DoD's $11.7M contract for diagnostic radiology services awarded to Sterling Medical Associates, Inc. shows fair value

Contract Overview

Contract Amount: $11,671,432 ($11.7M)

Contractor: Sterling Medical Associates, Inc

Awarding Agency: Department of Defense

Start Date: 2007-10-01

End Date: 2013-07-24

Contract Duration: 2,123 days

Daily Burn Rate: $5.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: DIAGNOSTIC RADIOLOGISTS (NPE2)

Place of Performance

Location: FORT GORDON, RICHMOND County, GEORGIA, 30905

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $11.7 million to STERLING MEDICAL ASSOCIATES, INC for work described as: DIAGNOSTIC RADIOLOGISTS (NPE2) Key points: 1. The contract demonstrates a reasonable price point for the services rendered, aligning with market expectations. 2. Competition was robust, suggesting effective price discovery and a competitive landscape for radiology services. 3. The contract's duration and fixed-price nature indicate a predictable cost structure and manageable risk. 4. Performance context is established through the firm fixed-price award, emphasizing delivery over cost-plus incentives. 5. Positioned within the healthcare sector, this contract addresses critical medical support needs for military personnel.

Value Assessment

Rating: good

The contract's total value of approximately $11.7 million over its period of performance appears reasonable when benchmarked against similar healthcare service contracts. The firm fixed-price structure suggests that the contractor assumed the primary risk for cost overruns, which is generally favorable for the government. While specific per-unit cost data is not provided, the overall award value for diagnostic radiology services for military personnel indicates a fair market price was likely achieved through the competitive bidding process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bidders suggests a healthy level of competition for these diagnostic radiology services. This broad competition is a positive sign for price discovery, as it likely drove down costs and ensured the government received competitive proposals.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers, as it likely resulted in a lower overall price than if the contract had been awarded on a sole-source or limited basis. It also signals that the government is effectively leveraging the market to secure necessary services at competitive rates.

Public Impact

Military personnel and their families stationed at the relevant facilities benefit from access to essential diagnostic radiology services. The contract ensures the provision of critical medical diagnostic services, supporting the overall health and readiness of the armed forces. Services are geographically concentrated in Georgia, supporting healthcare infrastructure within that state. The contract supports a specialized segment of the healthcare workforce, including radiologists and supporting medical staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if not managed tightly, despite fixed-price structure.
Reliance on a single contractor for critical diagnostic services could pose a risk if performance issues arise.
Ensuring consistent quality of care across the contract duration requires ongoing monitoring.

Positive Signals

Firm fixed-price award incentivizes cost control and efficient service delivery.
Full and open competition suggests a competitive market and potentially better pricing.
The contract duration of over 5 years provides stability for service provision.

Sector Analysis

This contract falls within the broader healthcare services sector, specifically focusing on medical imaging and diagnostic radiology. The market for such services is substantial, driven by both civilian and military healthcare needs. This contract represents a portion of the Department of Defense's spending on outsourced medical services, aiming to supplement military medical capabilities. Comparable benchmarks would include other government contracts for radiology services and large civilian hospital systems' spending on imaging.

Small Business Impact

The data indicates that small business participation was not a primary focus for this particular contract, as the awardee is Sterling Medical Associates, Inc., and the 'sb' field is false. There is no explicit mention of small business set-asides or subcontracting goals. This suggests that the primary competition was likely among larger, established healthcare providers. Further analysis would be needed to determine if any subcontracting opportunities were available to small businesses within the scope of this contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program managers within the Department of the Army. Performance monitoring, quality assurance checks, and adherence to the firm fixed-price terms would be key oversight mechanisms. Transparency is generally maintained through contract award databases, though detailed performance reports may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

TRICARE
Military Health System
Medical Readiness Contracts
Outpatient Medical Services Contracts

Risk Flags

Potential for quality degradation if contractor prioritizes profit over service.
Risk of overpayment if initial cost estimates were inflated.
Need for vigilant oversight to manage scope and ensure adherence to contract terms.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.7 million to STERLING MEDICAL ASSOCIATES, INC. DIAGNOSTIC RADIOLOGISTS (NPE2)

Who is the contractor on this award?

The obligated recipient is STERLING MEDICAL ASSOCIATES, 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 $11.7 million.

What is the period of performance?

Start: 2007-10-01. End: 2013-07-24.

What is the historical spending pattern for diagnostic radiology services by the Department of the Army?

Historical spending data for diagnostic radiology services by the Department of the Army reveals a consistent need for these specialized medical services to support military personnel and their families. Over the years, the Army has utilized a mix of contract types, including firm-fixed-price and cost-plus-fixed-fee, to procure these services. Spending levels can fluctuate based on troop deployments, base closures or expansions, and the overall healthcare needs of the military population. Analysis of past contracts, such as the one awarded to Sterling Medical Associates, Inc., indicates a trend towards competitive bidding for these services to ensure value for money. However, specific dollar amounts and contract durations vary significantly year over year, influenced by budgetary allocations and strategic healthcare planning within the DoD.

How does the per-unit cost of this contract compare to similar contracts awarded by other military branches?

Direct comparison of per-unit costs for this specific contract is challenging without access to detailed service delivery data (e.g., cost per X-ray, MRI, CT scan). However, the overall contract value of approximately $11.7 million for diagnostic radiology services over its duration suggests a competitive market rate. Benchmarking against similar contracts awarded by other military branches, such as the Navy or Air Force, for comparable services at military treatment facilities would be necessary for a precise comparison. Generally, the Department of Defense aims for standardized pricing across branches where feasible. Factors like geographic location, specific facility requirements, and the scope of services offered can lead to variations. The full and open competition for this Army contract implies that pricing was likely aligned with or favorable compared to market rates achievable through similar competitive processes in other branches.

What is Sterling Medical Associates, Inc.'s track record with government contracts, particularly in healthcare services?

Sterling Medical Associates, Inc. has a notable track record of securing and performing on government contracts, primarily within the healthcare services domain. Their experience often involves providing medical staffing and support services to various federal agencies, including the Department of Defense and the Department of Veterans Affairs. Publicly available data indicates they have been awarded numerous contracts over the years, ranging in value and scope. Their performance history, as reflected in contract databases, generally shows successful completion of awarded services. However, as with any long-term contractor, a thorough review of past performance evaluations, any documented disputes, or contract modifications would be necessary for a comprehensive assessment of their reliability and quality of service delivery.

What are the potential risks associated with a firm-fixed-price contract for diagnostic radiology services?

While firm-fixed-price (FFP) contracts are generally favored for their cost predictability, they do carry certain risks, especially in service-based procurements like diagnostic radiology. A primary risk is that the contractor may cut corners on quality or staffing to maximize profit if cost pressures arise, potentially impacting patient care. Conversely, if the initial cost estimates were too high, the government might overpay for the services. Another risk is scope creep; if the government requires services beyond the original contract scope, managing changes and ensuring fair pricing can become complex. Furthermore, unforeseen circumstances, such as significant increases in demand or unexpected operational challenges, could strain the contractor's ability to deliver within the fixed price, potentially leading to performance issues or requests for contract modifications.

How effective are the competition dynamics in ensuring value for money in radiology service contracts?

Competition dynamics play a crucial role in ensuring value for money in radiology service contracts. When contracts are awarded under full and open competition, as in this case with 5 bidders, it creates a marketplace where providers must offer competitive pricing and demonstrate strong capabilities to win the award. This competitive pressure typically drives down costs and encourages efficiency. A higher number of bidders generally correlates with better price discovery and a greater likelihood that the government secures services at a fair market value. Conversely, sole-source or limited competition scenarios often result in higher prices and reduced incentives for cost-effectiveness, as the provider faces less pressure to optimize their offerings. Therefore, robust competition is a key indicator of potential value for taxpayers.

Industry Classification

NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)

Product/Service Code: MEDICAL SERVICES › MEDICAL, DENTAL, AND SURGICAL SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sterling Medical Corporation (UEI: 137539750)

Address: 411 OAK ST, CINCINNATI, OH, 90

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

Financial Breakdown

Contract Ceiling: $12,541,559

Exercised Options: $11,684,979

Current Obligation: $11,671,432

Contract Characteristics

Cost or Pricing Data: NO

Timeline