HHS's $25.8M contract for premium stabilization programs operational support awarded to General Dynamics Information Technology, Inc

Contract Overview

Contract Amount: $25,847,389 ($25.8M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2017-04-04

End Date: 2020-01-21

Contract Duration: 1,022 days

Daily Burn Rate: $25.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: Healthcare

Official Description: IGF::OT::IGF PAYMENT POLICY AND FINANCIAL MANAGEMENT GROUP PREMIUM STABILIZATION PROGRAMS OPERATIONAL SUPPORT

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $25.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IGF::OT::IGF PAYMENT POLICY AND FINANCIAL MANAGEMENT GROUP PREMIUM STABILIZATION PROGRAMS OPERATIONAL SUPPORT Key points: 1. The contract's value of $25.8 million over its period of performance suggests a significant investment in operational support for critical healthcare programs. 2. Competition dynamics for this contract are assessed to understand if the pricing reflects market value and efficiency. 3. Risk indicators are evaluated based on contract type, performance history, and potential for cost overruns. 4. Performance context is established by comparing this contract's objectives and outcomes to similar government initiatives. 5. The contract's positioning within the broader healthcare IT and administrative services sector is analyzed for its strategic importance. 6. The use of a Time and Materials contract type warrants scrutiny for potential cost escalation and contractor efficiency.

Value Assessment

Rating: fair

The contract's total value of $25.8 million over approximately three years represents a substantial expenditure for operational support. Benchmarking this against similar contracts for administrative and management consulting services within HHS or other agencies is crucial. Without specific comparable data, it's difficult to definitively assess value for money. However, the Time and Materials (T&M) pricing structure, while flexible, can sometimes lead to higher costs if not closely managed, suggesting a need for diligent oversight to ensure efficient resource utilization and prevent cost creep.

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 had the opportunity to bid. The presence of two bidders suggests a moderate level of competition. While full and open competition is generally preferred for ensuring fair pricing and access to a wide range of capabilities, the specific number of bidders can influence the intensity of price negotiation and the ultimate value achieved. A higher number of bidders typically leads to more competitive pricing.

Taxpayer Impact: The full and open competition, despite having only two bidders, suggests that taxpayers likely benefited from a competitive bidding process, which should have driven a more reasonable price compared to a sole-source award. However, the limited number of bidders might have constrained the full potential for price discovery.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially millions of individuals relying on the stability of health insurance marketplaces. Services delivered include crucial operational support for premium stabilization programs, ensuring the smooth functioning of healthcare insurance markets. The geographic impact is national, as these programs affect health insurance availability and affordability across the United States. Workforce implications may involve the utilization of specialized administrative and IT support personnel by the contractor, contributing to employment in these fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Time and Materials (T&M) contract type can lead to cost overruns if not meticulously managed and monitored for efficiency.
A limited number of bidders (two) in a full and open competition might indicate potential barriers to entry or a specialized market, potentially impacting the degree of price competition.
The duration of the contract (over three years) requires ongoing performance monitoring to ensure continued value and alignment with evolving program needs.

Positive Signals

Awarded under full and open competition, which generally promotes fair pricing and access to a broad range of qualified contractors.
The contract supports critical healthcare programs (premium stabilization), indicating alignment with significant government priorities.
The contractor, General Dynamics Information Technology, Inc., is a large and established entity with experience in government contracting, suggesting a degree of reliability.

Sector Analysis

This contract falls within the administrative management and general management consulting services sector, specifically supporting healthcare operations. The market for such services is substantial, driven by the complexity of federal healthcare programs like Medicare and Medicaid. Comparable spending benchmarks would involve analyzing other large-scale IT and operational support contracts within HHS and other federal agencies that manage complex public services. The size of this contract ($25.8M) places it as a significant, but not exceptionally large, award within this domain.

Small Business Impact

The contract data indicates that small business participation was not a primary focus, as the contract was not set aside for small businesses and the prime contractor is a large corporation. There is no explicit information regarding subcontracting plans for small businesses. This suggests that the primary benefits for small businesses would likely stem from indirect opportunities or if General Dynamics Information Technology, Inc. voluntarily engages them for specific services, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures would be embedded in the contract's performance work statement, requiring adherence to delivery schedules, quality standards, and reporting requirements. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or identified during the contract's performance.

Related Government Programs

Medicare Program Integrity
Medicaid Program Operations
Affordable Care Act (ACA) Implementation
Health Insurance Marketplace Operations
Federal Health IT Initiatives

Risk Flags

Potential for cost overruns due to Time and Materials contract type.
Limited competition (two bidders) may impact optimal price discovery.
Need for robust oversight to ensure contractor efficiency and performance.
Reliance on a single contractor for critical operational support functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $25.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IGF::OT::IGF PAYMENT POLICY AND FINANCIAL MANAGEMENT GROUP PREMIUM STABILIZATION PROGRAMS OPERATIONAL SUPPORT

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $25.8 million.

What is the period of performance?

Start: 2017-04-04. End: 2020-01-21.

What is the track record of General Dynamics Information Technology, Inc. in managing similar federal contracts, particularly within the healthcare sector?

General Dynamics Information Technology, Inc. (GDIT) has a substantial track record in managing large-scale federal IT and professional services contracts across various agencies, including the Department of Health and Human Services (HHS). They have been involved in numerous projects related to healthcare IT modernization, data analytics, and operational support for programs like Medicare and Medicaid. Their experience often includes managing complex systems, ensuring cybersecurity, and providing administrative support. While specific performance metrics for individual contracts are not always publicly detailed, GDIT's consistent presence as a prime contractor on significant government awards suggests a general capability to meet contractual obligations. However, a deeper dive into past performance reviews and any documented issues on similar HHS contracts would provide a more precise assessment of their suitability for this specific task.

How does the awarded amount of $25.8 million compare to the estimated value or typical spending for similar operational support contracts within CMS?

The awarded amount of $25.8 million over approximately three years for premium stabilization programs operational support is a significant figure, reflecting the complexity and importance of these functions within CMS. To benchmark this effectively, one would need to compare it against similar contracts for administrative management, IT support, and program operations within CMS or other federal healthcare agencies. For instance, contracts supporting the Health Insurance Marketplace or other large-scale federal health IT initiatives often run into tens or hundreds of millions of dollars over their lifecycles. The $25.8 million figure suggests a substantial, but not unprecedented, investment. Without access to a detailed breakdown of the services provided and the specific deliverables, a precise value-for-money assessment relative to market rates is challenging. However, it indicates a considerable commitment to ensuring the stability and operational efficiency of these critical healthcare programs.

What are the primary risks associated with the Time and Materials (T&M) contract type used for this award, and how might they impact cost and performance?

The primary risk associated with a Time and Materials (T&M) contract type is the potential for cost escalation, as the government pays for the actual labor hours and materials used, plus a fixed fee or labor-hour rate. This structure can incentivize contractors to extend project timelines or increase labor hours if not carefully managed, potentially leading to costs exceeding initial estimates. For this $25.8 million contract, the risk is that the operational support could become more expensive than anticipated if contractor efficiency is not rigorously monitored. Performance risks include ensuring that the quality of work remains high despite the focus on hours billed. To mitigate these risks, CMS would need to implement strong oversight, including detailed tracking of hours, regular performance reviews, and clear task definitions to prevent scope creep and ensure efficient resource allocation.

Given the 'full and open competition' with two bidders, what does this imply about the market for these specialized services and potential price discovery?

The fact that this contract was awarded under 'full and open competition' with two bidders suggests a moderately competitive market for these specialized administrative and operational support services within the healthcare sector. While 'full and open' theoretically allows any qualified vendor to compete, having only two bidders might indicate that the market is either highly specialized, requiring unique capabilities, or that there are significant barriers to entry for other potential vendors. This level of competition is generally better than a sole-source award, as it allows for some degree of price negotiation and comparison. However, with only two offers, the price discovery process might not be as robust as it would be with a larger pool of bidders. Taxpayers benefit from competition, but the limited number of participants could mean that the government did not achieve the absolute lowest possible price achievable in a more crowded marketplace.

What are the key performance indicators (KPIs) likely being used to measure the success of this contract, and how are they monitored?

Key performance indicators (KPIs) for a contract like this, focused on operational support for premium stabilization programs, would likely revolve around efficiency, timeliness, accuracy, and compliance. Examples could include metrics related to the speed of processing applications or inquiries, the accuracy rate of data entry and reporting, adherence to program deadlines, system uptime and availability, and the successful resolution of operational issues. Monitoring would typically be conducted by the Contracting Officer's Representative (COR) and the program office through regular performance reports submitted by the contractor, site visits, quality assurance surveillance plans (QASPs), and potentially user feedback mechanisms. The contract's Performance Work Statement (PWS) would explicitly define these KPIs and the acceptable performance thresholds, with deviations triggering corrective actions or impacting contractor payment.

How does this contract fit into the broader strategy of the Centers for Medicare and Medicaid Services (CMS) for managing the health insurance marketplaces?

This contract is integral to the operational backbone of CMS's efforts to manage the health insurance marketplaces, particularly concerning premium stabilization programs. These programs are designed to ensure that insurance markets remain stable and affordable for consumers by mitigating risks associated with adverse selection. Operational support is crucial for the effective implementation and ongoing management of these stabilization mechanisms, which may include risk adjustment, reinsurance, and risk corridors. By outsourcing specific operational functions to General Dynamics Information Technology, Inc., CMS can leverage specialized expertise and resources to maintain the smooth functioning of these complex programs, thereby supporting the broader strategic goal of providing accessible and affordable health insurance options to Americans.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: FCO00CORP0000C

Offers Received: 2

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corporation

Address: 3150 FAIRVIEW PARK DR STE 100, 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: $28,567,400

Exercised Options: $25,847,389

Current Obligation: $25,847,389

Actual Outlays: $-4,819

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00F256CA

IDV Type: FSS

Timeline