TRICARE Disputes to Continue as TriWest to Protest UnitedHealth’s Win
Filed under: Business Line, Companies, Contract Awards, Department of Defense, Events, GAO, logistics, medicine, Protest, Services, UnitedHealth
Earlier this month the U.S. Department of Defense decided to award the TRICARE West management contract to UnitedHealth Group (UNH). This was the culmination of almost two years of effort to award this very large contract. Previous attempts to award the nearly $20 billion contract were protested by the loser as TriWest Health Alliance the incumbent and UnitedHealth attempted to win the contract.
TRICARE is the main medical insurance program for the U.S. military. It covers active duty members, their dependents, retirees and some Reservists and National Guard members. Under TRICARE personnel utilize civil providers as well as military medical facilities and the companies with the contracts manage the execution of their benefits. The U.S. is divided into regions and different contracts are awarded to various contractors to operate them. TriWest had been formed to do the West contract and has had it until the latest round of contracts in 2009.
Now only ten days after the announcement of the award to UnitedHealth after two rounds of protest TriWest is saying it will file a protest against this latest decision. In their press release the company states that this is due to concerns that the “contract is the result of a flawed and unfair process.” Specifically they believe that due to their lower price the contest should be re-evaluated.
The normal process for the protest is that it will be reviewed by the Service awarding, then may go to the Government Accountability Organization (GAO) and ultimately to the Federal Courts if a party is not satisfied. The result of the review could be denying the protest allowing UnitedHealth to keep the contract, a direction to redo the source selection, a new contest or in rare cases the award is overturned and given to the protester. Protests normally are allowed 100 days. During the protest the new contract cannot be executed so UnitedHealth’s effort will be placed on hold.
The contract is the majority of TriWest’s business. The near term health of the company requires them to keep it. They have little to lose by protesting this award.
VA Awards New Contract for Electronic Health Records
Filed under: Business Line, Companies, Contract Awards, development program, Events, Federal Budget Process, Harris Corporation, IT, logistics, medicine, Services
Earlier this month the Veteran’s Administration (VA) cancelled a contract with ASM Research that was intended to develop a key component of the agency’s Electronic Health Record (EHR) system. The $102 million contract was for the “enterprise service bus” which would allow other applications to communicate with each other and the overall system. Since the whole point of the EHR is to speed sharing of information the bus would be a major enabler of this.
The contract with ASM was cancelled less then two months after award due to what turned out to be issue with conflicts of interest with some of the sub-contractors hired by ASM that may have affected the bid process.
Now the vA has awarded a new contract for the work to Harris Corporation (HRS). This contract has a value of $80 million and is for the same basic work. While Harris is best known as a manufacturer of radios and communications systems it also has an active healthcare solutions group.
This works on information systems as well as those to share and manage data. Many defense contractors have looked at getting into this business as they DoD and Federal Government are expected to spend billions on healthcare over the next decade. Much of this will go to large scale IT programs and systems.
UnitedHealth Is Final Choice for Tricare West Contract
Filed under: Business Line, Companies, Congress, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Protest, Services, UnitedHealth
Almost two weeks ago it came out that the Department of Defense had made a final decision in to whom to award the TRICARE West management contract to. The rumors were that UnitedHealth (UNH) would be the winner and that was confirmed at the end of last week.
UnitedHealth won the over $20 billion, 5 year contract after a series of competitions, awards and protests that have taken almost three years to resolve. The losing company, TriWest Healthcare Alliance, had been formed to just manage the contract.
One of the issues facing TriWest was the fact that they had paid a fine of $10 million to the U.S. Government after a whistleblower lawsuit about pricing. How much this affected the source selection is of course impossible to know.
There are reports that UnitedHealth will most likely absorb some of the jobs that TriWest will lose to help it manage the contract.
TRICARE is the U.S. military’s primary medical provider. It is used to cover active duty members, their dependents, retirees and selected Reserve and National Guard personnel. In 2008-2009 new five year contracts to manage the different regions were awarded but several faced protests and took some years to work out.
Defense Department medical costs have increased greatly over the last ten years as the military has fought in Iraq and Afghanistan, grown in size and also gained more retirees. This has caused the TRICARE, Veterans and other health care programs to grow significantly. The recent Obama budget proposal hopes to begin reining in this cost growth by in some ways requiring members to pay more in co-pays and fees. Whether that is politically acceptable remains to be seen. Certainly TRICARE will be a big part of that budget discussion.
