HHS Spends $550M on IT Systems Development with General Dynamics, Raising Value Concerns

Contract Overview

Contract Amount: $549,937,542 ($549.9M)

Contractor: General Dynamics Information Technology, Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2010-08-13

End Date: 2017-11-07

Contract Duration: 2,643 days

Daily Burn Rate: $208.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TAS::75 0511::TAS ENTERPRISE SYSTEMS DEVELOPMENT

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $549.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC for work described as: TAS::75 0511::TAS ENTERPRISE SYSTEMS DEVELOPMENT Key points: 1. Significant contract value of $550M for IT systems development. 2. General Dynamics Information Technology, Inc. is the sole awardee. 3. Potential value concerns due to cost-plus award fee structure. 4. The sector is Information Technology, specifically Computer Systems Design Services.

Value Assessment

Rating: questionable

The Cost Plus Award Fee (CPAF) structure can incentivize cost overruns if not managed tightly. Without clear performance metrics and benchmarks, it's difficult to assess if the $550M spent represents excellent value for the delivered systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the subsequent delivery order structure and CPAF pricing model may limit the direct impact of initial competition on the final cost.

Taxpayer Impact: Taxpayer funds are being utilized for this contract. The CPAF structure necessitates robust oversight to ensure costs are reasonable and performance is achieved to maximize taxpayer value.

Public Impact

Impacts the Centers for Medicare and Medicaid Services (CMS) operations. Affects the development and maintenance of critical health IT systems. Potential for improved or degraded healthcare service delivery based on system effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee structure
Lack of specific performance metrics for value assessment
Long contract duration

Positive Signals

Awarded under full and open competition
Managed by a reputable agency (HHS/CMS)

Sector Analysis

This contract falls within the IT sector, specifically computer systems design services. Spending benchmarks for similar large-scale IT development projects vary widely, but $550M over several years indicates a substantial investment.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The prime contractor is a large business, suggesting limited direct opportunities for small businesses unless they are subcontractors.

Oversight & Accountability

The contract was awarded by the Centers for Medicare and Medicaid Services, a major agency with established oversight processes. However, the CPAF structure requires diligent monitoring of costs and performance to ensure accountability.

Related Government Programs

Computer Systems Design Services
Department of Health and Human Services Contracting
Centers for Medicare and Medicaid Services Programs

Risk Flags

Cost Plus Award Fee (CPAF) structure can lead to higher costs.
Lack of transparency on specific performance metrics and award fee decisions.
Long contract duration increases risk of scope creep and cost escalation.
Potential for vendor lock-in despite initial competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $549.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. TAS::75 0511::TAS ENTERPRISE SYSTEMS DEVELOPMENT

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 $549.9 million.

What is the period of performance?

Start: 2010-08-13. End: 2017-11-07.

What were the key performance indicators (KPIs) used to determine award fees under the CPAF structure, and how did the contractor perform against them?

The specific KPIs for the Cost Plus Award Fee (CPAF) structure are not detailed in the provided data. Typically, these would include metrics related to system functionality, reliability, on-time delivery, and adherence to budget constraints. Without access to the contract's performance reports and award fee determinations, it's impossible to definitively assess if the contractor met or exceeded expectations, which is crucial for justifying the CPAF model's effectiveness and the overall value received.

How did the full and open competition translate into cost savings or better performance compared to other contract types for this specific IT development?

While the initial award was under full and open competition, the subsequent use of a Cost Plus Award Fee (CPAF) structure for delivery orders can complicate direct cost savings comparisons. CPAF aims to incentivize performance but can lead to higher costs if not managed stringently. The true impact on cost savings and performance hinges on the effectiveness of the competition for the initial contract and the subsequent oversight of the CPAF elements to ensure value for money was achieved.

What is the long-term strategic value of the TAS Enterprise Systems Development project, and how does this $550M investment align with HHS's broader mission?

The TAS Enterprise Systems Development project is critical for the operational efficiency and data management capabilities of the Centers for Medicare and Medicaid Services (CMS). A $550M investment over several years suggests a significant undertaking aimed at modernizing or enhancing core IT infrastructure. The strategic value lies in its potential to improve healthcare program administration, data analytics for policy-making, and beneficiary services. Alignment with HHS's mission depends on the successful delivery of robust, secure, and user-friendly systems that support these objectives.

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

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 15245 SHADY GROVE RD STE 200, ROCKVILLE, MD, 20850

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $549,937,542

Exercised Options: $549,937,542

Current Obligation: $549,937,542

Actual Outlays: $329,548

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $376,749,317

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700017I

IDV Type: IDC

Timeline