HHS awards $42.7M contract for auditing services, with a significant portion allocated to the Centers for Medicare and Medicaid Services

Contract Overview

Contract Amount: $42,736,421 ($42.7M)

Contractor: Conrad LLP

Awarding Agency: Department of Health and Human Services

Start Date: 2022-09-23

End Date: 2026-09-25

Contract Duration: 1,463 days

Daily Burn Rate: $29.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: ELECTRONIC STAFFING DATA (PAYROLL-BASED JOURNAL) AUDITING SPECIALIST - BASE YEAR

Place of Performance

Location: LAKE FOREST, ORANGE County, CALIFORNIA, 92630

State: California Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $42.7 million to CONRAD LLP for work described as: ELECTRONIC STAFFING DATA (PAYROLL-BASED JOURNAL) AUDITING SPECIALIST - BASE YEAR Key points: 1. The contract value of $42.7 million over its base and option periods suggests a substantial need for auditing expertise within the agency. 2. The 'FULL AND OPEN COMPETITION' indicates a broad market solicitation, potentially leading to competitive pricing. 3. The 'TIME AND MATERIALS' contract type introduces cost variability, requiring diligent oversight to manage expenditures effectively. 4. The contract duration of 1463 days (approximately 4 years) allows for sustained support but also necessitates long-term performance monitoring. 5. The primary agency, Centers for Medicare and Medicaid Services (CMS), handles vast healthcare programs, making auditing critical for financial integrity. 6. The North American Industry Classification System (NAICS) code 541211 points to a specialized accounting and auditing service sector.

Value Assessment

Rating: good

The total contract value of $42.7 million for auditing services appears reasonable given the duration and the critical nature of the work for CMS. Benchmarking against similar large-scale auditing contracts within federal healthcare agencies would provide a more precise value-for-money assessment. The 'TIME AND MATERIALS' pricing structure, while flexible, warrants close monitoring to ensure costs remain aligned with the scope of work and do not escalate beyond initial expectations. The contract's base year value and potential for growth through options should be evaluated against the agency's budget and the criticality of the services provided.

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 were invited to bid. With 3 bidders identified, this indicates a moderate level of competition. A higher number of bidders typically correlates with more competitive pricing and a wider range of innovative solutions. The fact that it was fully competed is a positive sign for price discovery and ensuring the government receives fair market value for the services rendered.

Taxpayer Impact: A fully competed contract generally benefits taxpayers by driving down costs through competitive bidding. This process helps ensure that public funds are used efficiently and effectively, as multiple vendors vie to offer the best value proposition.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially millions of healthcare beneficiaries whose program integrity is safeguarded. Services delivered include auditing and accounting expertise crucial for financial oversight and compliance within federal healthcare programs. The geographic impact is primarily national, given CMS's role in administering nationwide healthcare programs, though the contractor's physical location is California. Workforce implications include the employment of auditing specialists and potentially other accounting professionals by the contractor, CONRAD LLP.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'TIME AND MATERIALS' contract type can lead to cost overruns if not managed meticulously, as labor hours and material costs are directly billed.
The duration of the contract (over 4 years) necessitates continuous performance monitoring to ensure sustained quality and adherence to evolving regulatory requirements.
Reliance on a single award for such a critical function could pose a risk if the contractor faces performance issues or financial instability.

Positive Signals

The contract was awarded through 'FULL AND OPEN COMPETITION,' indicating a robust bidding process that likely secured competitive pricing.
The contractor, CONRAD LLP, has secured a significant federal contract, suggesting a level of established capability and trust within the government contracting space.
The specialized nature of the service (auditing for healthcare programs) implies a focus on critical compliance and financial integrity, which is a positive indicator of the contract's purpose.

Sector Analysis

The federal auditing and accounting services sector is a critical component of government operations, ensuring financial accountability and compliance. This contract falls within the professional, scientific, and technical services industry, specifically focusing on accounting and auditing services (NAICS 541211). The market for these services within the federal government is substantial, driven by the need for oversight across numerous agencies and programs, particularly in complex areas like healthcare. Comparable spending benchmarks would involve analyzing other large federal contracts for auditing and financial advisory services awarded to firms of similar size and specialization.

Small Business Impact

This contract was not awarded as a small business set-aside, as indicated by 'sb': false. Furthermore, the contractor, CONRAD LLP, is likely a larger entity given the contract value. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The absence of a small business set-aside suggests that the competition was open to all qualified vendors, and the primary focus was on securing the best technical solution and price, rather than specifically promoting small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Department of Health and Human Services (HHS) and specifically the Centers for Medicare and Medicaid Services (CMS). Mechanisms likely include regular performance reviews, milestone tracking, and financial audits of the contractor's billing. Transparency is facilitated through contract databases like FPDS-NG. While no specific Inspector General (IG) is mentioned, HHS has its own Office of Inspector General (OIG) which has broad jurisdiction over HHS programs and could investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Federal Health IT Services
Medicare Program Integrity
Medicaid Program Auditing
Government Financial Auditing Services
Healthcare Compliance Contracts

Risk Flags

Cost Overrun Risk (Time and Materials)
Performance Monitoring Intensity
Contract Duration Management

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $42.7 million to CONRAD LLP. ELECTRONIC STAFFING DATA (PAYROLL-BASED JOURNAL) AUDITING SPECIALIST - BASE YEAR

Who is the contractor on this award?

The obligated recipient is CONRAD LLP.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $42.7 million.

What is the period of performance?

Start: 2022-09-23. End: 2026-09-25.

What is the historical spending pattern for auditing services by the Centers for Medicare and Medicaid Services (CMS) over the past five years?

Analyzing historical spending patterns for auditing services by CMS is crucial for understanding the agency's commitment to financial oversight and identifying trends. While specific historical data for this exact contract is not provided, general trends indicate a consistent and significant investment in auditing and program integrity functions within CMS due to the vast sums managed by Medicare and Medicaid. Federal procurement data typically shows that agencies like CMS award numerous contracts for auditing, consulting, and financial management services annually. These expenditures are often driven by regulatory requirements, the complexity of healthcare finance, and the need to prevent fraud, waste, and abuse. A detailed analysis would involve querying federal procurement databases for all contracts awarded under NAICS code 541211 (Offices of Certified Public Accountants) or similar codes by CMS over the last five fiscal years, looking at total obligated amounts, contract types, and competition levels to establish a baseline and identify any significant year-over-year changes or shifts in contracting strategy.

How does the per-unit cost or hourly rate for auditing specialists under this contract compare to market rates or similar federal contracts?

Benchmarking the per-unit cost or hourly rate for auditing specialists under this contract against market rates and similar federal contracts is essential for assessing value for money. The provided data indicates a 'TIME AND MATERIALS' contract type, which means specific hourly rates for labor categories would be defined in the contract's schedule. Without access to these detailed rates, a precise comparison is difficult. However, the fact that it was awarded under 'FULL AND OPEN COMPETITION' with 3 bidders suggests that the rates negotiated were likely competitive within the federal acquisition landscape. To perform a thorough benchmark, one would need to compare the contractor's billed hours and associated rates against data from other federal contracts for similar auditing services, particularly those awarded by agencies with comparable needs (e.g., other large health or human services agencies). Industry surveys and commercial rate data for certified public accountants and auditors in the Washington D.C. metropolitan area (a common benchmark location for federal contractors) could also provide context, though federal rates often include specific overhead and profit margins that differ from the commercial sector.

What is CONRAD LLP's track record with federal contracts, particularly those related to auditing and healthcare?

CONRAD LLP's track record with federal contracts, especially in auditing and healthcare, is a key indicator of their capability and reliability. As a recipient of this $42.7 million contract from HHS, it suggests they have demonstrated sufficient qualifications and competitive pricing to win a significant government award. A review of federal procurement databases (like FPDS-NG) would reveal the extent of their past performance. This would include the number and value of previous federal contracts, the agencies they have served, the types of services rendered (specifically looking for auditing, accounting, financial management, and healthcare-related services), and their performance ratings on past contracts. Positive past performance, especially on similar large-scale contracts, provides confidence in their ability to execute this current requirement effectively. Conversely, any history of performance issues, contract disputes, or negative past performance reviews would raise concerns about their suitability for this role.

What are the primary risks associated with a 'TIME AND MATERIALS' contract for auditing services, and how are they mitigated?

The primary risk associated with a 'TIME AND MATERIALS' (T&M) contract for auditing services is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts reimburse the contractor for direct labor hours at specified rates and for the actual cost of materials. This structure can lead to unpredictable final costs if the scope of work is not well-defined, if inefficiencies arise, or if the contractor inflates hours or material charges. For auditing services, this could manifest as extended research, excessive documentation review, or prolonged client interaction. Mitigation strategies employed by the government typically include: 1) establishing ceiling prices that the contractor cannot exceed, 2) defining labor categories and rates clearly in the contract, 3) requiring detailed timesheets and justifications for hours worked, 4) implementing robust project management and oversight to monitor progress and identify potential inefficiencies early, and 5) including clauses that allow the government to audit the contractor's costs. The 'base year' and option periods also allow for re-evaluation and potential adjustments to terms if cost control becomes an issue.

How does the competition level (3 bidders) for this contract potentially impact the value received by the government?

The competition level of 3 bidders for this contract, awarded under 'FULL AND OPEN COMPETITION,' suggests a moderate degree of market engagement. While more bidders generally lead to greater price competition and potentially lower costs for the government, three bidders still indicate that the opportunity was attractive enough to draw multiple qualified firms. This level of competition is often sufficient to drive prices down from what might be expected in a sole-source or limited-source scenario. It allows the government to compare proposals and select the offer that represents the best value, considering both price and technical merit. However, a higher number of bidders (e.g., 5 or more) could have potentially resulted in even more aggressive pricing or a wider array of innovative solutions. The government's evaluation process, including the clarity of the solicitation requirements and the evaluation criteria, plays a significant role in how effectively these three bids translate into value for the taxpayer.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 23161 LAKE CENTER DR STE 200, LAKE FOREST, CA, 92630

Business Categories: Category Business, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $112,867,525

Exercised Options: $71,946,584

Current Obligation: $42,736,421

Actual Outlays: $32,733,957

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS23F056AA

IDV Type: FSS

Timeline