DoD's $18.3M Physician Services Contract with Sterling Medical Associates Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $18,330,610 ($18.3M)
Contractor: Sterling Medical Associates, Inc
Awarding Agency: Department of Defense
Start Date: 2006-11-14
End Date: 2012-03-31
Contract Duration: 1,964 days
Daily Burn Rate: $9.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 6
Pricing Type: FIRM FIXED PRICE
Sector: Healthcare
Official Description: SRP SERVICES
Place of Performance
Location: EL PASO, EL PASO County, TEXAS, 79920
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $18.3 million to STERLING MEDICAL ASSOCIATES, INC for work described as: SRP SERVICES Key points: 1. The contract awarded to Sterling Medical Associates for physician services represents a significant expenditure of $18.3 million. 2. While the contract was awarded under full and open competition, the duration and lack of specific performance metrics raise questions about ongoing value. 3. The primary risk lies in potential overpayment due to the long contract term and the nature of physician services, which can be difficult to benchmark. 4. The sector is healthcare services, specifically physician offices, a critical but often complex area for government procurement.
Value Assessment
Rating: questionable
The contract's value is difficult to assess without detailed performance data and comparison to similar, shorter-term contracts. The firm-fixed-price structure provides some cost certainty, but the extended duration could lead to inflated costs if market rates decrease.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, suggesting a competitive bidding process. However, the long duration (over 5 years) may have limited the number of active bidders at the time of award and could obscure current market price discovery.
Taxpayer Impact: The long-term nature of this contract, coupled with potential inefficiencies in price adjustments over time, could result in taxpayers paying more than necessary for physician services.
Public Impact
Military personnel and their families rely on these physician services for their healthcare needs. The significant contract value indicates a substantial portion of the budget allocated to healthcare support. The long contract duration raises concerns about adaptability to evolving healthcare needs and technologies. Transparency in pricing and performance is crucial for public trust in defense spending.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration without clear performance adjustments.
- Potential for cost creep over the contract's lifespan.
- Limited insight into ongoing market competitiveness for these services.
Positive Signals
- Awarded under full and open competition.
- Firm-fixed-price contract provides cost predictability.
Sector Analysis
This contract falls within the healthcare services sector, specifically physician offices. Government spending in this area is substantial, but often complex due to the variability in service delivery and the need for specialized personnel. Benchmarking physician service costs can be challenging.
Small Business Impact
The data indicates this contract was not awarded to small businesses (ss: false, sb: false). Further analysis would be needed to determine if small businesses had opportunities to participate in the subcontracting or if the scope inherently favored larger entities.
Oversight & Accountability
The long duration of this contract warrants scrutiny regarding ongoing oversight. Regular performance reviews and market price checks would be essential to ensure continued value for money and accountability for taxpayer funds.
Related Government Programs
- Offices of Physicians (except Mental Health Specialists)
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for overpayment due to long contract duration.
- Lack of clear performance metrics tied to pricing.
- Difficulty in benchmarking physician services costs.
- Limited evidence of ongoing price competitiveness checks.
Tags
offices-of-physicians-except-mental-heal, department-of-defense, tx, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.3 million to STERLING MEDICAL ASSOCIATES, INC. SRP SERVICES
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 $18.3 million.
What is the period of performance?
Start: 2006-11-14. End: 2012-03-31.
How does the actual cost per physician per year compare to market benchmarks for similar services, considering the contract's duration?
Without specific performance data and current market rates, a precise comparison is difficult. However, given the contract's age and length, it's plausible that costs may exceed current market benchmarks, especially if physician salaries or overhead costs have decreased or stabilized in the broader market since 2006.
What mechanisms were in place to ensure the firm-fixed price remained competitive and reflected fair market value throughout the contract's extended period?
Firm-fixed-price contracts aim for cost certainty at award. However, for long-duration contracts like this, mechanisms for price adjustments based on market shifts or performance metrics are crucial. The absence of readily available information on such mechanisms raises concerns about sustained value and potential overpayment.
To what extent did the full and open competition at the time of award translate into sustained cost-effectiveness over the contract's lifespan?
While full and open competition is a positive indicator, its impact on sustained cost-effectiveness diminishes with contract length if market conditions change significantly. The long duration suggests that initial competitive pricing might not reflect current market realities, potentially impacting overall value for taxpayer money.
Industry Classification
NAICS: Health Care and Social Assistance › Offices of Physicians › Offices of Physicians (except Mental Health Specialists)
Product/Service Code: MEDICAL SERVICES › NURSING, NURSING HOME, EVAL/SCREEN
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 6
Pricing Type: FIRM FIXED PRICE (J)
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
Financial Breakdown
Contract Ceiling: $18,330,611
Exercised Options: $18,330,610
Current Obligation: $18,330,610
Parent Contract
Parent Award PIID: V797P4422A
IDV Type: FSS
Timeline
Start Date: 2006-11-14
Current End Date: 2012-03-31
Potential End Date: 2012-03-31 00:00:00
Last Modified: 2012-09-28
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