Interior Department awards $93.5M contract for behavioral health services, raising questions about competition and value

Contract Overview

Contract Amount: $93,450,029 ($93.5M)

Contractor: Carelon Behavioral Health, Inc.

Awarding Agency: Department of the Interior

Start Date: 2013-02-01

End Date: 2014-04-30

Contract Duration: 453 days

Daily Burn Rate: $206.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: IGF::OT::IGF MILITARY ONESOURCE 2ND BRIDGE CONTRACT

Place of Performance

Location: NORFOLK, NORFOLK (CITY) County, VIRGINIA, 23502, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of the Interior obligated $93.5 million to CARELON BEHAVIORAL HEALTH, INC. for work described as: IGF::OT::IGF MILITARY ONESOURCE 2ND BRIDGE CONTRACT Key points: 1. The contract's value of $93.5 million over its period of performance suggests a significant investment in behavioral health services. 2. The 'NOT COMPETED' award status indicates a lack of open competition, potentially impacting price discovery and value for money. 3. The contract was awarded to a single vendor, Carelon Behavioral Health, Inc., suggesting a sole-source or limited competition scenario. 4. The duration of the contract (453 days) provides a reasonable timeframe for service delivery but requires ongoing performance monitoring. 5. The absence of small business set-aside flags warrants scrutiny regarding opportunities for smaller providers in this service area. 6. The contract's classification under 'Other Individual and Family Services' (NAICS 624190) places it within a broad category of social services.

Value Assessment

Rating: questionable

Benchmarking the value of this $93.5 million contract is challenging without comparable sole-source awards for similar behavioral health services within the Department of the Interior. The pricing structure, being firm-fixed-price, offers cost certainty but does not inherently guarantee optimal value. A detailed cost breakdown and comparison to market rates for equivalent services would be necessary to fully assess if the government received good value for its investment. The lack of competition further complicates a robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly marked as 'NOT COMPETED,' indicating that it was awarded directly to Carelon Behavioral Health, Inc. without a competitive bidding process. This suggests that either a sole-source justification was approved, or the procurement was conducted under highly restricted conditions. The lack of multiple bidders means there was no opportunity for price negotiation or comparison against alternative providers, which is a significant drawback for ensuring the best possible pricing for taxpayers.

Taxpayer Impact: When a contract is not competed, taxpayers may not benefit from the cost savings that typically arise from competitive bidding. This can lead to higher prices than might be achieved in an open market, potentially diverting funds that could be used for other essential government services.

Public Impact

The primary beneficiaries of this contract are individuals and families requiring behavioral health services, likely within the purview of the Department of the Interior's responsibilities. The services delivered are expected to encompass a range of behavioral health support, potentially including counseling, therapy, and related interventions. The geographic impact is likely concentrated in areas where the Department of the Interior operates and where its beneficiaries reside, with a specific mention of Virginia (ST: VA, SN: VIRGINIA). Workforce implications could include the employment of behavioral health professionals by the contractor, as well as potential impacts on internal DOI staff involved in managing or coordinating these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Sole-source awards can limit opportunities for new or smaller providers to enter the market.
The broad NAICS code may obscure the specific nature of services, making performance monitoring more difficult.
Without a competitive process, it's harder to verify if the chosen vendor has the most cost-effective or highest-quality solution.
The contract's value suggests a significant reliance on a single entity, potentially creating vendor lock-in.

Positive Signals

The contract addresses critical behavioral health needs, indicating a commitment to supporting vulnerable populations.
A firm-fixed-price contract provides budget certainty for the Department of the Interior.
The award to Carelon Behavioral Health, Inc. suggests they were deemed capable of meeting the specific requirements, possibly due to specialized expertise or existing relationships.
The contract duration allows for sustained service delivery, which is important for continuity of care in behavioral health.

Sector Analysis

The behavioral health services sector is a critical component of the broader healthcare and social services industry. This contract falls under NAICS code 624190, 'Other Individual and Family Services,' which encompasses a wide array of non-residential social assistance programs. The market for these services is often characterized by a mix of large, established providers and smaller, specialized organizations. Government contracts in this space are crucial for ensuring access to care, particularly for specific populations served by federal agencies. Comparable spending benchmarks would typically involve analyzing other federal, state, and local government contracts for similar behavioral health support services.

