HHS awards $5.5B contact center contract to Maximus Federal Services over 9 years

Contract Overview

Contract Amount: $5,536,080,055 ($5.5B)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2013-04-15

End Date: 2022-05-31

Contract Duration: 3,333 days

Daily Burn Rate: $1.7M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: IGF::OT::IGF CONTACT CENTER OPERATIONS (CCO)

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $5.54 billion to MAXIMUS FEDERAL SERVICES, INC. for work described as: IGF::OT::IGF CONTACT CENTER OPERATIONS (CCO) Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Cost-plus award fee structure incentivizes performance but requires careful oversight. 3. Long contract duration (9 years) indicates a need for sustained service delivery. 4. Significant contract value suggests a critical function for CMS operations. 5. No small business set-aside, raising questions about small business participation. 6. Contractor has a substantial track record with federal agencies.

Value Assessment

Rating: good

The contract's value of $5.5 billion over nine years represents a substantial investment in contact center operations. Benchmarking this against similar large-scale federal contact center contracts is challenging due to the unique scope and duration. However, the cost-plus award fee (CPAF) structure implies that pricing is tied to performance, which can be a good value if managed effectively. The total award value suggests a significant operational scale, and the pricing would need to be closely monitored against performance metrics to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely invited to bid. The presence of six bidders (no) suggests a competitive environment, which generally leads to better pricing and service innovation. The extensive competition for such a large and critical service is a positive sign for price discovery and ensures that the government has a wide pool of qualified contractors to choose from.

Taxpayer Impact: Full and open competition for this substantial contract likely resulted in more favorable pricing for taxpayers compared to a sole-source or limited competition award. The competitive process helps drive down costs and improve service quality.

Public Impact

Beneficiaries include Medicare and Medicaid beneficiaries seeking information and support. Services delivered include telemarketing, customer service, and other contact center functions. Geographic impact is national, supporting beneficiaries across the United States. Workforce implications include job creation within the contact center industry, primarily in Virginia. Enhances access to critical health program information and enrollment assistance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns under the Cost Plus Award Fee (CPAF) structure if not rigorously managed.
Long-term reliance on a single contractor could lead to complacency or reduced innovation over time.
Ensuring consistent service quality across all contact points and over the full contract duration requires robust oversight.

Positive Signals

Awarded through full and open competition, indicating a competitive market and likely fair pricing.
Maximus Federal Services has extensive experience in government contracting, suggesting a lower execution risk.
The CPAF structure incentivizes contractor performance, potentially leading to higher quality service delivery.
The contract's long duration suggests a stable and reliable service for beneficiaries.

Sector Analysis

The Information Technology and Telecommunications sector, specifically the contact center sub-sector, is a significant area of federal spending. This contract falls under the broader category of business process outsourcing and customer support services. Federal agencies increasingly rely on specialized contractors to manage large-scale contact center operations, handling millions of inquiries annually. Comparable spending benchmarks are difficult to establish precisely due to the unique scale and scope of federal programs, but the overall market for contact center services is substantial.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, Maximus Federal Services, will likely perform the majority of the work. While this allows for maximum flexibility for the prime contractor, it may limit opportunities for small businesses to participate in this large federal contract, potentially impacting the small business ecosystem in this sector.

Oversight & Accountability

Oversight for this contract would primarily fall under the Centers for Medicare and Medicaid Services (CMS), a division of HHS. As a Cost Plus Award Fee (CPAF) contract, performance metrics and award fee determinations are critical oversight mechanisms. Transparency would be facilitated through regular reporting requirements and potentially through the HHS Office of Inspector General (OIG) for audits and investigations. The long duration necessitates continuous monitoring of performance and costs.

Related Government Programs

HHS Contact Center Operations
CMS Beneficiary Services
Federal Customer Support Contracts
Health Insurance Marketplace Call Centers
Medicare Call Center Operations
Medicaid Call Center Operations

Risk Flags

Potential for cost overruns due to CPAF structure.
Risk of service degradation over a long contract duration.
Dependence on a single contractor for critical services.
Need for robust ongoing performance monitoring and oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $5.54 billion to MAXIMUS FEDERAL SERVICES, INC.. IGF::OT::IGF CONTACT CENTER OPERATIONS (CCO)

Who is the contractor on this award?

