HHS awarded CGI Federal $79.4M for IT services, with a significant portion spent in the last two years

Contract Overview

Contract Amount: $79,447,281 ($79.4M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2013-08-01

End Date: 2019-01-31

Contract Duration: 2,009 days

Daily Burn Rate: $39.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $79.4 million to CGI FEDERAL INC. for work described as: IGF::OT::IGF Key points: 1. The contract value represents a substantial investment in IT modernization and support for CMS. 2. Performance was primarily driven by cost-plus award fee, indicating a focus on achieving specific outcomes. 3. The contract's duration and value suggest a long-term need for these IT services. 4. Analysis of spending patterns shows a ramp-up in the latter half of the contract period. 5. The IT services sector is highly competitive, making the pricing and value proposition critical. 6. The contract's structure may incentivize contractor performance but requires careful oversight to manage costs.

Value Assessment

Rating: fair

The total award of $79.4 million over approximately five years averages to about $15.9 million annually. Benchmarking this against similar IT services contracts for large federal agencies is challenging without more granular data on the specific services provided. However, the cost-plus award fee structure suggests that the government aimed to incentivize performance while managing costs, but it also carries a risk of cost overruns if not closely monitored. The final delivery order value of $39.5 million indicates a significant portion of the total award was utilized.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for price discovery and ensuring a broad range of potential contractors could bid. However, the number of bidders is not specified, which limits the assessment of the actual competitive intensity. A robust competition typically leads to better pricing and innovation.

Taxpayer Impact: Full and open competition provides taxpayers with assurance that the government sought the best value from the market, potentially leading to more competitive pricing and a wider array of solutions.

Public Impact

Beneficiaries include CMS staff and potentially healthcare providers and beneficiaries who rely on the IT systems supported by these services. Services delivered likely encompass a range of IT support, including system design, development, maintenance, and potentially cybersecurity. The geographic impact is primarily within the operational scope of CMS, supporting its national mission. Workforce implications could include the employment of IT professionals by CGI Federal and potentially by CMS itself, depending on the nature of the support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus award fee contracts require diligent oversight to prevent scope creep and ensure costs remain reasonable.
The significant portion of the award utilized in the latter years warrants scrutiny of the spending trajectory.
Lack of specific details on performance metrics makes it difficult to fully assess value for money.
The broad nature of 'Computer Systems Design Services' can sometimes obscure the true cost drivers.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
The use of an award fee structure implies a mechanism for incentivizing contractor performance.
The contract supported critical IT functions for a major federal health agency.

Sector Analysis

The IT services sector is a vast and dynamic market within the federal government, encompassing a wide range of services from software development to cloud computing and cybersecurity. Federal spending in this sector is consistently high, driven by the need to modernize legacy systems, enhance data security, and improve service delivery. Contracts like this one, for computer systems design services, are fundamental to maintaining and upgrading the complex IT infrastructure required by agencies like CMS. Comparable spending benchmarks would typically be found within IT services categories for large civilian agencies, often running into tens or hundreds of millions of dollars annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The primary contractor is CGI Federal Inc., a large business. While there is no direct set-aside, large federal contracts often include subcontracting requirements. The extent to which CGI Federal subcontracted to small businesses is not detailed here, but it is a crucial factor in assessing the overall impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would fall under the Department of Health and Human Services and the Centers for Medicare and Medicaid Services. The specific oversight mechanisms would include contract management reviews, performance monitoring against award fee criteria, and potentially audits by the HHS Office of Inspector General. Transparency is facilitated through contract databases like FPDS, but detailed performance reports and cost breakdowns are often internal.

Related Government Programs

CMS IT Modernization Programs
Federal Health IT Services
Department of Health and Human Services IT Contracts
Computer Systems Design Services (NAICS 541512)
Cost Plus Award Fee Contracts

Risk Flags

Cost-plus award fee contracts require diligent oversight to manage costs effectively.
Significant portion of award value realized through a single delivery order warrants further investigation into spending patterns.
Lack of detailed performance metrics makes independent assessment of value for money challenging.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $79.4 million to CGI FEDERAL INC.. IGF::OT::IGF

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 $79.4 million.

What is the period of performance?

Start: 2013-08-01. End: 2019-01-31.

What specific IT services were provided under this contract, and how did they align with CMS's strategic goals?

The contract falls under the NAICS code 541512 for Computer Systems Design Services. This broad category typically includes services such as designing and developing software, integrating hardware and software systems, and providing IT consulting. For CMS, these services likely supported critical systems related to Medicare and Medicaid program administration, data management, beneficiary services, and provider portals. Alignment with strategic goals would involve supporting initiatives like healthcare data analytics, improving user interfaces for beneficiaries and providers, enhancing system security, and ensuring the reliability of mission-critical applications. Without specific task orders or statements of work, the precise nature of services and their direct strategic alignment remains generalized.

How does the average annual spending of approximately $15.9 million compare to similar IT services contracts at CMS or other large federal health agencies?

The average annual spending of roughly $15.9 million for this contract is within the typical range for significant IT support contracts at large federal agencies like CMS. However, direct comparisons are difficult without knowing the specific scope of work, the complexity of the systems supported, and the level of service required. Larger, more complex IT modernization or system development contracts can easily exceed hundreds of millions annually. Smaller, more focused support contracts might be in the single-digit millions. This contract's value suggests a substantial, ongoing need for IT expertise, likely encompassing a mix of maintenance, enhancement, and potentially new development activities for core CMS systems.

What were the key performance indicators (KPIs) or award fee criteria used to evaluate CGI Federal's performance, and how did they impact the final award amount?

The schema indicates a 'Cost Plus Award Fee' (CPAF) contract type. Under CPAF, the contractor is reimbursed for allowable costs plus a fee that is composed of a base amount and an award amount. The award amount is determined by the government based on its subjective evaluation of the contractor's performance against pre-defined criteria. These criteria typically relate to factors like technical performance, schedule adherence, cost control, and overall customer satisfaction. While the specific KPIs or award fee criteria for this contract are not provided, they would have been crucial in determining how much of the potential award fee CGI Federal actually received. A high rating against these criteria would maximize the fee, while a low rating would minimize it, directly impacting the total compensation.

What is the historical spending trend for this contract, and does the spending pattern suggest any issues with budget execution or scope management?

The data indicates a total award of $79.4 million with a final delivery order value of $39.5 million. The contract duration spans from August 1, 2013, to January 31, 2019, a period of over five years. Without a detailed breakdown of spending by year or by delivery order, it's difficult to definitively establish a trend. However, the fact that a significant portion ($39.5M) was realized through a single delivery order suggests potentially concentrated activity or a major project phase towards the end of the contract. A more granular analysis of annual spending would be needed to identify potential issues like budget under-execution early on, followed by a surge, or consistent spending aligned with planned activities.

Given CGI Federal's track record, what are the potential risks associated with this contract, and what mitigation strategies were likely in place?

CGI Federal is a large, established government contractor with a broad portfolio. Potential risks associated with a contract of this nature and size include cost overruns (especially with CPAF), performance deficiencies, cybersecurity vulnerabilities, and contractor personnel issues. Mitigation strategies typically employed by agencies include robust contract oversight, clearly defined performance standards and award fee criteria, regular performance reviews, strong cybersecurity protocols, and contingency planning. The government's ability to adjust the award fee based on performance serves as a primary risk mitigation tool for ensuring contractor accountability and quality of service.

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: CGI Inc

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $90,489,919

Exercised Options: $79,447,281

Current Obligation: $79,447,281

Actual Outlays: $-33,641

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline