GAO greenlights $58 billion in DoD TRICARE awards, denying nine industry protests

The Government Accountability Office has denied nine out of nine bid protests filed by health insurers who came out on the losing end of the Defense Department’s $58 billion in contract awards to run the military’s managed health care system. The protests were widely expected because of the sheer dollar volume of the contracts, but their wholesale denial represented a major victory for Defense health officials. They had hoped to avoid a repeat of the last round of contract competition for the TRICARE system, a debacle in which all three were overturned in bid protests that delayed their final implementation by almost three years. This time, DoD sought advance advice from GAO and other acquisition experts in hopes of making the latest round of TRICARE contracts as protest-proof as possible in the months leading up to the eventual July awards to Humana and Health Net Federal Services. In its own statement, GAO made clear that it had reached a final conclusion in all of the cases, filed by competing health insurers Wellpoint, UnitedHealth Military and Veterans, and by one of the winners, Health Net. In the latest round, DoD decided to consolidate its current three regionally-managed contracts into just two: the more populous North and South regions became TRICARE East, while the TRICARE West contract, covering most beneficiaries west of the Mississippi River remained geographically unchanged. Barring any further legal action, Humana, the incumbent contractor for TRICARE South, will manage the new East region under a $40.5 billion contract. Health Net is the incumbent contractor for the North region that will continue to exist until DoD phases-in the T-2017 contracts during the coming nine to 12 months.