DoD's $44M contract for health care database software awarded to SK Telecom raises questions about competition and value

Contract Overview

Contract Amount: $44,007,733 ($44.0M)

Contractor: SK Telecom CO.,Ltd.

Awarding Agency: Department of Defense

Start Date: 2015-01-01

End Date: 2018-06-21

Contract Duration: 1,267 days

Daily Burn Rate: $34.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF BESTCARE 2.0A HEALTH CARE DATABASE

Plain-Language Summary

Department of Defense obligated $44.0 million to SK TELECOM CO.,LTD. for work described as: IGF::OT::IGF BESTCARE 2.0A HEALTH CARE DATABASE Key points: 1. The contract's value of $44 million over its period of performance warrants scrutiny for cost-effectiveness. 2. Awarded as 'NOT AVAILABLE FOR COMPETITION', the lack of open bidding limits price discovery and potentially increases costs. 3. The duration of the contract (1267 days) suggests a significant, long-term need for the health care database. 4. The specific product code '334614' relates to software reproduction, indicating a focus on data management or distribution. 5. The contract's classification as a 'DEFINITIVE CONTRACT' implies a pre-negotiated agreement for specific goods or services. 6. The absence of small business set-aside flags suggests this was not specifically targeted to boost small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this $44 million contract is challenging without more specific details on the software and its functionalities. However, the lack of competition is a significant red flag. Typically, competitive bidding drives down prices and ensures better value for taxpayer money. Awarding a contract of this magnitude without exploring competitive options suggests that the government may not have secured the most advantageous pricing. Further analysis would require comparing the per-unit cost of data managed or the overall cost against similar health care database solutions in the market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that the Department of the Army did not conduct a full and open competition. This typically occurs when a specific product or service is only available from a single source, or when there are compelling reasons to bypass competition. The lack of multiple bidders means there was no opportunity for price negotiation or comparison against alternative solutions, potentially leading to a higher cost for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, the government cannot be certain it received the best possible price for this health care database software.

Public Impact

The primary beneficiaries are likely Department of Defense personnel and potentially their dependents who utilize healthcare services managed through this database. The contract delivers a health care database, crucial for managing patient information, medical records, and potentially operational health data within the DoD. The geographic impact is likely widespread within the Department of Defense, supporting healthcare operations across various military branches and installations. Workforce implications could include IT professionals managing the database and healthcare providers relying on its data for patient care and operational efficiency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in inflated costs for taxpayers.
Limited transparency into the justification for sole-source award.
Potential for vendor lock-in due to the nature of specialized software.
Performance risks associated with a single vendor's ability to deliver and maintain the system over time.

Positive Signals

Addresses a critical need for health care data management within the Department of Defense.
The contract is a definitive contract, suggesting a clear scope and terms.
Awarded to a known entity (SK Telecom), potentially indicating prior vetting or existing relationship.

Sector Analysis

The Information Technology sector, specifically software and data management solutions, is a significant area of federal spending. Contracts like this, for health care databases, are crucial for modernizing and maintaining operational efficiency within large government organizations. The market for such specialized software can be competitive, but often involves proprietary systems or unique integration requirements that can lead to non-competitive awards. Federal spending in IT for healthcare systems is substantial, driven by the need for secure, reliable, and scalable data solutions.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. The award to SK Telecom, a large corporation, suggests that small businesses were likely not primary participants in this specific contract, either as prime contractors or through significant subcontracting roles, unless specified elsewhere. This contract does not appear to have been structured to directly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse. Transparency is limited by the sole-source nature of the award; however, contract award data is generally publicly available through federal procurement databases.

Related Government Programs

DoD Health Affairs IT Systems
Military Health System Electronic Health Records
Defense Health Agency Contracts
Medical Information Systems
Software and Data Management Solutions

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency regarding the necessity of a sole-source approach.
Contract duration may indicate long-term dependency on a single vendor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $44.0 million to SK TELECOM CO.,LTD.. IGF::OT::IGF BESTCARE 2.0A HEALTH CARE DATABASE

Who is the contractor on this award?

