HHS awarded $21.2M for IT services to American Management Systems, Inc. over 5 years

Contract Overview

Contract Amount: $21,264,549 ($21.3M)

Contractor: American Management Systems Incorporated

Awarding Agency: Department of Health and Human Services

Start Date: 2004-08-25

End Date: 2009-07-31

Contract Duration: 1,801 days

Daily Burn Rate: $11.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: OTHER ADP & TELECOMMUNICATIONS SVCS

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $21.3 million to AMERICAN MANAGEMENT SYSTEMS INCORPORATED for work described as: OTHER ADP & TELECOMMUNICATIONS SVCS Key points: 1. Contract value appears reasonable for a 5-year IT services engagement. 2. Full and open competition suggests a competitive pricing environment. 3. Contract type (Cost Plus Fixed Fee) may present some cost control challenges. 4. Performance period of 5 years indicates a long-term need for these services. 5. The contract falls within the custom computer programming services sector. 6. This award represents a portion of broader IT spending within CMS.

Value Assessment

Rating: good

The contract value of $21.2 million over five years averages to approximately $4.24 million per year. This figure seems within a reasonable range for custom computer programming services provided to a large federal agency like CMS. Benchmarking against similar contracts for IT development and support services would provide a more precise value-for-money assessment, but initial indications suggest fair pricing given the duration and scope.

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 offers. This typically leads to a more robust selection of vendors and potentially more competitive pricing. The number of bidders is not specified, but the competitive nature of the award process is a positive sign for price discovery and achieving value.

Taxpayer Impact: Taxpayers benefit from the competitive process, which is expected to drive down costs and ensure the government receives the best possible value for its investment in IT services.

Public Impact

Beneficiaries include CMS staff who will utilize the custom software and services. Services delivered are custom computer programming and related IT support. Geographic impact is primarily within the federal government's operational centers. Workforce implications include employment for IT professionals at the contractor and potentially within CMS for oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to incur higher costs to achieve a fixed profit, potentially leading to cost overruns if not managed tightly.
Lack of specific performance metrics in the provided data makes it difficult to assess the contractor's performance history.
The long contract duration could lead to vendor lock-in if not carefully managed and reviewed.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely yielded fair pricing.
The contract is for essential IT services supporting CMS operations.
The contractor, American Management Systems, Inc., has a history of federal contracting, implying some level of established processes and experience.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically under Custom Computer Programming Services (NAICS 541511). This is a significant market within the federal government, with agencies continually investing in software development, system integration, and IT support. Comparable spending benchmarks for IT services at agencies like HHS can range from millions to billions annually, depending on the agency's size and mission.

Small Business Impact

The data indicates this contract was not set aside for small businesses (SB is false). There is no information provided regarding subcontracting plans. Therefore, the direct impact on the small business ecosystem is likely minimal, as the primary awardee is a large business. Future analysis could explore subcontracting opportunities if available.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures would be defined in the contract's statement of work and performance standards. Transparency is generally facilitated through contract databases like FPDS, though detailed performance reports are often internal.

Related Government Programs

IT Services
Custom Software Development
Health Information Technology
Federal IT Procurement
Centers for Medicare and Medicaid Services Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long contract duration may necessitate performance reviews to ensure continued relevance and value.
Specific performance metrics are not detailed in the provided summary data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $21.3 million to AMERICAN MANAGEMENT SYSTEMS INCORPORATED. OTHER ADP & TELECOMMUNICATIONS SVCS

Who is the contractor on this award?

The obligated recipient is AMERICAN MANAGEMENT SYSTEMS INCORPORATED.

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 $21.3 million.

What is the period of performance?

Start: 2004-08-25. End: 2009-07-31.

What was the specific nature of the custom computer programming services provided under this contract?

The provided data indicates the contract falls under NAICS code 541511, Custom Computer Programming Services. While the specific details are not elaborated, this typically encompasses designing, developing, and modifying software to meet specific client needs. For the Centers for Medicare and Medicaid Services (CMS), these services could range from developing new healthcare eligibility systems, enhancing data analytics platforms for public health, to maintaining and updating existing critical infrastructure software that supports healthcare programs like Medicare and Medicaid. The 'OTHER ADP & TELECOMMUNICATIONS SVCS' description suggests a broad scope within IT services beyond just pure programming.

How does the $21.2 million contract value compare to similar IT service contracts awarded by CMS or HHS?

The $21.2 million contract value awarded over five years (approximately $4.24 million annually) for custom computer programming services appears to be a moderate-sized award within the context of a large agency like CMS. CMS and HHS procure substantial IT services, often in the hundreds of millions or even billions of dollars annually for major system overhauls or large-scale support contracts. This specific contract's value suggests it addresses a particular set of IT needs rather than a comprehensive agency-wide IT transformation. A direct comparison would require analyzing contracts with similar NAICS codes, contract types (Cost Plus Fixed Fee), and performance periods within HHS over the same timeframe.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract type for IT services?

Cost Plus Fixed Fee (CPFF) contracts carry inherent risks, primarily related to cost control. In a CPFF arrangement, the contractor is reimbursed for all allowable costs plus a predetermined fixed fee representing profit. This structure can incentivize contractors to incur higher costs, as their profit margin is fixed regardless of the actual costs incurred. For the government, this means there is less direct financial incentive for the contractor to be highly efficient or to find cost-saving measures. Effective oversight, detailed cost tracking, and robust negotiation of the 'cost' elements are crucial to mitigate the risk of cost overruns and ensure value for money.

What is the significance of the contract being awarded under 'Full and Open Competition'?

Awarding a contract under 'Full and Open Competition' signifies that the government solicited offers from all eligible responsible sources and that all responsible sources were permitted to compete. This is generally considered the preferred method of procurement as it maximizes the opportunity for a wide range of vendors to participate, fostering a competitive environment. This competition is expected to lead to better pricing, higher quality services, and innovative solutions, ultimately benefiting taxpayers by ensuring the government obtains the best value. It contrasts with sole-source or limited competition procurements, which may result in higher prices or fewer options.

What does the contract award date (2004) and end date (2009) suggest about historical IT spending trends at CMS?

The contract awarded in 2004 and ending in 2009 falls within a period of significant IT modernization efforts across the federal government, particularly in healthcare. This timeframe predates some of the more recent large-scale data analytics and cloud adoption trends but was crucial for establishing foundational IT infrastructure and custom application development. The fact that CMS awarded a multi-year, multi-million dollar contract for custom programming suggests a sustained investment in developing bespoke solutions to manage complex healthcare programs. It reflects a period where agencies were heavily reliant on custom-built systems rather than off-the-shelf solutions or widespread cloud services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 11

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,264,549

Exercised Options: $21,264,549

Current Obligation: $21,264,549

Parent Contract

Parent Award PIID: 500020039

IDV Type: IDC

Timeline