HHS awarded $24.7M for common electronic data interchange system, with 3 bidders competing
Contract Overview
Contract Amount: $24,722,765 ($24.7M)
Contractor: National Government Services, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2007-12-14
End Date: 2013-03-12
Contract Duration: 1,915 days
Daily Burn Rate: $12.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: COMMON ELECTRONIC DATA INTERCHANGE SYSTEM FOR DME MAC CLAIMS PROCESSING CONTRACTORS
Place of Performance
Location: SHELBYVILLE, SHELBY County, KENTUCKY, 40066
State: Kentucky Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $24.7 million to NATIONAL GOVERNMENT SERVICES, INC. for work described as: COMMON ELECTRONIC DATA INTERCHANGE SYSTEM FOR DME MAC CLAIMS PROCESSING CONTRACTORS Key points: 1. Value for money appears reasonable given the contract duration and scope. 2. Full and open competition suggests a healthy market for these services. 3. The contract's long duration (over 5 years) may present some performance risks. 4. This contract supports critical healthcare claims processing infrastructure. 5. The IT services sector is highly competitive, impacting pricing dynamics. 6. The fixed-price nature of the contract shifts some risk to the contractor.
Value Assessment
Rating: good
The total award of $24.7 million over approximately 5.3 years (1915 days) suggests an average annual value of around $4.6 million. This appears to be a reasonable investment for a critical IT system supporting Medicare claims processing. Benchmarking against similar large-scale IT contracts for government agencies indicates that this pricing is within expected ranges, especially considering the specialized nature of healthcare data exchange.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, with three bidders participating. This level of competition is generally positive, indicating that multiple vendors were interested and capable of performing the required services. The presence of three bidders suggests that the government had a reasonable selection of qualified contractors, which can lead to more competitive pricing and better service offerings.
Taxpayer Impact: The full and open competition likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario. It ensures that the government explored the market to find the best value.
Public Impact
Beneficiaries: Healthcare providers submitting claims to Medicare, and ultimately Medicare beneficiaries who rely on efficient claims processing. Services Delivered: Maintenance and operation of a system facilitating electronic data interchange for Durable Medical Equipment (DME) Medicare Administrative Contractor (MAC) claims. Geographic Impact: National impact, as it supports a core function of the Centers for Medicare and Medicaid Services (CMS) across the United States. Workforce Implications: Supports IT professionals involved in system development, maintenance, and data processing within the contractor organization and potentially within CMS.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration could lead to vendor lock-in or reduced incentive for innovation.
- Reliance on a single contractor for a critical system poses a risk if performance degrades.
- Potential for scope creep over the contract's extended period.
- Changes in healthcare regulations could necessitate system modifications, impacting costs and timelines.
Positive Signals
- Successful operation of a critical healthcare IT infrastructure.
- Contract awarded through full and open competition, indicating market validation.
- Firm fixed-price contract structure provides cost certainty.
- Contractor has a track record of performing similar government IT services.
Sector Analysis
This contract falls within the Information Technology (IT) sector, specifically focusing on custom computer programming services and IT infrastructure management. The healthcare IT market is a significant and growing segment, driven by the increasing digitization of healthcare services and the need for efficient data exchange. Comparable spending benchmarks for large-scale government IT contracts can vary widely, but this contract's value is moderate for a system supporting a core function of CMS.
Small Business Impact
This contract does not appear to have a specific small business set-aside. Given the nature of the services and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses would be mandated, though they may arise organically. The focus is on a large, established IT service provider capable of managing a complex government system.
Oversight & Accountability
Oversight is primarily provided by the Centers for Medicare and Medicaid Services (CMS), a division of HHS. As a definitive contract, it would be subject to standard federal procurement regulations and oversight mechanisms. Performance reviews, audits, and reporting requirements would be in place to ensure contractor compliance and system functionality. The Inspector General for HHS would also have jurisdiction for investigations into fraud, waste, or abuse.
Related Government Programs
- Medicare Claims Processing Systems
- Healthcare Data Exchange Initiatives
- Durable Medical Equipment (DME) Programs
- CMS IT Modernization Efforts
- Federal Health IT Contracts
Risk Flags
- Long contract duration may lead to technological obsolescence.
- Performance monitoring is critical due to the system's importance.
- Potential for vendor lock-in over the contract's life.
Tags
it-services, healthcare-it, hhs, cms, definitive-contract, firm-fixed-price, full-and-open-competition, custom-computer-programming, medicare, claims-processing, data-interchange, kentucky
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $24.7 million to NATIONAL GOVERNMENT SERVICES, INC.. COMMON ELECTRONIC DATA INTERCHANGE SYSTEM FOR DME MAC CLAIMS PROCESSING CONTRACTORS
Who is the contractor on this award?
The obligated recipient is NATIONAL GOVERNMENT SERVICES, 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 $24.7 million.
What is the period of performance?
Start: 2007-12-14. End: 2013-03-12.
What is the track record of National Government Services, Inc. with similar federal IT contracts?
National Government Services, Inc. (NGS) has a significant history of performing IT services for the federal government, particularly within the healthcare domain. They have been a Medicare Administrative Contractor (MAC) for various regions, which involves extensive claims processing and data management. Their experience includes managing large-scale IT systems, ensuring data security, and complying with complex healthcare regulations. This background suggests they possess the necessary expertise and infrastructure to manage the Common Electronic Data Interchange System for DME MAC Claims Processing. Their prior performance on similar contracts would be a key factor in their selection for this award.
How does the value of this contract compare to other federal IT contracts for claims processing?
The total award of $24.7 million over approximately 5.3 years, averaging around $4.6 million annually, positions this contract as moderately sized within the federal IT landscape. Large-scale federal IT procurements, especially those involving critical infrastructure like healthcare claims processing, can range from tens of millions to billions of dollars. For a specialized system supporting Durable Medical Equipment (DME) claims processing for Medicare, this value appears reasonable. It is not as large as enterprise-wide system overhauls but represents a substantial investment in maintaining and operating a crucial component of the Medicare system. Benchmarking against contracts for similar functions, such as other MAC IT support or claims adjudication systems, would provide a more precise comparison.
What are the primary risks associated with this contract, and how are they mitigated?
The primary risks associated with this contract include potential performance degradation over its long duration, vendor lock-in, and the impact of evolving healthcare regulations. A long contract term (1915 days) could reduce the contractor's incentive to innovate or could lead to outdated technology if not managed proactively. Vendor lock-in is a concern as switching contractors for such a critical system is complex and costly. Mitigation strategies likely include robust performance metrics and Service Level Agreements (SLAs) within the contract, regular performance reviews by CMS, and provisions for system updates and modifications to accommodate regulatory changes. The firm fixed-price nature also shifts some financial risk to the contractor for cost overruns.
How effective is the competition level in ensuring value for taxpayers?
The fact that this contract was awarded under full and open competition with three bidders is a strong indicator of effective price discovery and value for taxpayers. Competition drives down prices as contractors vie for the award by offering their best terms. Having multiple capable bidders suggests that the government had a choice among qualified vendors, preventing a situation where a single provider could dictate terms. This competitive environment likely resulted in a more favorable price than if the contract had been sole-source or awarded with limited competition, ensuring that taxpayer funds are used efficiently for this essential IT service.
What is the historical spending trend for this specific type of service or system within HHS?
Analyzing historical spending trends for this specific contract requires access to detailed procurement data beyond the provided summary. However, it can be inferred that spending on IT systems for Medicare claims processing has been a consistent and significant expenditure for HHS over many years. As healthcare transitions towards electronic data interchange and digital platforms, investments in maintaining and upgrading these systems are ongoing. The $24.7 million awarded over approximately 5.3 years reflects a sustained commitment to this function. Without specific historical data for this exact EDI system, it's difficult to pinpoint a precise trend, but it aligns with the broader trend of increasing IT investment in federal healthcare administration.
What are the potential implications of the firm fixed-price contract type on cost and performance?
A firm fixed-price (FFP) contract type is generally advantageous for the government when the scope of work is well-defined and risks can be reasonably estimated. For taxpayers, FFP provides cost certainty, as the contractor is obligated to complete the work for the agreed-upon price, absorbing any cost overruns. This shifts the financial risk from the government to the contractor. However, it can also disincentivize the contractor from exceeding performance expectations or implementing significant innovations unless explicitly incentivized, as there is no direct financial reward for doing so beyond meeting the contract requirements. The government's role in clearly defining requirements and monitoring performance is crucial under an FFP structure.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services
Product/Service Code: MEDICAL SERVICES › DEPENDENT MEDICARE SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Elevance Health, Inc. (UEI: 037955940)
Address: 8115 KNUE RD, INDIANAPOLIS, IN, 46250
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $24,722,765
Exercised Options: $24,722,765
Current Obligation: $24,722,765
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Timeline
Start Date: 2007-12-14
Current End Date: 2013-03-12
Potential End Date: 2013-03-12 00:00:00
Last Modified: 2022-01-18
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