DoD's $28M medical assessment contract awarded to OptumServe Health Services for Reserve Health Readiness Program

Contract Overview

Contract Amount: $27,965,518 ($28.0M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-10-21

End Date: 2021-10-20

Contract Duration: 364 days

Daily Burn Rate: $76.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDICAL/DENTAL ASSESSMENT SERVICES - EXAMS AND PERIODIC HEALTH ASSESSMENTS INCLUDING VISION AND CORRECTIVE PROCEDURES TO MAINTAIN A DEPLOYABLE FORCE FOR THE RESERVE HEALTH READINESS PROGRAM

Place of Performance

Location: LA CROSSE, LA CROSSE County, WISCONSIN, 54601

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $28.0 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: MEDICAL/DENTAL ASSESSMENT SERVICES - EXAMS AND PERIODIC HEALTH ASSESSMENTS INCLUDING VISION AND CORRECTIVE PROCEDURES TO MAINTAIN A DEPLOYABLE FORCE FOR THE RESERVE HEALTH READINESS PROGRAM Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost savings through competition. 2. The fixed-price contract structure aims to control costs, but the lack of competition limits price discovery. 3. Performance period of one year suggests a need for ongoing services, potentially indicating a stable demand. 4. The service category, 'Offices of Physicians,' is broad and may encompass various specialized medical assessments. 5. Focus on maintaining a deployable force highlights the critical nature of these health readiness services.

Value Assessment

Rating: questionable

The contract's value of approximately $28 million for a one-year period for medical and dental assessment services appears substantial. Without comparable contract data or a competitive bidding process, it is difficult to benchmark the value for money. The fixed-price nature of the contract provides some cost certainty, but the absence of competition prevents a thorough assessment of whether the pricing is at market rates or represents the best possible value for taxpayers.

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. This approach bypasses the standard procurement process where multiple vendors would submit bids, allowing for price negotiation and selection of the most advantageous offer. The lack of competition here means that the Defense Health Agency did not explore offers from other qualified contractors, which could potentially lead to higher costs than if a competitive process had been undertaken.

Taxpayer Impact: Sole-source awards limit opportunities for taxpayers to benefit from competitive pricing and innovation that typically arises from a bidding environment. This can result in higher overall spending for government services.

Public Impact

Reserve component service members benefit from essential medical and dental assessments to ensure they are fit for duty. Services include periodic health assessments, vision care, and corrective procedures crucial for maintaining military readiness. The contract supports the Reserve Health Readiness Program, a critical initiative for the Department of Defense. Geographic impact is likely nationwide, covering reserve members across various locations. Workforce implications include the need for qualified medical and dental professionals to perform these assessments.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Sole-source award raises concerns about transparency and fairness in procurement.
Potential for contractor lock-in if services are highly specialized and difficult to transition.

Positive Signals

Fixed-price contract provides cost predictability.
Focus on health readiness is vital for military operational effectiveness.
Contract awarded to a known entity (OptumServe) may imply prior satisfactory performance.

Sector Analysis

The healthcare services sector, particularly within government contracting, is a significant market. This contract falls under the broader category of healthcare support services, which includes a wide range of medical, diagnostic, and administrative functions. The Defense Health Agency is a major procurer of such services to maintain the health and readiness of military personnel. Benchmarking this contract's value is challenging without specific details on the scope of services and comparable contracts within the federal healthcare space.

Small Business Impact

The data indicates that this contract was not awarded to a small business (ss: false) and there is no indication of small business subcontracting requirements (sb: false). Therefore, this contract does not appear to directly benefit small businesses through set-asides or mandated subcontracting. The absence of small business participation could mean missed opportunities for smaller, specialized healthcare providers to contribute to the Reserve Health Readiness Program.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Health Agency's program management and contracting oversight offices. As a sole-source award, scrutiny might be higher to ensure the necessity and justification for not competing. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Reserve Component Health Readiness
Military Medical Services
Defense Health Agency Contracts
Medical Assessment Services

Risk Flags

Sole-source award lacks competitive justification.
Potential for overpayment due to lack of competition.
Limited transparency in procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.0 million to OPTUMSERVE HEALTH SERVICES, INC.. MEDICAL/DENTAL ASSESSMENT SERVICES - EXAMS AND PERIODIC HEALTH ASSESSMENTS INCLUDING VISION AND CORRECTIVE PROCEDURES TO MAINTAIN A DEPLOYABLE FORCE FOR THE RESERVE HEALTH READINESS PROGRAM

Who is the contractor on this award?

The obligated recipient is OPTUMSERVE HEALTH SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $28.0 million.

What is the period of performance?

Start: 2020-10-21. End: 2021-10-20.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as urgent and compelling needs, unique capabilities of a single contractor, or when only one responsible source is available. Without this justification, it is impossible to assess whether the non-competitive award was appropriate and in the best interest of the government. Further investigation into the contract file or agency procurement records would be necessary to determine the rationale.

How does the cost of these services compare to similar contracts awarded competitively?

Direct comparison of costs is not feasible with the provided data, as this contract was awarded sole-source. Competitive awards allow for price benchmarking against multiple bids and market rates. To assess value for money, one would need to identify similar contracts for medical and dental assessment services for reserve components that were awarded competitively. Analyzing the per-service cost, overhead, and profit margins in those competitive contracts would provide a basis for evaluating whether the $28 million sole-source award represents fair and reasonable pricing. The absence of competition inherently limits the ability to confirm cost-effectiveness.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. However, given the objective of maintaining a deployable force, likely KPIs would include metrics related to the timeliness of assessments, the accuracy of medical evaluations, the percentage of service members meeting readiness standards post-assessment, and potentially patient satisfaction. The Defense Health Agency would be responsible for monitoring these KPIs to ensure OptumServe Health Services, Inc. is meeting the contract's requirements and contributing to the overall health readiness of the reserve component.

What is OptumServe Health Services, Inc.'s track record with similar government contracts?

OptumServe Health Services, Inc. is a known provider of health services to the government, including significant contracts with the Department of Defense and the Department of Veterans Affairs. They have experience in areas such as medical evaluations, telehealth, and health readiness support. While this specific contract is for $28 million over one year, OptumServe has managed larger and longer-term contracts. Their track record generally involves providing a range of healthcare solutions, but the performance specifics and quality of service on individual contracts would require a deeper dive into past performance reviews and contract close-out data.

What is the historical spending trend for medical and dental assessment services for the Reserve Health Readiness Program?

The provided data only covers a single contract award from October 2020 to October 2021. To understand historical spending trends, one would need to examine contract awards for this specific service category (NAICS 621111, Offices of Physicians) and program (Reserve Health Readiness Program) over several preceding fiscal years. This would involve analyzing contract databases for similar services, identifying the total obligated amounts, contract types, and awardees. Without this broader historical data, it's impossible to determine if the $28 million expenditure represents an increase, decrease, or stable level of spending for these services.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001118R0053

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Unitedhealth Group Incorporated

Address: 328 FRONT ST S, LA CROSSE, WI, 54601

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

Financial Breakdown

Contract Ceiling: $27,965,518

Exercised Options: $27,965,518

Current Obligation: $27,965,518

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT001119D0002

IDV Type: IDC

Timeline