Treasury's $11.3M Vision Insurance Contract with United Healthcare Faces Scrutiny Over Pharmacy Benefit Management
Contract Overview
Contract Amount: $11,327,195 ($11.3M)
Contractor: United Healthcare Services,Inc.
Awarding Agency: Department of the Treasury
Start Date: 2016-10-18
End Date: 2026-12-31
Contract Duration: 3,726 days
Daily Burn Rate: $3.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: IGF::OT::IGF. VISION INSURANCE ADMINISTRATIVE SERVICES
Place of Performance
Location: HOPKINS, HENNEPIN County, MINNESOTA, 55343
Plain-Language Summary
Department of the Treasury obligated $11.3 million to UNITED HEALTHCARE SERVICES,INC. for work described as: IGF::OT::IGF. VISION INSURANCE ADMINISTRATIVE SERVICES Key points: 1. The contract, valued at $11.3 million, is for Pharmacy Benefit Management and other third-party administration of insurance. 2. United Healthcare Services, Inc. is the sole awardee under a full and open competition. 3. The contract duration is 3726 days, ending in December 2026. 4. The contract type is Firm Fixed Price, indicating predictable costs. 5. The awarding agency is the Department of the Treasury, specifically the Office of the Comptroller of the Currency.
Value Assessment
Rating: fair
The contract's pricing is based on a Firm Fixed Price structure, which offers cost predictability. However, without specific unit cost data or benchmarks for Pharmacy Benefit Management services, a detailed value assessment against similar contracts is challenging.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. This method generally promotes price discovery and aims for fair market pricing.
Taxpayer Impact: The firm fixed price structure helps control taxpayer costs, but the overall value for money depends on the efficiency and effectiveness of the services provided.
Public Impact
Federal employees and retirees relying on vision insurance benefits administered through this contract will experience continuity of service. The contract's focus on Pharmacy Benefit Management suggests potential impacts on prescription drug costs for vision-related eyewear. The Office of the Comptroller of the Currency's oversight ensures the proper administration of these benefits for its workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of detailed performance metrics and cost breakdowns makes it difficult to assess true value for money.
- Long contract duration (over 10 years) may limit opportunities for leveraging newer, potentially more cost-effective solutions.
- Pharmacy Benefit Management is a complex area where opaque pricing can obscure true costs.
Positive Signals
- Firm Fixed Price contract provides cost certainty for the government.
- Awarded under Full and Open Competition, suggesting a competitive process.
- Long-term contract provides stability for benefit administration.
Sector Analysis
This contract falls within the administrative services sector, specifically focusing on insurance and benefits management. Benchmarks for PBM services can vary widely based on the scope of services and the population covered.
Small Business Impact
The data does not indicate any specific provisions or set-asides for small businesses in this contract.
Oversight & Accountability
The Office of the Comptroller of the Currency is responsible for overseeing this contract. Robust oversight is crucial to ensure the vendor delivers services effectively and at a fair price, especially given the complexity of PBM.
Related Government Programs
- Pharmacy Benefit Management and Other Third Party Administration of Insurance and Pension Funds
- Department of the Treasury Contracting
- Office of the Comptroller of the Currency Programs
Risk Flags
- Lack of transparency in PBM pricing and rebate structures.
- Potential for vendor lock-in due to the long contract duration.
- Difficulty in benchmarking PBM services due to industry complexity.
- Absence of specific performance metrics in the provided data.
Tags
pharmacy-benefit-management-and-other-th, department-of-the-treasury, mn, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $11.3 million to UNITED HEALTHCARE SERVICES,INC.. IGF::OT::IGF. VISION INSURANCE ADMINISTRATIVE SERVICES
Who is the contractor on this award?
The obligated recipient is UNITED HEALTHCARE SERVICES,INC..
Which agency awarded this contract?
Awarding agency: Department of the Treasury (Office of the Comptroller of the Currency).
What is the total obligated amount?
The obligated amount is $11.3 million.
What is the period of performance?
Start: 2016-10-18. End: 2026-12-31.
What specific metrics are used to evaluate the effectiveness of United Healthcare's Pharmacy Benefit Management services under this contract?
The provided data does not specify the performance metrics used to evaluate the effectiveness of the Pharmacy Benefit Management services. A thorough review would require access to the contract's statement of work and performance standards. Understanding these metrics is crucial for assessing whether the government is receiving optimal value and if the services are meeting the needs of the beneficiaries.
How does the government ensure that the 'full and open competition' process resulted in the most cost-effective solution for Pharmacy Benefit Management?
While 'full and open competition' suggests a broad solicitation, ensuring cost-effectiveness requires a detailed evaluation of proposals beyond just the lowest price. This includes assessing the vendor's proposed PBM strategies, network discounts, rebate management, and administrative fees. The government should have a robust evaluation plan that weighs technical merit and cost to confirm the selected solution provides the best overall value.
What is the potential taxpayer impact if the Pharmacy Benefit Management services are not optimized for cost savings on prescription drugs related to vision care?
If the PBM services are not optimized, taxpayers could face increased costs through higher premiums or direct spending on prescription drugs. Inefficient negotiation of drug prices, suboptimal formulary management, or high administrative fees can lead to inflated expenses. Over the long term, this could result in a less sustainable and more costly benefits program for the government and its beneficiaries.
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: SOCIAL SERVICES › SOCIAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: CC16HQR0019
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Unitedhealth Group Incorporated
Address: 9900 BREN RD E #300 OPUS CTR, MINNETONKA, MN, 55343
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $11,327,195
Exercised Options: $11,327,195
Current Obligation: $11,327,195
Actual Outlays: $7,074,350
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2016-10-18
Current End Date: 2026-12-31
Potential End Date: 2026-12-31 00:00:00
Last Modified: 2026-01-08
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