HHS awards $90.4M contract for Durable Medical Equipment Fee for Service Shared System Maintenance to General Dynamics

Contract Overview

Contract Amount: $90,400,123 ($90.4M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2011-02-01

End Date: 2016-07-31

Contract Duration: 2,007 days

Daily Burn Rate: $45.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: DURABLE MEDICAL EQUIPMENT FEE FOR SERVICE SHARED SYSTEM MAINTAINER

Place of Performance

Location: TOWSON, BALTIMORE County, MARYLAND, 21204

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $90.4 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: DURABLE MEDICAL EQUIPMENT FEE FOR SERVICE SHARED SYSTEM MAINTAINER Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Award Fee, which incentivizes contractor performance. 3. The duration of the contract is over 5 years, indicating a long-term need for these services. 4. The system is critical for Durable Medical Equipment (DME) services within Medicare and Medicaid. 5. The contractor, General Dynamics Information Technology, Inc., is a large, established federal contractor. 6. The contract was awarded as a delivery order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contracts. The Cost Plus Award Fee structure allows for flexibility but can also lead to higher costs if not managed tightly. The total award amount of $90.4 million over approximately 5.5 years averages to about $16.4 million annually. This figure needs to be compared against the scope and criticality of the DME Fee for Service Shared System to determine true value for money.

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 approach generally fosters price discovery and encourages competitive pricing. The agency likely sought to leverage the market to obtain the best value for the maintenance of this critical system.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it aims to secure the most cost-effective solution by allowing multiple vendors to vie for the contract, driving down prices.

Public Impact

Beneficiaries of Durable Medical Equipment (DME) services, particularly those covered by Medicare and Medicaid, benefit from the reliable maintenance of the shared system. The contract ensures the continued operation and maintenance of a critical IT system supporting the administration of DME benefits. The geographic impact is national, as the system supports services across the United States. The workforce implications are primarily for the contractor's IT professionals and support staff responsible for system maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can sometimes lead to cost overruns if not meticulously monitored.
The long duration of the contract may reduce flexibility to adopt newer technologies if the system's needs evolve significantly.
Lack of specific performance metrics in the provided data makes it difficult to assess the quality of service delivered.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
The contractor, General Dynamics Information Technology, Inc., is a large and experienced federal IT services provider.
The contract aims to maintain a critical shared system for DME services, indicating a focus on essential government functions.

Sector Analysis

The IT services sector, particularly government IT maintenance and support, is a large and competitive market. Contracts for maintaining critical government systems often involve significant dollar values due to the complexity and essential nature of the services. This contract fits within the broader category of IT support services for healthcare administration, a significant area of federal spending.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major IT services provider, it is unlikely to have significant direct subcontracting opportunities for small businesses unless specified within the contract's detailed terms, which are not available here. The focus is on a large prime contractor fulfilling a substantial IT requirement.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS). Mechanisms likely include regular performance reviews, audits, and adherence to contract deliverables. The Cost Plus Award Fee structure implies performance-based oversight to determine award fees. Transparency would be subject to federal procurement regulations and agency policies.

Related Government Programs

Medicare Fee-for-Service Program
Medicaid Information Technology
Durable Medical Equipment (DME) Benefit Administration
Shared IT Systems Maintenance
Federal Health IT Contracts

Risk Flags

Cost Plus Award Fee structure requires diligent oversight to manage costs.
Long contract duration may limit adaptability to future technological advancements.
Performance metrics for CPAF contracts can be complex to define and measure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $90.4 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. DURABLE MEDICAL EQUIPMENT FEE FOR SERVICE SHARED SYSTEM MAINTAINER

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 $90.4 million.

What is the period of performance?

Start: 2011-02-01. End: 2016-07-31.

What is the track record of General Dynamics Information Technology, Inc. in managing similar federal IT maintenance contracts?

General Dynamics Information Technology, Inc. (GDIT) has a substantial track record in managing large-scale IT contracts for various federal agencies, including HHS. They are known for providing a wide range of IT services, from infrastructure management to software development and cybersecurity. Their experience often includes maintaining complex, mission-critical systems similar to the DME Fee for Service Shared System. While specific performance data for this particular contract is not detailed here, GDIT's general profile suggests they possess the resources and expertise to handle such requirements. However, a deeper dive into past performance reviews, contract awards, and any past issues or successes on comparable contracts would provide a more precise assessment of their capabilities and reliability in this specific domain.

How does the annual cost of this contract compare to the estimated value or criticality of the DME Fee for Service Shared System?

The annual cost for this contract averages approximately $16.4 million ($90.4M / 5.5 years). The criticality of the Durable Medical Equipment (DME) Fee for Service Shared System cannot be overstated, as it underpins the administration and payment processes for essential medical equipment for Medicare and Medicaid beneficiaries nationwide. Without this system, the timely and accurate processing of DME claims would be severely disrupted, impacting patient access to necessary equipment and provider reimbursement. While $16.4 million annually is a significant sum, it must be weighed against the potential costs of system failure, fraud, or inefficient operations, which could far exceed the maintenance expenditure. A comprehensive cost-benefit analysis, considering operational efficiency gains, error reduction, and fraud prevention facilitated by a well-maintained system, would be necessary for a definitive value assessment.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for IT system maintenance?

Cost Plus Award Fee (CPAF) contracts present several risks, primarily related to cost control and performance definition. For IT system maintenance, a key risk is that the 'cost-plus' nature can incentivize the contractor to incur higher costs, as a percentage of these costs may be passed on. While the 'award fee' component is intended to incentivize performance, defining objective and measurable performance standards can be challenging for complex IT systems. If award criteria are too vague or subjective, the contractor may not be adequately motivated to achieve optimal performance, or conversely, the government may struggle to justify withholding award fees. Another risk is the potential for scope creep, where additional features or services are added without adequate cost adjustments. Effective government oversight is crucial to mitigate these risks by closely monitoring costs, ensuring clear performance metrics, and diligently evaluating contractor performance against those metrics.

What is the historical spending trend for the maintenance of the DME Fee for Service Shared System prior to this contract?

The provided data indicates the start date of this specific contract was February 1, 2011, with an end date of July 31, 2016. The 'dur' field shows '2007', which might suggest the system's operational history or a previous contract period. To understand historical spending trends, one would need to examine contract awards for the DME Fee for Service Shared System maintenance from prior years, potentially going back to 2007 or earlier. This would involve searching federal procurement databases (like FPDS or USASpending) for previous contracts awarded to the incumbent or other contractors for similar services. Analyzing these historical data points would reveal whether spending has been consistent, increasing, or decreasing, and identify any significant shifts in contract values or durations that might indicate changes in system complexity, scope, or maintenance needs.

How does the competition level (full and open) for this contract potentially impact the quality of IT services received?

Awarding this contract through 'full and open competition' generally suggests that multiple qualified vendors were able to bid, fostering a competitive environment. This increased competition can incentivize bidders to offer higher quality services and more innovative solutions to win the contract. Vendors are motivated to demonstrate their capabilities and propose robust maintenance plans to secure the business. Furthermore, a competitive process allows the government to select the vendor that offers the best overall value, which includes not just price but also technical approach, past performance, and management capability. While quality is a key factor in evaluation, the ultimate selection depends on the specific evaluation criteria used. However, the principle of full and open competition is designed to enhance the likelihood of securing high-quality services by leveraging market forces.

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 (UEI: 001381284)

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: $90,636,425

Exercised Options: $90,636,425

Current Obligation: $90,400,123

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $2,025,846

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200700021I

IDV Type: IDC

Timeline