The obligated recipient is MAXIMUS FEDERAL 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 $5.54 billion.

What is the period of performance?

Start: 2013-04-15. End: 2022-05-31.

What is the track record of Maximus Federal Services with similar large-scale federal contracts, particularly in contact center operations?

Maximus Federal Services has a significant track record in managing large federal contracts, including extensive experience in contact center operations for various government agencies. They are known for handling complex programs involving citizen engagement, benefits administration, and customer support. For instance, they have managed large contracts for the Health Insurance Marketplace, state Medicaid agencies, and other federal programs requiring extensive call center capabilities. Their history suggests a capacity to manage contracts of this scale and complexity, though performance can vary across specific contracts and require ongoing scrutiny to ensure alignment with government objectives and taxpayer value.

How does the pricing structure (Cost Plus Award Fee) compare to other federal contact center contracts of similar scope?

The Cost Plus Award Fee (CPAF) structure is common for federal contracts where performance outcomes are critical and can be objectively measured, but the exact scope of work might evolve. It allows the government to reimburse the contractor for allowable costs plus a fee that is determined based on performance against pre-defined metrics. Compared to fixed-price contracts, CPAF can offer more flexibility but requires robust oversight to prevent cost overruns. For large-scale contact center operations, CPAF is often chosen to incentivize high-quality service, responsiveness, and efficiency, balancing cost control with performance achievement. Benchmarking specific CPAF rates is complex as they are tied to negotiated cost ceilings and award fee criteria unique to each contract.

What are the primary risks associated with a contract of this duration (9 years) and value ($5.5B)?

The primary risks associated with a contract of this duration and value include potential cost escalation over time, contractor complacency leading to service degradation, and technological obsolescence. A nine-year term means the contract spans multiple budget cycles and potential shifts in administration priorities, which could impact funding or scope. Ensuring the contractor remains innovative and efficient throughout the contract's life requires strong performance management and contract modifications to incorporate new technologies or processes. Furthermore, the sheer size of the contract makes it a significant investment, increasing the financial risk if performance issues arise or if the program's objectives change substantially.

How effective has Maximus Federal Services been in meeting performance targets on previous large federal contracts?

Assessing the overall effectiveness of Maximus Federal Services requires a detailed review of individual contract performance reports, Inspector General audits, and CPARS (Contractor Performance Assessment Reporting System) data, which are not fully detailed in the provided summary. Generally, Maximus has a history of managing large, complex government contracts, including significant contact center operations. While they have received positive feedback and contract renewals for many programs, like any large contractor, they may have also faced challenges or criticisms on specific contracts related to performance, cost control, or customer service delivery. A comprehensive evaluation would involve analyzing their performance metrics and award fee scores across their federal portfolio.

What is the historical spending trend for federal contact center operations, and how does this contract compare?

Federal spending on contact center operations has been steadily increasing as agencies aim to improve citizen engagement and service delivery through digital and telephonic channels. This $5.5 billion contract over nine years represents a significant portion of that spending within HHS/CMS, reflecting the critical nature of beneficiary support for Medicare and Medicaid. While specific historical spending data for all federal contact centers isn't provided, contracts of this magnitude are indicative of the government's ongoing investment in maintaining and enhancing its customer service infrastructure. This contract's value aligns with the trend of outsourcing large-scale support functions to specialized contractors.

Are there any specific performance metrics or award fee criteria that are particularly noteworthy for this contract?

The provided data does not detail the specific performance metrics or award fee criteria for this contract. However, for a Cost Plus Award Fee (CPAF) contract of this nature, typical metrics would likely include call answer rates, average handle time, first-call resolution rates, customer satisfaction scores, data security compliance, and adherence to program-specific requirements (e.g., accuracy of information provided to beneficiaries). The award fee structure incentivizes the contractor to exceed baseline performance expectations in these areas. Without the specific criteria, it's impossible to judge the rigor of the performance incentives.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › Telemarketing Bureaus and Other Contact Centers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: RFPCMS20120004

Offers Received: 6

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 3120 FAIRVIEW PARK DR STE 400, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $5,536,080,055

Exercised Options: $5,536,080,055

Current Obligation: $5,536,080,055

Actual Outlays: $558,818,937

Subaward Activity

Number of Subawards: 13

Total Subaward Amount: $257,428,006

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline