Defense Health Agency awards $33M+ contract for medical, dental, and COVID services to OptumServe Health Services

Contract Overview

Contract Amount: $33,025,343 ($33.0M)

Contractor: Optumserve Health Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2022-10-27

End Date: 2023-05-31

Contract Duration: 216 days

Daily Burn Rate: $152.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MEDICAL/DENTAL, VISION, EXAMINATION, TESTING, TREATMENT AND COVID SERVICE

Place of Performance

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

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $33.0 million to OPTUMSERVE HEALTH SERVICES, INC. for work described as: MEDICAL/DENTAL, VISION, EXAMINATION, TESTING, TREATMENT AND COVID SERVICE Key points: 1. Contract awarded as a delivery order under an existing indefinite-delivery/indefinite-quantity (IDIQ) contract. 2. Services encompass a broad range of medical, dental, vision, examination, testing, and treatment, including COVID-related care. 3. The contract was not competed, raising questions about potential price discovery and value for money. 4. The duration of the contract is 216 days, indicating a short-term or specific need. 5. The fixed-price contract type suggests that costs are predetermined, but the lack of competition may have inflated the price. 6. The contractor, OptumServe Health Services, Inc., is a significant player in the health services sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the lack of competitive bidding. The raw dollar amount of over $33 million for a period of approximately 7 months suggests a substantial per-diem or per-service cost. Without comparable contract data or a competitive process, it's difficult to definitively assess if this represents good value for money. The fixed-price nature provides some cost certainty, but the absence of competition means taxpayers may not have benefited from the lowest possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a delivery order under an existing contract and was not competed. This indicates that the Defense Health Agency likely utilized a pre-existing agreement, potentially for expediency or because the contractor was deemed the sole provider for these specific services under that agreement. The lack of open competition means that multiple bidders were not evaluated, which can limit price negotiation and potentially lead to higher costs for the government.

Taxpayer Impact: The absence of competition means taxpayers may not have received the most cost-effective solution. Without a bidding process, there's less pressure on the contractor to offer the lowest possible price.

Public Impact

Military personnel and their families receiving medical, dental, and vision care. Access to testing and treatment services, including those related to COVID-19. Support for the operational readiness of military forces through comprehensive healthcare services. Potential impact on the civilian healthcare workforce if military healthcare needs are being met by private contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Limited transparency into the cost drivers for the services provided.
Potential for vendor lock-in if this delivery order is part of a larger sole-source strategy.

Positive Signals

Contract awarded to a known entity, OptumServe Health Services, Inc., suggesting established capabilities.
Fixed-price contract type offers some cost predictability.
Services provided are critical for military health and readiness.

Sector Analysis

The healthcare services sector is a significant area of federal spending, particularly for agencies like the Defense Health Agency responsible for the well-being of military personnel and their families. This contract falls under the 'Offices of Physicians' NAICS code, indicating direct patient care services. The market for healthcare services is large and diverse, with many providers ranging from large corporations to smaller specialized firms. Federal contracts in this space often involve complex service delivery models and require adherence to strict regulatory and quality standards.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. Therefore, the direct impact on the small business ecosystem is likely minimal for this specific award. However, larger prime contractors like OptumServe often have subcontracting plans for other contracts, which could indirectly involve small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Health Agency's program management and contracting oversight offices. As a delivery order under an existing IDIQ, the initial contract likely underwent significant review. However, the lack of open competition for this specific order reduces the inherent oversight provided by a competitive bidding process. Transparency is moderate, as contract awards are generally public, but detailed cost breakdowns and performance metrics may not be readily available without specific Freedom of Information Act requests.

Related Government Programs

TRICARE
Military Health System
Department of Veterans Affairs Healthcare Services
Federal Employee Health Benefits Program

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency in Cost Structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.0 million to OPTUMSERVE HEALTH SERVICES, INC.. MEDICAL/DENTAL, VISION, EXAMINATION, TESTING, TREATMENT AND COVID SERVICE

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 $33.0 million.

What is the period of performance?

Start: 2022-10-27. End: 2023-05-31.

What is the historical spending pattern for similar medical and dental services by the Defense Health Agency?

Analyzing historical spending patterns for similar services by the Defense Health Agency (DHA) is crucial for context. While specific data for this exact delivery order is limited due to its sole-source nature, the DHA manages a vast network of healthcare services through various contracts. Historically, the DHA has awarded billions of dollars annually for healthcare delivery, including medical, dental, and specialized services, often through large IDIQ vehicles. Spending can fluctuate based on operational tempo, troop deployments, and evolving healthcare needs, such as the increased focus on COVID-19 related services. Without access to the parent IDIQ contract's award history and task order details, a precise comparison is difficult, but the $33 million figure for a roughly 7-month period suggests a significant but not unprecedented level of expenditure for comprehensive health services.

How does the pricing of this contract compare to market rates for similar services?

Directly comparing the pricing of this contract to market rates is challenging because it was awarded on a sole-source basis, meaning there was no competitive bidding process to establish a market-driven price. The contract is firm fixed-price, which sets the cost upfront, but without competing bids, it's impossible to know if this price reflects the best value achievable. To assess market competitiveness, one would need to benchmark the per-diem rates, service-specific costs, or overall contract value against similar contracts awarded by other federal agencies or even large private healthcare systems for comparable services and geographic locations. The absence of this competitive benchmark makes a definitive value-for-money assessment difficult.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The specific Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) for this particular delivery order are not publicly detailed in the provided data. However, for contracts of this nature, particularly those involving healthcare services for military personnel, KPIs and SLAs are typically stringent. They would likely focus on aspects such as patient wait times, appointment availability, quality of care metrics (e.g., infection rates, patient satisfaction scores), response times for emergency services, and adherence to medical protocols. The Defense Health Agency would have established these to ensure the contractor meets the required standards for medical readiness and beneficiary care. Performance would be monitored regularly, with potential penalties or incentives tied to meeting these agreed-upon metrics.

What is the track record of OptumServe Health Services, Inc. in fulfilling similar government contracts?

OptumServe Health Services, Inc. has a significant track record of fulfilling government contracts, particularly within the healthcare domain. They are a known provider for various federal agencies, including the Department of Defense and the Department of Veterans Affairs. Their experience often includes large-scale health services, medical readiness support, and administrative healthcare functions. While this specific contract was a sole-source award, OptumServe has likely been involved in numerous competed contracts, demonstrating their capability to deliver a wide range of healthcare solutions. Reviewing their past performance ratings on contracts like these, including any past performance issues or commendations, would provide a clearer picture of their reliability and effectiveness as a government contractor.

What are the potential risks associated with a sole-source award for essential healthcare services?

The primary risk associated with a sole-source award for essential healthcare services is the potential for inflated costs due to the lack of competition. Without competing bids, the government may not be securing the most cost-effective solution. Another risk is reduced incentive for the contractor to innovate or improve service quality beyond the minimum contractual requirements, as there is no competitive pressure. Furthermore, sole-source awards can sometimes indicate a lack of market readiness or a failure in the procurement process to identify multiple capable vendors, potentially limiting future competition and increasing reliance on a single provider. Ensuring robust oversight and performance management becomes even more critical in sole-source situations.

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: $33,025,343

Exercised Options: $33,025,343

Current Obligation: $33,025,343

Actual Outlays: $792,708

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT001119D0002

IDV Type: IDC

Timeline