HHS awards $113M sole-source contract for employee assistance program to Magellan Healthcare Inc

Contract Overview

Contract Amount: $113,305,740 ($113.3M)

Contractor: Magellan Healthcare Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2014-05-01

End Date: 2022-12-31

Contract Duration: 3,166 days

Daily Burn Rate: $35.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF EMPLOYEE ASSISTANCE PROGRAM FOR FOH

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20814

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $113.3 million to MAGELLAN HEALTHCARE INC for work described as: IGF::OT::IGF EMPLOYEE ASSISTANCE PROGRAM FOR FOH Key points: 1. Contract awarded on a sole-source basis, limiting competitive opportunities. 2. Long contract duration of over 8 years suggests potential for sustained pricing. 3. Firm Fixed Price contract type offers cost certainty for the government. 4. The contract supports human resources consulting services, indicating a focus on employee well-being. 5. Awarded by the Office of the Assistant Secretary for Administration, highlighting internal support functions. 6. The contractor, Magellan Healthcare Inc., has a significant award value, suggesting substantial service provision.

Value Assessment

Rating: fair

The total award of over $113 million for an employee assistance program over an eight-year period warrants careful benchmarking. Without specific performance metrics or comparable contract data, it is difficult to definitively assess value for money. However, the sustained commitment to a single provider may indicate satisfaction with services or a lack of readily available alternatives. The firm fixed-price structure provides cost predictability, but the overall cost-effectiveness hinges on the quality and utilization of the services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when circumstances preclude full and open competition. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Sole-source awards can limit opportunities for taxpayers to benefit from competitive pricing and innovation that often arises from a bidding process.

Public Impact

Federal employees, particularly those within the Department of Health and Human Services, benefit from access to confidential counseling and support services. The contract provides crucial human resources consulting services aimed at enhancing employee well-being and productivity. Services are likely delivered across various locations where HHS operates, with a primary focus on Maryland. The contract supports a workforce of federal employees by offering resources to manage personal and work-related challenges.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Long contract duration may obscure opportunities for cost savings through re-competition.
Lack of detailed performance data makes it difficult to assess the true value delivered.
The significant dollar value raises questions about the efficiency of service delivery over the contract term.

Positive Signals

Firm Fixed Price contract provides budget certainty.
Sustained relationship with a single provider may indicate consistent service quality.
Focus on employee assistance programs addresses critical workforce support needs.

Sector Analysis

The Employee Assistance Program (EAP) sector within government contracting is a specialized area focused on providing mental health and counseling services to federal employees. This contract falls under Human Resources Consulting Services, a broad category that includes a range of support functions. While specific market size data for federal EAP contracts is not readily available, the consistent need for such services across government agencies suggests a stable and ongoing market. This contract represents a significant investment in employee well-being within the Department of Health and Human Services.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'sb' field being false. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were mandated. The large value of this contract awarded to a single entity may limit opportunities for small businesses to participate as subcontractors unless specifically included in the prime contractor's plan.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services' internal contracting and program management offices. The Office of the Assistant Secretary for Administration is responsible for the administration of this award. Transparency regarding specific performance metrics and utilization rates would be key to assessing accountability. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Employee Assistance Programs
Human Resources Consulting Services
Department of Health and Human Services Contracts
Sole Source Contracts
Employee Well-being Programs

Risk Flags

Sole Source Award
Lack of Competition
Long Contract Duration
Significant Contract Value

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $113.3 million to MAGELLAN HEALTHCARE INC. IGF::OT::IGF EMPLOYEE ASSISTANCE PROGRAM FOR FOH

Who is the contractor on this award?

The obligated recipient is MAGELLAN HEALTHCARE INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Administration).

What is the total obligated amount?

The obligated amount is $113.3 million.

What is the period of performance?

Start: 2014-05-01. End: 2022-12-31.

What is the track record of Magellan Healthcare Inc. in delivering employee assistance programs to federal agencies?

Magellan Health Inc. is a significant player in the healthcare services industry, with a substantial focus on behavioral health and pharmacy management. While this specific contract is a large award, Magellan has a history of serving government entities, including other federal agencies and state Medicaid programs. Their experience typically encompasses providing a range of mental health services, counseling, and support programs. Assessing their track record would involve reviewing past performance evaluations, any documented issues or successes on similar federal contracts, and their overall capacity to manage large-scale EAP provisions. Without specific details on prior federal EAP contracts beyond this award, a comprehensive assessment of their track record is limited to their general market presence and stated capabilities in behavioral health.

How does the cost of this contract compare to similar employee assistance programs in the federal government?

Benchmarking the cost of this $113 million contract for an Employee Assistance Program (EAP) against similar federal contracts is challenging without access to detailed cost breakdowns and service level agreements for comparable awards. EAP costs can vary significantly based on the scope of services offered (e.g., number of counseling sessions, types of specialized support), the size and geographic distribution of the employee population served, and the contract duration. Given this contract's sole-source nature and long duration (over 8 years), it's difficult to determine if the pricing reflects competitive market rates. A thorough comparison would require identifying other federal EAP contracts of similar scale and duration, analyzing their pricing structures, and understanding any differences in service offerings or contract terms.

What are the primary risks associated with a sole-source award of this magnitude for employee assistance services?

The primary risk associated with a sole-source award of this magnitude is the lack of competitive pressure, which can lead to inflated costs and potentially suboptimal service delivery. Without competing bids, the government may not be securing the most cost-effective solution available in the market. There's also a risk that the chosen contractor, Magellan Healthcare Inc., may face less incentive to innovate or improve service quality over the contract's long duration, as there is no immediate threat of losing the contract to a competitor. Furthermore, sole-source awards can raise concerns about fairness and equal opportunity for other qualified vendors who were not given a chance to bid. Ensuring robust oversight and performance management becomes critical to mitigate these risks.

What is the expected effectiveness of the services provided under this contract in supporting federal employee well-being?

The effectiveness of the services provided under this contract hinges on several factors, including the quality of counseling and support offered by Magellan Healthcare Inc., the accessibility of these services to federal employees, and the utilization rates. Employee Assistance Programs are generally designed to help employees manage personal and work-related issues that could impact their job performance and overall well-being. Expected outcomes include reduced absenteeism, improved morale, increased productivity, and better retention rates. The success of this specific contract will depend on Magellan's ability to deliver confidential, timely, and effective support tailored to the needs of HHS employees. Performance metrics and employee feedback would be crucial indicators of the program's actual effectiveness.

How has federal spending on employee assistance programs evolved over time, and where does this contract fit in?

Federal spending on Employee Assistance Programs (EAPs) has generally seen a steady increase over the years as agencies recognize the importance of supporting employee mental health and well-being to enhance productivity and reduce healthcare costs. While specific aggregate spending data for EAPs across the entire federal government is not easily accessible, the trend indicates a growing investment in these services. This $113 million contract awarded to Magellan Healthcare Inc. by HHS represents a significant, long-term commitment to EAP services within a major agency. Its size and duration suggest it is a substantial component of HHS's overall strategy for employee support, aligning with the broader federal trend of prioritizing workforce well-being.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Human Resources Consulting Services

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Magellan Health, Inc.

Address: 6950 COLUMBIA GATEWAY DR, COLUMBIA, MD, 21046

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

Financial Breakdown

Contract Ceiling: $117,613,083

Exercised Options: $113,305,740

Current Obligation: $113,305,740

Actual Outlays: $13,249,874

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline