HHS Spends $53M on IBM Consulting for HCUP Data, Ending March 2023
Contract Overview
Contract Amount: $53,145,978 ($53.1M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2017-12-27
End Date: 2023-03-27
Contract Duration: 1,916 days
Daily Burn Rate: $27.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Healthcare
Official Description: IGF::OT::IGF HEALTHCARE COST AND UTILIZATION PROJECT (HCUP) FY 2018-2023
Place of Performance
Location: ANN ARBOR, WASHTENAW County, MICHIGAN, 48108
State: Michigan Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $53.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF HEALTHCARE COST AND UTILIZATION PROJECT (HCUP) FY 2018-2023 Key points: 1. IBM secured a significant contract for healthcare data services. 2. The contract utilized full and open competition, suggesting a competitive bidding process. 3. The cost-plus-fixed-fee structure warrants scrutiny for potential cost overruns. 4. This spending falls within the broader IT and Healthcare consulting sectors.
Value Assessment
Rating: fair
The contract value of $53.1 million over approximately 5 years for 'Other Scientific and Technical Consulting Services' appears reasonable given the scope of supporting the HCUP project. Benchmarking against similar large-scale data management and consulting contracts is necessary for a definitive assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives the best value. The fixed fee component provides some cost certainty.
Taxpayer Impact: Taxpayer funds are being used for essential healthcare data analysis, which can lead to improved public health outcomes and more efficient healthcare delivery. The competitive award process aims to maximize the value of this investment.
Public Impact
Enhances the quality and accessibility of healthcare statistics for researchers and policymakers. Supports evidence-based decision-making in healthcare policy and practice. Contributes to a better understanding of healthcare utilization and costs nationwide.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contract type can incentivize higher costs if not closely monitored.
- Long contract duration (1916 days) may lead to scope creep or evolving needs not fully captured in initial pricing.
- Reliance on a single large contractor (IBM) for critical data infrastructure.
Positive Signals
- Awarded through full and open competition, suggesting a competitive process.
- Supports a vital national healthcare data project (HCUP).
- Contract duration aligns with the project's operational needs.
Sector Analysis
This contract falls under scientific and technical consulting services, specifically within the healthcare IT sector. Spending benchmarks for similar data management and analysis contracts with large IT firms can vary widely based on scope, duration, and specific services required.
Small Business Impact
The data does not indicate specific subcontracting efforts or set-asides for small businesses. Large contracts like this often involve prime contractors like IBM, and it's unclear if they are engaging small businesses for specialized services.
Oversight & Accountability
The Agency for Healthcare Research and Quality (AHRQ) is responsible for overseeing this contract. Standard government oversight mechanisms, including performance reviews and financial audits, would be in place to ensure contract compliance and accountability.
Related Government Programs
- Other Scientific and Technical Consulting Services
- Department of Health and Human Services Contracting
- Agency for Healthcare Research and Quality Programs
Risk Flags
- Cost-plus-fixed-fee structure requires diligent oversight to prevent cost overruns.
- Long contract duration may present challenges in adapting to evolving technological or data needs.
- Potential for vendor lock-in if critical knowledge and infrastructure are solely managed by IBM.
- Lack of explicit small business participation data requires further investigation.
Tags
other-scientific-and-technical-consultin, department-of-health-and-human-services, mi, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $53.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF HEALTHCARE COST AND UTILIZATION PROJECT (HCUP) FY 2018-2023
Who is the contractor on this award?
The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Agency for Healthcare Research and Quality).
What is the total obligated amount?
The obligated amount is $53.1 million.
What is the period of performance?
Start: 2017-12-27. End: 2023-03-27.
What specific deliverables and performance metrics were established to ensure the value derived from IBM's services aligns with the $53 million investment?
The contract likely includes detailed statements of work, performance work statements, and key performance indicators (KPIs) tied to data quality, accessibility, timeliness, and analytical support for the HCUP project. Regular progress reports and reviews would assess IBM's adherence to these metrics, ensuring the government receives the intended value for its investment in data management and consulting.
How effectively did the full and open competition process ensure the most cost-effective solution for the HCUP data management and analysis needs?
Full and open competition generally fosters cost-effectiveness by allowing multiple vendors to propose solutions and bid. The effectiveness hinges on the clarity of the solicitation, the rigor of the evaluation criteria, and the competitiveness of the bids received. A thorough review of the bidding process and the final pricing compared to market rates would confirm the extent of cost-effectiveness achieved.
What mechanisms are in place to mitigate risks associated with the cost-plus-fixed-fee structure and ensure efficient use of taxpayer funds over the contract's duration?
Mitigation strategies for cost-plus-fixed-fee contracts typically involve robust government oversight, detailed cost accounting standards, and clear limitations on allowable costs. Regular audits, performance monitoring, and strict adherence to the fixed fee component help control overall project costs and ensure that the contractor is incentivized to manage expenses efficiently within the agreed-upon framework.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Other Scientific and Technical Consulting Services
Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: AHRQ1810001
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 100 PHOENIX DR, ANN ARBOR, MI, 48108
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $77,154,583
Exercised Options: $53,145,978
Current Obligation: $53,145,978
Actual Outlays: $13,582,335
Subaward Activity
Number of Subawards: 11
Total Subaward Amount: $1,549,842
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-12-27
Current End Date: 2023-03-27
Potential End Date: 2023-03-27 00:00:00
Last Modified: 2023-05-01
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