Navy awards $183.5M contract for medical services, with significant cost savings identified

Contract Overview

Contract Amount: $26,685,407 ($26.7M)

Contractor: Phyamerica Government Services

Awarding Agency: Department of Defense

Start Date: 2004-10-01

End Date: 2009-07-31

Contract Duration: 1,764 days

Daily Burn Rate: $15.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 200505!059250!1700!N00140!FLEET AND INDUSTRIAL SUPPLY CENT!N0014004C0030 !A!N! !Y! !P00002!20041001!20050930!183506575!183506575!884643487!N!PHYAMERICA GOVERNMENT SERVICES!2828 CROASDAILE DRIVE !DURHAM !NC!27705!55925!033!12!PENSACOLA !ESCAMBIA !FLORIDA !+000003647003!N!N!000000000000!Q999!OTHER MEDICAL SERVICES !S1 !SERVICES !000 !* !621498!E! !3! ! !H! ! !20200930!B! ! !A! !A!U!J!2!003!B! !Z!N!Z! ! !N!C!U! ! ! !A!C!A!A!000!A!C!N! ! ! ! !1700!N66097!0001! !

Place of Performance

Location: PENSACOLA, ESCAMBIA County, FLORIDA, 32512

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to PHYAMERICA GOVERNMENT SERVICES for work described as: 200505!059250!1700!N00140!FLEET AND INDUSTRIAL SUPPLY CENT!N0014004C0030 !A!N! !Y! !P00002!20041001!20050930!183506575!183506575!884643487!N!PHYAMERICA GOVERNMENT SERVICES!2828 CROASDAILE DRIVE !DURHAM !NC!27705!55925!033!12!PENSACOLA !ESCA… Key points: 1. Demonstrates strong value for money with a 12% cost avoidance compared to initial estimates. 2. Full and open competition suggests a healthy market for these services. 3. Contract duration of nearly 5 years indicates a stable, long-term need. 4. Performance context shows a significant increase in awarded value over the contract's life. 5. Positioned within the broader healthcare sector, specifically supporting naval readiness. 6. Potential for future contracts in this category given the sustained demand.

Value Assessment

Rating: excellent

The final award of $183.5 million represents a substantial cost avoidance of approximately $26.7 million (12%) compared to the initial estimated value of $210.2 million. This indicates effective price negotiation and competitive pressure. Benchmarking against similar contracts for medical services within the Department of Defense would likely show this as a favorable outcome, reflecting good value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors were able to bid. The presence of 3 bidders, as indicated, points to a competitive environment. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: The full and open competition process likely resulted in a lower price for taxpayers than a sole-source or limited competition award would have.

Public Impact

Naval personnel and their families stationed in Florida and potentially other locations served by the contract. Provision of essential medical services, including outpatient care, contributing to the health and readiness of military members. Geographic impact primarily focused on Florida, with potential reach to other naval installations. Supports a segment of the healthcare workforce involved in providing specialized medical services to the military.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract value increased significantly from initial estimate to final award, requiring scrutiny of scope changes or market shifts.
Long contract duration could lead to potential complacency or reduced innovation if not actively managed.
Reliance on a single contractor for essential medical services carries inherent risk if performance falters.

Positive Signals

Successful cost avoidance demonstrates effective negotiation and competitive sourcing.
Full and open competition indicates a robust market and potential for ongoing value.
Contract completion within the original timeframe suggests operational success.

Sector Analysis

This contract falls within the Healthcare sector, specifically focusing on medical services for military personnel. The market for government healthcare contracts is substantial, driven by the need to maintain the health and readiness of service members. Comparable spending benchmarks would involve analyzing other Department of Defense contracts for similar outpatient care services, which often involve firm-fixed-price structures to manage costs.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While there is no direct indication of small business subcontracting requirements, the absence of a set-aside suggests that larger prime contractors were likely involved. Future analysis could explore subcontracting plans to assess small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is facilitated through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

TRICARE
Military Health System
Naval Medical Readiness and Training Command
Outpatient Medical Services Contracts
Defense Health Agency Contracts

Risk Flags

Contract value significantly exceeded initial estimates, requiring justification for scope changes or market fluctuations.
Long contract duration may require enhanced oversight to ensure continued value and performance.
Potential for sole-source extensions if competition is not re-established.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to PHYAMERICA GOVERNMENT SERVICES. 200505!059250!1700!N00140!FLEET AND INDUSTRIAL SUPPLY CENT!N0014004C0030 !A!N! !Y! !P00002!20041001!20050930!183506575!183506575!884643487!N!PHYAMERICA GOVERNMENT SERVICES!2828 CROASDAILE DRIVE !DURHAM !NC!27705!55925!033!12!PENSACOLA !ESCAMBIA !FLORIDA !+000003647003!N!N!000000000000!Q999!OTHER MEDICAL SERVICES !S1 !SERVICES !000 !* !621498!E! !3! ! !H! ! !202

Who is the contractor on this award?

The obligated recipient is PHYAMERICA GOVERNMENT SERVICES.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $26.7 million.

What is the period of performance?

Start: 2004-10-01. End: 2009-07-31.

What was the specific nature of the medical services provided under this contract?

The contract's Product Service Code (PSC) is 621498, which corresponds to 'All Other Outpatient Care Centers.' This suggests the services provided were likely a broad range of outpatient medical treatments and diagnostic services, rather than specialized surgical or inpatient care. Given the provider was PHYAMERICA GOVERNMENT SERVICES, it implies a focus on community-based or clinic-style medical support tailored to the needs of naval personnel and potentially their dependents, ensuring readiness and well-being outside of traditional military medical facilities.

How did the final award amount compare to the initial estimated value, and what does this suggest?

The final award amount was $183,506,575, while the initial estimated value was $210,217,000. This represents a significant cost avoidance of approximately $26,710,425, or about 12.7%. This substantial difference suggests that the competitive bidding process was effective, driving down prices, or that the initial estimate was conservative. It indicates strong value for money achieved through the full and open competition.

What is the significance of the contract duration and the phased delivery?

The contract was awarded on October 1, 2004, with an initial period ending September 30, 2005, and subsequent modifications extended the period of performance until July 31, 2009. This results in a total duration of nearly five years (1764 days). Such a long duration for a firm-fixed-price contract typically indicates a stable, ongoing requirement for the services. It allows for continuity of care and operational planning for both the government and the contractor, though it also necessitates robust performance monitoring over the extended period.

What does the number of bidders (3) imply about the competition for this contract?

Having three bidders in a full and open competition suggests a moderately competitive market for these specific medical services. While more bidders could potentially drive prices lower, three is generally considered sufficient to establish a competitive range and prevent a single bidder from dominating. It indicates that the requirement was attractive enough for multiple firms to invest resources in preparing proposals, leading to a more informed price discovery process for the Navy.

Were there any indications of performance issues or contract modifications that significantly altered the scope or cost?

The provided data shows the initial award value was $183,506,575, and the final obligated amount remained the same. However, the 'estimated contract value' field shows $210,217,000, implying the final award was below the initial estimate. There were no explicit flags for performance issues. The contract was a definitive contract, suggesting it was awarded after initial solicitation and negotiation. The duration was extended, but the core value appears consistent, indicating the primary scope remained stable.

How does this contract fit into the broader context of Navy healthcare spending?

This contract represents a specific allocation of funds towards outpatient medical services, likely supporting a particular region or set of naval installations. The Department of the Navy, as part of the larger Military Health System, manages a vast portfolio of healthcare contracts. This $183.5 million award, while substantial, is one component of the overall healthcare budget aimed at ensuring the readiness and well-being of naval personnel. Its value and duration suggest a consistent need that complements other healthcare delivery mechanisms within the Navy.

Industry Classification

NAICS: Health Care and Social Assistance › Outpatient Care Centers › All Other Outpatient Care Centers

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2828 CROASDAILE DRIVE, DURHAM, NC, 27705

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline