DoD's $20.45B T3 Managed Care Support Contract Awarded to Humana Government Business Inc

Contract Overview

Contract Amount: $20,451,127,097 ($20.5B)

Contractor: Humana Government Business Inc

Awarding Agency: Department of Defense

Start Date: 2011-03-03

End Date: 2019-03-27

Contract Duration: 2,946 days

Daily Burn Rate: $6.9M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Healthcare

Official Description: T3 MANAGED CARE SUPPORT CONTRACT FOR SOUTH REGION

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40202

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $20.45 billion to HUMANA GOVERNMENT BUSINESS INC for work described as: T3 MANAGED CARE SUPPORT CONTRACT FOR SOUTH REGION Key points: 1. The contract represents a significant investment in managed care support for the South Region. 2. Competition dynamics for this large-scale contract are crucial for ensuring taxpayer value. 3. Performance context is essential to understand the effectiveness of managed care services delivered. 4. Sector positioning highlights the critical role of private contractors in military healthcare. 5. Risk indicators may include contractor performance, cost overruns, and beneficiary satisfaction.

Value Assessment

Rating: fair

The contract's value of over $20 billion over its duration suggests a substantial program. Benchmarking this against similar large-scale managed care contracts within the Department of Defense or other federal agencies would be necessary for a comprehensive value assessment. Without specific performance metrics or comparisons to industry standards for managed care support, it is difficult to definitively assess the value for money. The cost-plus-fixed-fee structure warrants scrutiny to ensure efficient cost management by the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of two bidders suggests a competitive environment, which can contribute to price discovery and potentially better terms for the government. However, the specific details of the bidding process, including the number of proposals received and the evaluation criteria, are needed to fully understand the extent of competition and its impact on the final award.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a more competitive bidding process, which can lead to lower prices and better service offerings. This approach helps ensure that the government is not overpaying for services and that the most capable contractors are selected.

Public Impact

Beneficiaries of this contract include active duty military personnel, retirees, and their families in the South Region who receive managed healthcare services. The services delivered encompass a wide range of medical and healthcare support functions, aiming to improve the efficiency and quality of care within the military health system. The geographic impact is focused on the South Region of the United States, where the managed care services are implemented. Workforce implications may include the employment of healthcare professionals, administrative staff, and support personnel by Humana Government Business Inc. and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns given the cost-plus-fixed-fee contract type.
Ensuring consistent quality of care across a large geographic region.
Managing beneficiary satisfaction and grievance resolution effectively.
Dependence on a single contractor for critical healthcare support services.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Long-term contract duration may indicate stability and established service delivery.
Contractor's experience in government contracting and managed care is likely a positive signal.

Sector Analysis

The healthcare sector, particularly within government contracting, is characterized by large, complex programs. This contract fits within the broader landscape of military healthcare provision, where the Defense Health Agency (DHA) manages a vast network of facilities and services. Comparable spending benchmarks would involve looking at other large managed care support contracts awarded by the DHA or other federal health agencies like CMS, which also manage significant healthcare expenditures.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and that subcontracting data is not explicitly provided (ss: false). This suggests that the primary award went to a large business. The implications for small businesses would depend on whether Humana Government Business Inc. actively seeks small business subcontractors for specialized services or supplies, which is not detailed here. Without specific subcontracting plans, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Health Agency, with potential involvement from the Department of Defense's Inspector General. Accountability measures would be embedded in the contract's performance work statement, including service level agreements and reporting requirements. Transparency is often enhanced through contract award databases and public reporting, though detailed operational oversight information may be limited.

Related Government Programs

TRICARE Prime
Defense Health Program
Military Health System
Managed Care Support Contracts

Risk Flags

Potential for cost overruns due to CPFF structure.
Ensuring consistent quality of care across a large region.
Dependence on contractor performance for critical healthcare services.
Complexity of managing a large-scale managed care program.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.45 billion to HUMANA GOVERNMENT BUSINESS INC. T3 MANAGED CARE SUPPORT CONTRACT FOR SOUTH REGION

Who is the contractor on this award?

The obligated recipient is HUMANA GOVERNMENT BUSINESS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.45 billion.

What is the period of performance?

Start: 2011-03-03. End: 2019-03-27.

What is the historical spending pattern for managed care support in the South Region prior to this contract?

Analyzing historical spending for managed care support in the South Region prior to the T3 contract requires access to historical contract data for predecessor contracts. Typically, the Defense Health Agency (DHA) awards large, multi-year contracts for managed care support. If this T3 contract replaced previous contracts (e.g., T1 and T2), examining the total obligated amounts, contract modifications, and performance periods of those earlier contracts would reveal spending trends. For instance, if previous contracts were significantly smaller or had different scopes, it would indicate an increase in program scale or a shift in service requirements. Without specific data on prior contracts, it's difficult to provide precise historical figures, but the trend in military healthcare spending generally shows a consistent and often increasing demand for managed care services to support the growing beneficiary population.

How does Humana Government Business Inc.'s track record with similar large federal contracts influence the risk assessment for this award?

Humana Government Business Inc. has a substantial track record in managing large federal healthcare contracts, particularly within the TRICARE program. Their experience includes managing complex managed care support contracts for various regions, which provides a degree of confidence in their operational capabilities. However, past performance is not a guarantee of future success. A thorough risk assessment would involve reviewing specific performance metrics from previous contracts, including on-time delivery, quality of service, cost control, and beneficiary satisfaction. Any history of significant contract disputes, performance failures, or audit findings would elevate the risk profile. Conversely, a consistent record of meeting or exceeding performance standards would mitigate risks associated with contractor capability and reliability.

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

The success of this managed care support contract is typically measured through a set of Key Performance Indicators (KPIs) outlined in the Performance Work Statement (PWS). These KPIs often include metrics related to access to care (e.g., appointment wait times for primary and specialty care), quality of care (e.g., adherence to clinical practice guidelines, patient safety metrics), beneficiary satisfaction (measured through surveys and grievance resolution rates), and cost efficiency (e.g., managing healthcare costs within budgeted parameters). For a contract of this magnitude, KPIs would also likely cover network adequacy, claims processing timeliness, and the effectiveness of case management programs. Regular performance reviews and audits are conducted to ensure the contractor is meeting these contractual obligations.

What is the potential impact of this contract on the overall healthcare delivery system for military personnel and their families in the South Region?

This contract has a profound impact on the healthcare delivery system for military personnel and their families in the South Region. As the primary managed care support contractor, Humana Government Business Inc. is responsible for organizing and delivering a significant portion of healthcare services. This includes managing provider networks, facilitating access to care, processing claims, and potentially implementing health promotion and disease prevention programs. The effectiveness of their management directly influences the quality, accessibility, and efficiency of healthcare received by beneficiaries. A well-executed contract can lead to improved health outcomes and higher satisfaction, while deficiencies could result in longer wait times, limited provider choices, and decreased beneficiary confidence in the military healthcare system.

How does the 'Cost Plus Fixed Fee' (CPFF) contract type influence cost control and potential for overruns?

The Cost Plus Fixed Fee (CPFF) contract type is designed to cover all allowable costs incurred by the contractor plus a predetermined fixed fee, which represents the contractor's profit. This structure incentivizes the contractor to control costs, as the fee remains constant regardless of the final cost of the project. However, it also places the primary cost risk on the government. If the contractor's costs exceed initial estimates, the government still pays the actual allowable costs plus the fixed fee. This can lead to cost overruns if the contractor is inefficient or if unforeseen circumstances drive up expenses. Effective oversight, detailed cost accounting standards, and robust negotiation of the fixed fee are crucial to mitigate the risk of excessive spending under a CPFF contract.

Industry Classification

NAICS: Finance and Insurance › Insurance Carriers › Direct Health and Medical Insurance Carriers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: H9400207R0007

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 500 WEST MAIN STREET, LOUISVILLE, KY, 40202

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

Financial Breakdown

Contract Ceiling: $20,499,773,712

Exercised Options: $20,499,773,712

Current Obligation: $20,451,127,097

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $760,201,372

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline