DoD's $1.06B healthcare contract with SVCMC, Inc. awarded via sole-source vehicle
Contract Overview
Contract Amount: $1,064,728,795 ($1.1B)
Contractor: Svcmc, Inc.
Awarding Agency: Department of Defense
Start Date: 2013-10-01
End Date: 2023-09-30
Contract Duration: 3,651 days
Daily Burn Rate: $291.6K/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: NEW YORK, NEW YORK County, NEW YORK, 10001
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $1.06 billion to SVCMC, INC. for work described as: COMPREHENSIVE HEALTHCARE SERVICES Key points: 1. Contract value represents significant investment in healthcare services for military personnel. 2. Sole-source award raises questions about competition and potential for cost savings. 3. Long contract duration (10 years) suggests a need for stable, long-term service provision. 4. Fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 5. The contract's focus on direct health and medical insurance carriers indicates a critical support function. 6. Geographic concentration in New York may point to specific regional healthcare needs.
Value Assessment
Rating: fair
Benchmarking the value of this $1.06 billion contract is challenging without specific service details and comparable contracts. However, the sheer scale suggests a substantial investment. The firm fixed-price nature provides cost certainty for the government, but the lack of competition means there's no direct market comparison to assess if the price is optimal. Further analysis would require understanding the scope of services and comparing them to industry benchmarks for similar healthcare delivery models.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one vendor can provide the required services, often due to unique capabilities, existing infrastructure, or national security reasons. The absence of multiple bidders limits price discovery and may result in higher costs compared to a competitive procurement.
Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without competing bids, it's difficult to ensure the government is receiving the best possible price for these essential healthcare services.
Public Impact
Military personnel and their families in the New York region are the primary beneficiaries of these comprehensive healthcare services. The contract ensures the delivery of direct health and medical insurance carrier services, crucial for maintaining the well-being of service members. The geographic focus on New York (NY) indicates a concentration of military presence or specific healthcare needs in that area. This contract supports a significant healthcare infrastructure, potentially impacting the local healthcare workforce through employment opportunities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential cost savings for taxpayers.
- Lack of transparency in the justification for sole-source procurement.
- Long-term nature of the contract could lead to vendor lock-in if not managed effectively.
- Potential for cost overruns if scope creep occurs without adequate oversight.
- Geographic concentration might not reflect evolving healthcare needs across different regions.
Positive Signals
- Firm fixed-price contract provides cost certainty and shifts risk to the contractor.
- Long duration suggests a stable and reliable provision of essential healthcare services.
- Contractor (SVCMC, INC.) likely possesses specialized capabilities required by the Defense Health Agency.
- Ensures continuity of care for military beneficiaries.
Sector Analysis
This contract falls within the healthcare services sector, specifically focusing on direct health and medical insurance carriers. The federal government is a major purchaser of healthcare services, particularly for military personnel and veterans. The market for such services is large and complex, involving numerous providers and specialized niches. This contract represents a significant portion of the Defense Health Agency's spending in this area, aiming to ensure the health readiness of the armed forces.
Small Business Impact
Information regarding small business set-asides or subcontracting plans is not available in the provided data. Given the sole-source nature and the scale of the contract, it is less likely to have been specifically set aside for small businesses. However, the prime contractor may engage small businesses for specific support services, though this is not explicitly detailed.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Health Agency (DHA), a component of the Department of Defense. Accountability measures would include performance metrics, regular reporting requirements, and contract close-out procedures. Transparency is limited due to the sole-source award, but contract modifications and performance reviews are usually documented. The Inspector General of the Department of Defense would have jurisdiction over any investigations into fraud, waste, or abuse.
Related Government Programs
- TRICARE
- Military Health System
- DoD Medical Services
- Federal Health Insurance Programs
Risk Flags
- Sole-source award lacks competitive justification.
- Potential for inflated pricing due to lack of competition.
- Long contract duration may reduce flexibility and increase lock-in risk.
- Limited public information on specific services and performance metrics.
Tags
healthcare, defense, department-of-defense, defense-health-agency, definitive-contract, sole-source, firm-fixed-price, large-contract, medical-insurance, new-york, svcmc-inc
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.06 billion to SVCMC, INC.. COMPREHENSIVE HEALTHCARE SERVICES
Who is the contractor on this award?
The obligated recipient is SVCMC, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $1.06 billion.
What is the period of performance?
Start: 2013-10-01. End: 2023-09-30.
What specific healthcare services are encompassed by this $1.06 billion contract?
The provided data indicates the contract is for 'COMPREHENSIVE HEALTHCARE SERVICES' and falls under the North American Industry Classification System (NAICS) code 524114, which pertains to 'Direct Health and Medical Insurance Carriers'. This suggests the contract likely covers a broad range of medical services, potentially including physician visits, hospital care, prescription drugs, mental health services, and other related health benefits. It may also involve the administration and management of health insurance plans for military personnel and their dependents. Without further details on the contract's statement of work, the precise scope remains general, but it is clearly aimed at providing essential healthcare coverage and delivery.
Why was this substantial contract awarded on a sole-source basis instead of being competed?
Sole-source awards are typically justified when a specific justification exists, such as the contractor possessing unique capabilities, proprietary technology, or being the only responsible source capable of meeting the government's needs. For a contract of this magnitude and duration (10 years), the Defense Health Agency likely determined that SVCMC, Inc. was the only entity that could fulfill the complex requirements of providing comprehensive healthcare services to military beneficiaries in the specified region. Reasons could include established infrastructure, specialized expertise in military healthcare, or integration with existing systems that would make a competitive procurement impractical or detrimental to service continuity.
How does the firm fixed-price contract type impact cost management and risk for this healthcare service contract?
A firm fixed-price (FFP) contract type means the contractor, SVCMC, Inc., is obligated to perform the work for a predetermined price, regardless of the actual costs incurred. This shifts the primary cost risk from the government to the contractor. For the government, this offers significant budget certainty, as the total cost is known upfront. However, it also means that if the contractor manages their costs efficiently, they retain the savings, potentially leading to higher profit margins for the contractor. Conversely, if costs escalate unexpectedly for the contractor, they bear the loss. This contract type is generally preferred when the scope of work is well-defined and technical risks are manageable.
What is the historical spending pattern for comprehensive healthcare services by the Defense Health Agency?
The provided data only details this specific contract awarded in 2013 and ending in 2023. To understand historical spending patterns, one would need to analyze the Defense Health Agency's budget allocations and contract awards over multiple fiscal years. This would involve examining spending on similar comprehensive healthcare services, including those awarded competitively and through sole-source vehicles. Analyzing trends in contract values, number of awards, and average contract durations would reveal whether spending has increased, decreased, or remained stable. It would also highlight shifts in procurement strategies, such as a move towards or away from sole-source awards for such critical services.
What are the potential implications of a 10-year contract duration for service delivery and contractor performance?
A 10-year contract duration (3651 days) signifies a long-term commitment by the government to SVCMC, Inc. for comprehensive healthcare services. This extended period allows for greater stability and continuity in service delivery, which is crucial for military healthcare. It enables the contractor to make significant investments in infrastructure, technology, and personnel, potentially leading to improved service quality over time. However, such a long duration also carries risks. It can lead to vendor lock-in, making it difficult to switch providers even if performance declines or better options emerge. It also requires robust oversight mechanisms to ensure the contractor remains accountable and responsive to evolving needs throughout the contract's life.
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: 450 W 33RD ST FL 11, NEW YORK, NY, 10001
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: $1,064,728,795
Exercised Options: $1,064,728,795
Current Obligation: $1,064,728,795
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: 2025-08-27
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