Small Business Impact

The data indicates that this contract was not competed and does not appear to have specific small business set-aside provisions (SB: false, SS: false). This means that opportunities for small businesses to participate as prime contractors were likely non-existent. Furthermore, there is no explicit information provided regarding subcontracting requirements for small businesses. This lack of focus on small business participation could limit the growth and development of smaller entities within the behavioral health service ecosystem serving the Department of the Interior.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Department of the Interior's contracting officers and program managers responsible for monitoring performance and ensuring compliance with the contract terms. Accountability measures would be tied to the firm-fixed-price structure, requiring the contractor to deliver specified services within the agreed-upon budget. Transparency assessment is limited due to the sole-source nature of the award; public visibility into the justification for non-competition and the evaluation process is minimal. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Department of Health and Human Services (HHS) grants for social services
Veterans Affairs (VA) mental health programs
Department of Defense (DoD) family support services
Substance Abuse and Mental Health Services Administration (SAMHSA) grants

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency
No Small Business Participation Identified

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $93.5 million to CARELON BEHAVIORAL HEALTH, INC.. IGF::OT::IGF MILITARY ONESOURCE 2ND BRIDGE CONTRACT

Who is the contractor on this award?

The obligated recipient is CARELON BEHAVIORAL HEALTH, INC..

Which agency awarded this contract?

Awarding agency: Department of the Interior (Departmental Offices).

What is the total obligated amount?

The obligated amount is $93.5 million.

What is the period of performance?

Start: 2013-02-01. End: 2014-04-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which strongly suggests a sole-source or limited competition award. However, the specific justification for this determination is not included in the data. Typically, sole-source awards require a formal justification, such as the existence of only one responsible source capable of providing the required services, urgent and compelling needs that preclude competition, or specific statutory authority. Without this documentation, it is impossible to fully assess the appropriateness of bypassing the competitive process. This lack of transparency is a common concern with non-competed contracts, as it limits the public's ability to understand why competitive market forces were not leveraged.

How does the per-unit cost of services under this contract compare to industry benchmarks for similar behavioral health services?

The provided data does not include specific per-unit cost breakdowns for the services rendered under this $93.5 million contract. Therefore, a direct comparison to industry benchmarks is not possible. To conduct such an analysis, detailed information on the types of services provided (e.g., therapy sessions, case management hours, psychiatric evaluations), the volume of each service, and the corresponding prices would be required. Benchmarking would then involve comparing these unit prices against established rates from government databases (like GSA schedules, if applicable), industry surveys, or pricing data from recently awarded, competitively procured contracts for similar services. The firm-fixed-price nature of the contract means the overall cost is set, but the efficiency and value of the underlying unit costs remain unverified without further data.

What is the track record of Carelon Behavioral Health, Inc. in delivering similar government contracts, particularly those awarded non-competitively?

Information regarding Carelon Behavioral Health, Inc.'s track record, especially concerning government contracts awarded non-competitively, is not detailed in the provided data. A comprehensive assessment would require reviewing their past performance history, including contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any past issues or disputes. Understanding their experience with similar behavioral health services, the scale of previous contracts, and their success in meeting government requirements is crucial. Specifically, investigating the circumstances and outcomes of any prior sole-source awards to this contractor would provide valuable insight into their reliability and efficiency in situations where competition is absent.

What specific behavioral health services are being procured under this contract, and how are they expected to impact the target population?

The contract falls under NAICS code 624190, 'Other Individual and Family Services,' and is awarded to Carelon Behavioral Health, Inc. While the specific services are not itemized in the provided data, this classification suggests a broad range of support, potentially including mental health counseling, substance abuse treatment, family therapy, case management, and crisis intervention. The expected impact on the target population, likely individuals and families associated with the Department of the Interior, would be improved access to essential behavioral health care, leading to better well-being, increased resilience, and potentially reduced societal costs associated with untreated mental health and substance use disorders. The scale of the contract ($93.5M) implies a significant scope of services intended to address substantial needs.

How does the total spending on 'Other Individual and Family Services' by the Department of the Interior compare to previous years and other agencies?

The provided data focuses solely on this single contract and does not offer historical spending patterns for the Department of the Interior (DOI) in the 'Other Individual and Family Services' category (NAICS 624190) or allow for inter-agency comparisons. To assess historical trends, one would need access to DOI's historical contract databases or budget reports covering multiple fiscal years. Comparing DOI's spending in this area to other agencies would require a broader analysis of federal procurement data across different departments. Without this broader context, it is difficult to determine if this $93.5 million award represents an increase, decrease, or typical level of spending for the DOI in this service area.

Industry Classification

NAICS: Health Care and Social Assistance › Individual and Family Services › Other Individual and Family Services

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: FHC Health Systems, Inc. (UEI: 105752901)

Address: 240 CORPORATE BLVD, NORFOLK, VA, 23502

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $93,450,029

Exercised Options: $93,450,029

Current Obligation: $93,450,029

Contract Characteristics

Cost or Pricing Data: NO

Timeline