DoD awards $370M managed health care contract to CHRISTUS HEALTH for services in Texas

Contract Overview

Contract Amount: $369,749,346 ($369.7M)

Contractor: Christus Health

Awarding Agency: Department of Defense

Start Date: 2023-10-01

End Date: 2026-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $337.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: MANAGED HEALTH CARE PLAN SERVICES FROM A DESIGNATED PROVIDER

Place of Performance

Location: IRVING, DALLAS County, TEXAS, 75038

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $369.7 million to CHRISTUS HEALTH for work described as: MANAGED HEALTH CARE PLAN SERVICES FROM A DESIGNATED PROVIDER Key points: 1. Contract value represents significant investment in healthcare delivery for military personnel and families. 2. Sole-source award raises questions about competition and potential for cost savings. 3. Long-term contract duration (1095 days) suggests a need for stable, ongoing services. 4. Focus on managed care indicates a shift towards integrated healthcare solutions. 5. Geographic concentration in Texas may impact service accessibility for personnel stationed elsewhere. 6. Firm fixed-price structure aims to control costs but may limit flexibility.

Value Assessment

Rating: fair

The contract's value of $369.7 million over three years for managed health care services appears substantial. Benchmarking this against similar large-scale managed care contracts within the Department of Defense or other federal agencies is difficult without more specific service details. However, the sole-source nature of the award prevents a direct comparison of pricing against competing bids, which could have revealed opportunities for better value. The firm fixed-price structure provides cost certainty but might not be the most cost-effective if service needs fluctuate significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The Defense Health Agency likely determined that CHRISTUS HEALTH was the only responsible source capable of meeting the government's needs. This approach bypasses the competitive bidding process, which typically drives down prices and fosters innovation. Without competition, it is harder to ascertain if the government secured the best possible price and terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the absence of competition removes the incentive for vendors to offer their most competitive pricing. It also limits opportunities for other qualified providers to secure government contracts.

Public Impact

Military personnel and their families in Texas will benefit from managed health care services. The contract ensures the delivery of comprehensive medical and insurance carrier services. Services are geographically focused within Texas, impacting beneficiaries in that region. The contract supports healthcare jobs within the CHRISTUS HEALTH network in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of competition may reduce transparency in pricing and service level agreements.
Concentration of services in Texas could create access issues for beneficiaries outside the state.
Firm fixed-price contract might not be optimal if demand for services varies significantly.

Positive Signals

Ensures continuity of essential managed health care services for a critical population.
Long-term contract provides stability for both the provider and the beneficiaries.
Firm fixed-price contract offers budget certainty for the Defense Health Agency.
Leverages existing infrastructure and expertise of CHRISTUS HEALTH in the region.

Sector Analysis

The healthcare sector, particularly managed care, is a significant area of federal spending. This contract falls under the broader category of health insurance carriers and managed care organizations that serve specific populations. The Defense Health Agency (DHA) is responsible for providing healthcare to the nation's warfighters, their families, and other eligible beneficiaries. Spending in this area is driven by the need for comprehensive medical services, prescription drug benefits, and administrative support for healthcare delivery. Comparable spending benchmarks would involve analyzing other large managed care contracts awarded by the DHA or other government entities like the Centers for Medicare & Medicaid Services (CMS).

Small Business Impact

The provided data indicates that small business participation is not a stated requirement or focus for this contract (ss: false, sb: false). As a sole-source award to a large entity like CHRISTUS HEALTH, it is unlikely to include specific small business set-asides. Subcontracting opportunities for small businesses may exist within the broader network of CHRISTUS HEALTH, but these are not explicitly detailed in the contract information. The impact on the small business ecosystem is likely minimal, as the contract is not designed to foster small business growth through direct award or set-aside provisions.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Health Agency (DHA), which is responsible for managing and monitoring its execution. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency may be limited due to the sole-source nature of the award, making public scrutiny of the procurement process challenging. The DHA likely has internal audit functions and may engage with the Government Accountability Office (GAO) or the Inspector General for specific oversight activities if issues arise.

Related Government Programs

TRICARE
Defense Health Program
Military Health System
Health Insurance Carriers

Risk Flags

Sole-source award may limit cost savings.
Lack of competition reduces transparency in pricing.
Geographic concentration may not serve all beneficiaries equally.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $369.7 million to CHRISTUS HEALTH. MANAGED HEALTH CARE PLAN SERVICES FROM A DESIGNATED PROVIDER

Who is the contractor on this award?

The obligated recipient is CHRISTUS HEALTH.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $369.7 million.

What is the period of performance?

Start: 2023-10-01. End: 2026-09-30.

What specific managed health care services are included under this contract?

The contract specifies 'MANAGED HEALTH CARE PLAN SERVICES FROM A DESIGNATED PROVIDER.' While the exact scope is not detailed in the provided data, this typically encompasses a range of services including medical care coordination, network management, claims processing, pharmacy benefits management, and potentially wellness programs. For the Defense Health Agency (DHA), these services are crucial for ensuring that military personnel and their families receive timely and appropriate healthcare, often through a designated network of providers. The 'designated provider' aspect suggests that CHRISTUS HEALTH will be responsible for managing a specific network of facilities and physicians to deliver these services, ensuring adherence to quality standards and cost controls.

Why was this contract awarded on a sole-source basis?

The data indicates the contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, which is synonymous with a sole-source award. Government agencies typically justify sole-source awards when only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or if the contractor is the sole provider of a specific service in a particular geographic area. For this CHRISTUS HEALTH contract, the Defense Health Agency likely determined that CHRISTUS HEALTH possessed unique qualifications or existing infrastructure in Texas that made it the only viable option to meet the specific requirements of the managed health care plan services without undue delay or significant cost increase.

How does the firm fixed-price contract type impact cost and flexibility?

A firm fixed-price (FFP) contract is a type of contract where the price is set at the outset and is not subject to adjustment based on the contractor's cost experience. This structure provides the greatest cost certainty for the government, as the total expenditure is known in advance, assuming the contractor meets all performance obligations. For the Defense Health Agency (DHA), this means predictable budgeting for the $369.7 million award. However, FFP contracts offer less flexibility. If the scope of services needs to change significantly or unforeseen circumstances arise that increase the contractor's costs, the contractor bears the risk. Conversely, if the contractor can deliver the services more efficiently than anticipated, they retain the profit. This structure incentivizes the contractor to control costs but may also lead them to be conservative in service provision or to resist changes that could increase their expenses.

What is the significance of the contract's duration and start/end dates?

The contract has a duration of 1095 days, which equates to exactly three years, with a start date of October 1, 2023, and an end date of September 30, 2026. This three-year term suggests a need for sustained and stable provision of managed health care services. For the Defense Health Agency (DHA), a multi-year contract like this allows for consistent healthcare delivery to its beneficiaries without the disruption of frequent re-procurement processes. It also provides CHRISTUS HEALTH with a predictable revenue stream and the opportunity to invest in the necessary infrastructure and personnel to support the contract effectively. The duration is typical for large-scale service contracts where establishing and maintaining a healthcare network requires significant lead time and ongoing commitment.

What is the geographic focus of this contract and its implications?

This contract is specifically focused on Texas (ST: TX, SN: TEXAS). This geographic concentration implies that the managed health care plan services provided by CHRISTUS HEALTH are intended primarily for military personnel, their families, and other eligible beneficiaries residing in or near Texas. The Defense Health Agency (DHA) often regionalizes its healthcare services to leverage existing provider networks and manage costs effectively. For beneficiaries in Texas, this means access to a specific, established healthcare system. However, it also raises questions about how beneficiaries stationed in or relocating to other states are served under this particular award, suggesting that other contracts or mechanisms are in place to cover those needs.

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

Solicitation ID: HT940223R0002

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 5101 N O CONNOR BLVD, IRVING, TX, 75039

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: $2,051,866,242

Exercised Options: $484,686,770

Current Obligation: $369,749,346

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline