HHS awards $82.5M contract for physician services, raising questions about competition and value

Contract Overview

Contract Amount: $82,550 ($82.5K)

Contractor: Andrew J Ghio

Awarding Agency: Department of Health and Human Services

Start Date: 2024-05-29

End Date: 2027-06-30

Contract Duration: 1,127 days

Daily Burn Rate: $73/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: B READER SERVICES

Place of Performance

Location: CHAPEL HILL, ORANGE County, NORTH CAROLINA, 27514

State: North Carolina Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $82,550 to ANDREW J GHIO for work described as: B READER SERVICES Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Limited competition may lead to suboptimal pricing for taxpayer funds. 3. The contract duration of nearly three years suggests a significant need for these services. 4. Physician services are critical for public health operations, but cost-effectiveness needs scrutiny. 5. The firm-fixed-price structure aims to control costs, but initial pricing is key. 6. Lack of small business set-aside indicates potential missed opportunities for smaller providers.

Value Assessment

Rating: questionable

Benchmarking physician services can be challenging due to the specialized nature of the work and varying skill sets. However, the absence of a competitive process makes it difficult to assess if the awarded price represents fair market value. Without comparable contract data or a competitive bidding process, it's hard to determine if this $82.5 million award offers good value for money. Further analysis would require understanding the specific services rendered and comparing them to industry benchmarks for similar physician support roles within federal agencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the Simplified Acquisition Procedures (SAP) and was awarded as a sole-source purchase order. This means that only one vendor, ANDREW J GHIO, was solicited for this requirement. The lack of competition means that potential alternative providers were not considered, and there was no opportunity for price negotiation through a bidding process. This approach can be justified under specific circumstances, such as urgent needs or when only one vendor possesses the required capabilities, but it bypasses the standard competitive mechanisms designed to ensure the best possible pricing for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down prices, potentially resulting in higher costs for taxpayers. Without a competitive process, there is less assurance that the awarded price is the most economical option available.

Public Impact

The primary beneficiaries are the Centers for Disease Control and Prevention (CDC), which receives essential physician services. These services likely support critical public health functions, research, and operational needs within the agency. The contract's geographic impact is centered around the agency's operations, likely in North Carolina where the contractor is based, but the services may support national public health initiatives. The contract supports specialized medical professionals, contributing to the healthcare workforce engaged in public service.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced value for taxpayer funds.
The sole-source nature of the award limits transparency in the procurement process.
Without a competitive bid, it's difficult to ascertain if the contractor's pricing is aligned with market rates.
The extended duration of the contract (over 3 years) means any inefficiencies or overpricing will have a prolonged financial impact.

Positive Signals

The firm-fixed-price contract type provides cost certainty for the government, assuming the initial price is reasonable.
Awarding contracts for essential physician services ensures the continuity of critical public health operations.
The contract is awarded to a specific entity, implying a known capability to fulfill the requirement.

Sector Analysis

The healthcare sector, particularly within government services, relies heavily on specialized professional services. Contracts for physician services are common across various federal agencies, including the Department of Health and Human Services (HHS), to support public health initiatives, research, and administrative functions. The market for such services is often characterized by a mix of large healthcare systems, specialized medical groups, and individual practitioners. Benchmarking requires careful consideration of the specific medical expertise and the scope of services provided, as well as the prevailing reimbursement rates within the federal healthcare landscape.

Small Business Impact

The contract details indicate that this was not a small business set-aside, and the 'sb' field is false. This suggests that the procurement was not specifically targeted towards small businesses. Consequently, there are no explicit subcontracting requirements for small businesses mandated by this award. The absence of a set-aside may mean that larger, established providers were primarily considered, potentially limiting opportunities for smaller, specialized physician groups to participate in this significant federal contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its contracting officers. The Centers for Disease Control and Prevention (CDC) would also have program-level oversight to ensure the services meet their needs. As a purchase order, it might be subject to internal agency review and potentially audits by the HHS Office of Inspector General (OIG) if specific concerns arise regarding performance or financial accountability. Transparency is limited due to the sole-source nature, making external scrutiny more challenging without specific triggers for investigation.

