HHS awards $19.18M for SNOMED CT services, raising questions about competition and value

Contract Overview

Contract Amount: $19,180,006 ($19.2M)

Contractor: International Health Terminology Standards Development Organisation

Awarding Agency: Department of Health and Human Services

Start Date: 2022-06-21

End Date: 2026-12-31

Contract Duration: 1,654 days

Daily Burn Rate: $11.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: SNOMED CT AND RELATED SERVICES

Plain-Language Summary

Department of Health and Human Services obligated $19.2 million to INTERNATIONAL HEALTH TERMINOLOGY STANDARDS DEVELOPMENT ORGANISATION for work described as: SNOMED CT AND RELATED SERVICES Key points: 1. The contract's value of $19.18 million over its period of performance warrants scrutiny for cost-effectiveness. 2. The absence of a competitive bidding process suggests potential for inflated pricing and reduced value for taxpayer dollars. 3. The sole-source nature of this award presents a significant risk indicator for price discovery and market efficiency. 4. Performance context is limited due to the lack of competitive benchmarks, making it difficult to assess contractor efficiency. 5. This contract positions the agency within the critical health informatics sector, supporting standardized medical terminology. 6. The reliance on a single vendor for essential data services could create vendor lock-in and future dependency.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized services provided. Without competitive bids, it's difficult to ascertain if the $19.18 million represents a fair market price for SNOMED CT and related services. The lack of transparency in pricing negotiations makes it hard to compare against similar contracts. Further analysis would be needed to determine if alternative solutions could offer better value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other vendors were solicited or considered. This approach bypasses the standard competitive bidding process, which typically involves multiple proposals and evaluations to ensure the best value. The lack of competition limits the agency's ability to leverage market forces to drive down costs and improve service quality.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This can result in less efficient use of public funds.

Public Impact

The primary beneficiaries are the National Institutes of Health (NIH) and the broader Department of Health and Human Services (HHS), which rely on SNOMED CT for standardized health data. The services delivered include the provision and maintenance of SNOMED CT, a critical clinical terminology used in electronic health records and health information exchange. The geographic impact is national, as SNOMED CT is a globally recognized standard used across the US healthcare system. Workforce implications include the need for skilled personnel to manage, implement, and utilize standardized terminologies within healthcare IT systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Lack of transparency in the procurement process hinders value assessment.
Potential for vendor lock-in due to specialized nature of services.
Limited performance data available due to non-competitive award.

Positive Signals

Supports critical health informatics infrastructure for HHS.
Ensures availability of a vital standardized medical terminology.
Long-term contract provides stability for essential services.

Sector Analysis

This contract falls within the Health Information Technology sector, specifically focusing on data standards and terminology management. The market for health informatics services is substantial, driven by the increasing digitization of healthcare and the need for interoperability. SNOMED CT is a foundational element for many health IT systems, making its maintenance and distribution a critical function. Comparable spending benchmarks are difficult to establish due to the unique nature of SNOMED CT and its governance.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating significant subcontracting opportunities for small businesses. The nature of the services, related to specialized terminology standards, may lend itself to larger, established organizations. Further investigation into subcontracting plans would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its respective contracting officers and program managers. Transparency is limited due to the sole-source nature of the award. Accountability measures would be defined in the contract's terms and conditions, focusing on service delivery and adherence to standards. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

SNOMED International
Health Information Exchange
Electronic Health Records
Clinical Data Standards
National Health IT Initiatives

Risk Flags

Sole-source procurement
Lack of competitive bidding
Potential for non-optimal pricing
Limited transparency in award process

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $19.2 million to INTERNATIONAL HEALTH TERMINOLOGY STANDARDS DEVELOPMENT ORGANISATION. SNOMED CT AND RELATED SERVICES

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL HEALTH TERMINOLOGY STANDARDS DEVELOPMENT ORGANISATION.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $19.2 million.

What is the period of performance?

Start: 2022-06-21. End: 2026-12-31.

What is the track record of the International Health Terminology Standards Development Organisation (IHTSDO) in providing SNOMED CT services?

The International Health Terminology Standards Development Organisation (IHTSDO), now known as SNOMED International, is the global organization responsible for developing and maintaining SNOMED CT. Their track record is established as the sole entity authorized to manage this critical health terminology. They work with member countries to ensure the quality, consistency, and widespread adoption of SNOMED CT. Their expertise lies in the complex process of clinical terminology development, mapping, and distribution. However, their role as the sole provider of these specific services means that government agencies like HHS must rely on their established processes and pricing structures, which are not subject to competitive market forces for this particular contract.

How does the pricing of this contract compare to similar services, if any exist?

Direct comparison of pricing for this contract is difficult due to its sole-source nature and the unique global role of SNOMED International in managing SNOMED CT. Unlike typical IT services or data processing contracts that have numerous comparable vendors and market rates, SNOMED CT is a specialized, internationally governed standard. Therefore, there are no direct 'competitors' in the traditional sense for the core service of providing and maintaining the SNOMED CT terminology itself. The contract value of $19.18 million over approximately four years reflects the costs associated with maintaining, updating, and distributing this complex clinical standard. Without competitive bids, it's challenging to benchmark this against alternative solutions or determine if it represents optimal value for taxpayer money.

What are the primary risks associated with a sole-source award for essential health terminology services?

The primary risks associated with a sole-source award for essential health terminology services like SNOMED CT revolve around cost, innovation, and dependency. Firstly, the lack of competition can lead to higher prices than might be achieved in a competitive environment, as the vendor faces less pressure to offer the most cost-effective solution. Secondly, without the stimulus of competition, there may be less incentive for the vendor to innovate or proactively improve services beyond the contractual requirements. Thirdly, a sole-source award can create vendor lock-in, making it difficult and costly for the government to switch providers or adopt alternative solutions in the future, even if better options become available. This dependency can also pose a risk if the vendor experiences financial instability or changes its strategic direction.

What is the historical spending pattern for SNOMED CT services by the Department of Health and Human Services?

Historical spending data for SNOMED CT services by the Department of Health and Human Services (HHS) prior to this $19.18 million award is not readily available in the provided data. However, it is understood that HHS, through agencies like the National Institutes of Health (NIH) and potentially others involved in health standards and interoperability, has a long-standing need for access to and support for SNOMED CT. Such services are typically procured through agreements with SNOMED International or its designated representatives. The current contract, spanning from June 2022 to December 2026, represents a significant investment. Analyzing previous contract values, durations, and procurement methods would provide a clearer picture of HHS's historical investment and evolving needs in this area.

How does the duration of this contract (2022-2026) impact the assessment of value and risk?

The contract duration of approximately four years (from June 21, 2022, to December 31, 2026) provides a stable period for the provision of essential SNOMED CT services. For the government, this duration offers predictability in service availability, which is crucial for health IT systems relying on standardized terminology. However, a longer duration, especially in a sole-source context, can also amplify the risks associated with vendor lock-in and potentially higher costs over time. If the pricing is not optimized upfront, the government commits to these terms for an extended period. Conversely, a shorter contract might necessitate more frequent and potentially costly re-procurement processes. The assessment of value is thus balanced against the risk of long-term commitment without competitive pressure.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75N97022R00010

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ONE KINGDOM STREET, LONDON

Business Categories: Category Business, Foreign Owned, International Organization, Limited Liability Corporation, Nonprofit Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $26,667,805

Exercised Options: $21,562,938

Current Obligation: $19,180,006

Actual Outlays: $19,180,006

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline