DoD's $13M T-5 Managed Care Support Contract Awarded to Mercer for Health Plan Innovation

Contract Overview

Contract Amount: $12,969,891 ($13.0M)

Contractor: Mercer (US) LLC

Awarding Agency: Department of Defense

Start Date: 2020-04-03

End Date: 2025-12-12

Contract Duration: 2,079 days

Daily Burn Rate: $6.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: Healthcare

Official Description: THE HEALTH PLAN INNOVATIVE SUPPORT (HPIS) PROGRAM SUPPORTS THE DEVELOPMENT AND IMPLEMENTATION OF UPCOMING TRICARE MANAGED CARE SUPPORT CONTRACTS (T-5).

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10036

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $13.0 million to MERCER (US) LLC for work described as: THE HEALTH PLAN INNOVATIVE SUPPORT (HPIS) PROGRAM SUPPORTS THE DEVELOPMENT AND IMPLEMENTATION OF UPCOMING TRICARE MANAGED CARE SUPPORT CONTRACTS (T-5). Key points: 1. Contract aims to develop and implement future TRICARE managed care support contracts. 2. Focus on innovation in health plan support suggests a forward-looking approach. 3. The fixed-price level-of-effort contract type provides cost certainty for a defined scope. 4. A long performance period (2020-2025) indicates a significant, ongoing requirement. 5. The contract's value is substantial, reflecting the complexity of TRICARE operations. 6. Administrative Management and General Management Consulting Services are key to this award.

Value Assessment

Rating: good

The contract value of approximately $13 million over its period of performance appears reasonable for a program focused on developing future large-scale managed care support contracts. Benchmarking against similar large-scale consulting efforts for federal health programs would provide further context. The fixed-price level-of-effort structure suggests a degree of cost control, assuming the scope of work is well-defined and achievable within the allocated budget. Without specific comparable contract data for T-5 precursor activities, a precise value-for-money assessment is challenging, but the investment aligns with the strategic importance of modernizing TRICARE.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This competitive process is expected to drive better pricing and service quality. The presence of 7 bidders (implied by 'no': 7) suggests a healthy level of interest and a robust competitive landscape for this type of specialized consulting service within the defense health sector.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a marketplace where contractors are incentivized to offer competitive pricing and innovative solutions to win significant contracts.

Public Impact

Beneficiaries of the TRICARE program, including active duty military, retirees, and their families, will ultimately benefit from improved managed care support services. The contract supports the development of critical infrastructure for future healthcare delivery within the Department of Defense. The geographic impact is nationwide, as TRICARE serves beneficiaries across the United States and potentially overseas. This contract may indirectly impact the healthcare consulting workforce by creating demand for specialized expertise in government healthcare program management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in a long-term development contract if requirements are not tightly managed.
Reliance on a single contractor (Mercer) for a critical development phase could pose a risk if performance falters.
Ensuring the 'innovative' solutions developed are practical and implementable within future TRICARE contract constraints.

Positive Signals

Awarded through full and open competition, suggesting a competitive selection process.
Fixed-price level-of-effort contract type provides cost predictability for a defined scope.
The contract's focus on future T-5 contracts indicates strategic planning by the DHA.
Mercer's established presence in government contracting suggests relevant experience.

Sector Analysis

This contract falls within the professional services sector, specifically management and administrative consulting, serving the federal healthcare market. The Defense Health Agency (DHA) manages healthcare for the U.S. military, and contracts like HPIS are crucial for modernizing and optimizing its vast operations. The market for federal healthcare consulting is substantial, driven by the continuous need for efficiency, compliance, and technological advancement within agencies like the DHA. This contract is a component of the larger strategy to ensure the effective delivery of healthcare services to military personnel and their families.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). As a large, complex consulting effort, it is unlikely that significant subcontracting opportunities for small businesses will be mandated, though the prime contractor may engage them for specific expertise. The primary focus appears to be on the capabilities of the large business awardee, Mercer.

Oversight & Accountability

Oversight for this contract would primarily reside with the Defense Health Agency (DHA) contracting officers and program managers. The contract's fixed-price level-of-effort structure implies defined deliverables and reporting requirements that facilitate oversight. Transparency is generally maintained through contract award databases and public reporting mechanisms. While specific Inspector General (IG) involvement isn't detailed here, the DoD IG has broad jurisdiction over defense spending and could investigate if performance or financial irregularities arise.

Related Government Programs

TRICARE Managed Care Support Contracts
Defense Health Agency IT and Management Support
Federal Healthcare Consulting Services
Military Health System Modernization Programs

Risk Flags

Long-term contract duration requires ongoing performance monitoring.
Complexity of developing future large-scale managed care contracts.
Potential for evolving requirements in the healthcare sector.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.0 million to MERCER (US) LLC. THE HEALTH PLAN INNOVATIVE SUPPORT (HPIS) PROGRAM SUPPORTS THE DEVELOPMENT AND IMPLEMENTATION OF UPCOMING TRICARE MANAGED CARE SUPPORT CONTRACTS (T-5).

Who is the contractor on this award?

The obligated recipient is MERCER (US) LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $13.0 million.

What is the period of performance?

Start: 2020-04-03. End: 2025-12-12.

What is Mercer's track record with the Defense Health Agency and similar large federal healthcare contracts?

Mercer (US) LLC has a significant history of performing work for various U.S. government agencies, including the Department of Defense and the Defense Health Agency. Their expertise often lies in areas such as compensation, benefits, human capital consulting, and actuarial services, which are relevant to managing large health plans. While specific details on past TRICARE-related projects require deeper investigation, Mercer's general profile suggests they possess the scale and experience necessary for complex federal contracts. Analyzing past performance evaluations and contract history within federal databases like FPDS or SAM.gov would provide a more granular understanding of their performance on similar, large-scale healthcare and benefits administration contracts for the government.

How does the $13 million contract value compare to similar health plan innovation support contracts within the federal government?

The $13 million contract value for the Health Plan Innovative Support (HPIS) program, spanning from April 2020 to December 2025, represents a moderate investment for a program focused on developing future managed care support contracts. Benchmarking requires comparing it to contracts with similar objectives, such as strategic planning, system development, or process improvement for large federal health programs. For instance, contracts supporting the Centers for Medicare & Medicaid Services (CMS) or other large DoD health initiatives might offer comparable data points. However, the specific 'innovative support' nature of HPIS, aimed at shaping future T-5 contracts, suggests a specialized scope. Without direct comparisons for precursor development phases of major managed care contracts, it's challenging to definitively label the value as high or low, but it appears aligned with strategic development efforts rather than full-scale implementation.

What are the primary risks associated with the "development and implementation of upcoming TRICARE managed care support contracts (T-5)"?

The primary risks associated with developing and implementing upcoming TRICARE Managed Care Support Contracts (T-5) are multifaceted. Firstly, there's the risk of **technical complexity and integration challenges**, as TRICARE is an enormous and intricate system. Ensuring new systems or processes developed under HPIS seamlessly integrate with existing infrastructure and future T-5 requirements is critical. Secondly, **changing requirements and evolving healthcare landscapes** pose a significant risk; the healthcare environment and military healthcare needs can shift, potentially rendering initial development obsolete or requiring costly pivots. Thirdly, **contractor performance and capability gaps** are always a concern, especially given the scale of T-5; ensuring the chosen contractor possesses the right expertise and executes effectively is paramount. Finally, **stakeholder buy-in and adoption** among various military branches, healthcare providers, and beneficiaries present a risk, as successful implementation hinges on acceptance and effective utilization of the new support mechanisms.

What historical spending patterns exist for TRICARE managed care support contracts, and how does this award fit in?

Historical spending on TRICARE Managed Care Support Contracts (MCSCs) has been substantial, often running into billions of dollars over multi-year periods for the prime contracts that deliver direct healthcare services. These large-scale contracts typically cover vast geographic regions and millions of beneficiaries. The HPIS program, valued at approximately $13 million, represents a distinct category of spending. It is not for direct service delivery but rather for the strategic planning, research, and development phase that informs the *next generation* of these massive MCSCs (T-5). Therefore, this $13 million award is a relatively small, upfront investment designed to shape and potentially optimize the much larger future T-5 contracts. It fits into a pattern of the Defense Health Agency investing in foresight and strategic development to ensure the efficiency and effectiveness of its core healthcare mission.

What are the potential performance implications of a Fixed Price Level of Effort (FPLE) contract type for this program?

A Fixed Price Level of Effort (FPLE) contract type, like the one used for the HPIS program, offers specific implications for performance. The 'Fixed Price' aspect provides cost certainty for the government, as the total price is established upfront for a defined scope. The 'Level of Effort' component means the contractor is paid for a predetermined amount of labor hours or direct costs necessary to complete the specified work. This structure is suitable when the scope is well-defined but the exact quantity of work or duration might be uncertain. For performance, it incentivizes the contractor to manage their resources efficiently to complete the effort within the fixed price. However, it can also limit flexibility; if unforeseen complexities arise requiring significantly more effort than initially estimated, the contractor might face financial strain unless contract modifications are pursued. For the government, it ensures they don't pay for unused contractor time, but requires careful monitoring to ensure the 'level of effort' is genuinely productive and aligned with project goals.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HT940220Q0003

Offers Received: 7

Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)

Evaluated Preference: NONE

Contractor Details

Parent Company: Marsh & Mclennan Companies Inc

Address: 1166 AVENUE OF THE AMERICAS FL 30, NEW YORK, NY, 10036

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $12,969,891

Exercised Options: $12,969,891

Current Obligation: $12,969,891

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $5,134,023

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS10F0262L

IDV Type: FSS

Timeline