DoD's $390M TRICARE contract to CHRISTUS HEALTH for healthcare services awarded via non-competitive process

Contract Overview

Contract Amount: $390,377,122 ($390.4M)

Contractor: Christus Health

Awarding Agency: Department of Defense

Start Date: 2003-05-30

End Date: 2008-09-30

Contract Duration: 1,950 days

Daily Burn Rate: $200.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 200512!508601!9700!H94002!TRICARE SUPPORT OFFICE !H9400203C0020 !A!N! !N! !P00007!20050907!20080531!053629069!071367887!071367887!N!CHRISTUS HEALTH !2600 NORTH LOOP WEST !HOUSTON !TX!77092!35000!201!48!HOUSTON !HARRIS !TEXAS !+000003000000!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !000 !* !524114!E! !3!B!S!C! !D!20040930!B! ! !A! !A!N!J!1!001!B! !Z!N!Z! ! !N!C!Y! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77092

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $390.4 million to CHRISTUS HEALTH for work described as: 200512!508601!9700!H94002!TRICARE SUPPORT OFFICE !H9400203C0020 !A!N! !N! !P00007!20050907!20080531!053629069!071367887!071367887!N!CHRISTUS HEALTH !2600 NORTH LOOP WEST !HOUSTON !TX!77092!35000!201!48!HOUSTON !HARR… Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Significant contract value suggests a substantial need for healthcare services within the TRICARE program. 3. The duration of the contract (over 4 years) indicates a long-term commitment to the selected provider. 4. Awarded to CHRISTUS HEALTH, a large healthcare provider, suggesting established capabilities but potentially limited competition. 5. The contract's focus on general healthcare services implies a broad scope of medical support for beneficiaries. 6. Lack of competition raises concerns about whether the government secured the best possible value for taxpayer dollars.

Value Assessment

Rating: questionable

The total award amount of $390,377,122.23 for general healthcare services over approximately 4 years is substantial. Without a competitive bidding process, it is difficult to benchmark this against similar contracts or assess if the pricing is optimal. The lack of competition means the government did not benefit from market forces to drive down costs. Further analysis would be needed to compare the services provided and their cost-effectiveness against other TRICARE support contracts or civilian healthcare benchmarks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This typically occurs when only one responsible source is available or capable of meeting the requirement. The lack of competition limits the government's ability to solicit multiple proposals and negotiate the best possible price. It suggests that either CHRISTUS HEALTH was the only entity deemed capable of fulfilling the TRICARE support requirements, or the justification for sole-source was based on specific circumstances that precluded a broader competition.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest feasible price. This contract's significant value means any price inefficiencies could represent a substantial financial impact.

Public Impact

TRICARE beneficiaries, including active duty military personnel, retirees, and their families, are the primary recipients of the healthcare services provided under this contract. The contract delivers general health care services, encompassing a wide range of medical support necessary for maintaining the health and readiness of the military community. The geographic impact is likely widespread, covering areas where TRICARE beneficiaries are located and require medical support, potentially across multiple states or regions. The contract supports a significant healthcare workforce, both directly employed by CHRISTUS HEALTH and indirectly through its network of providers and suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for vendor lock-in if CHRISTUS HEALTH is the only provider with the necessary infrastructure and expertise for this specific TRICARE support.
Difficulty in assessing true value-for-money without comparative bids.
Reliance on a single contractor for critical healthcare services could pose a risk if performance issues arise.

Positive Signals

Award to an established healthcare provider (CHRISTUS HEALTH) suggests a high likelihood of meeting service delivery requirements.
The significant contract value indicates a comprehensive scope of services designed to meet substantial beneficiary needs.
Long contract duration implies a stable and continuous provision of essential healthcare services.
The contract likely leverages existing healthcare infrastructure and expertise, potentially leading to efficient service delivery.

Sector Analysis

This contract falls within the Healthcare sector, specifically supporting government healthcare programs like TRICARE. The market for healthcare services, particularly for large government contracts, is substantial and competitive, though often segmented by specialty and program. Benchmarking this contract's value would involve comparing it to other large-scale healthcare service contracts awarded by agencies like the Department of Defense or Veterans Affairs, as well as analyzing per-member-per-month costs for similar populations. The scale of this award suggests it represents a significant portion of the TRICARE support services budget.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not explicitly detailed in the provided data. As this was a sole-source award, the typical mechanisms for ensuring small business participation through competitive bidding were bypassed. It is unclear if CHRISTUS HEALTH has a subcontracting plan in place to engage small businesses for any portion of these healthcare services. Further investigation into the contract's terms and conditions would be necessary to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the TRICARE Management Activity. Mechanisms likely include performance monitoring, quality assurance reviews, and financial audits. The contract's sole-source nature might reduce the intensity of certain oversight aspects related to price negotiation but would heighten focus on performance and service delivery. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

