TRICARE sustains protest in $17 billion service contract

Friday - 4/8/2011, 6:56am EDT

Jared Serbu, Reporter, Federal News Radio

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By Jared Serbu
Reporter
Federal News Radio

The Defense Department is pulling back a massive contract it awarded in 2009 to provide health insurance services in one of its three TRICARE regions, the military health care agency said Thursday.

The TRICARE Management Activity (TMA), which administers health benefits offered through private medical providers to military servicemembers, retirees and their families, said it had sustained an agency-level protest filed by UnitedHealthcare over the $17 billion contract for its TRICARE West region, which serves 2.7 million beneficiaries in 21 states.

TRICARE said it would reevaluate its award to TriWest Healthcare Alliance Corp, the incumbent vendor. The agency will soon issue an amended request for proposals and let the two companies submit revised bids, officials said.

TMA awarded $55 billion in contracts under its third-generation managed healthcare plan, known as T-3, for all three of its U.S. regions in July 2009. In each case, the losing bidder protested, either to the agency itself or to the Government Accountability Office.

In the South region, TMA initially awarded the contract to UnitedHealthcare, the nation's largest managed care company, then reopened the solicitation following a successful GAO protest by Louisville-based Humana, Inc. TRICARE reawarded the South contract to Humana in February.

UnitedHealthcare then appealed the reversal to GAO in March; a decision is expected later this year.

In the North region, TMA originally selected Hartford, Conn-based Aetna. Los Angeles-based Health Net protested to GAO, and TRICARE ultimately reawarded the contract to Health Net, the incumbent. Services under the new contract began this month.

TRICARE officials said the current contract for the West region would remain in place while it is reevaluating the competing proposals. They said beneficiaries would see no disruption in services while the solicitation is reopened.

This story is part of Federal News Radio's daily DoD Report. For more defense news, click here.

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