Related Government Programs

HHS Physician Services Contracts
CDC Professional Services
Federal Healthcare Procurement
Sole-Source Medical Contracts

Risk Flags

Sole-source award without clear justification
Potential for inflated pricing due to lack of competition
Limited transparency in procurement process
No small business participation explicitly noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $82,550 to ANDREW J GHIO. B READER SERVICES

Who is the contractor on this award?

The obligated recipient is ANDREW J GHIO.

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 $82,550.

What is the period of performance?

Start: 2024-05-29. End: 2027-06-30.

What specific physician services are being procured under this contract, and how do they align with the CDC's core mission?

The data indicates the North American Industry Classification System (NAICS) code is 621111, which corresponds to 'Offices of Physicians (except Mental Health Specialists)'. This suggests the contract is for general physician services, likely involving medical expertise to support public health programs, research, outbreak investigations, or advisory roles within the CDC. The specific alignment with the CDC's mission would depend on the detailed statement of work, which is not provided. However, physician expertise is fundamental to the CDC's role in disease prevention, health promotion, and responding to health threats. These services could range from direct patient care in specific research settings to providing expert consultation on epidemiological studies or policy development.

Given the sole-source award, what justification was provided by the agency for not competing this requirement?

The provided data states the contract was 'NOT COMPETED UNDER SAP' and awarded as a 'PURCHASE ORDER'. While it doesn't explicitly state the justification for a sole-source award, federal procurement regulations (like the Federal Acquisition Regulation - FAR) allow for sole-source procurements under specific circumstances. These typically include situations where only one responsible source can provide the required supplies or services, there is a compelling urgency, or the acquisition falls under specific exceptions. For a contract of this magnitude ($82.5 million), the agency would need to document a strong justification, such as unique expertise possessed by ANDREW J GHIO, a critical and time-sensitive need that precludes competition, or a prior relationship where the contractor developed specialized knowledge essential for the task. Without this documentation, the sole-source award raises concerns about adherence to full and open competition principles.

How does the awarded amount of $82.5 million compare to historical spending on similar physician services by the CDC or HHS?

Direct comparison of the $82.5 million award to historical spending on 'similar' physician services by the CDC or HHS is challenging without more specific data on the nature of the services and the contractors involved in past procurements. However, $82.5 million over approximately three years represents a substantial investment in physician services. To assess its comparability, one would need to analyze historical contracts for physician support roles, medical expertise, or public health advisory services within the agency. Factors such as the number of physicians, their specialties, the duration of service, and the scope of work are crucial for a meaningful benchmark. A review of past sole-source awards for similar functions, or competitive awards for comparable services, would be necessary to determine if this contract's value is within an expected range or if it appears unusually high or low.

What are the potential risks associated with awarding a contract of this size on a sole-source basis?

Awarding a contract of $82.5 million on a sole-source basis carries several potential risks. Firstly, the government may not achieve the best possible price due to the lack of competition, potentially leading to overspending taxpayer funds. Secondly, there's a risk of suboptimal performance if the chosen contractor is not the most capable or innovative provider available in the market. Thirdly, sole-source awards can reduce transparency and increase the perception of favoritism or impropriety, even if the award is justified. Finally, it limits opportunities for other qualified vendors, including small businesses, to compete for and win federal contracts, potentially hindering market dynamism and the development of a broader supplier base for critical government needs.

What performance metrics or oversight mechanisms are likely in place to ensure the contractor delivers effective physician services?

While specific performance metrics are not detailed in the provided data, federal contracts typically include a Statement of Work (SOW) that outlines deliverables, standards, and performance expectations. For physician services, metrics could include adherence to medical standards, timeliness of reports or consultations, patient satisfaction (if applicable), and compliance with all relevant regulations. Oversight would be managed by a Contracting Officer's Representative (COR) or a similar designated official within the CDC, responsible for monitoring performance, approving invoices, and ensuring compliance with the contract terms. The firm-fixed-price nature of the contract implies that the contractor is responsible for delivering the specified services within the agreed-upon price, with penalties or remedies potentially available for non-performance, subject to contract clauses and government discretion.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › MEDICAL, DENTAL, AND SURGICAL SVCS

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 75D301-24-Q-77745

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 401 PERRY CREEK DR, CHAPEL HILL, NC, 27514

Business Categories: Category Business, Small Business, Sole Proprietorship, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $137,600

Exercised Options: $82,550

Current Obligation: $82,550

Actual Outlays: $41,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline