Creative Protest of TRICARE Dental Contract by United Concordia Fails

by: Matthew Potter
May 19, 2011

Category: Business Line, Companies, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Pennsylvia, Protest, Services, States | RSS 2.0

TRICARE is the primary healthcare provider for the United States’ military, their dependents and retirees. It works similar to a HMO with a network of providers and prescription services to supplement the available military hospitals. TRICARE requires a small co-pay from members for themselves and their dependents. Due to the size of the U.S. military the TRICARE management contracts awarded to commercial providers are quite large. This includes the one to provide dental benefits.

Two years ago the Department awarded new contracts for the various TRICARE regions to manage the system. These contracts were all worth $2-3 billion a year and at least three were protested. Earlier this year the various protests were resolved but there is still an outstanding protest of one of the new contracts awarded due to the protests.

Late last year the TRICARE dental contract was awarded. Unlike the medical ones this pretty much covers everyone in TRICARE in only a single contract rather then having multiple regional ones. It was won by Met Life (MET) over the incumbent, United Concordia Companies Inc., which is part of Highmark Inc. Met Life was awarded the $3.09 billion contract and United Concordia promptly protested.

While Met Life was cheaper then United Concordia the incumbent based part of their protest on the fact that the change in contractors would cause hardship for TRICARE subscribers due to the need for them to potentially change providers. This meant being the incumbent should help the evaluation of their bid. They asked the Government to review how the Source Selection criteria were applied in the decision.

The Government Accountability Office (GAO) denied the protest. They ruled that the contract was awarded properly.

When a contract is re-competed it is easy for the Government to be favorable to the incumbent. These are people they have worked with for several years and trust. The source selection must look past these types of personal relationships and evaluate the bids against the criteria. Often the winner hires most of the former workers and one of the concerns with this contract is that because Met Life’s bid is smaller it may not support the same size workforce as United Concordia did.

If there is really reductions in U.S. defense spending and it is very likely then the chances of protests will increase as there is less work for the same amount of bidders. Each contract becomes more valuable to companies and they will fight hard to get them and if they are the incumbent keep them.

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