The obligated recipient is SK TELECOM CO.,LTD..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $44.0 million.

What is the period of performance?

Start: 2015-01-01. End: 2018-06-21.

What specific functionalities does the IGF BESTCARE 2.0A Health Care Database provide to the Department of Defense?

The provided data indicates the contract is for 'Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing' and is classified under PSC 334614. While the exact functionalities of the 'IGF BESTCARE 2.0A Health Care Database' are not detailed, this classification suggests it relates to the reproduction, management, or distribution of health care data, potentially in a digital format. It could encompass patient record management, clinical data warehousing, or the distribution of health information resources. The 'BESTCARE' designation implies a focus on improving healthcare delivery or administration within the DoD.

Why was this contract awarded on a 'NOT AVAILABLE FOR COMPETITION' basis instead of through full and open competition?

The 'NOT AVAILABLE FOR COMPETITION' (NAFOC) status typically implies that the procuring agency determined that full and open competition was not feasible or not in the government's best interest. Common justifications include that the item is available only from a limited number of sources, or that a specific brand name item is required. For this contract, awarded to SK Telecom, the justification for NAFOC would need to be documented by the Department of the Army. Without access to that specific justification, it's impossible to definitively state the reason, but it suggests a perceived lack of alternatives or a unique capability offered by SK Telecom.

How does the $44 million contract value compare to similar health care database contracts within the federal government?

Direct comparison of the $44 million value is difficult without knowing the precise scope, duration, and specific functionalities of the 'IGF BESTCARE 2.0A Health Care Database'. However, federal spending on health IT systems, including electronic health records and data management platforms, can range from millions to billions of dollars. Contracts for large-scale enterprise systems often exceed tens or hundreds of millions. The value of this contract appears substantial, but its relative cost-effectiveness hinges on the specific services delivered and the lack of competitive pricing due to its sole-source nature.

What is SK Telecom's track record with the Department of Defense or other federal agencies for similar IT contracts?

Information on SK Telecom's specific track record with the Department of Defense for health care database software is not detailed in the provided data. SK Telecom is a large South Korean telecommunications company with diverse IT capabilities. Federal procurement databases would need to be consulted to ascertain the extent of their past performance with the DoD or other U.S. federal agencies, particularly for contracts involving health IT or complex software solutions. A review of their past performance would be crucial for assessing their reliability and capability in fulfilling this contract.

What are the potential risks associated with awarding a significant health care database contract as a sole-source acquisition?

Sole-source acquisitions carry inherent risks, primarily related to cost and performance. Without competition, the government loses the benefit of price negotiation and market forces that typically drive down costs. This can lead to overpayment. Additionally, there's a risk of vendor lock-in, where the government becomes dependent on a single provider, making future transitions difficult and potentially expensive. Performance risks also exist, as the government has fewer options if the sole-source vendor fails to deliver adequate service or support. Transparency and justification for sole-source awards are critical to mitigate these risks.

How does this contract align with the Department of Defense's broader strategy for health information management and technology modernization?

This contract for a health care database likely aligns with the DoD's ongoing efforts to modernize its health information systems and improve data management. The DoD has invested heavily in initiatives like the Defense Health Agency's efforts to standardize electronic health records and data analytics. A dedicated health care database supports the consolidation, analysis, and accessibility of critical health data, which is essential for clinical decision-making, operational readiness, and research. The specific 'BESTCARE' designation suggests a focus on enhancing the quality and efficiency of healthcare services provided to service members and their families.

Industry Classification

NAICS: Manufacturing › Manufacturing and Reproducing Magnetic and Optical Media › Software and Other Prerecorded Compact Disc, Tape, and Record Reproducing

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 65 EULJI-RO, JUNG-GU, SEOUL

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $44,007,733

Exercised Options: $44,007,733

Current Obligation: $44,007,733

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline