Two of DoD's Biggest Military Contracts Are Now Up for Grabs

Cmdr. Sanghee Park is on the receiving end of her annual influenza vaccination.
Cmdr. Sanghee Park is on the receiving end of her annual influenza vaccination, administered by Hospital Corpsman 3rd Class Brandon Fletcher at Naval Hospital Bremerton, October 21, 2019. (U.S. Navy/Douglas H Stutz)

The race has begun for contractors hoping to snag two of the Defense Department's most lucrative military contracts: the opportunity to manage Tricare, providing health services to more than 9 million service members, retirees and their families.

The Pentagon released a draft request for proposal Aug. 28 for Tricare's fifth generation of contracts, referred to as T-5, which together could be worth more than $58 billion if all options are exercised.

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The contracts are expected to be awarded in 2021.

Currently, the contract to provide managed care in the Tricare East Region is held by Humana Military Healthcare Services, Inc., while the Tricare West contract is managed by Health Net Federal Services LLC.

The two were awarded the contracts in July 2016 -- Humana's, worth up to $40 billion for the duration of the contract, which ends in April, 2022, and Health Net Federal Services, up to $17.7 billion for the contract period ending in December 2023.

The contract timing is off-kilter because of a disastrous contract turnover in 2017 between the company that previously managed the Tricare West region, UnitedHealthcare and Health Net and Humana, which shared parts of the region before it was reconfigured to its current area.

According to the Government Accountability Office, the Defense Health Agency was largely to blame for the problems seen during the transition. GAO analysts said DHA failed to conduct proper oversight of the turnover, which resulted in delays implementing the contract as well as patient enrollment issues and provider payment delays.

More than 15,000 beneficiaries also were dropped temporarily from Tricare during the transition and payment information for 224,000 beneficiaries was lost.

Pentagon officials have said they have implemented changes, including updating policy manuals and streamlining processes to ensure a smooth transition for the T-5 contracts.

As part of the T-5 bidding process, companies will be allowed to bid for both regions but can only win one contract. No single company will be selected to manage both regions.

The contracts are expected to begin in January 2024, and, if all options are executed, will end December 2031.

According to Bloomberg Government, DoD will hold industry days for interested bidders Sept. 14-15. Responses to the draft RFP are due by Sept. 18.

-- Patricia Kime can be reached at Follow her on Twitter @patriciakime.

Related: 35,000 Military Retirees Will Soon See a Tricare Refund

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