HHS awards $465M contract for income verification services to Carahsoft Technology Corp

Contract Overview

Contract Amount: $465,015,535 ($465.0M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of Health and Human Services

Start Date: 2023-09-30

End Date: 2028-09-29

Contract Duration: 1,826 days

Daily Burn Rate: $254.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CURRENT SOURCES OF INCOME AND EMPLOYMENT VERIFICATION SERVICE (CSI)

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $465.0 million to CARAHSOFT TECHNOLOGY CORP for work described as: CURRENT SOURCES OF INCOME AND EMPLOYMENT VERIFICATION SERVICE (CSI) Key points: 1. Contract value of $465M over 5 years suggests significant demand for income verification services. 2. Full and open competition indicates a potentially competitive bidding process. 3. Fixed-price contract type may offer cost certainty but could limit flexibility. 4. The contract is managed by CMS, a key agency within HHS. 5. The duration of 1826 days (5 years) aligns with typical long-term service agreements. 6. The North American Industry Classification System (NAICS) code 511210 points to software publishers, suggesting a technology-centric solution.

Value Assessment

Rating: good

The contract value of $465M over five years for income verification services appears substantial. Benchmarking against similar contracts for large-scale data verification and software solutions is necessary for a precise value-for-money assessment. However, the fixed-price nature suggests an attempt to control costs. Without specific per-unit data or comparison to market rates for similar verification services, a definitive assessment of pricing efficiency is challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a moderate level of competition for this significant contract. While two bidders is better than one, a higher number of bidders typically leads to more robust price discovery and potentially lower prices for the government.

Taxpayer Impact: The full and open competition, despite only two bidders, suggests that taxpayers likely benefited from a competitive process that aimed to secure the best value. However, exploring why only two bids were received could reveal opportunities for broader competition in the future.

Public Impact

Beneficiaries include federal agencies relying on accurate income and employment data for program eligibility and fraud prevention. Services delivered are critical for the integrity of various social and health programs administered by HHS. The geographic impact is national, supporting federal operations across the United States. Workforce implications may include roles in software development, data analysis, and program administration related to the service.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (only 2 bidders) could indicate potential barriers to entry or a niche market.
Reliance on a single contractor for a critical service over five years poses a risk if performance degrades.
The fixed-price contract might disincentivize cost-saving innovations by the contractor if not structured with performance incentives.

Positive Signals

Awarded through full and open competition, suggesting a fair and transparent process.
The fixed-price contract provides cost predictability for the government.
The contract duration of five years allows for stable service delivery and potential for contractor investment in the solution.

Sector Analysis

The Information Technology sector, specifically software publishers (NAICS 511210), is characterized by rapid innovation and significant government spending. This contract for income and employment verification services likely leverages sophisticated software platforms to process and analyze large datasets. Comparable spending benchmarks would involve other large-scale data management, analytics, or identity verification contracts within federal agencies, particularly those focused on social services and healthcare.

Small Business Impact

The data indicates that small business participation was not a specific set-aside (ss: false, sb: false). This suggests that the primary focus of this large contract was on obtaining the best solution through open competition, rather than specifically targeting small businesses. Subcontracting opportunities for small businesses may exist within the prime contractor's execution plan, but they are not explicitly mandated by the contract's set-aside status.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS) within HHS. Accountability measures are typically embedded in the contract's performance work statement, including service level agreements and reporting requirements. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply to investigate any potential fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Social Security Administration (SSA) Income Verification Programs
Department of Labor (DOL) Employment Data Services
IRS Taxpayer Data Access Programs
Federal Benefits Administration Systems
State-level eligibility verification systems

Risk Flags

Data Security and Privacy Risk
Contractor Performance Risk
Limited Competition Risk
Technology Obsolescence Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $465.0 million to CARAHSOFT TECHNOLOGY CORP. CURRENT SOURCES OF INCOME AND EMPLOYMENT VERIFICATION SERVICE (CSI)

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

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 $465.0 million.

What is the period of performance?

Start: 2023-09-30. End: 2028-09-29.

What is the historical spending pattern for income and employment verification services by HHS or CMS?

Analyzing historical spending patterns for income and employment verification services by HHS and CMS is crucial for understanding the context of this $465M award. While specific historical data for this exact service is not provided, agencies like CMS and HHS consistently invest in data verification to ensure the integrity of programs like Medicare and Medicaid. Past contracts for similar services, whether for eligibility determination, fraud detection, or program integrity, would likely show significant and sustained investment. Trends might indicate an increasing reliance on technology-driven solutions, a shift towards cloud-based platforms, and a growing emphasis on data security and privacy. Understanding the scale and evolution of past spending can help benchmark the current award and identify potential areas for cost efficiencies or technological advancements.

How does Carahsoft Technology Corp's track record in government contracting influence the risk assessment of this award?

Carahsoft Technology Corp is a well-established government IT solutions provider and reseller, known for its extensive contract vehicles and partnerships with numerous technology vendors. Their track record typically involves facilitating the procurement of software and hardware for federal agencies. For this specific contract, Carahsoft is likely acting as the prime contractor, potentially leveraging its existing relationships and contract vehicles to deliver the income and employment verification service. Their experience in navigating federal procurement processes and managing complex IT solutions suggests a lower execution risk from a contractual and administrative standpoint. However, the actual performance of the verification service itself will depend on the underlying technology and any specialized subcontractors involved. A review of Carahsoft's past performance on similar large-scale service contracts, particularly those involving data processing and verification, would provide a more granular risk assessment.

What are the key performance indicators (KPIs) likely included in this contract to measure service effectiveness?

Key Performance Indicators (KPIs) for a contract focused on income and employment verification services would likely center on accuracy, timeliness, security, and system availability. For accuracy, KPIs might include the percentage of correctly verified income/employment records and a low rate of false positives or negatives. Timeliness could be measured by the average turnaround time for verification requests. System availability would be critical, with targets for uptime (e.g., 99.9%) to ensure continuous access to the service. Security KPIs would focus on data breach incidents, compliance with relevant data protection regulations (like HIPAA, if applicable), and successful completion of security audits. Additionally, KPIs related to customer support responsiveness and the efficiency of the verification process (e.g., cost per verification) might also be included to ensure overall value and operational effectiveness.

Given the $465M value, what are the potential risks associated with data privacy and security for this contract?

The substantial value of this contract, coupled with its focus on income and employment verification, inherently carries significant data privacy and security risks. The service will likely handle sensitive Personally Identifiable Information (PII) and potentially financial data of individuals interacting with federal programs. Risks include potential data breaches due to cyberattacks, insider threats, or accidental disclosures. Ensuring compliance with stringent federal data protection regulations (e.g., NIST standards, Privacy Act) is paramount. The contractor must implement robust security measures, including encryption, access controls, regular security audits, and incident response plans. Any failure in these areas could lead to severe consequences, including identity theft, financial fraud, reputational damage to the government agencies involved, and substantial legal and financial penalties for the contractor.

How does the NAICS code 511210 (Software Publishers) align with the described service, and what does it imply about the solution?

The North American Industry Classification System (NAICS) code 511210, 'Software Publishers,' aligns with the contract for income and employment verification services by indicating that the core solution is likely software-based. This suggests that Carahsoft Technology Corp, or its partners, will provide or develop a sophisticated software platform designed to access, process, and verify income and employment data. This could involve database management, data analytics, API integrations with various data sources (e.g., payroll providers, tax agencies, credit bureaus), and user interfaces for accessing verification results. The 'Software Publishers' classification implies that the value proposition is centered on the technology itself – its functionality, scalability, security, and ability to integrate with existing government systems. It suggests a move away from purely manual or paper-based processes towards a more automated, efficient, and potentially data-rich verification system.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11493 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $2,066,275,124

Exercised Options: $465,015,535

Current Obligation: $465,015,535

Actual Outlays: $350,936,195

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QSWA18D008F

IDV Type: FSS

Timeline