HHS awarded CGI Federal $23.3M for Health Plan Management Systems, a non-competitive delivery order

Contract Overview

Contract Amount: $23,331,031 ($23.3M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-08-01

End Date: 2013-07-31

Contract Duration: 1,460 days

Daily Burn Rate: $16.0K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TAS::75 8393::TAS HEALTH PLAN MANAGEMENT SYSTEMS

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $23.3 million to CGI FEDERAL INC. for work described as: TAS::75 8393::TAS HEALTH PLAN MANAGEMENT SYSTEMS Key points: 1. The contract's cost-plus-award-fee structure allows for performance-based incentives, but requires careful monitoring to ensure value. 2. As a non-competitive award, the pricing and scope were not tested against market alternatives. 3. The duration of the contract (over 4 years) suggests a need for sustained services, but also raises questions about long-term cost-effectiveness. 4. The services provided are critical for health plan operations, indicating a significant impact on program delivery. 5. The contract falls within the IT services sector, specifically computer systems design, a common area for federal spending.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its non-competitive nature and specific service scope. Without competing offers, it's difficult to ascertain if the $23.3 million represents a fair market price. The cost-plus-award-fee (CPA) structure can lead to cost overruns if not managed tightly, though it also incentivizes performance. Comparing it to similar, competitively awarded IT services contracts for health plan management would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a non-competitive delivery order, meaning it was not openly competed. This approach is typically used when a specific vendor possesses unique capabilities or when urgency dictates a rapid award. The lack of competition means that pricing and service terms were not negotiated against multiple bidders, potentially limiting price discovery and the government's leverage.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. The government did not benefit from the potential cost savings that often arise from a competitive bidding process.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially millions of individuals relying on health insurance programs. Services delivered are crucial for the management and administration of health plans, ensuring operational continuity. The geographic impact is national, supporting federal health programs administered across the United States. Workforce implications are primarily within CGI Federal, supporting their IT professionals and project management teams.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to higher costs for taxpayers.
Cost-plus-award-fee contracts require rigorous oversight to prevent cost escalation.
The long contract duration could indicate a lack of readily available alternative solutions or potential vendor lock-in.

Positive Signals

The contract supports critical health plan management functions for CMS.
The award-fee component incentivizes contractor performance.
CGI Federal is a known entity in government IT services, suggesting some level of established capability.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The federal government is a significant spender in this area, with agencies like HHS constantly seeking solutions for managing complex health programs. Comparable spending benchmarks would involve analyzing other large IT contracts awarded by CMS or similar health-focused agencies for system development and maintenance, particularly those involving sensitive data and program administration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. Therefore, it did not directly contribute to small business contracting goals. There is no information provided regarding subcontracting plans, so the impact on the small business ecosystem through subcontracting is unknown. The award to a large prime contractor like CGI Federal typically means opportunities for small businesses would be through subcontracts, if any were planned.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. As a delivery order under a larger contract vehicle (though the vehicle itself is not specified), oversight would focus on performance against the statement of work, adherence to cost controls, and achievement of award fee criteria. Transparency is limited by the non-competitive nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Health Insurance Marketplace IT Systems
Medicare and Medicaid IT Modernization
Federal Health IT Services
CMS Program Management Support

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 $23.3 million to CGI FEDERAL INC.. TAS::75 8393::TAS HEALTH PLAN MANAGEMENT SYSTEMS

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 $23.3 million.

What is the period of performance?

Start: 2009-08-01. End: 2013-07-31.

What is the track record of CGI Federal with HHS and CMS on similar contracts?

CGI Federal has a substantial history of working with the Department of Health and Human Services (HHS) and its Centers for Medicare and Medicaid Services (CMS) on various IT and program management contracts. Their portfolio includes work on Medicare, Medicaid, and health insurance marketplace systems. While this specific contract was a non-competitive delivery order, CGI Federal has also been awarded competitively bid contracts by these agencies. A detailed review of their past performance ratings, any past performance issues, and the successful delivery of complex IT solutions for CMS would be necessary to fully assess their track record on this specific engagement. Their long-standing presence suggests a level of established trust and capability, but also necessitates scrutiny to ensure continued value and performance.

How does the cost-plus-award-fee structure compare to other contract types for similar IT services?

Cost-plus-award-fee (CPAF) contracts, like the one used here, are often employed when the scope of work is not precisely defined or when performance incentives are critical. They allow the contractor to recover allowable costs plus a fee that is composed of a fixed base amount and an award amount based on meeting or exceeding performance objectives. Compared to firm-fixed-price (FFP) contracts, CPAF offers more flexibility for the government in evolving requirements but carries a higher risk of cost overruns if not managed diligently. Compared to cost-plus-fixed-fee (CPFF), CPAF provides stronger incentives for performance. For IT services, especially those involving system design and development where requirements can change, CPAF can be appropriate, but it demands robust government oversight to ensure the 'award' portion is earned and not simply a cost pass-through.

What are the risks associated with a non-competitive award for IT services?

The primary risk of a non-competitive (sole-source or sole-bid) award for IT services is the potential for inflated pricing. Without the pressure of competing bids, the contractor may not be incentivized to offer the most cost-effective solution. This can lead to taxpayers paying more than necessary for the services rendered. Another risk is a lack of innovation; a sole provider may be less motivated to introduce cutting-edge solutions or efficiencies compared to a competitive environment where vendors vie for market share. Furthermore, it can create a perception of favoritism or a lack of due diligence in procurement, potentially undermining public trust. Finally, it can lead to vendor lock-in, making it difficult and costly to switch providers in the future.

What is the typical duration for similar IT system design contracts at HHS?

The duration of IT system design and management contracts at HHS can vary significantly based on the complexity, scope, and criticality of the systems involved. Contracts for foundational systems, like those supporting Medicare and Medicaid, often span multiple years, sometimes exceeding five years, due to the intricate nature of the programs and the need for stable, long-term support. The 1460-day duration (approximately 4 years) for this CGI Federal contract is not unusual for a significant IT service engagement within HHS. However, longer durations, especially when coupled with non-competitive awards, warrant scrutiny to ensure that the government is not locked into a potentially suboptimal solution or price over an extended period without opportunities for re-evaluation or competitive re-sourcing.

How does the $23.3 million total award amount compare to overall federal IT spending in healthcare?

The $23.3 million awarded to CGI Federal for Health Plan Management Systems represents a modest portion of the overall federal IT spending within the healthcare sector. Federal agencies, particularly HHS, invest billions annually in IT to manage programs like Medicare, Medicaid, and the Affordable Care Act. For context, CMS alone manages budgets in the hundreds of billions, and a significant portion of that requires robust IT infrastructure and services. While $23.3 million is a substantial sum for a single contract, it is relatively small when viewed against the backdrop of total federal healthcare IT expenditures, which can easily reach tens of billions of dollars annually across various agencies and initiatives. This contract's value is more significant when assessed against similar, specific IT system management contracts rather than the entire federal healthcare IT budget.

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: $27,811,351

Exercised Options: $23,331,031

Current Obligation: $23,331,031

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline