate these risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75D301-21-R-71997

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Blue Cross and Blue Shield of South Carolina

Address: 2800 CENTURY PKWY NE STE 700, ATLANTA, GA, 30345

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

Financial Breakdown

Contract Ceiling: $126,091,188

Exercised Options: $126,091,188

Current Obligation: $126,091,188

Actual Outlays: $92,427,584

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline