HHS awards $33.2M contract to IBM for Risk Adjustment System, impacting Medicare and Medicaid
Contract Overview
Contract Amount: $33,193,761 ($33.2M)
Contractor: International Business Machines Corporation
Awarding Agency: Department of Health and Human Services
Start Date: 2007-11-01
End Date: 2010-10-31
Contract Duration: 1,095 days
Daily Burn Rate: $30.3K/day
Competition Type: COMPETITIVE DELIVERY ORDER
Number of Offers Received: 2
Pricing Type: TIME AND MATERIALS
Sector: IT
Official Description: RISK ADJUSTMENT SYSTEM
Place of Performance
Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244
State: Maryland Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $33.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: RISK ADJUSTMENT SYSTEM Key points: 1. IBM secured a significant contract valued at $33.2 million. 2. The contract was awarded via a competitive delivery order, suggesting some level of price negotiation. 3. Potential risks include vendor lock-in and the long duration of the contract (3 years). 4. The sector is IT, specifically software and computer services for healthcare administration.
Value Assessment
Rating: good
The contract value of $33.2 million for a 3-year period appears reasonable for a large IT system. Benchmarking against similar government IT contracts of this scope would provide a more precise assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: unknown
Awarded as a competitive delivery order, this method allows for competition among pre-qualified vendors. The 'time and materials' pricing structure, however, can sometimes lead to cost overruns if not closely monitored.
Taxpayer Impact: Taxpayers benefit from competitive bidding, which aims to secure fair pricing. However, the 'time and materials' aspect requires diligent oversight to ensure efficiency and prevent inflated costs.
Public Impact
Impacts millions of beneficiaries by supporting the administration of Medicare and Medicaid. Ensures the accuracy of payments within the healthcare system through risk adjustment. Supports the operational efficiency of the Centers for Medicare and Medicaid Services (CMS).
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns due to Time and Materials pricing.
- Long contract duration may limit flexibility for future technological advancements.
- Dependence on a single vendor (IBM) for a critical system.
Positive Signals
- Awarded through a competitive process.
- Supports a vital government function in healthcare.
- Experienced vendor (IBM) likely brings significant expertise.
Sector Analysis
This contract falls within the IT sector, specifically software development and maintenance for government health programs. Spending benchmarks for similar large-scale health IT systems vary widely, but $33.2 million over three years is within a typical range for system modernization or support.
Small Business Impact
The data does not indicate any specific provisions or awards made to small businesses under this contract. Further analysis would be needed to determine if small businesses were involved as subcontractors or if opportunities were missed.
Oversight & Accountability
The 'competitive delivery order' suggests a structured procurement process. However, the 'time and materials' pricing model necessitates robust oversight from HHS to ensure accountability and prevent scope creep or inefficient resource allocation.
Related Government Programs
- Computer and Software Stores
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Potential for cost overruns due to T&M pricing.
- Lack of clarity on small business participation.
- Long contract duration may not align with rapid technological changes.
- Dependence on a single vendor for a critical system.
Tags
computer-and-software-stores, department-of-health-and-human-services, md, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $33.2 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. RISK ADJUSTMENT SYSTEM
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 (Centers for Medicare and Medicaid Services).
What is the total obligated amount?
The obligated amount is $33.2 million.
What is the period of performance?
Start: 2007-11-01. End: 2010-10-31.
What is the specific functionality of the Risk Adjustment System and how does it contribute to the overall value of the contract?
The Risk Adjustment System is crucial for ensuring equitable payments within Medicare and Medicaid by adjusting payments based on the health status of beneficiaries. This contract likely supports the development, maintenance, or enhancement of this system, directly contributing to the accuracy and fairness of healthcare reimbursements, thus providing significant value to the program's financial integrity.
What are the primary risks associated with the 'time and materials' pricing structure in this contract?
The primary risk of 'time and materials' (T&M) pricing is the potential for cost escalation if the scope of work is not clearly defined or if project timelines are extended. Without strict oversight and well-defined milestones, the contractor could incur higher labor and material costs than anticipated, leading to budget overruns and a reduced return on investment for the government.
How effective is the competitive delivery order process in ensuring the best value for this type of IT system acquisition?
A competitive delivery order can be effective in securing competitive pricing, especially if multiple qualified vendors are involved. However, the ultimate effectiveness hinges on the clarity of the statement of work and the government's ability to manage the 'time and materials' aspect. If well-managed, it can yield good value; if poorly managed, it risks becoming less cost-effective than a fixed-price contract.
Industry Classification
NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: COMPETITIVE DELIVERY ORDER
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Address: 6710 ROCKLEDGE DRIVE, BETHESDA, MD, 20817
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $38,096,317
Exercised Options: $33,193,761
Current Obligation: $33,193,761
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS35F4984H
IDV Type: FSS
Timeline
Start Date: 2007-11-01
Current End Date: 2010-10-31
Potential End Date: 2010-10-31 00:00:00
Last Modified: 2023-06-20
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