HHS awards $840M contract for administrative management services, with Highpoint Digital Inc. as prime

Contract Overview

Contract Amount: $839,853,826 ($839.9M)

Contractor: Highpoint Digital, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2013-03-01

End Date: 2023-01-31

Contract Duration: 3,623 days

Daily Burn Rate: $231.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: IGF::OT::IGF FOR OTHER FUNCTIONS

Place of Performance

Location: INDIANAPOLIS, HAMILTON County, INDIANA, 46290

State: Indiana Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $839.9 million to HIGHPOINT DIGITAL, INC. for work described as: IGF::OT::IGF FOR OTHER FUNCTIONS Key points: 1. Contract value of $840M over its life suggests significant scope and long-term need for administrative management services. 2. The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' indicates a competitive process, though the exclusion of specific sources warrants further investigation. 3. A Cost Plus Fixed Fee (CPFF) contract type can present cost control challenges if not managed diligently. 4. The contract duration of over 3000 days highlights a sustained relationship and potential for deep integration with agency operations. 5. The primary service NAICS code 541611 points to a focus on general management consulting, a broad category with potential for varied service delivery. 6. The contract's significant value may indicate a critical function within the Centers for Medicare and Medicaid Services (CMS).

Value Assessment

Rating: fair

Benchmarking the value of this $840M contract is challenging without specific details on the services rendered. However, the Cost Plus Fixed Fee (CPFF) structure requires careful oversight to ensure value for money, as it incentivizes cost incurrence. Comparing it to similar large-scale administrative management contracts within HHS or other agencies would provide better context on its pricing and efficiency. The fixed fee component offers some cost predictability, but the 'cost plus' element necessitates robust auditing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This suggests that while the competition was intended to be broad, certain sources were specifically excluded. The number of bidders is not explicitly stated, but the 'exclusion of sources' implies a potentially narrowed field compared to a truly open competition. This could impact price discovery and potentially limit the range of innovative solutions considered.

Taxpayer Impact: Taxpayers may benefit from a competitive process, but the exclusion of sources could mean that potentially lower-cost or more effective solutions from excluded vendors were not considered, potentially leading to higher overall costs or less optimal service delivery.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially the broader healthcare system through improved administrative efficiency. Services delivered likely encompass a wide range of administrative and management consulting functions critical to the operation of CMS programs. The geographic impact is primarily centered around the agency's operations, likely supporting federal employees and contractors involved in CMS initiatives. Workforce implications could include support for federal staff and the creation of jobs within the contractor's organization, potentially in Indiana where the contract is noted.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type requires diligent oversight to prevent cost overruns and ensure efficiency.
The 'exclusion of sources' in the competition process warrants scrutiny to understand the rationale and potential impact on cost and innovation.
The long duration of the contract could lead to vendor lock-in if not managed with regular performance reviews and market checks.

Positive Signals

The contract was awarded through a competitive process, indicating some level of market vetting.
The significant contract value suggests the contractor is capable of handling large-scale, complex administrative tasks.
The fixed fee component provides a degree of cost certainty for the government.

Sector Analysis

Administrative Management and General Management Consulting Services (NAICS 541611) is a broad sector encompassing a wide array of advisory and support functions for organizations. This contract fits within the government's significant spending on professional services to support its vast operations. Comparable spending benchmarks would involve looking at other large federal contracts for management consulting, particularly within large agencies like HHS, to assess if the $840M value is in line with the scope and duration of services provided.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary set-aside consideration for this contract. This suggests that the prime contract was awarded to a large business. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to leverage the small business ecosystem for specialized services within this large contract.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers, program managers within CMS, and potentially the HHS Office of Inspector General (OIG). The CPFF structure necessitates rigorous financial oversight and auditing to ensure costs are reasonable and allocable. Transparency would be enhanced through regular reporting requirements from the contractor and public contract databases, though specific performance metrics and detailed spending breakdowns may not always be fully public.

Related Government Programs

HHS Administrative Support Contracts
CMS Management Consulting Services
Federal Professional Services Spending
Government-wide Management Consulting Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight.
Exclusion of sources in competition may limit price discovery.
Long contract duration could lead to vendor lock-in.
Broad service category may obscure specific performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $839.9 million to HIGHPOINT DIGITAL, INC.. IGF::OT::IGF FOR OTHER FUNCTIONS

Who is the contractor on this award?

The obligated recipient is HIGHPOINT DIGITAL, 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 $839.9 million.

What is the period of performance?

Start: 2013-03-01. End: 2023-01-31.

What specific administrative management and general management consulting services are being provided under this contract?

The contract's NAICS code (541611) indicates services related to administrative management and general management consulting. This is a broad category that can encompass strategic planning, organizational design, process improvement, financial management consulting, human capital consulting, and IT management consulting, among others. Without more specific contract line item details or statements of work, the precise nature of the services remains general. Given the scale and duration, it likely involves comprehensive support for CMS operations, potentially including policy implementation support, program management assistance, data analysis, and operational efficiency improvements across various CMS divisions.

How does the $840M contract value compare to similar administrative management contracts within HHS or other large federal agencies?

A direct comparison of the $840M value requires identifying contracts with similar scope, duration, and service complexity. Large federal agencies like HHS, DoD, and GSA frequently award multi-year, high-value contracts for management and administrative support. For instance, contracts supporting large-scale IT modernization, healthcare program administration, or complex logistical operations can reach similar figures. However, the specific nature of 'administrative management' is broad. If this contract primarily covers back-office functions or general advisory services, $840M over its lifespan might represent a premium compared to contracts focused on more specialized or technical consulting. A detailed analysis would involve benchmarking against contracts with similar NAICS codes and agency components.

What are the key risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude?

The primary risk with a CPFF contract is that the government may pay more than necessary if the contractor's costs are not managed efficiently. While the fixed fee provides a ceiling on the contractor's profit, the 'cost plus' element means the government bears the risk of cost overruns. For a contract valued at $840M, effective oversight is paramount. Risks include potential for scope creep, inadequate cost tracking by the contractor, and insufficient government auditing. The government must ensure that all costs claimed are reasonable, allocable, and allowable. Without robust government oversight and clear performance metrics, the CPFF structure can lead to inflated costs and reduced value for taxpayer money.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply for the competition and pricing?

This designation suggests a competitive process was initiated, but certain potential bidders were intentionally excluded. The rationale for exclusion could range from specific technical requirements, past performance issues, or national security concerns. While 'full and open' implies broad solicitation, the exclusion narrows the field. This could limit the number of viable proposals received, potentially reducing the downward pressure on pricing that a wider competition might generate. It also raises questions about whether the most innovative or cost-effective solutions were considered. The government must justify the exclusion of sources to ensure fairness and maximize competition within the defined parameters.

What is the historical spending pattern for administrative management services at CMS, and how does this contract fit in?

Analyzing historical spending patterns for administrative management services at CMS would involve reviewing past contract awards for similar services (NAICS 541611 or related codes) over several fiscal years. This $840M contract, spanning from 2013 to 2023, represents a significant, long-term investment. If CMS has consistently awarded large contracts in this category, it indicates a sustained need for external expertise in managing its complex operations. If this contract represents a substantial increase or decrease compared to previous spending, it could signal a shift in strategy, increased demand for services, or a move towards greater internal capacity. Understanding this trend provides context for the current contract's scale and importance.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 510A HERNDON PKWY, HERNDON, VA, 20170

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $839,853,826

Exercised Options: $839,853,826

Current Obligation: $839,853,826

Actual Outlays: $99,358,598

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline