HHS awards $80M IT contract to General Dynamics for Medicare/Medicaid IT operations

Contract Overview

Contract Amount: $79,911,794 ($79.9M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2010-01-14

End Date: 2015-01-13

Contract Duration: 1,825 days

Daily Burn Rate: $43.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: RDS IT/OPS

Place of Performance

Location: TOWSON, BALTIMORE County, MARYLAND, 21204

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $79.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: RDS IT/OPS Key points: 1. Contract value represents a significant investment in essential healthcare IT infrastructure. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The contract's duration of five years indicates a long-term need for these services. 4. Focus on IT operations for Medicare and Medicaid highlights critical government functions. 5. The cost-plus-fixed-fee pricing structure may incentivize contractor efficiency. 6. Delivery order under a larger contract indicates a phased or modular approach to service delivery.

Value Assessment

Rating: good

The contract value of approximately $80 million over five years for IT operations is substantial. Benchmarking against similar large-scale IT support contracts for federal health agencies suggests this is within a reasonable range, though specific performance metrics would be needed for a definitive value assessment. The cost-plus-fixed-fee structure, while common, requires careful oversight to ensure costs remain controlled and the fixed fee is appropriate for the scope of work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but this procurement method generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The agency likely sought to maximize value by allowing a wide range of qualified contractors to participate.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining services at competitive market rates, thereby optimizing the use of public funds.

Public Impact

Beneficiaries include millions of Medicare and Medicaid enrollees who rely on the uninterrupted operation of these systems. Services delivered are critical for the administration and management of federal healthcare programs. Geographic impact is national, supporting the IT infrastructure for Centers for Medicare and Medicaid Services (CMS) operations. Workforce implications include the potential for IT professionals employed by the contractor to support these vital systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus-fixed-fee contracts if not managed diligently.
Dependence on a single large contractor for critical IT infrastructure could pose a risk if performance falters.
Ensuring adequate cybersecurity measures are in place for sensitive health data is paramount.

Positive Signals

Award to a large, established IT provider like General Dynamics suggests a high likelihood of technical capability and experience.
The use of full and open competition indicates a structured procurement process aimed at achieving best value.
The five-year duration provides stability for essential IT operations, ensuring continuity of service.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer systems design and related services. The market for federal IT services is highly competitive, with numerous large and small businesses vying for government contracts. Spending in this area is driven by the government's continuous need to modernize and maintain its complex IT infrastructure, particularly for critical functions like healthcare administration. Comparable spending benchmarks would involve analyzing other large IT support contracts awarded by agencies like HHS, DOD, and GSA.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While General Dynamics is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on the specific requirements outlined in the contract and the contractor's own subcontracting plan. Without this information, the direct impact on the small business ecosystem is unclear, but large prime contracts often include provisions for small business participation.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Health and Human Services, specifically the Centers for Medicare and Medicaid Services (CMS). Mechanisms likely include regular performance reviews, milestone tracking, and financial audits, especially given the cost-plus-fixed-fee structure. Transparency is typically managed through contract reporting requirements and public contract databases. The Inspector General for HHS would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Medicare IT Modernization
Medicaid Information Technology
Federal Health IT Services
CMS Operations Support
Government IT Infrastructure

Risk Flags

Cost Overruns Potential
Cybersecurity Risk
Contractor Performance Monitoring
System Integration Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $79.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. RDS IT/OPS

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 $79.9 million.

What is the period of performance?

Start: 2010-01-14. End: 2015-01-13.

What is the historical spending pattern for IT operations at CMS with General Dynamics Information Technology?

Analyzing historical spending with General Dynamics Information Technology (GDIT) for IT operations at CMS requires accessing contract databases and financial reports over several years. While this specific $80 million contract spans from 2010-2015, GDIT has a long-standing relationship with various federal agencies, including HHS and CMS, for IT support. To provide a precise historical spending pattern, one would need to aggregate data from all contracts awarded to GDIT by CMS, looking at trends in contract values, types (e.g., cost-plus, fixed-price), and the specific services rendered. This would help identify if spending has been consistent, increasing, or decreasing, and whether this $80 million award represents a typical investment or a significant shift in resource allocation for IT operations.

How does the pricing structure (Cost Plus Fixed Fee) compare to other similar IT operations contracts awarded by HHS?

The Cost Plus Fixed Fee (CPFF) pricing structure used for this $80 million contract is common for complex IT projects where the scope may evolve or is difficult to define precisely upfront. Under CPFF, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to other HHS IT contracts, CPFF is often used for research and development or system integration projects. Fixed-price contracts might be preferred for well-defined, stable requirements to incentivize contractor efficiency and cost control. However, CPFF can be advantageous when innovation or flexibility is paramount. A detailed comparison would involve analyzing the specific scope of work for this contract against others, the level of uncertainty involved, and the typical profit margins (fixed fees) seen across similar HHS IT procurements to assess if this contract's fee is competitive and appropriate for the risk and effort involved.

What are the key performance indicators (KPIs) used to measure the success of this contract, and how has GDIT performed against them?

Key Performance Indicators (KPIs) for a contract like this, focused on IT operations for Medicare and Medicaid, would likely include metrics related to system uptime and availability, response times for technical support, incident resolution rates, data security compliance, and project milestone completion. For instance, maintaining 99.9% system uptime for critical healthcare platforms would be a crucial KPI. Assessing GDIT's performance against these KPIs would require access to performance evaluation reports, contractor performance assessment reporting (CPAR) data, and potentially internal agency assessments. Without access to these specific performance records, it's challenging to definitively state how well GDIT has met the contract's objectives. However, the renewal or continuation of such contracts often implies satisfactory performance, though specific data is needed for a thorough evaluation.

What is the potential impact of this contract on the broader federal IT services market, particularly concerning competition?

This contract, awarded under full and open competition, signifies a substantial opportunity within the federal IT services market. The $80 million value over five years makes it a significant award, attracting established players like General Dynamics Information Technology. Its full and open nature suggests that the government sought the widest possible pool of qualified bidders, fostering competition. This can drive innovation and potentially lower prices across the federal IT landscape as contractors strive to win such large, high-profile awards. The success of GDIT on this contract could also influence future bidding strategies and market positioning for other large IT service providers competing for similar government contracts, potentially leading to consolidation or specialization within the sector.

Are there any known risks or challenges associated with General Dynamics Information Technology's performance on similar large-scale federal IT contracts?

General Dynamics Information Technology (GDIT) is a major federal contractor with extensive experience across numerous large-scale IT programs. Like any large contractor, they may have faced challenges or criticisms on specific contracts related to cost management, schedule adherence, or technical execution. A thorough risk assessment would involve reviewing publicly available performance evaluations (e.g., CPARs), news reports, and any Inspector General findings related to GDIT's past performance on comparable HHS or CMS contracts. Without specific data on this particular contract's performance history or known issues, it's difficult to pinpoint concrete risks. However, general risks for large IT contracts include scope creep, cybersecurity vulnerabilities, integration challenges with legacy systems, and ensuring adequate staffing levels with qualified personnel, all of which require diligent oversight regardless of the contractor.

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: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3211 JERMANTOWN RD, FAIRFAX, VA, 22030

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

Financial Breakdown

Contract Ceiling: $79,911,794

Exercised Options: $79,911,794

Current Obligation: $79,911,794

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700021I

IDV Type: IDC

Timeline