HHS awarded $34.1M for Medicare Appeals System IT services, with CGI Federal Inc. as the contractor

Contract Overview

Contract Amount: $34,153,754 ($34.2M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2008-12-01

End Date: 2014-07-31

Contract Duration: 2,068 days

Daily Burn Rate: $16.5K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: TAS::75 0511::TAS MEDICARE APPEALS SYSTEM

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $34.2 million to CGI FEDERAL INC. for work described as: TAS::75 0511::TAS MEDICARE APPEALS SYSTEM Key points: 1. The contract's value of $34.1 million over its period of performance suggests a significant investment in IT infrastructure for a critical government function. 2. The use of a 'COMPETITIVE DELIVERY ORDER' indicates that while the overall contract vehicle may have been competed, this specific order was placed under existing terms. 3. The 'COST PLUS FIXED FEE' pricing structure can sometimes lead to cost overruns if not managed tightly, posing a potential risk to budget adherence. 4. The contract duration of over 2000 days highlights the long-term nature of the services provided, implying a need for sustained IT support. 5. The 'Computer Systems Design Services' category points to a focus on developing and maintaining complex IT systems essential for Medicare operations. 6. The absence of small business set-aside flags suggests this contract was not specifically targeted to boost small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this $34.1 million contract requires comparison to similar IT system development and maintenance contracts within the federal government, particularly those for healthcare administration. Without specific data on the scope and complexity of the Medicare Appeals System, a direct value-for-money assessment is challenging. However, the duration of the contract (over 2000 days) suggests a substantial, long-term engagement. The 'COST PLUS FIXED FEE' (CPFF) pricing model, while allowing for flexibility, can be less predictable in terms of final cost compared to fixed-price contracts, potentially impacting overall value if not meticulously managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a 'COMPETITIVE DELIVERY ORDER,' implying that the underlying contract vehicle was subject to full and open competition. However, the specifics of how many bids were received for this particular delivery order are not detailed in the provided data. A competitive award generally suggests a better opportunity for price discovery and potentially more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: A competitive award process, even for a delivery order, is generally beneficial for taxpayers as it encourages multiple vendors to offer their best pricing and technical solutions, potentially leading to cost savings and higher quality services.

Public Impact

Beneficiaries of this contract include Medicare beneficiaries who rely on an efficient and functional appeals system to resolve disputes regarding their healthcare coverage. The services delivered are critical for the operational integrity of the Centers for Medicare and Medicaid Services (CMS), ensuring the proper administration of the Medicare program. The geographic impact is national, as the Medicare program serves beneficiaries across the United States. Workforce implications include the IT professionals employed by CGI Federal Inc. to develop, maintain, and support the Medicare Appeals System, as well as CMS staff who utilize the system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'COST PLUS FIXED FEE' (CPFF) contract type can present cost control challenges if not rigorously monitored, potentially leading to expenditures exceeding initial estimates.
The long contract duration (over 2000 days) necessitates sustained oversight to ensure continued relevance and performance of the IT system.
Without detailed performance metrics, it's difficult to ascertain the system's efficiency and effectiveness in processing appeals.
The lack of specific information on competition for this particular delivery order makes it hard to definitively assess if maximum value was achieved.

Positive Signals

The contract was awarded through a competitive process, suggesting a baseline level of vetting and potential for favorable terms.
The contractor, CGI Federal Inc., is a known entity in the federal IT services space, implying a degree of established capability.
The focus on a critical system like Medicare Appeals indicates a commitment to maintaining essential government functions.
The contract's completion date suggests the system was operational for a significant period, fulfilling its intended purpose.

Sector Analysis

The IT services sector within the federal government is vast, encompassing a wide range of needs from software development to cybersecurity and infrastructure management. Contracts for systems supporting major healthcare programs like Medicare represent a significant portion of this spending. The market for such services is highly competitive, with numerous large and small businesses vying for government contracts. Benchmarks for similar IT system design and development contracts often vary widely based on complexity, scope, and duration, but multi-million dollar awards for critical national systems are common.

Small Business Impact

The provided data indicates that this contract was not awarded as a small business set-aside ('sb': false) and does not appear to have specific subcontracting requirements for small businesses mentioned ('ss': false). This suggests that the primary contractor, CGI Federal Inc., likely handled the majority of the work internally or through larger partners. Consequently, the direct impact on the small business ecosystem for this specific contract may be limited, although CGI Federal Inc. may engage small businesses in other capacities not detailed here.

Oversight & Accountability

Oversight for federal contracts of this magnitude typically involves the contracting agency (Department of Health and Human Services, specifically CMS) through contract officers and program managers. The 'COST PLUS FIXED FEE' structure necessitates close monitoring of costs and performance to ensure adherence to the fixed fee and overall budget. Transparency is generally facilitated through contract databases like FPDS-NG (where this data originates) and agency reporting. Inspector General jurisdiction would likely fall under the HHS Office of Inspector General, which investigates fraud, waste, and abuse in HHS programs and operations.

Related Government Programs

Medicare Modernization Act (MMA) IT Systems
Healthcare.gov IT Infrastructure
CMS Data Management Systems
Federal Health IT Initiatives
Department of Health and Human Services IT Modernization

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost escalations.
Long contract duration necessitates ongoing performance monitoring and adaptation to evolving technological needs.
Lack of specific performance metrics in the provided data hinders a definitive assessment of system effectiveness.
Potential for scope creep in IT projects, especially those with long timelines.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $34.2 million to CGI FEDERAL INC.. TAS::75 0511::TAS MEDICARE APPEALS SYSTEM

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL 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 $34.2 million.

What is the period of performance?

Start: 2008-12-01. End: 2014-07-31.

What was the specific scope of work for the Medicare Appeals System IT services provided by CGI Federal Inc. under this contract?

The provided data indicates the contract was for 'Computer Systems Design Services' (NAICS code 541512) related to the 'TAS MEDICARE APPEALS SYSTEM.' This generally encompasses the design, development, implementation, and maintenance of IT systems. For the Medicare Appeals System, this would likely involve software development, database management, system integration, user interface design, testing, and ongoing support to ensure the efficient processing and management of appeals related to Medicare claims and coverage decisions. The exact functionalities and technical specifications would be detailed in the contract's Statement of Work (SOW), which is not provided here but would outline specific deliverables, performance standards, and technical requirements.

How does the $34.1 million contract value compare to other federal IT contracts for similar healthcare systems?

The $34.1 million contract value for the Medicare Appeals System IT services falls within a common range for significant federal IT projects, especially those supporting large-scale healthcare programs. For instance, contracts related to the Affordable Care Act (ACA) marketplaces, electronic health record (EHR) systems, or other large CMS initiatives often run into tens or hundreds of millions of dollars over their lifecycles. While a precise comparison requires detailed analysis of contract scope, duration, and specific services rendered, $34.1 million over approximately 6.7 years (2068 days) suggests a substantial but not exceptionally high investment for maintaining and potentially enhancing a critical national system like Medicare appeals. It indicates a sustained effort in IT support rather than a one-time, massive development project.

What are the primary risks associated with a 'Cost Plus Fixed Fee' (CPFF) contract for IT services, and how might they have been mitigated?

The primary risk with a CPFF contract is the potential for cost overruns. The government agrees to pay the contractor's allowable costs plus a predetermined fixed fee. If the contractor's costs exceed estimates, the government still pays those costs, potentially leading to a final price higher than initially anticipated. This can happen due to scope creep, unforeseen technical challenges, or inefficient performance. Mitigation strategies employed by the government typically include rigorous oversight of contractor expenditures, detailed review of cost proposals, clear definition of allowable costs, performance metrics tied to fee adjustments (though less common in pure CPFF), and strong project management to control scope and schedule. The fixed fee itself incentivizes the contractor to manage costs to some extent, as their profit is capped.

What was the historical spending trend for the Medicare Appeals System prior to or following this contract award?

The provided data only details one specific contract award from December 1, 2008, to July 31, 2014, totaling $34.1 million. To understand historical spending trends, one would need to examine all contracts awarded for the Medicare Appeals System across different fiscal years and contractors. This would involve querying federal procurement databases for all related contract actions (e.g., Delivery Orders, Task Orders, prime contracts) issued by CMS for this specific system or its predecessors. Analyzing these historical data points would reveal whether spending has been consistent, increasing, or decreasing, and identify any significant shifts in investment related to system upgrades, maintenance, or expansion.

How effective has CGI Federal Inc. been in delivering IT services for the federal government, particularly in the healthcare sector?

CGI Federal Inc. is a significant contractor with the U.S. federal government, holding numerous contracts across various agencies, including Health and Human Services (HHS). Their track record includes work on large-scale IT systems, such as those for the Social Security Administration and various state Medicaid systems. In the healthcare sector, CGI has been involved in developing and maintaining systems critical to government health programs. Assessing their overall effectiveness requires a detailed review of past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), contract completion success rates, and any documented issues or disputes. While this specific contract was completed, a broader analysis of their performance across all federal engagements would be necessary for a comprehensive evaluation.

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: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: CGI Inc

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 22033

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $34,153,754

Exercised Options: $34,153,754

Current Obligation: $34,153,754

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline