HHS awards CGI Federal $24.2M for IT systems design, facing questions on value and competition

Contract Overview

Contract Amount: $24,196,707 ($24.2M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2015-08-20

End Date: 2020-01-31

Contract Duration: 1,625 days

Daily Burn Rate: $14.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

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 $24.2 million to CGI FEDERAL INC. for work described as: IGF::OT::IGF Key points: 1. Analysis reveals potential for better value through more competitive bidding. 2. Contract performance context is limited, making direct value assessment challenging. 3. Risk indicators suggest a need for closer monitoring of cost and schedule. 4. The contract's sector positioning is within essential healthcare IT services. 5. Pricing appears to be at market rates, but detailed benchmarking is needed. 6. Competition dynamics indicate a moderate level of market interest.

Value Assessment

Rating: fair

The contract's total value of $24.2 million over approximately five years suggests a moderate annual spend. Benchmarking against similar IT systems design contracts is difficult without more granular data on the specific services provided. While the firm-fixed-price structure offers some cost certainty, the lack of detailed performance metrics and comparison points makes a definitive value-for-money assessment challenging. Further analysis of the specific deliverables and their impact would be required to determine if the pricing represents excellent value.

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 offers. With three bidders, the competition level was moderate. While this suggests some market interest, it is lower than ideal for ensuring the most competitive pricing and innovative solutions. The agency's ability to secure the best possible price and performance is influenced by the number and quality of competing proposals.

Taxpayer Impact: A moderate level of competition means taxpayers may not have received the absolute lowest price achievable, though it is better than a sole-source award. The agency had multiple options, which should have driven a more competitive outcome.

Public Impact

Beneficiaries include federal agencies relying on robust IT infrastructure for healthcare services. Services delivered encompass computer systems design, crucial for modernizing healthcare IT. Geographic impact is primarily national, supporting federal healthcare initiatives. Workforce implications include the need for skilled IT professionals to manage and develop these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited public data on specific performance metrics makes it hard to gauge effectiveness.
The duration of the contract (over 5 years) could lead to scope creep or outdated technology if not managed carefully.
Benchmarking against similar contracts is difficult due to the proprietary nature of specific IT system designs.

Positive Signals

Awarded through full and open competition, ensuring a broad range of potential contractors.
Firm-fixed-price contract type provides cost certainty for the government.
The contract supports critical IT infrastructure for the Department of Health and Human Services.

Sector Analysis

The IT systems design sector is a critical component of the federal government's operational efficiency, particularly within healthcare. This contract falls under the broader category of professional, scientific, and technical services. The market for these services is highly competitive, with numerous firms offering specialized expertise. Federal spending in this area is substantial, reflecting the ongoing need to modernize and maintain complex IT systems that underpin government functions, including critical healthcare services.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of significant subcontracting opportunities for small businesses. The award to a large prime contractor suggests that the primary focus was on securing specialized IT systems design capabilities, which may be more readily available from larger, established firms. This could limit the direct impact on the small business IT ecosystem unless specific subcontracting plans are in place and actively managed.

Oversight & Accountability

Oversight for this contract would typically fall under the Centers for Medicare and Medicaid Services (CMS) program managers and contracting officers. Transparency is moderate, as contract award data is publicly available, but detailed performance reports and cost breakdowns are often not. The Inspector General for the Department of Health and Human Services would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Healthcare IT Modernization Programs
Federal Civilian IT Services
Computer Systems Design and Related Services
Department of Health and Human Services IT Contracts

Risk Flags

Potential for cost inefficiencies due to moderate competition.
Lack of detailed performance metrics hinders value assessment.
Long contract duration increases risk of scope creep or obsolescence.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $24.2 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 $24.2 million.

What is the period of performance?

Start: 2015-08-20. End: 2020-01-31.

What is the specific nature of the IT systems designed under this contract, and how do they contribute to CMS's mission?

The contract, NAICS code 541512 (Computer Systems Design Services), indicates that CGI Federal INC. was engaged in designing and developing IT systems for the Centers for Medicare and Medicaid Services (CMS). While the exact systems are not detailed in the provided data, such services typically involve the planning, design, integration, and implementation of software and hardware solutions. These systems are crucial for CMS's mission of administering Medicare, Medicaid, and the Health Insurance Marketplace, enabling efficient processing of claims, management of beneficiary data, and support for healthcare policy initiatives. The $24.2 million award suggests a significant scope of work, likely involving complex system architecture and development.

How does the $24.2 million contract value compare to similar IT systems design contracts awarded by federal agencies?

The $24.2 million contract value for CGI Federal INC. over its duration (approximately 5 years) represents a moderate investment in IT systems design. Annualized, this is roughly $4.8 million per year. Comparing this to similar federal IT contracts requires access to a broader dataset of contract awards within the same NAICS code (541512) and for agencies with comparable IT needs. However, for large-scale IT system design and development, especially within critical sectors like healthcare, this figure is within a common range. Contracts for major system overhauls or new platform development can easily reach tens or hundreds of millions of dollars, while smaller, more focused design tasks might be in the low millions.

What are the key performance indicators (KPIs) used to assess the success of this contract, and has CGI Federal INC. met them?

The provided data does not include specific Key Performance Indicators (KPIs) or performance reports for this contract. Typically, for IT systems design contracts, KPIs might include adherence to project timelines, successful system integration, achievement of specified technical performance standards (e.g., uptime, response times), user satisfaction, and successful completion of testing phases. Without access to the contract's Statement of Work (SOW) and subsequent performance evaluations, it is impossible to determine if CGI Federal INC. has met its contractual obligations or to assess the overall success of the systems designed. This lack of transparency is a common challenge in evaluating federal IT contracts.

Given the firm-fixed-price nature, what is the risk of cost overruns or scope creep for this contract?

The firm-fixed-price (FFP) contract type is designed to mitigate cost overrun risk for the government, as the contractor agrees to a set price for the defined scope of work. However, risk can still exist. Scope creep, where the project's requirements expand beyond the original agreement, is a significant risk. If not managed through formal change order processes, scope creep can lead to cost increases or delays, even under an FFP contract. Contractor performance issues or unforeseen technical challenges could also strain the fixed price. The duration of this contract (over 5 years) increases the potential for scope creep and the need for vigilant contract management to ensure the original objectives are met within the agreed-upon price.

How does the historical spending on IT systems design services by CMS compare to this specific contract award?

Analyzing historical spending patterns for CMS on IT systems design services (NAICS 541512) would provide context for the $24.2 million award to CGI Federal INC. Without specific historical data, it's difficult to make a direct comparison. However, CMS, as a major agency within HHS, consistently invests heavily in IT to manage its vast programs. Spending on IT modernization, system development, and maintenance is a significant portion of its budget. A $24.2 million contract over five years suggests a substantial, but not necessarily outlier, investment. Understanding if CMS has awarded similar-sized contracts frequently, or if this represents a larger or smaller investment than typical for such services, would require a review of past contract awards and budget allocations.

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CGI Inc (UEI: 248513116)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $24,196,707

Exercised Options: $24,196,707

Current Obligation: $24,196,707

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $2,063,289

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HHSM500200700015I

IDV Type: IDC

Timeline