Defense Health Care

Despite TRICARE Procurement Improvements, Problems Remain Gao ID: HEHS-95-142 August 3, 1995

As federal and state medical programs move to managed care, competitively bid contracting with private health care firms is being used more and more. In the federal sector, the Defense Department (DOD) has been a leader in the use of these contracts. As part of its introduction of a nationwide management health care program for the military, known as TRICARE, DOD has begun to award large, complex, competitively bid contracts to support and supplement the health care provided in military facilities. These five-year contracts are estimated to cost a total of about $17 billion. In response to concerns about DOD's difficulties with an early contract award covering California and Hawaii for which GAO sustained a protest of the award, this report reviews (1) procurement process problems identified by the bid protest experiences, (2) DOD's actions to improve and help ensure the fairness of the procurement process, and (3) what problems and concerns remain and whether further steps are needed.

GAO found that: (1) DOD has changed its managed care procurement process to address such past problems as its failure to evaluate bidders' proposed prices according to solicitation criteria, the lack of communication between technical and price evaluators, and its failure to properly evaluate bidders' cost containment approaches; (2) although DOD has revised its evaluation methodology and has added new discussion requirements to improve future procurements and ensure better treatment of bidders, protests are likely to continue, given the vast sums of money at stake and the relatively small expense of protesting; (3) DOD may have difficulty meeting the congressional deadline for awarding all contracts by September 1996, since procurements have been taking twice as long as planned; (4) DOD has tried to make up for procurement delays by reducing its transition period after contract award for contractors to deliver health care, but this action has created major risks; and (5) DOD must establish required qualifications for evaluation board members, since their tasks have become so specialized.


Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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