Knight Inc. contract for pharmacy benefit management awarded $22.1M by PBGC, spanning 8 years

Contract Overview

Contract Amount: $22,123,166 ($22.1M)

Contractor: Knight Inc a Benefit Administration Company

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2001-11-13

End Date: 2009-09-30

Contract Duration: 2,878 days

Daily Burn Rate: $7.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: LABOR HOURS

Sector: Other

Official Description: OTHER PROFESSIONAL SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20005

State: District of Columbia Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $22.1 million to KNIGHT INC A BENEFIT ADMINISTRATION COMPANY for work described as: OTHER PROFESSIONAL SERVICES Key points: 1. The contract's value of $22.1 million over eight years suggests a significant investment in pharmacy benefit management services. 2. Awarded under full and open competition, this contract likely benefited from a competitive bidding process to ensure fair pricing. 3. The duration of the contract (2001-2009) provides a substantial performance history for evaluating the contractor's effectiveness. 4. The contract's focus on pharmacy benefit management indicates a specialized service area within the broader insurance and pension fund administration sector. 5. The relatively small number of bids (2) might warrant further investigation into the breadth of competition achieved. 6. The contract was awarded by the Pension Benefit Guaranty Corporation, highlighting its role in managing retirement benefits.

Value Assessment

Rating: fair

The total award of $22.1 million over nearly eight years averages to approximately $2.76 million annually. Without specific benchmarks for pharmacy benefit management services for an organization of the PBGC's size and scope, a precise value-for-money assessment is challenging. However, the contract's length suggests a stable, long-term relationship, which can sometimes lead to cost efficiencies. Further analysis would require comparing the services provided and their outcomes against industry standards and similar contracts for government agencies or large pension funds.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the competition was open, certain sources may have been excluded prior to the solicitation. This suggests a deliberate decision to limit the initial pool of potential bidders, the reasons for which are not detailed here. With only two bids received, the level of competition may have been constrained, potentially impacting price discovery and the range of innovative solutions considered. A more robust competition typically involves a larger number of responsive bidders.

Taxpayer Impact: While the competition was open, the exclusion of sources and the low number of bids could mean that taxpayers did not benefit from the full potential of market competition, possibly leading to less aggressive pricing than might have been achieved with broader participation.

Public Impact

The primary beneficiaries are participants and beneficiaries of pension plans managed by the Pension Benefit Guaranty Corporation, who rely on efficient administration of benefits. The services delivered include pharmacy benefit management and other third-party administration of insurance and pension funds, ensuring proper processing and disbursement. The geographic impact is primarily national, as the PBGC operates on a federal level, serving beneficiaries across the United States. Workforce implications are likely internal to the PBGC, with this contract supporting their administrative functions rather than directly creating external jobs, though the contractor employs staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bids received could indicate potential barriers to entry or a lack of market interest, impacting price competitiveness.
The 'exclusion of sources' clause requires further scrutiny to understand its justification and potential impact on market fairness.
The contract's long duration might lead to vendor lock-in if not managed carefully with performance reviews and exit strategies.

Positive Signals

Awarded under full and open competition, suggesting an effort to leverage market forces.
The contract's substantial duration indicates a stable and potentially cost-effective long-term partnership for essential services.
The contractor, Knight Inc., has a defined role in benefit administration, suggesting specialized expertise relevant to the PBGC's mission.

Sector Analysis

This contract falls within the 'Other Professional Services' category, specifically focusing on 'Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds.' This sector is critical for managing healthcare costs and ensuring the smooth operation of retirement plans. The market for these services is substantial, involving numerous specialized firms that handle complex administrative tasks, negotiate drug prices, and process claims. The PBGC's spending here is a component of its overall operational budget aimed at fulfilling its mandate to protect defined benefit pension plans.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). There is no information regarding subcontracting plans or their impact on the small business ecosystem. Therefore, the direct impact on small businesses through this specific contract appears minimal, unless Knight Inc. voluntarily engaged small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily reside with the Pension Benefit Guaranty Corporation (PBGC) contracting officers and program managers. As a federal contract, it is subject to federal procurement regulations and oversight bodies like the Government Accountability Office (GAO) and the PBGC's Office of Inspector General (OIG), if applicable. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics and internal oversight processes are not publicly disclosed.