TRICARE Prime
TRICARE Select
Military Health System
Department of Veterans Affairs Healthcare Services
Federal Employee Health Benefits Program

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency in procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $390.4 million to CHRISTUS HEALTH. 200512!508601!9700!H94002!TRICARE SUPPORT OFFICE !H9400203C0020 !A!N! !N! !P00007!20050907!20080531!053629069!071367887!071367887!N!CHRISTUS HEALTH !2600 NORTH LOOP WEST !HOUSTON !TX!77092!35000!201!48!HOUSTON !HARRIS !TEXAS !+000003000000!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !000 !* !524114!E! !3!B!S!C! !D!200

Who is the contractor on this award?

The obligated recipient is CHRISTUS HEALTH.

Which agency awarded this contract?

Awarding agency: Department of Defense (Tricare Management Activity).

What is the total obligated amount?

The obligated amount is $390.4 million.

What is the period of performance?

Start: 2003-05-30. End: 2008-09-30.

What is the track record of CHRISTUS HEALTH in managing large federal healthcare contracts, particularly those with the Department of Defense?

CHRISTUS HEALTH is a large, non-profit healthcare system with a significant presence in Texas and other regions. While they operate numerous hospitals and clinics, their specific track record with large, sole-source federal contracts like this TRICARE support contract requires detailed examination. Information on their past performance, including any previous DoD contracts, their scale, duration, and outcomes, would be crucial. Assessing their ability to manage complex logistical, administrative, and clinical requirements for a large beneficiary population is key. Without specific data on prior federal contracts, it's assumed they leverage their extensive experience in managing large healthcare operations to fulfill this role, but a review of past performance metrics and any reported issues would provide a clearer picture of their capabilities and reliability in the federal contracting space.

How does the cost of this contract compare to similar TRICARE support contracts or civilian healthcare benchmarks?

Direct comparison of this $390 million contract to similar TRICARE support contracts is challenging without knowing the specific services covered and the beneficiary population size and demographics. However, given it was awarded sole-source, there's a risk it may not represent the best value. Benchmarking against civilian healthcare markets for comparable services (e.g., per-member-per-month costs for managed care organizations) could provide some insight, but TRICARE contracts often include unique requirements related to military readiness and specific beneficiary needs. The absence of competition means a formal cost-benefit analysis or comparison with bids from other potential providers was not conducted, making it difficult to definitively state if the pricing is optimal or if taxpayers received maximum value.

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

The primary risks of a sole-source award for a $390 million contract are significant. Firstly, the lack of competition means the government likely paid a higher price than it might have in a competitive environment, representing a potential loss of value for taxpayers. Secondly, it reduces transparency in the procurement process, making it harder to scrutinize the justification for the award and the reasonableness of the price. Thirdly, it can lead to vendor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch contractors in the future, even if performance is subpar. Finally, without competitive pressure, the contractor may have less incentive to innovate or improve service efficiency over the contract's duration.

What is the expected effectiveness of CHRISTUS HEALTH in delivering general health care services to TRICARE beneficiaries?

The effectiveness of CHRISTUS HEALTH in delivering these services is presumed to be high, given their status as a large healthcare provider. However, effectiveness is contingent on the specific performance metrics outlined in the contract and the contractor's adherence to them. TRICARE contracts typically involve rigorous performance standards related to access to care, quality of services, patient satisfaction, and network adequacy. While CHRISTUS HEALTH's extensive experience in healthcare delivery suggests a strong foundation, the actual effectiveness will be measured by their ability to meet these specific DoD requirements and maintain high standards of care for a large and diverse beneficiary population over the contract's lifespan.

How has federal spending on TRICARE support services evolved over time, and where does this contract fit within that trend?

Federal spending on TRICARE support services has generally trended upwards over the years, driven by factors such as an increasing number of beneficiaries, rising healthcare costs, and expanding scope of services. This $390 million contract, awarded in the mid-2000s, represents a significant investment within that trend. Its sole-source nature might indicate a specific strategic decision or a response to unique circumstances at the time of award, rather than a typical competitive procurement. Understanding historical spending patterns for TRICARE support, including the proportion allocated to direct care versus administrative and support services, and the prevalence of competitive versus non-competitive awards, would provide context for this contract's place within the broader fiscal landscape.

Industry Classification

NAICS: Health Care and Social Assistance › Outpatient Care Centers › HMO Medical Centers

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2600 NORTH LOOP W, HOUSTON, TX, 90

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline