IBM awarded $51.1M for Medicare/Medicaid program integrity modeling and analytic support

Contract Overview

Contract Amount: $51,103,271 ($51.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2015-09-29

End Date: 2020-03-28

Contract Duration: 1,642 days

Daily Burn Rate: $31.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF PROCUREMENT OF THE FIRST OF TWO PROGRAM INTEGRITY MODELING AND ANALYTIC SUPPORT CONTRACTS

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $51.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF PROCUREMENT OF THE FIRST OF TWO PROGRAM INTEGRITY MODELING AND ANALYTIC SUPPORT CONTRACTS Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Duration of over 4.5 years indicates a significant, long-term need. 3. Cost-plus-fixed-fee structure may incentivize cost control but requires careful oversight. 4. The contract supports program integrity, a critical function for healthcare spending. 5. Awarded to a single large business, with no small business set-aside noted. 6. The specific services are computer systems design, aligning with data analytics needs.

Value Assessment

Rating: good

The contract value of $51.1 million over approximately 4.5 years represents a substantial investment in program integrity. Benchmarking this against similar contracts for advanced analytics and IT support within federal health agencies is crucial. While specific per-unit costs are not provided, the fixed-fee component suggests a defined profit margin. The overall value appears reasonable given the complexity and criticality of ensuring program integrity within Medicare and Medicaid.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of 4 bids suggests a competitive environment, which typically leads to better pricing and innovation for the government. The agency sought proposals for computer systems design services related to program integrity modeling and analytic support.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive marketplace that drives down costs and improves service quality.

Public Impact

Beneficiaries include Medicare and Medicaid program beneficiaries, who are protected from fraud and abuse. Services delivered include advanced modeling and analytic support to identify and prevent improper payments. Geographic impact is national, covering the vast scope of federal healthcare programs. Workforce implications include the need for specialized data scientists, analysts, and IT professionals.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not managed tightly.
Reliance on a single large contractor for critical program integrity functions could pose a risk.
The complexity of healthcare data analytics requires continuous adaptation to evolving fraud schemes.

Positive Signals

Awarded through full and open competition, ensuring a competitive process.
Focus on program integrity directly addresses taxpayer concerns about healthcare spending efficiency.
The contract duration suggests a stable, long-term commitment to a vital government function.

Sector Analysis

This contract falls within the IT services sector, specifically computer systems design. The federal government is a major consumer of such services, particularly for complex data analysis and system development. Spending in this area is driven by the need to modernize legacy systems, enhance cybersecurity, and leverage data for improved decision-making. Comparable contracts often involve large-scale IT modernization, data analytics platforms, and specialized software development for agencies like HHS.

Small Business Impact

This contract was not set aside for small businesses and was awarded to a large business (IBM). There is no indication of specific subcontracting requirements for small businesses within the provided data. This suggests that the primary focus was on securing the capabilities of a large, established contractor for this complex IT service requirement, potentially limiting direct opportunities for small businesses on this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. As a cost-plus-fixed-fee contract, rigorous financial oversight is necessary to ensure costs are reasonable and allocable. Transparency is facilitated through contract reporting mechanisms, and the HHS Office of Inspector General (OIG) would have jurisdiction to investigate any potential fraud, waste, or abuse related to its execution.

Related Government Programs

Centers for Medicare & Medicaid Services (CMS) IT Modernization
Healthcare Fraud and Abuse Control Program
Federal Health IT Initiatives
Data Analytics for Government Programs

Risk Flags

Cost-plus-fixed-fee contract type requires diligent oversight to manage costs.
Sole award to a large business may limit small business participation.
Complexity of healthcare data analytics requires continuous adaptation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $51.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF PROCUREMENT OF THE FIRST OF TWO PROGRAM INTEGRITY MODELING AND ANALYTIC SUPPORT CONTRACTS

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 $51.1 million.

What is the period of performance?

Start: 2015-09-29. End: 2020-03-28.

What is the track record of IBM with CMS for similar program integrity contracts?