Related Government Programs

Pension Benefit Administration
Healthcare Services Procurement
Insurance Services
Third-Party Administration Contracts
Federal Employee Benefits Programs

Risk Flags

Limited Competition
Exclusion of Sources
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $22.1 million to KNIGHT INC A BENEFIT ADMINISTRATION COMPANY. OTHER PROFESSIONAL SERVICES

Who is the contractor on this award?

The obligated recipient is KNIGHT INC A BENEFIT ADMINISTRATION COMPANY.

Which agency awarded this contract?

Awarding agency: Pension Benefit Guaranty Corporation (Pension Benefit Guaranty Corporation).

What is the total obligated amount?

The obligated amount is $22.1 million.

What is the period of performance?

Start: 2001-11-13. End: 2009-09-30.

What was the specific justification for excluding certain sources prior to the 'full and open competition' phase?

The provided data indicates the contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This specific clause suggests that while the competition was ultimately open to all eligible bidders, a preliminary step involved identifying and potentially excluding certain entities from the outset. The rationale for such exclusions is not detailed in the summary data. Common reasons for excluding sources can include prior performance issues, lack of specific required certifications or capabilities, or strategic decisions to focus on a particular segment of the market. Understanding the exact justification would require reviewing the original solicitation documents or contract award justification. Without this information, it's difficult to fully assess the impact on competition and potential value for taxpayers.

How does the annual cost of this contract compare to similar pharmacy benefit management contracts for federal agencies?

The contract's total value of $22.1 million over approximately 8 years (from Nov 2001 to Sep 2009) equates to an average annual expenditure of roughly $2.76 million. Benchmarking this against similar contracts is challenging without access to detailed service level agreements, scope of work, and specific performance metrics for comparable federal agencies or large pension funds. Pharmacy benefit management costs can vary significantly based on the number of lives covered, the complexity of the drug formulary, rebate negotiations, and administrative overhead. To provide a precise comparison, one would need to identify contracts with similar patient populations, benefit designs, and service requirements, and then analyze their cost structures and outcomes relative to the services provided under this PBGC contract.

What were the key performance indicators (KPIs) used to evaluate Knight Inc.'s performance throughout the contract duration?

The provided summary data does not include specific Key Performance Indicators (KPIs) or details regarding the performance evaluation of Knight Inc. for this contract. Typically, contracts of this nature would include metrics related to cost savings achieved through formulary management and rebate negotiations, claims processing accuracy and timeliness, member satisfaction, and adherence to regulatory requirements. The Pension Benefit Guaranty Corporation (PBGC) would have internal processes and contracting officer representatives responsible for monitoring these aspects. A thorough review of contract performance would necessitate accessing PBGC's contract management files, performance reports, or any post-award reviews conducted during the contract's lifecycle (2001-2009).

What is the historical spending trend for pharmacy benefit management services by the Pension Benefit Guaranty Corporation?

The provided data pertains to a single contract awarded to Knight Inc. from 2001 to 2009, totaling $22.1 million. This represents a specific period and a specific contractor for pharmacy benefit management. To understand the historical spending trend, one would need to analyze PBGC's procurement data over a longer timeframe, looking at all contracts related to pharmacy benefit management and third-party administration. This would involve identifying previous contracts, their values, durations, and the services rendered. Without this broader dataset, it's impossible to establish a trend, such as whether spending has increased, decreased, or remained stable over time, or how this $22.1 million contract fits into the PBGC's overall historical expenditure on such services.

Were there any challenges or disputes encountered during the performance of this contract?

The summary data provided does not contain information regarding any challenges, disputes, or contract modifications that may have occurred during the performance of this contract between Knight Inc. and the Pension Benefit Guaranty Corporation (PBGC) from 2001 to 2009. Federal contract performance can sometimes involve unforeseen issues, scope changes, or disagreements. Information on such events would typically be found in contract modification records, official correspondence between the parties, or potentially in dispute resolution filings if significant issues arose. Without access to these detailed contract administration records, it is not possible to determine if any challenges or disputes were encountered.

Industry Classification

NAICS: Finance and Insurance › Agencies, Brokerages, and Other Insurance Related Activities › Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 400 ROUSER RD, CORAOPOLIS, PA, 17

Business Categories: Category Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $23,870,398

Exercised Options: $23,870,398

Current Obligation: $22,123,166

Timeline