DoD's $1.56B comprehensive healthcare contract with PacMed Clinics shows long-term commitment
Contract Overview
Contract Amount: $1,564,810,239 ($1.6B)
Contractor: Pacmed Clinics
Awarding Agency: Department of Defense
Start Date: 2013-10-01
End Date: 2023-09-30
Contract Duration: 3,651 days
Daily Burn Rate: $428.6K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: COMPREHENSIVE HEALTHCARE SERVICES
Place of Performance
Location: SEATTLE, KING County, WASHINGTON, 98144
Plain-Language Summary
Department of Defense obligated $1.56 billion to PACMED CLINICS for work described as: COMPREHENSIVE HEALTHCARE SERVICES Key points: 1. The contract's substantial value suggests a critical, long-term need for these healthcare services. 2. A 'not available for competition' award indicates potential sole-source justifications or limited market options. 3. The contract duration of over 10 years warrants scrutiny regarding sustained value and performance. 4. Fixed-price terms offer cost predictability but may limit flexibility for evolving healthcare needs. 5. The absence of small business set-asides suggests a focus on large, established providers. 6. The geographic focus on Washington state highlights a regional concentration of service delivery.
Value Assessment
Rating: fair
Benchmarking the value of this comprehensive healthcare contract is challenging without specific service details and comparable contracts. However, a $1.56 billion award over 10 years represents significant investment. The fixed-price nature provides cost certainty, but the lack of competitive bidding raises questions about whether the government secured the best possible price. Further analysis would require comparing unit costs for specific services against market rates or similar DoD contracts in other regions.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was awarded as 'not available for competition,' strongly suggesting a sole-source or limited competition scenario. This typically occurs when only one vendor can meet the specific requirements, or in situations where urgency or unique capabilities necessitate a direct award. The lack of open competition means potential price discovery through bidding was bypassed, which could lead to higher costs for taxpayers if not carefully managed through negotiation and oversight.
Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down prices, potentially resulting in less favorable terms for taxpayers compared to fully competed contracts.
Public Impact
Military personnel and their families in the Washington state region benefit from consistent, comprehensive healthcare services. The contract ensures the delivery of direct health and medical insurance carrier services, crucial for military readiness and well-being. Services are geographically concentrated in Washington, impacting the local healthcare infrastructure and potentially the workforce. The sustained, long-term nature of the contract provides stability for the contractor and its employees.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated pricing over the contract's long duration.
- The extensive 10-year term raises concerns about adaptability to future healthcare innovations and needs.
- Limited transparency on specific performance metrics and outcomes makes assessing true value difficult.
- Sole-source awards can reduce accountability if performance issues arise, as switching contractors is complex.
Positive Signals
- Consistent delivery of essential healthcare services to a critical population.
- Long-term contract provides stability and predictability for both the government and the contractor.
- Fixed-price contract offers budget certainty for the Department of Defense.
- The contractor's established presence suggests a capacity to meet the demanding requirements of military healthcare.
Sector Analysis
This contract falls within the Healthcare sector, specifically focusing on direct health and medical insurance carrier services. The market for such services is substantial, driven by government mandates and the need for specialized care for uniformed services. The $1.56 billion value over a decade places it as a significant award within this niche, likely serving a large beneficiary population. Comparable spending benchmarks would typically involve other large-scale TRICARE contracts or similar government health service agreements.
Small Business Impact
The data indicates this contract was not awarded with small business set-asides (ss=false, sb=false). This suggests that the scope and nature of the comprehensive healthcare services required were likely beyond the capacity or specialization of small businesses, or that the contracting strategy did not prioritize small business participation. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award, potentially limiting their opportunities within this particular contract vehicle.
Oversight & Accountability
Oversight for this contract would primarily fall under the Defense Health Agency (DHA) and potentially the Department of Defense's Inspector General. Mechanisms likely include regular performance reviews, audits, and contract management processes to ensure compliance with terms and conditions. Transparency is assessed based on the availability of contract details and performance reporting, which can be limited for sole-source awards. The long duration necessitates continuous monitoring to ensure ongoing value and adherence to evolving healthcare standards.
Related Government Programs
- TRICARE Prime
- Military Health System
- Defense Health Agency Contracts
- Healthcare Services for Federal Employees
- Medical Insurance Carriers
Risk Flags
- Long contract duration increases risk of obsolescence or changing needs.
- Sole-source award limits price competition and potential for better value.
- Lack of transparency on specific performance metrics hinders outcome assessment.
- Potential for contractor complacency over a decade-long engagement.
Tags
healthcare, department-of-defense, defense-health-agency, definitive-contract, firm-fixed-price, sole-source, medical-insurance-carriers, washington, large-contract, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.56 billion to PACMED CLINICS. COMPREHENSIVE HEALTHCARE SERVICES
Who is the contractor on this award?
The obligated recipient is PACMED CLINICS.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $1.56 billion.
What is the period of performance?
Start: 2013-10-01. End: 2023-09-30.
What specific healthcare services are encompassed by this $1.56 billion contract?
The contract is broadly categorized under 'COMPREHENSIVE HEALTHCARE SERVICES' and specifically lists 'Direct Health and Medical Insurance Carriers' (NAICS 524114). This suggests the contract covers a wide range of medical services, potentially including primary care, specialist consultations, diagnostic services, prescription drug benefits, and potentially administrative functions related to health insurance processing for military personnel and their families. The exact scope would be detailed in the contract's statement of work, which is not provided here. Given the 'not available for competition' status and the long duration, it likely involves a significant, integrated healthcare delivery system within a specific geographic region.
How does the $1.56 billion contract value compare to similar healthcare contracts awarded by the Department of Defense?
Comparing this $1.56 billion contract requires context on the specific services and duration. The Department of Defense awards numerous large contracts for healthcare, often through the TRICARE program, which can run into billions of dollars annually. However, this specific contract's value over its 10-year duration (approximately $156 million per year) appears substantial for a single provider or integrated system, especially if it represents a significant portion of healthcare delivery in a particular region. Benchmarking would involve examining other regional TRICARE contracts or large-scale medical support agreements to assess if the per-beneficiary cost or overall value is competitive, considering the services provided and the market.
What are the primary risks associated with a sole-source, 10-year contract for comprehensive healthcare services?
The primary risks associated with a sole-source, 10-year contract for comprehensive healthcare services include potential price escalation over time due to the lack of competitive pressure, reduced incentive for innovation if the contractor becomes complacent, and a lack of flexibility to adapt to changing healthcare needs or technological advancements. Furthermore, if the contractor's performance falters, the government faces significant challenges and costs in transitioning to a new provider due to the long-term, integrated nature of the services. Ensuring robust oversight and performance management is critical to mitigate these risks.
What is the historical spending pattern for comprehensive healthcare services by the Department of Defense in Washington state?
Historical spending data for comprehensive healthcare services by the Department of Defense in Washington state, particularly related to this specific contract (awarded in 2013), would reveal trends in healthcare procurement for military beneficiaries in that region. Without access to detailed historical contract databases, it's difficult to provide precise figures. However, the significant value and long duration of this contract suggest a sustained and substantial commitment to providing healthcare services in Washington. This likely reflects the presence of a large military population and the strategic importance of ensuring their health and readiness through consistent, long-term partnerships with healthcare providers.
What are the implications of the 'firm fixed price' contract type for service delivery and cost control?
A 'firm fixed price' (FFP) contract type means the contractor agrees to perform the work for a predetermined, fixed price, regardless of the actual costs incurred. For the government, this offers significant cost certainty and predictability, making budgeting easier. It shifts the risk of cost overruns to the contractor. For service delivery, it can incentivize efficiency as the contractor aims to maximize profit by controlling costs. However, it may also lead the contractor to cut corners on quality or scope if not carefully monitored, or to resist necessary changes that could increase costs, potentially impacting the comprehensiveness or responsiveness of the healthcare services provided.
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: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1200 12TH AVE S, SEATTLE, WA, 98144
Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,564,810,239
Exercised Options: $1,564,810,239
Current Obligation: $1,564,810,239
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2013-10-01
Current End Date: 2023-09-30
Potential End Date: 2023-09-30 00:00:00
Last Modified: 2025-09-15
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