TRICARE Pharmacy Services Contract Awarded to Evernorth Federal Services for $1.92 Billion
Contract Overview
Contract Amount: $1,925,670,572 ($1.9B)
Contractor: Evernorth Federal Services Inc
Awarding Agency: Department of Defense
Start Date: 2021-09-23
End Date: 2026-12-31
Contract Duration: 1,925 days
Daily Burn Rate: $1.0M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: TRICARE PHARMACY SERVICES
Place of Performance
Location: SAINT LOUIS, SAINT LOUIS County, MISSOURI, 63121
State: Missouri Government Spending
Plain-Language Summary
Department of Defense obligated $1.93 billion to EVERNORTH FEDERAL SERVICES INC for work described as: TRICARE PHARMACY SERVICES Key points: 1. Significant contract value of $1.92 billion for pharmacy services. 2. Evernorth Federal Services Inc. is the sole awardee. 3. Potential risks associated with a large, long-term contract. 4. The contract falls under the Defense Health Agency within the healthcare sector.
Value Assessment
Rating: good
The contract value of $1.92 billion over its potential duration appears reasonable for comprehensive pharmacy services. Benchmarking against similar large-scale government healthcare contracts would provide a more precise assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a robust price discovery process. The definitive contract structure indicates a clear agreement on scope and pricing.
Taxpayer Impact: Taxpayer funds are being utilized for essential healthcare services, with competition aiming to ensure value for money.
Public Impact
Ensures access to prescription medications for military personnel and their families. Impacts the healthcare and pharmaceutical industries through a major contract. Potential for cost savings or increased efficiency in TRICARE pharmacy operations.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- Long-term contract duration may limit future flexibility.
- Sole awardee could reduce ongoing competitive pressure.
Positive Signals
- Full and open competition likely secured competitive pricing.
- Definitive contract provides clear terms and conditions.
Sector Analysis
This contract is within the healthcare sector, specifically focusing on pharmacy benefits management for the military. Spending benchmarks for similar large-scale government health insurance contracts are typically in the billions.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as Evernorth Federal Services Inc. is a large corporation. There is no specific indication of subcontracting opportunities for small businesses within this award.
Oversight & Accountability
The Department of Defense, through the Defense Health Agency, is responsible for overseeing this contract. Robust oversight mechanisms are crucial to ensure service delivery and cost control over the contract's life.
Related Government Programs
- Direct Health and Medical Insurance Carriers
- Department of Defense Contracting
- Defense Health Agency Programs
Risk Flags
- Contract value is substantial.
- Long contract duration.
- Sole awardee.
- No small business set-aside indicated.
Tags
direct-health-and-medical-insurance-carr, department-of-defense, mo, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.93 billion to EVERNORTH FEDERAL SERVICES INC. TRICARE PHARMACY SERVICES
Who is the contractor on this award?
The obligated recipient is EVERNORTH FEDERAL 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 $1.93 billion.
What is the period of performance?
Start: 2021-09-23. End: 2026-12-31.
What are the key performance indicators (KPIs) for this contract, and how will their achievement be measured to ensure value for money?
Key performance indicators likely include medication availability, patient satisfaction, cost containment measures, and adherence to formulary requirements. The Defense Health Agency will track these through regular reporting, audits, and potentially site visits. Success in meeting these KPIs is crucial for demonstrating that the $1.92 billion investment is delivering effective and efficient pharmacy services to TRICARE beneficiaries.
What are the potential risks associated with a single awardee managing such a large and critical pharmacy services contract for an extended period?
A single awardee for a long duration presents risks such as potential complacency, reduced incentive for innovation, and vendor lock-in. If Evernorth Federal Services encounters financial difficulties or operational issues, it could significantly disrupt pharmacy services for millions of beneficiaries. The government's oversight must be vigilant to mitigate these risks through performance management and contingency planning.
How does the firm-fixed-price contract type contribute to managing cost uncertainty and ensuring predictable spending for TRICARE pharmacy services?
The firm-fixed-price (FFP) contract type shifts most of the cost risk to the contractor, Evernorth Federal Services. This provides predictable spending for the government, as the price is set regardless of the contractor's actual costs. While FFP encourages contractor efficiency, it requires a well-defined scope of work to avoid disputes and ensure all necessary services are covered within the agreed price.
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: HT940220R0002
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 EXPRESS WAY, SAINT LOUIS, MO, 63121
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $5,283,521,531
Exercised Options: $2,715,609,184
Current Obligation: $1,925,670,572
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2021-09-23
Current End Date: 2026-12-31
Potential End Date: 2029-12-31 00:00:00
Last Modified: 2026-01-15
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