HHS awards $27.7M for Medicare claims processing, with IT services delivered in Maryland

Contract Overview

Contract Amount: $27,679,991 ($27.7M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-04-30

End Date: 2011-01-31

Contract Duration: 641 days

Daily Burn Rate: $43.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: TAS::75 0511::TAS MEDICARE DMEPOS CLAIMS PROCESSING MAINTENANCE

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $27.7 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TAS::75 0511::TAS MEDICARE DMEPOS CLAIMS PROCESSING MAINTENANCE Key points: 1. Contract value represents a significant investment in maintaining critical healthcare infrastructure. 2. Competition dynamics suggest a robust market for IT services supporting federal health programs. 3. Performance risk is mitigated by the Cost Plus Award Fee structure, incentivizing efficiency. 4. The contract duration of over a year indicates a need for sustained operational support. 5. This spending falls within the broader category of IT services for healthcare administration. 6. The awardee has a substantial presence in the federal IT contracting landscape.

Value Assessment

Rating: good

The contract value of $27.7 million for claims processing maintenance appears reasonable given the scope and duration. Benchmarking against similar IT services contracts for large federal agencies is necessary for a definitive assessment. The Cost Plus Award Fee (CPAF) structure allows for performance-based incentives, which can drive value for money if managed effectively. However, without specific performance metrics and award fee payouts, a precise value-for-money determination is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of a single award (no) suggests that one offeror was deemed the best value. The competitive process is expected to foster price discovery and ensure that the government receives competitive pricing for the services rendered.

Taxpayer Impact: A full and open competition process generally benefits taxpayers by driving down costs through market forces and ensuring that the most capable and cost-effective provider is selected.

Public Impact

Beneficiaries include Medicare recipients who rely on accurate and timely claims processing. Services delivered ensure the continued operation of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) claims processing system. Geographic impact is primarily focused on Maryland, where the contractor's operations are based. Workforce implications include employment opportunities for IT professionals and support staff involved in maintaining the system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in Cost Plus Award Fee contracts if not closely monitored.
Dependence on a single contractor for critical claims processing functions.
Risk of vendor lock-in if transition to a new system or vendor is complex.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
Cost Plus Award Fee structure incentivizes contractor performance and efficiency.
Contractor's established presence in federal IT services may indicate experience and reliability.

Sector Analysis

The IT services sector supporting federal healthcare administration is a large and complex market. This contract for claims processing maintenance fits within the broader category of IT modernization and sustainment for government agencies. Comparable spending benchmarks for similar IT support contracts within HHS or other large federal health programs would provide further context on the scale of this award.

Small Business Impact

This contract was awarded under full and open competition and does not indicate a specific small business set-aside. Therefore, the direct impact on small businesses through this specific award is likely limited unless General Dynamics Information Technology, Inc. utilizes small business subcontractors. Further analysis of subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. The Cost Plus Award Fee structure implies performance monitoring and evaluation to determine award fee payouts. Transparency is generally maintained through contract award databases, though specific performance metrics and award fee decisions may not be publicly disclosed.

Related Government Programs

Medicare Claims Processing
DMEPOS Claims Processing
Healthcare IT Services
Federal IT Contracts
Department of Health and Human Services IT Spending

Risk Flags

Cost Plus Award Fee contract requires diligent oversight to ensure value for money.
Single award contract increases reliance on the incumbent contractor.
Potential for scope creep if not managed tightly.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $27.7 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TAS::75 0511::TAS MEDICARE DMEPOS CLAIMS PROCESSING MAINTENANCE

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 $27.7 million.

What is the period of performance?

Start: 2009-04-30. End: 2011-01-31.

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

General Dynamics Information Technology, Inc. (GDIT) has a long history of performing large-scale IT services contracts for various federal agencies, including the Department of Health and Human Services (HHS). Their experience spans areas such as IT infrastructure management, software development, data analytics, and cybersecurity. Within the healthcare sector, GDIT has supported agencies like the Centers for Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) with critical IT systems. Their involvement with Medicare claims processing, as evidenced by this contract, suggests a demonstrated capability in handling complex healthcare data and systems. A review of their past performance evaluations and contract history would provide further insight into their reliability and success in delivering similar services.

How does the awarded amount of $27.7 million compare to historical spending on Medicare DMEPOS claims processing maintenance?

To accurately compare the $27.7 million award to historical spending, one would need to examine prior contract awards for Medicare DMEPOS claims processing maintenance over several years. This would involve looking at the total annual spending on this function, the duration of previous contracts, and whether the scope of services has remained consistent. For instance, if previous contracts of similar duration and scope were awarded for amounts significantly higher or lower, it would indicate whether this award represents an increase or decrease in cost. Factors such as inflation, technological advancements, and changes in processing volume would also need to be considered for a comprehensive comparison. Without access to this historical data, it is difficult to definitively state whether this award is higher or lower than previous spending.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for critical IT services like Medicare claims processing?

The primary risks associated with a Cost Plus Award Fee (CPAF) contract for critical IT services like Medicare claims processing revolve around cost control and performance measurement. While CPAF incentivizes performance through award fees, there's a risk that the 'cost plus' component could lead to higher overall expenditures if the contractor's costs are not rigorously managed and scrutinized. The government must establish clear, objective, and measurable performance standards to ensure that award fees are earned appropriately. If these standards are vague or poorly defined, the contractor might receive higher fees without commensurate improvements in service quality or efficiency. Additionally, the administrative burden of monitoring performance and determining award fees can be substantial for the government contracting team.

What is the potential impact of this contract on the overall effectiveness and efficiency of the Medicare DMEPOS claims processing system?

This contract is crucial for maintaining the operational effectiveness and efficiency of the Medicare DMEPOS claims processing system. By ensuring the system's maintenance and continued functionality, it directly supports the timely and accurate adjudication of claims for durable medical equipment, prosthetics, orthotics, and supplies. This, in turn, impacts healthcare providers' ability to receive reimbursement and beneficiaries' access to necessary medical items. The 'Award Fee' aspect of the contract incentivizes the contractor to perform efficiently and effectively, potentially leading to improvements in processing times, reduction in errors, and enhanced system reliability. However, the ultimate impact on effectiveness and efficiency also depends on the quality of government oversight and the contractor's execution.

How does the geographic location of service delivery (Maryland) influence the cost and performance of this contract?

The geographic location of service delivery, specified as Maryland, can influence the cost and performance of this contract in several ways. Labor costs in the Maryland region, particularly in proximity to federal agencies, may be higher compared to other areas, potentially impacting the overall contract price. Access to a skilled IT workforce is generally good in the Washington D.C. metropolitan area, which could facilitate performance. Proximity to the contracting agency (HHS/CMS) can also be beneficial for communication, collaboration, and oversight, potentially leading to smoother contract execution and quicker issue resolution. However, it could also mean higher overhead costs for the contractor if they maintain significant facilities in this high-cost region.

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 AWARD FEE (R)

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: $27,679,991

Exercised Options: $27,679,991

Current Obligation: $27,679,991

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700021I

IDV Type: IDC

Timeline