HHS Awards $592M to CGS Administrators for Direct Health and Medical Insurance Carriers Services
Contract Overview
Contract Amount: $592,280,125 ($592.3M)
Contractor: CGS Administrators, LLC
Awarding Agency: Department of Health and Human Services
Start Date: 2015-09-21
End Date: 2024-05-31
Contract Duration: 3,175 days
Daily Burn Rate: $186.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: Healthcare
Official Description: IGF::OT::IGF
Place of Performance
Location: NASHVILLE, DAVIDSON County, TENNESSEE, 37214
Plain-Language Summary
Department of Health and Human Services obligated $592.3 million to CGS ADMINISTRATORS, LLC for work described as: IGF::OT::IGF Key points: 1. Significant contract value of $592.3M awarded to CGS Administrators, LLC. 2. Services fall under Direct Health and Medical Insurance Carriers (NAICS 524114). 3. Full and open competition was utilized, suggesting a competitive bidding process. 4. Contract duration is extensive, spanning from 2015 to 2024.
Value Assessment
Rating: fair
The contract type is Cost Plus Award Fee (CPAF), which can lead to higher costs if not managed carefully. Benchmarking against similar contracts for insurance carrier services is difficult without more granular cost data.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple bidders likely participated. This method generally promotes price discovery and competitive pricing.
Taxpayer Impact: The extensive duration and cost-plus nature of this contract warrant close monitoring to ensure taxpayer funds are used efficiently and effectively.
Public Impact
Impacts beneficiaries of Medicare and other health insurance programs administered by CMS. Ensures the operational continuity of critical health insurance carrier functions. Potential for cost savings or overruns depending on performance and award fee structure.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (over 8 years) increases risk of cost escalation.
- Cost Plus Award Fee (CPAF) can incentivize higher costs if not properly managed.
- Lack of specific performance metrics makes it hard to assess value for money.
Positive Signals
- Awarded under full and open competition, suggesting competitive pricing.
- CMS is a major agency with established oversight processes.
- Contract has been active for a significant period, implying some level of operational success.
Sector Analysis
This contract falls within the Health Insurance sector, specifically for Direct Health and Medical Insurance Carriers. Spending in this sector is substantial due to the nature of healthcare administration and insurance operations.
Small Business Impact
The data does not indicate any specific set-asides for small businesses. The prime contractor, CGS Administrators, LLC, is likely a large business, and the contract's scope may not be easily divisible for small business participation.
Oversight & Accountability
The Centers for Medicare and Medicaid Services (CMS) is responsible for oversight. The contract's long duration and CPAF structure necessitate robust performance monitoring and financial oversight to ensure accountability and prevent waste.
Related Government Programs
- Direct Health and Medical Insurance Carriers
- Department of Health and Human Services Contracting
- Centers for Medicare and Medicaid Services Programs
Risk Flags
- Extended contract duration increases risk of cost overruns.
- CPAF structure may incentivize higher costs if not strictly managed.
- Lack of detailed performance metrics makes value assessment difficult.
- Potential for scope creep over the contract's long lifespan.
- Dependence on a single contractor for critical insurance carrier functions.
Tags
direct-health-and-medical-insurance-carr, department-of-health-and-human-services, tn, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $592.3 million to CGS ADMINISTRATORS, LLC. IGF::OT::IGF
Who is the contractor on this award?
The obligated recipient is CGS ADMINISTRATORS, LLC.
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 $592.3 million.
What is the period of performance?
Start: 2015-09-21. End: 2024-05-31.
What specific services are provided under this contract, and how do they align with CMS's mission to administer health insurance programs effectively?
This contract supports Direct Health and Medical Insurance Carriers (NAICS 524114). These services are crucial for the operational functioning of CMS's health insurance programs, likely involving claims processing, provider services, and beneficiary support. Effective execution ensures beneficiaries receive timely and accurate services, aligning directly with CMS's core mission.
Given the Cost Plus Award Fee structure, what are the key performance indicators (KPIs) used to determine the award fee, and how are they monitored to ensure taxpayer value?
The specific KPIs for the award fee are not detailed in the provided data. However, for a CPAF contract of this nature, KPIs typically focus on operational efficiency, accuracy in claims processing, beneficiary satisfaction, and adherence to regulatory requirements. CMS's contracting officers would be responsible for monitoring these metrics and ensuring the award fee reflects exceptional performance rather than just meeting basic requirements.
What is the projected cost efficiency of this contract over its entire duration, considering potential inflation and evolving healthcare regulations?
Projecting cost efficiency over a nearly decade-long contract is challenging. While full and open competition aims for initial price competitiveness, the CPAF structure allows for costs to fluctuate based on performance and incurred expenses. CMS must actively manage contract modifications, monitor spending against benchmarks, and adapt to regulatory changes to maintain cost efficiency and ensure the contract remains a good value.
Industry Classification
NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers
Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: HHSM5002014RFP0075
Offers Received: 4
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 26 CENTURY BLVD STE 610, NASHVILLE, TN, 37214
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $673,718,826
Exercised Options: $672,698,826
Current Obligation: $592,280,125
Actual Outlays: $231,177,452
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $73,980
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2015-09-21
Current End Date: 2024-05-31
Potential End Date: 2024-05-31 00:00:00
Last Modified: 2025-07-31
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