IBM has a long history of providing IT services and solutions to various federal agencies, including the Department of Health and Human Services (HHS) and its sub-agencies like CMS. Their involvement in large-scale government IT projects is extensive. For program integrity specifically, IBM has likely engaged in similar data analytics, system development, and consulting roles. Analyzing past performance evaluations and contract awards for IBM related to healthcare analytics and fraud detection within CMS would provide a clearer picture of their specific expertise and reliability in this domain. Without access to detailed past performance data for this specific contract or related ones, it's difficult to provide a precise assessment, but IBM's general profile suggests significant experience.

How does the $51.1 million value compare to other federal contracts for program integrity analytics?

The $51.1 million contract value for program integrity modeling and analytic support over approximately 4.5 years is substantial, reflecting the complexity and scale of Medicare and Medicaid operations. Federal spending on healthcare analytics and program integrity has been increasing significantly as agencies seek to combat fraud, waste, and abuse. Comparable contracts awarded to other large system integrators or specialized analytics firms for similar purposes within HHS or other health-focused agencies often range from tens to hundreds of millions of dollars, depending on the scope, duration, and specific technologies involved. This award appears to be within the expected range for a contract of this nature supporting critical national healthcare programs.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of service?

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to IBM, present specific risks. The primary risk for the government is that the contractor may not be sufficiently incentivized to control costs, as the fixed fee is earned regardless of the final cost incurred (within allowable costs). This can potentially lead to cost overruns if the contractor's initial cost estimates are inaccurate or if project scope changes significantly without proper adjustments. For the government, effective oversight is paramount to scrutinize all incurred costs and ensure they are reasonable, allocable, and necessary. Conversely, the fixed fee provides the contractor with a predictable profit margin, which can be attractive for complex, high-risk projects where cost estimation is challenging.

How effective are program integrity modeling and analytic support contracts in reducing healthcare fraud?

Contracts focused on program integrity modeling and analytic support are generally considered crucial tools in the fight against healthcare fraud, waste, and abuse. By leveraging advanced data analytics, these services help identify anomalous patterns, potential fraudulent claims, and areas of inefficiency within massive datasets like those generated by Medicare and Medicaid. This allows agencies to proactively investigate suspicious activities, recover improper payments, and implement preventive measures. While quantifying the exact return on investment can be complex, the ability to detect and deter fraud through sophisticated analytics is widely recognized as essential for safeguarding taxpayer dollars and ensuring the sustainability of healthcare programs. The effectiveness hinges on the quality of the data, the sophistication of the analytical models, and the agency's ability to act on the insights provided.

What is the historical spending trend for IT services related to program integrity at CMS?

Historical spending trends for IT services related to program integrity at CMS have generally shown an upward trajectory over the past decade. This is driven by several factors: the increasing volume and complexity of healthcare data, the growing sophistication of fraud schemes, and a greater emphasis by Congress and the public on accountability and efficiency in federal spending. CMS has consistently invested in technology and data analytics capabilities to enhance its program integrity efforts. This includes spending on data warehousing, predictive modeling, fraud detection algorithms, and case management systems. The $51.1 million awarded to IBM for this specific contract aligns with this trend of significant investment in advanced IT solutions to protect the integrity of Medicare and Medicaid.

What are the implications of awarding this contract to a single large vendor versus multiple smaller vendors?

Awarding a significant contract like this to a single large vendor, such as IBM, can offer advantages in terms of streamlined management, unified technical approach, and potentially faster integration of services due to the vendor's established infrastructure and resources. It can ensure a cohesive strategy for complex program integrity functions. However, it also carries risks, including vendor lock-in, reduced flexibility, and potentially higher costs compared to a fragmented approach involving multiple specialized small businesses. For taxpayers, a single large vendor might mean less direct competition driving down price, but it could also lead to more efficient and comprehensive service delivery if the vendor performs well. The decision often balances the need for integrated, large-scale capabilities against the benefits of fostering a diverse supplier base.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: NIHJT2010001

Offers Received: 4

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $51,103,271

Exercised Options: $51,103,271

Current Obligation: $51,103,271

Actual Outlays: $58,059

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $5,309,341

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200030W

IDV Type: GWAC

Timeline