DoD's $32.5M medical support contract with REEF SYSTEMS CORP shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $32,453,222 ($32.5M)

Contractor: Reef Systems Corp

Awarding Agency: Department of Defense

Start Date: 2018-09-26

End Date: 2024-08-31

Contract Duration: 2,166 days

Daily Burn Rate: $15.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: POTFF PERSONAL AND NONPERSONAL MEDICAL SUPPORT TO PROVIDE REHABILITATIVE TREATMENT TO REDUCE INJURY AND IMPROVE READINESS

Place of Performance

Location: HAMPTON, HAMPTON CITY County, VIRGINIA, 23665

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $32.5 million to REEF SYSTEMS CORP for work described as: POTFF PERSONAL AND NONPERSONAL MEDICAL SUPPORT TO PROVIDE REHABILITATIVE TREATMENT TO REDUCE INJURY AND IMPROVE READINESS Key points: 1. Contract value of $32.5M over 6 years for rehabilitative treatment services. 2. Services aim to reduce injury and improve military readiness. 3. Awarded via full and open competition after exclusion of sources, indicating some vetting. 4. The contract is a definitive contract with a firm fixed price, providing cost predictability. 5. Small business participation is not explicitly detailed, warranting further investigation. 6. The contract's duration of 2166 days (approx. 6 years) suggests a long-term need for these services.

Value Assessment

Rating: fair

The contract's firm fixed price structure provides a degree of cost certainty. Benchmarking against similar medical support contracts is difficult without more granular data on the specific services provided and their complexity. The total value of $32.5M over nearly six years suggests an average annual spend of approximately $5.4M. This figure appears reasonable for comprehensive rehabilitative treatment services supporting a military population, but a detailed cost breakdown and comparison to commercial healthcare providers would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This solicitation method suggests that while the initial intent was open competition, certain sources may have been excluded prior to the final award. The data indicates only 2 bids were received, which is a relatively low number for a contract of this magnitude and duration. This limited competition could potentially impact price discovery and may not have fully leveraged the market's competitive potential.

Taxpayer Impact: A low number of bidders can sometimes lead to higher prices for taxpayers if the competition was not sufficiently robust to drive down costs effectively.

Public Impact

Military personnel requiring rehabilitative treatment benefit from improved access to care. Services contribute to enhanced military readiness by reducing injury impact and recovery times. The contract supports healthcare professionals in providing specialized physical, occupational, and speech therapy. Geographic impact is likely concentrated around the military installations served by REEF SYSTEMS CORP. Workforce implications include employment for therapists and support staff within the contractor organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bids received (2) suggests potential for reduced competition and possibly higher costs.
The 'exclusion of sources' clause warrants understanding why certain entities were not considered.
Lack of explicit small business subcontracting goals or reporting needs further scrutiny.
The long contract duration could lead to vendor lock-in or reduced flexibility over time.

Positive Signals

Firm fixed price contract provides cost predictability for the government.
The contract's objective to improve military readiness aligns with critical defense needs.
Awarded through a competitive process, even with exclusions, indicates some market vetting.
Services provided are essential for the health and well-being of service members.

Sector Analysis

This contract falls within the Healthcare Services sector, specifically focusing on rehabilitative and therapeutic services. The market for medical support services to government entities, particularly the Department of Defense, is substantial. Comparable spending benchmarks would involve analyzing other contracts for physical therapy, occupational therapy, and audiology services provided to military branches or other federal agencies. The size of this contract ($32.5M over ~6 years) positions it as a significant, though not exceptionally large, award within this niche.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and the contract type (st) is 'VA' (Veteran Affairs, though the agency is DoD). This suggests the contract was not specifically set aside for small businesses. There is no information on subcontracting plans or performance. Without explicit small business goals or reporting, it's unclear what impact this contract has on the small business ecosystem, and whether opportunities for small businesses to participate as subcontractors were actively pursued or mandated.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, as the servicing agency. As a definitive contract, it likely involves task orders or delivery orders that are subject to review. Accountability measures would be tied to performance metrics outlined in the contract's statement of work. Transparency is generally facilitated through contract databases like FPDS, where basic award information is available. The extent of Inspector General (IG) involvement would depend on any reported issues or audits related to performance, cost, or compliance.

Related Government Programs

TRICARE Medical Support Contracts
DoD Physical and Occupational Therapy Services
Military Medical Readiness Programs
Federal Healthcare Services Procurement
Veteran Affairs Medical Support Contracts

Risk Flags

Limited competition (2 bidders)
Potential for unaddressed small business participation
Need for detailed cost/performance benchmarking
Ambiguity in 'exclusion of sources' criteria

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.5 million to REEF SYSTEMS CORP. POTFF PERSONAL AND NONPERSONAL MEDICAL SUPPORT TO PROVIDE REHABILITATIVE TREATMENT TO REDUCE INJURY AND IMPROVE READINESS

Who is the contractor on this award?

The obligated recipient is REEF SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $32.5 million.

What is the period of performance?

Start: 2018-09-26. End: 2024-08-31.

What is the specific breakdown of services provided under this contract, and how do they align with the stated goal of improving military readiness?

The contract, 'POTFF PERSONAL AND NONPERSONAL MEDICAL SUPPORT TO PROVIDE REHABILITATIVE TREATMENT TO REDUCE INJURY AND IMPROVE READINESS,' implies a range of services including physical therapy, occupational therapy, and potentially speech therapy and audiology. These services are crucial for service members recovering from injuries sustained during training or active duty, as well as for preventative care to mitigate risks. By facilitating faster and more effective recovery, these rehabilitative treatments directly contribute to maintaining and improving the overall health, deployability, and readiness of the military force. Specific metrics for injury reduction and readiness improvement would ideally be detailed in the contract's performance work statement (PWS) and monitored throughout its duration.

How does the pricing of this contract compare to similar medical support services procured by the Department of Defense or other federal agencies?

Benchmarking the pricing of this $32.5M contract requires detailed comparison with similar contracts for rehabilitative medical support. Factors such as the specific services offered (e.g., intensity of therapy, types of equipment used), the geographic location of service delivery, and the patient population (e.g., active duty vs. dependents) significantly influence costs. Without access to the detailed pricing structure and service level agreements within this contract, a direct comparison is challenging. However, the firm fixed price nature suggests that the contractor assumed the risk for cost overruns. A comprehensive analysis would involve comparing the per-diem, per-session, or annual service rates against established government healthcare benchmarks or recent awards for comparable services.

What were the primary reasons for excluding certain sources during the competition phase, and did this exclusion limit the competitive landscape?

The contract utilized 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This typically means that while the solicitation was intended to be open to all responsible sources, specific entities were identified and excluded prior to the final competition phase. Reasons for exclusion can range from failure to meet pre-qualification criteria, past performance issues, or specific regulatory requirements. The fact that only two bids were ultimately received suggests that the exclusion of sources, or other market factors, may have significantly narrowed the competitive field. Understanding the criteria for exclusion is key to assessing whether the government received the best possible value and if the exclusion was justified.

What are the key performance indicators (KPIs) used to measure the success of this contract in achieving its objectives of injury reduction and readiness improvement?

Key performance indicators (KPIs) for this contract would likely focus on the effectiveness and efficiency of the rehabilitative treatments provided. These could include metrics such as the average duration of treatment required for specific injuries, the percentage of service members returning to duty within a target timeframe, readmission rates for the same or related conditions, patient satisfaction scores, and potentially objective measures of functional improvement. The contract's success in reducing injury impact and improving readiness would be evaluated against baseline data and established military standards for physical and psychological well-being. The government would monitor these KPIs to ensure the contractor is meeting its obligations and delivering value.

What is the historical spending pattern for similar medical support services within the Department of Defense, and how does this contract fit into that trend?

Historical spending on medical support services within the DoD is substantial, reflecting the continuous need to maintain the health and readiness of military personnel. Contracts for physical therapy, occupational therapy, and related rehabilitative services are common across various branches. This $32.5M contract, spanning nearly six years, represents a significant but not extraordinary investment in this area. Trends in DoD healthcare spending often show increases due to evolving medical technologies, rising healthcare costs, and fluctuating operational demands. Analyzing past spending on similar services would reveal whether this contract's value is consistent with historical levels, or if it represents an increase or decrease, potentially influenced by factors like increased operational tempo or shifts in healthcare strategy.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Other Health Practitioners › Offices of Physical, Occupational and Speech Therapists, and Audiologists

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA489018R5004

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1230 SE MAYNARD RD SUITE 202, CARY, NC, 27511

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Other Minority Owned Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,711,555

Exercised Options: $36,383,872

Current Obligation: $32,453,222

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline