DoD's $13.6M contract for healthcare services awarded to MCG Health Inc. shows potential value concerns

Contract Overview

Contract Amount: $12,405,301 ($12.4M)

Contractor: AU Medical Center, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-02-10

End Date: 2008-09-30

Contract Duration: 963 days

Daily Burn Rate: $12.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: 200606!600678!2100!W91YTV!DWIGHT DAVID EISENHOWER MED CENT!W91YTV06C0001 !A!N! !N! !P00003!20060210!20060930!135903867!135903867!135903867!N!MCG HEALTH INC !1120 15TH ST !AUGUSTA !GA!30912!30844!073!13!FORT GORDON !COLUMBIA !GEORGIA !+000004102128!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !621399!E! !3!B!S!C! !D!20100930!B! ! !A! !D!U!J!1!001!N!1G!Z!N!Z! ! !Y!Z!N! ! ! ! ! !A!A!000!A!B!N! ! ! !Y! ! !0001! !

Place of Performance

Location: AUGUSTA, RICHMOND County, GEORGIA, 30905

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $12.4 million to AU MEDICAL CENTER, INC. for work described as: 200606!600678!2100!W91YTV!DWIGHT DAVID EISENHOWER MED CENT!W91YTV06C0001 !A!N! !N! !P00003!20060210!20060930!135903867!135903867!135903867!N!MCG HEALTH INC !1120 15TH ST !AUGUSTA !GA!30912!30844!073!13!FORT GORDON !COLU… Key points: 1. The contract's value appears high relative to its duration and scope, warranting further investigation into pricing. 2. Limited competition for this contract may have impacted price discovery and potentially inflated costs. 3. The absence of a clear small business set-aside raises questions about opportunities for smaller enterprises. 4. Performance context is limited, making it difficult to assess the contractor's effectiveness and value delivered. 5. The contract falls within the broad category of healthcare services, a significant area of federal spending. 6. Oversight mechanisms need to be clearly defined to ensure accountability and transparency for this expenditure.

Value Assessment

Rating: questionable

The total award amount of $13,590,386.67 over a period of 963 days (approximately 2.6 years) suggests a monthly expenditure of roughly $419,000. This rate seems high for general healthcare services, especially when considering the contract was not competed. Benchmarking against similar contracts for comparable services is crucial to determine if this represents fair market value. Without more specific details on the services rendered, a precise comparison is difficult, but the cost per day is approximately $14,113, which warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits the government's ability to solicit bids from multiple vendors and secure the most competitive pricing. The lack of competition suggests potential reasons such as a unique capability or a pre-existing relationship, but it inherently reduces the pressure on the contractor to offer the lowest possible price.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

Beneficiaries of this contract are likely military personnel and their families receiving healthcare services at Fort Gordon. The services delivered are categorized under 'GENERAL HEALTH CARE SERVICES', indicating a broad range of medical support. The geographic impact is localized to Augusta, Georgia, where Fort Gordon is situated. Workforce implications include the potential employment of healthcare professionals by MCG Health Inc. to fulfill the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Limited performance data makes value assessment difficult.
The contract's duration and cost warrant closer examination for efficiency.
Sole-source awards can reduce transparency and accountability.
The broad service category makes specific performance evaluation challenging.

Positive Signals

Contract awarded to a known entity (MCG Health Inc.).
Contract has a defined start and end date.
The award amount is clearly stated.
The contract falls under a recognized NAICS code (621399).

Sector Analysis

This contract falls within the Healthcare sector, specifically general health care services. The federal government is a major purchaser of healthcare services, both for active-duty military and veterans, as well as through programs like Medicare and Medicaid. The NAICS code 621399, 'Offices of All Other Miscellaneous Health Practitioners,' suggests specialized, non-physician-led health services. Benchmarking this contract's value would require comparison with other sole-source or competitively awarded contracts for similar niche healthcare services provided to federal agencies.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award, it inherently bypasses the typical competitive processes where small business set-asides are often implemented. This means that opportunities for small businesses to compete for or subcontract on this specific contract were likely minimal or non-existent, potentially limiting their participation in this segment of federal healthcare spending.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army, which awarded the contract through Fort Gordon. Specific oversight mechanisms, such as performance reviews, quality assurance surveillance plans (QASPs), and reporting requirements, would be detailed in the contract itself. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

TRICARE
Military Health System
Department of Veterans Affairs Healthcare
General Medical and Surgical Hospitals
Outpatient Health Facilities

Risk Flags

Sole-source award lacks competitive pricing pressure.
High daily cost warrants further value analysis.
Limited public information on specific services rendered.
Potential for inflated costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.4 million to AU MEDICAL CENTER, INC.. 200606!600678!2100!W91YTV!DWIGHT DAVID EISENHOWER MED CENT!W91YTV06C0001 !A!N! !N! !P00003!20060210!20060930!135903867!135903867!135903867!N!MCG HEALTH INC !1120 15TH ST !AUGUSTA !GA!30912!30844!073!13!FORT GORDON !COLUMBIA !GEORGIA !+000004102128!N!N!000000000000!Q201!GENERAL HEALTH CARE SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !621399!E! !3!B!S!C! !D!201

Who is the contractor on this award?

The obligated recipient is AU MEDICAL CENTER, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $12.4 million.

What is the period of performance?

Start: 2006-02-10. End: 2008-09-30.

What specific healthcare services were provided under this contract, and how do they align with the NAICS code 621399?

The contract specifies 'GENERAL HEALTH CARE SERVICES' under NAICS code 621399, which covers 'Offices of All Other Miscellaneous Health Practitioners.' This code typically includes practitioners like physical therapists, occupational therapists, speech pathologists, audiologists, and other allied health professionals who are not physicians. Without a more detailed statement of work, it's difficult to ascertain the exact suite of services. However, it implies services beyond general medical or surgical care, likely focusing on rehabilitative, diagnostic, or therapeutic services provided by non-physician practitioners to support the health and well-being of personnel at Fort Gordon.

What factors led to this contract being awarded on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified when only one responsible source is available or capable of providing the required service. This could be due to unique capabilities, proprietary technology, urgent and compelling needs where competition is not feasible, or if the contract is a follow-on to a previous sole-source award where competition was previously determined impractical. For this contract, the justification for sole-source would need to be documented by the Department of the Army, potentially citing specific requirements unique to Fort Gordon's medical support needs or a lack of readily available alternative providers meeting those specific criteria within a reasonable timeframe.

How does the contract's duration (963 days) and total value ($13.6M) compare to similar healthcare service contracts awarded by the Department of Defense?

A total value of $13.6 million over approximately 2.6 years equates to an average monthly cost of about $419,000, or roughly $14,113 per day. This daily rate appears substantial for general healthcare services, even for a military installation. Without specific details on the scope of services (e.g., number of patients served, types of therapies provided, staffing levels), direct comparison is challenging. However, federal healthcare contracts, especially sole-source ones, can sometimes carry a premium. Benchmarking against competitively awarded contracts for similar services, or even other sole-source awards with detailed scopes of work, would be necessary to determine if this represents a fair value for the services rendered.

What are the potential risks associated with awarding a significant healthcare contract on a sole-source basis?

The primary risks of sole-source awards include lack of price competition, potentially leading to higher costs for the government and taxpayers. There's also a reduced incentive for the contractor to innovate or improve efficiency, as they face no direct competitive pressure. Furthermore, it can limit opportunities for other qualified vendors, including small businesses, to participate in federal contracting. Transparency and accountability can also be diminished, making it harder to ensure the best value is being obtained. For healthcare services, risks also extend to ensuring the quality and appropriateness of care provided, which might be more rigorously vetted in a competitive environment.

What is the track record of MCG Health Inc. in performing federal contracts, particularly within the Department of Defense?

MCG Health Inc. is a known entity in the healthcare sector. While this specific contract was awarded to 'MCG HEALTH INC' located in Augusta, GA, it's important to verify if this is the same entity as the broader MCG Health (now part of Hearst Health), which focuses on evidence-based clinical guidelines and care management software. If it is the same entity, their track record would involve providing tools and data to manage healthcare costs and quality. If the contract was for direct service provision, further investigation into their specific performance history with the DoD, including past performance evaluations and any contract disputes or awards, would be necessary to assess their reliability and capability for this particular service contract.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Other Health Practitioners › Offices of All Other Miscellaneous Health Practitioners

Product/Service Code: MEDICAL SERVICES › GENERAL HEALTH CARE 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

Address: 1120 15TH ST, AUGUSTA, GA, 12

Business Categories: Category Business, Nonprofit Organization, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline