HHS awards $34.8M for Health Plan Maintenance System services to CGI Federal Inc

Contract Overview

Contract Amount: $34,838,751 ($34.8M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-26

End Date: 2013-09-25

Contract Duration: 1,825 days

Daily Burn Rate: $19.1K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: HEALTH PLAN MAINTENANCE SYSTEM MAINTENANCE AND ENHANCEMENT SERVICES

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $34.8 million to CGI FEDERAL INC. for work described as: HEALTH PLAN MAINTENANCE SYSTEM MAINTENANCE AND ENHANCEMENT SERVICES Key points: 1. The contract value represents a significant investment in maintaining and enhancing a critical health IT system. 2. The non-competitive nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. Performance risk is moderate, given the system's age and the need for ongoing maintenance and enhancements. 4. The duration of the contract (5 years) suggests a long-term need for these specialized IT services. 5. This contract falls within the broader IT services sector, specifically focusing on government IT system design and maintenance.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar system maintenance contracts. The 'COST PLUS AWARD FEE' (CPAF) structure can lead to costs exceeding initial estimates if not managed tightly. Given the 5-year duration and the nature of IT system maintenance, the total award amount of $34.8M appears within a reasonable range for such services, but a detailed cost-reimbursement audit would be necessary for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order, indicating that CGI Federal Inc. was the only vendor considered. The reasons for this sole-source award are not detailed in the provided data, but typically such awards occur when a specific vendor possesses unique capabilities, intellectual property, or when the requirement arises from a previous contract where only that vendor could fulfill it. The lack of competition limits the government's ability to explore alternative solutions or secure more favorable pricing through a competitive bidding process.

Taxpayer Impact: Taxpayers may not benefit from the most competitive pricing due to the absence of a bidding process. This could result in higher overall costs for the services rendered compared to what might have been achieved through open competition.

Public Impact

Beneficiaries include federal employees and potentially citizens interacting with health insurance systems managed by CMS. Services delivered include maintenance and enhancement of the Health Plan Maintenance System, crucial for health insurance operations. The geographic impact is primarily national, supporting federal health insurance programs. Workforce implications include the need for specialized IT professionals to maintain and enhance complex government systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
The sole-source nature of the award raises questions about the thoroughness of market research.
Potential for cost overruns inherent in Cost Plus Award Fee contracts if not rigorously overseen.

Positive Signals

Contract addresses a critical need for maintaining essential health IT infrastructure.
The awardee, CGI Federal Inc., likely possesses specific expertise relevant to the system.
The long-term nature of the contract suggests a stable and predictable service delivery.

Sector Analysis

The IT services sector, particularly within government contracting, is highly competitive. This contract falls under Computer Systems Design Services, a segment focused on the design, development, integration, and maintenance of IT systems. The market for such services is substantial, with numerous firms capable of providing these solutions. However, specific legacy systems or highly specialized requirements can sometimes lead to sole-source or limited competition awards, as may be the case here. Benchmarking against similar government IT maintenance contracts would reveal if the pricing structure and total value are aligned with market norms.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. The prime contractor, CGI Federal Inc., is a large business. While not a set-aside, large contracts often have subcontracting plans, but the specifics of such plans are not detailed here. The absence of a small business set-aside means opportunities for small businesses to directly participate in this specific contract are limited unless they are subcontractors to CGI Federal Inc.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its Centers for Medicare and Medicaid Services (CMS). As a delivery order under a larger contract, the existing oversight mechanisms of the parent contract would apply. Transparency is limited by the non-competitive nature of the award. Accountability would be driven by the performance metrics within the Cost Plus Award Fee structure. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Health Insurance Portability and Accountability Act (HIPAA) compliance systems
Centers for Medicare and Medicaid Services (CMS) IT Modernization efforts
Federal Health IT Infrastructure Support
Government Health IT System Maintenance Contracts

Risk Flags

Non-competitive award
Cost Plus Award Fee structure
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $34.8 million to CGI FEDERAL INC.. HEALTH PLAN MAINTENANCE SYSTEM MAINTENANCE AND ENHANCEMENT SERVICES

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL INC..

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 $34.8 million.

What is the period of performance?

Start: 2008-09-26. End: 2013-09-25.

What is the specific nature of the 'Health Plan Maintenance System' and its criticality to CMS operations?

The Health Plan Maintenance System (HPMS) is a critical IT system used by the Centers for Medicare & Medicaid Services (CMS) to manage and administer health insurance plans. It plays a vital role in tasks such as enrollment, eligibility determination, premium processing, and compliance monitoring for various health insurance programs, including Medicare Advantage and the Health Insurance Marketplace. Its functionality is essential for the day-to-day operations of these programs, ensuring that beneficiaries receive accurate information and services, and that program rules are adhered to. Disruptions or inefficiencies in HPMS can have significant impacts on beneficiary access to care and the financial integrity of federal health programs.

Why was this contract awarded on a non-competitive basis, and what was the justification provided?

The provided data states this was a 'NON-COMPETITIVE DELIVERY ORDER'. While the specific justification is not detailed, common reasons for non-competitive awards include: 1) Only one source is capable of providing the required service (e.g., unique technical expertise, proprietary software). 2) A critical need exists that cannot be met by other sources in time. 3) The requirement was previously fulfilled by the same contractor, and a transition to another vendor would be prohibitively expensive or disruptive. Without access to the official justification documentation (e.g., a Justification for Other Than Full and Open Competition - JOFOC), it's impossible to definitively state the reason. However, the 'delivery order' nature suggests it might be a task under an existing indefinite-delivery, indefinite-quantity (IDIQ) contract, or a sole-source award for specific enhancements.

How does the 'Cost Plus Award Fee' (CPAF) contract type typically function, and what are the associated risks?

A Cost Plus Award Fee (CPAF) contract reimburses the contractor for allowable costs incurred, plus a fee that is composed of a base amount and an award amount. The award amount is determined based on the government's evaluation of the contractor's performance against pre-defined criteria. This structure incentivizes contractors to perform well by offering a potential bonus. However, it also carries risks: 1) Cost Overruns: The government bears the risk of cost overruns, as all allowable costs are reimbursed. 2) Subjective Performance Evaluation: The award fee determination can be subjective, potentially leading to disputes. 3) Administrative Burden: Requires significant government oversight to monitor costs and evaluate performance effectively. For taxpayers, the risk lies in potentially paying higher fees if performance evaluations are not rigorous or if costs escalate beyond initial projections.

What is the historical spending pattern for the Health Plan Maintenance System Maintenance and Enhancement Services?

The provided data reflects a single delivery order awarded on September 26, 2008, with an end date of September 25, 2013, totaling $34,838,751. This represents a 5-year period of performance. Without access to broader contract databases or historical procurement records for CMS IT systems, it's difficult to establish a comprehensive historical spending pattern specifically for this system. This single data point suggests a significant, multi-year investment in maintaining and enhancing the HPMS. To understand the full pattern, one would need to examine prior contracts for HPMS maintenance, any subsequent contracts awarded after 2013, and potentially compare spending on similar CMS systems to gauge trends in IT maintenance investments.

What are the potential implications of a 5-year contract duration for IT system maintenance?

A 5-year contract duration for IT system maintenance, like this one (2008-2013), indicates a long-term commitment to supporting and evolving a critical system. For the government, it provides stability and allows the contractor to develop deep institutional knowledge of the system, potentially leading to more efficient maintenance and development. However, it also carries risks: 1) Vendor Lock-in: A long duration can make it difficult and costly to switch vendors if performance declines or better alternatives emerge. 2) Stagnation: The contractor might become complacent, or the system's technology could become outdated if enhancements are not aggressively pursued. 3) Market Changes: The IT landscape can change rapidly over five years, and a fixed contract might not adequately adapt to new technologies or security threats without costly modifications or change orders.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: CGI Inc (UEI: 248513116)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $35,940,953

Exercised Options: $34,838,751

Current Obligation: $34,838,751

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline