DoD awards $667.7M contract for HMO Medical Centers to PACMED CLINICS, spanning 5 years

Contract Overview

Contract Amount: $667,672,923 ($667.7M)

Contractor: Pacmed Clinics

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2013-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $365.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: AWARD OF CONTRACT

Place of Performance

Location: SEATTLE, KING County, WASHINGTON, 98144

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $667.7 million to PACMED CLINICS for work described as: AWARD OF CONTRACT Key points: 1. The contract's value suggests a significant need for ongoing healthcare services within the Defense Health Agency. 2. A firm-fixed-price structure indicates predictable costs for the government, though it may limit flexibility. 3. The duration of 1825 days (5 years) points to a long-term strategic commitment by the agency. 4. The absence of specific performance metrics in the provided data makes a direct value-for-money assessment challenging. 5. The contract's focus on HMO Medical Centers highlights a specific model of healthcare delivery within the federal system. 6. The large award amount suggests PACMED CLINICS is a key provider for these services.

Value Assessment

Rating: fair

Benchmarking this contract's value is difficult without comparable data for HMO Medical Centers within the Department of Defense. The firm-fixed-price structure provides cost certainty, but the overall value for money depends heavily on the quality and efficiency of services delivered by PACMED CLINICS. Without specific performance metrics or comparisons to similar contracts, it's challenging to definitively assess if the $667.7 million represents optimal pricing for the services rendered over the five-year period. The scale of the award implies a substantial scope of services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in situations where competition is deemed not to be in the government's best interest. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: For taxpayers, a sole-source award means there was no competitive pressure to drive down prices, potentially resulting in a less cost-effective outcome compared to a fully competed contract.

Public Impact

Military personnel and their families enrolled in the TRICARE program likely benefit from the healthcare services provided by PACMED CLINICS. The contract ensures the continued operation of HMO Medical Centers, offering a specific model of managed healthcare. Services are likely concentrated in the geographic areas where PACMED CLINICS operates, serving the beneficiary population in those regions. The contract supports the healthcare workforce employed by PACMED CLINICS, including medical professionals and administrative staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency in pricing.
Performance metrics are not readily available for assessing service quality.
The large contract value could indicate a significant reliance on a single provider.

Positive Signals

Ensures continuity of healthcare services for beneficiaries.
Firm-fixed-price contract provides cost predictability for the government.
Long contract duration suggests a stable and established relationship.

Sector Analysis

The healthcare sector, particularly within the federal government, involves significant spending on medical services for beneficiaries. Contracts like this are crucial for the Defense Health Agency (DHA) to fulfill its mission of providing healthcare to the military community. The market for healthcare services is diverse, with various models like HMOs playing a role in managed care. Benchmarking this specific contract is challenging due to its specialized nature and sole-source award, but overall federal healthcare spending is substantial, with significant portions allocated to managed care organizations and direct medical services.

Small Business Impact

The provided data indicates that small business participation was not a factor in this contract award (ss: false, sb: false). There is no indication of small business set-asides or subcontracting requirements. This suggests that the primary contractor, PACMED CLINICS, is likely a larger entity, and the contract's structure does not appear to prioritize or facilitate opportunities for small businesses within its execution.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense and the Defense Health Agency. Specific oversight mechanisms, such as performance reviews, audits, and quality assurance checks, would be detailed in the contract itself. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

TRICARE Prime
Defense Health Agency Contracts
HMO Services
Federal Healthcare Procurement

Risk Flags

Sole-source award lacks competitive pricing pressure.
Limited transparency on specific services and performance metrics.
Potential for higher costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $667.7 million to PACMED CLINICS. AWARD OF CONTRACT

Who is the contractor on this award?

The obligated recipient is PACMED CLINICS.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $667.7 million.

What is the period of performance?

Start: 2008-10-01. End: 2013-09-30.

What is the historical spending pattern for HMO Medical Center services by the Department of Defense?

Analyzing historical spending patterns for HMO Medical Center services by the Department of Defense requires access to detailed procurement data over multiple fiscal years. Without specific historical data for this contract or similar sole-source awards, it's difficult to establish a precise trend. However, federal healthcare spending, particularly through the TRICARE program, has generally been substantial and subject to fluctuations based on beneficiary populations, healthcare cost inflation, and policy changes. Sole-source awards, like this one, can sometimes indicate a consistent, long-term need for a specific provider's services, suggesting a potentially stable, albeit uncompeted, spending stream in that particular area.

How does the per-member-per-month (PMPM) cost compare to industry benchmarks for similar HMO services?

Determining the per-member-per-month (PMPM) cost for this contract is not feasible with the provided data. The award amount of $667.7 million is a total contract value over five years, and the number of beneficiaries served by PACMED CLINICS under this contract is not specified. To perform such a comparison, one would need the total number of enrolled beneficiaries and the contract's payment structure (e.g., capitation rates). Industry benchmarks for PMPM costs vary significantly based on geographic location, age demographics, health status of the population, and the scope of covered benefits. Without these details, a meaningful comparison to market rates is impossible.

What are PACMED CLINICS' past performance records with the federal government, particularly with the Department of Defense?

Assessing PACMED CLINICS' past performance requires accessing federal contract databases that track contractor performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS). The provided data does not include this information. Generally, for a contract of this magnitude and duration, the awarding agency would have conducted a review of the contractor's track record. A sole-source award might imply a satisfactory or even excellent past performance, as agencies often prefer to continue with proven contractors for critical services. However, without explicit performance data, this remains an assumption.

What specific medical services are covered under this HMO Medical Center contract?

The provided data identifies the contract as being for 'HMO Medical Centers' (NAICS code 621491) but does not detail the specific medical services covered. HMO Medical Centers typically offer a comprehensive range of primary and specialty care services, preventive health programs, and case management. For the Department of Defense, these services are likely tailored to meet the healthcare needs of military personnel and their families under the TRICARE program. Detailed service inclusions would be outlined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not included in the summary data.

What is the risk associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude ($667.7 million) is the potential for reduced value for money due to the lack of competition. Without competing bids, there is less pressure on the contractor to offer the lowest possible price. This can lead to higher costs for the government and, by extension, taxpayers. Additionally, sole-source awards can sometimes indicate a lack of market readiness or availability of alternative providers, which could pose a risk to service continuity if the sole provider encounters significant operational issues. Transparency in pricing and service delivery may also be diminished compared to a competed contract.

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

Solicitation ID: H9400207R0006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1200 12TH AVE S, SEATTLE, WA, 07

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

Financial Breakdown

Contract Ceiling: $668,172,923

Exercised Options: $667,922,923

Current Obligation: $667,672,923

Contract Characteristics

Cost or Pricing Data: NO

Timeline