MediVector Receives Contract for Flu Therapeutic
Filed under: Business Line, Companies, Contract Awards, Department of Defense, development program, Events, medicine, Services
The U.S. Department of Defense’s Joint Project Manager Transformational Medical Technologies (JPM-TMT) issued a contract to MediVector, Inc. for further development of their Favipiravir (T-705) drug. This contract has a value of almost $140 million.
Favipiravir aids in treating flu systems while also reducing its spread among personnel. While flu may sound like a minor inconvenience compared to other biological weapons such as anthrax it can have a serious, short term effect on unit availability and capability. The JPM-TMT is also concerned with developments of artificial or weaponized flu strains.
The JPM-TMT’s goal is to invest its money into products that might have near term availability to treat different types of diseases. Favipiravir has shown promise so far and with the military investment might see accelerated development and trials.
Since 9/11 the U.S. has invested billions in developing means to not only protect its military from biological weapons and pandemics but also made efforts to protect the U.S. population. This has included investment in production facilities as well as new and better treatments for a variety of illnesses.
Long Running Saga of TRICARE Management Contracts Coming to an End?
Filed under: Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, Events, Humana, logistics, medicine, Protest, Services, UnitedHealth
Updated – To make clear this was an Agency level protest and not a GAO one.
TRICARE is the primary medical insurance program for the United States’ military. It covers those personnel, their dependents and retirees along with selected Reservists and National Guardsmen. It functions like a HMO for its members. The Defense Department divides up the country into regions and awards large contracts to individual health insurers to manage these. In 2009 new contracts were awarded but three of them were protested by different losers. Since then the Department of Defense has been working through the protests and getting new contracts in place.
The contracts are awarded regionally to provide management of care and providers. The West contract was originally won by the incumbent, TriWest, but UnitedHealth Group (UNH) protested. The Department of Defense upheld the protest and the contract was put up for bid again. Again TriWest and UnitedHealth bid on the contract. Now it is expected that a decision on the winner will be made in the near future.
Of course with the history of these contracts there is no guarantee that the loser may protest this decision. With the Southern contract Humana (HUM) and UnitedHealth went trough several iterations as the awards and protests followed each other. The last decision was by a Federal court in October that sided with Humana. This contract was in protest and litigation for over two years.
If the government can make a decision with this contract that sticks it should close out this saga. TRICARE contracts are usually only for five years so the next round should be coming up in 2014-2015. Expect competition to be just as fierce with that round.
Military health care is in transition as the Department of Defense looks for ways to reduce costs. These have increased greatly over the last decade due to the commitments to Iraq and Afghanistan and the larger size of the military. There are also now much more retirees and veterans who need care. In the next budget there is a proposal to increase the co-pays and fees paid by members for their TRICARE. There will also be pressure to reduce payments to service providers.
Even so expect the large health insurance companies compete for these contracts just like the last round.
Entegrion Will Continue Work on Plasma Storage and Transport
Filed under: Business Line, Companies, Contract Awards, Department of Defense, development program, Events, logistics, medicine, S&T, Services, States
The U.S. Defense Department has spent a lot of money over the last ten years on advanced medical technology and research. This has been driven by the nature of the threat of biological Weapons of Mass Destruction (WMD) as well as ways to treat soldiers on the battlefield better and more quickly. This has included billions on new vaccines and treatments for WMD potential such as anthrax and plague as well as those to allow personnel to operate in environments where diseases like Yellow Fever are common. Another area has been in treatment capabilities with improved bandages or anti-bacterialogical equipment.
Entegrion, a small bioreasearch company in North Carolina, received a contract to continue its work on flash freezing plasma. This will allow better storage and transport of the blood component used to provide transfusions on the battlefield. The contract with the Department of Defense is worth almost $44 million.
The contract is for four years with all options and will if things go well take the product through the third phase of clinical trials and then into license application.
Entigrion has also received other contracts from the military to work on products to treat shock and bleeding.
The U.S. has had great success in reducing the number of battlefield deaths in Iraq and Afghanistan. Part of this is due to the new technology for medical treatment as well as a ability to transport wounded quickly to large and effective hospitals.
The other thing is that much of this work will be applicable to the civilian population as well improving their medical treatment and health.
General Dynamics Awarded Military Health System Support Contract by TRICARE Management Activity — Press Release
Filed under: Business Line, Companies, Events, General Dynamics, logistics, medicine, Press Releases
General Dynamics Awarded Military Health System Support Contract by TRICARE Management Activity
FAIRFAX, Va., Sept. 23, 2011 /PRNewswire/ — General Dynamics Information Technology, a business unit of General Dynamics (NYSE: GD), has been awarded a five-year, $14.3 million task order by the TRICARE Management Activity (TMA) under the TRICARE Evaluation, Analysis and Management Support (TEAMS) contract. General Dynamics was originally awarded the TEAMS indefinite delivery, indefinite quantity contract in July 2008.
General Dynamics will provide program management services to the Defense and Veterans Brain Injury Center (DVBIC). Work will include program administration, conference planning, strategic communications and accounting support. The company will also coordinate information systems and technology services, including phone lines and computer access for DVBIC headquarters in Washington, D.C., and its Johnstown, Pa., and Charlottesville, Va., sites.
“General Dynamics has a long history of supporting vital health systems projects within the TRICARE Management Activity and the Military Health System,” said Zannie Smith, senior vice president of Army Solutions for General Dynamics Information Technology. “We will provide DVBIC with the program management and technical support they need to ensure service members, their dependents and veterans with traumatic brain injury receive the high-quality care they deserve.”
DVBIC is the primary traumatic brain injury component of the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury. It serves thousands of patients through a comprehensive network of 17 physical sites throughout the U.S. Departments of Defense and Veterans Affairs. In addition to treating service members and veterans with all levels of traumatic brain injury, the center conducts an extensive research program and provides education about brain injuries to families, the public and clinical providers.
Through the TEAMS contract, General Dynamics provides critical management support to the Defense Health Information Management System’s Electronic Health Record (EHR) program, an enterprise-wide medical clinical information system, used in all fixed military medical and deployed facilities, that generates, maintains, stores and provides secure online access to comprehensive patient records. The company also provides program and functional management services to the Defense Blood Standard System program office, which ensures the distribution of safe and effective blood products.
For more information about General Dynamics Information Technology, please visit www.gdit.com.
More information about General Dynamics is available at www.generaldynamics.com.
SOURCE General Dynamics Information Technology
IBM Expands Security Offerings Through Acquisition
Filed under: Business Line, Companies, development program, EADS, EADS Astrium, General Dynamics, IT, logistics, medicine, production program, S&T, Satellites, space
IBM (IMB) expanded its capabilities in the area of security analytical support through the acquisition of British company i2 yesterday. i2 provides software that does data analysis in support of law enforcement and military operations. The value of the transaction was not announced.
IBM has invested several billion since 2006 on companies that provide this and other types of security related services in order to bolster its capabilities in this market. The move also illustrates the further commitment of government and defense contractors to what is to be an expected growth area in the future as the U.S. military and others invest in more sophisticated computer security and intelligence support functions.
While IBM did not say how much they paid for i2 in 2008 it was last sold for $185 million indicating that this deal would be substantially more as the company has had some growth since then.
It is expected that Merger & Acquisition (M&A) activity will be accelerating and the deals will be getting larger. Recently there have been two deals in the billion dollar range by larger aerospace and defense companies. First, General Dynamics (GD) acquired Vangent a health IT company for $980 million and EADS’ (EADS:P) satellite division, Astrium, agreed to acquire satellite communications company Vizada for $960 million.
These two deals expand the company’s capabilities in less traditional markets for them but ones that it is felt the U.S. especially will be spending billions on in the near future. This is move away from their past efforts in developing, producing and supporting large platforms such as aircraft, vehicles and military communication systems.
Defense Industry Projects a Good 2011 but 2012 and Out Look Worse
Filed under: Acquisitions, Boeing, Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, development program, Events, Federal Budget Process, General Dynamics, IT, ITT Corporation, L-3, Lockheed Martin, logistics, medicine, Military Aviation, northrop grumman, Northrop Grumman Corp., production program, Restructuring, Services, U.S. Air Force, U.S. Army, U.S. Navy
Most of the large and mid-sized defense contractors reported their most recent quarterly results in the last few weeks. While for the quarter the results were mixed with some seeing decent increases in earnings and revenue while others saw a drop overall they all felt that they would meet or exceed their estimates for the full year. The 2011 defense budget still remained high due to the extra spending for Afghanistan and Iraq as well as investment in some major weapon systems. The 2012 budget is working its way through Congress and will see some reductions based on proposals by the Services as well as Congress’ directed cuts but overall will be about the same as 2011. Spending beyond that could be considerably reduced based on the new debt reduction “super committee” as well as the pressure to decrease overall Federal deficits.
As the focus of the defense budget changes from paying for the troops in Afghanistan and Iraq and the equipment and supplies they need to invest in new systems to replace older one or achieve new technologies some defense contractors will prosper over others. If the discussed defense cuts are followed through and amounts vary from $35 billion to $70 billion a year from a $700 billion budget then some major programs will be canceled, the size of the military will decrease greatly and parts of the defense industry in the U.S. will disappear. This will either be through M&A activity or just loss of contracts causing companies to fold up.
There have already been moves by the larger defense contractors to adjust to the potential changes in how the U.S. Defense Department spends its money. ITT Corporation (ITT) has decided to split yet again into three different companies basically separating their flat performing defense business from more successful water and chip manufacturing areas. L-3 Communications Holding (L3) while it had a good quarter announced that it too was spinning off part of itself to adjust to what it sees as the future in the U.S. It is setting up its Scientific, Engineering, Technical and Analytical (SETA) business as a new company. SETA contractors support government offices most often in acquisition and research and development. Many of these positions were converted to government positions and new Organizational Conflict of Interest (OCI) rules prevent companies that provide SETA services to also bid on large hardware programs. L-3 is adjusting by getting out of the business.
Perhaps the biggest adjustment was by Northrop Grumman (NOC) who moved to separate their entire shipbuilding segment earlier this year. Rather then sell it to one of their competitors they set up a new company entirely, Huntington Ingalls Industries (HII). This was in realization that future U.S. Navy shipbuilding plans were so limited it could not necessarily support the current number of shipyards in the U.S. HII has already moved to close its yard in Louisiana with significant effect on the local economy.
Other companies have moved out to use M&A to position themselves. Many of the larger companies such as Boeing (BA) and Lockheed Martin (LMT) have been buying intelligence and cyber security companies to expand their opportunities. General Dynamics (GD) earlier this week made a big move by spending almost $1 billion on a health IT company. With the focus on health care reform including improvements in record keeping and storage IT may become a big source of business for government contractors. The company, Vangent, which was privately held also just completed a large contract with the Census Bureau that should be offered again in a few years.
The U.S. military is pursuing some large programs over the next decade. These if they are canceled or cut back will have the largest effect on revenues and earnings. For Lockheed Martin it is the F-35 Joint Strike Fighter that is finally moving towards large scale production. A reduction in planned quantities will severely affect that company. For Boeing it is the KC-46A new aerial tanker as the Air Force plans to buy at least 179 initially at a cost of over $30 billion. General Dynamics has major ship and submarine construction programs and the Navy if it cuts these will limit GD’s future performance.
Right now the next several months should see major defense contractors maintain their revenues and earnings except in odd cases where contracts are restructured or ending. Once the 2012 budget is decided upon that will give an indication of how next year will be. Then 2013 and out should start to see some cuts in defense spending with similar effect on the companies. It can be expected that there will be a decrease in performance accelerating if severe cuts are made by the United States. The ability of the contractors to move to different business areas in response to these cuts will dictate how badly they are affected. All indications are right now that this sector will struggle in the next few years to maintain what they have let alone growing it even more. There may be more moves coming similar to those by Northrop, ITT and L-3.
Photo from Images_of_Money’s Flickr photostream.
Article first published as Defense Industry Projects a Good 2011 but 2012 and Out Look Worse on Technorati.
GD Acquires Large Health IT Company
Filed under: Boeing, Business Line, Companies, General Dynamics, IT, Lockheed Martin, logistics, medicine, Northrop Grumman Corp.
With the foreseeable reduction in U.S. defense spending one way that defense contractors can mitigate its effects is to branch out their business lines into areas that might see increased government spending in the future. That is why the large companies such as Boeing (BA), Lockheed Martin (LMT) and others have been investing in intelligence and cyber security companies and capabilities.
Now General Dynamics (GD) has done the same by acquiring a large health care IT provider, Vangent. THe deal to buy Vangent from its private equity firm owner, Veritas Capital, is valued at almost $1 billion which makes it one of the largest recent M&A moves by a defense contractor in recent times.
Not only is the Defense Department expected to invest heavily in electronic health records and data sharing systems but also Federal organizations like the Veterans Administration (VA), Health & Human Services (HHS), and many of the states. GD through this acquisition is positioning themselves to take advantage of this market. Vangent itself had over the past year invested in smaller companies that had done significant work in the area of government medical services.
The “Obamacare” health reform act is also going to require a large investment in health IT. It will reward doctors, hospitals, insurance companies and other health care providers who spend money on Electronic Health Records and other technology. This will create a large market for companies offering those products which could include GD and other defense contractors like Northrop Grumman (NOC) who have provided government IT services to states such as Virginia.
GD already provides health related services to some parts of the Defense Department including the Medical Communications for Combat Casualty Care (MC4) system. This is attempting to build electronic health care records for military members.
The addition of Vangent will only expand GD’s capabilities and perhaps help it ride out the coming period of reduced investment in weapon systems and combat support networks. It can be expected that other defense contractors may follow suit in the next few years as they look for potential acquisitions who can expand their offerings and products.
Department of Defense Continues Flu Research
Filed under: Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, development program, Editorial, Events, Federal Budget Process, medicine, production program, S&T, Services
One of the the threats that must be faced by the U.S. military today and its allies is that of biological warfare. This not only includes more exotic agents such as anthrax or the plague but also other more mundane diseases. At the same time the U.S. through the Department of Health and Human Services as well as Defense is also researching ways to protect the U.S. population and its own troops from pandemics.
If a large unit gets a flu or other disease outbreak it can render it ineffective for a significant period of time. During World War II for example many U.S. units had a lot of non-battle casualties from diseases such as malaria, trench foot and more exotic tropical ones such as yellow fever. An aggressive inoculation and preventative capability will help prevent those kind of outbreaks and maintain unit strength and capability.
With this in mind since over the last several years the U.S. has been funding research on new vaccines, better ways to mass produce them and stockpiles for these kind of eventualities. Vandalia Research just received a contract worth about $1 million to begin the research into scaling-up production and further development of their pandemic flu vaccine.
Since 2005 it has been estimated that the Federal government has spent over $2 billion on this type of research. Part of this was related to the failure to produce sufficient amounts of H1N1 flu vaccine in 2009. Much of the money has gone for ways to produce the vaccines using cellular reproduction rather then the traditional egg based system.
The U.S. should be expected to continue funding this type of research for the next several years as it develops new manufacturing processes and stockpiles of vaccines to protect against potential pandemic outbreaks.
Companies Continue Fights for U.S. Military Health Care Contracts
Filed under: Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, Editorial, Events, Federal Budget Process, IT, logistics, medicine, Protest, Services
The United States’ Department of Defense spends a great deal of money on health care. They are responsible for not only the active duty members but also their dependents, retirees as well as National Guardsmen and Reservists. The fighting since 9/11 has seen the expansion of the size of the military. Many personnel have families. There has also been an increase in the number of wounded and those needing long term car. The sustained fighting and activity also caused more retirees. Combined these pressures have required that total spending dramatically increase. In 2010 it was almost $50 billion or roughly 8 percent of the defense budget.
This has been recognized by leadership such as departing Secretary of Defense Robert Gates and some moves have been proposed to reduce spending or slow the rate of growth. If changes are not made then more-and-more of available funding will go for personnel related matters leaving less for investment in new weapons and technology. At the same time the growth has made this an attractive area for large U.S. health insurance companies and they are currently fighting over the contracts to manage the health care program.
The basic program used to do this is called TRICARE. It is like a large HMO that requires the military participants to pay a small upfront fee and then co-pays for visits and services. Because the military is so large and geographically diverse the Department of Defense centrally manages the program and divides the U.S. into regions with a contract for each. There are also omnibus contracts for overseas and dental care. The contracts average values of $4-5 billion a year.
In 2009 the Department went ahead and awarded the next set of five year contracts for the different regions. These were bid on by familiar insurance companies such as Aetna (AET), Humana (HUM) and UnitedHealth. In the late summer the winners were announced and often the incumbent did not retain the contract. Immediately several protests were filed by the losers.
Incredibly two of these protests remain unsettled today almost two years later. That indicates the importance of these contracts to the providers. In a time when the entire health care market in the U.S. is about to see radical change TRICARE does offer some stability at least for the next several years and may provide a decent source of revenues and income for these companies to offset future changes in the civilian market.
UnitedHealthCare is pursuing protests for the South and West contracts. The South has now gone through two source selection cycles with UnitedHealth winning the first one over Humana who protested which led to a new competition. This was awarded to Humana in March and that was protested by UnitedHealth. The Government Accountability Office (GAO) upheld the award and UnitedHealth has now sued in Federal Court which is the final step in the protest process. UnitedHealth believes that Humana in order to minimize costs has reduced the proposed payments to providers to such an extent that few if any will accept TRICARE patients leading to poorer choice for military members. The GAO did not sustain that argument.
UnitedHealth and Humana have also been fighting over the West contract. Here UnitedHealth was the incumbent and Humana won the new contract. That protest has also led to a decision to have a new contest that is yet to occur.
The size of the TRICARE management contracts and their value has caused those companies involved in them to try to win and keep them. Despite pressure by the Defense Department to reduce costs they are expected to remain sizable for a variety of reasons. They offer some stability as the U.S. moves to reform the civilian market. It can be expected that these protests will continue for the next few months as the contract awards are worked through.
Article first published as Companies Continue Fights for U.S. Military Health Care Contracts on Technorati.
UnitedHealthCare Takes Next Step in TRICARE Protest
Filed under: Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, Editorial, Events, Federal Budget Process, GAO, logistics, medicine, Protest, Services
As we had written last week the Government Accountability Office (GAO) had ruled against UnitedHealthcare’s protest of the award of the Southern Region TRICARE contract. This meant that the contract would go to Humana (HUM) who had actually been the incumbent back in 2009 when the government tried to award the latest group of TRICARE medical management contracts.
TRICARE is the medical insurance program offered by the Pentagon to its active duty members, their dependents, retirees and selected Reservists and National Guardsmen. The country is divided into regions and one insurance company is awarded a contract to manage it. These contracts are quite large in the region of $4-5 billion a year.
In 2009 the government attempted to award new five year contracts for the different regions. Three of the contracts were protested for various reasons but normally because the source selection criteria were not followed correctly. Two of the three have been resolved but the Southern one still remains in a legal battle. Originally Humana lost the contract to UnitedHealthcare but protested. That led to a decision to have a new contest which Humana then one. UnitedHealthcare then protested that decision. The GAO denied the protest and let the award to Humana stand.
Now Unitedhealthcare has decided to sue in the U.S. District Court of Federal Claims which is the next step in the protest process. In their press release from Tuesday the company states: “The Pentagon disregarded its own stated goals for this contract, and military families’ access to quality health care in the South will be put at risk as a result.” The company continues to believe that the decision by the government to choose companies for the TRICARE offering low reimbursement rates limits care and choice for the military.
The lawsuit should take a few months to decide and the current TRICARE contract should continue with Humana
TRICARE Protests Continue
Filed under: Business Line, Companies, Contract Awards, Department of Defense, Editorial, Events, Federal Budget Process, GAO, logistics, medicine, Protest, Services
TRICARE is the primary medical insurance program for the United States’ military. It covers those personnel, their dependents and retirees along with selected Reservists and National Guardsmen. It functions like a HMO for its members. The Defense Department divides up the country into regions and awards large contracts to individual health insurers to manage these. In 2009 new contracts were awarded but three of them were protested with one, the Southern Region, still not resolved.
The Southern contract was originally awarded to UnitedHealthCare but the incumbent Humana (HUM) protested the decision. The Government Accountability Office (GAO) which reviews protests agreed that the Defense Department had failed to carry out a proper source selection and it was decided to have another competition for the potential $23.5 billion of work.
That contract source selection occurred this spring and it was decided that Humana was the winner. UnitedHealthCare promptly protested that decision basing their claims on a belief that Humana offered too low a payments to providers to lower their costs and that may end up forcing providers from TRICARE limiting the members options.
That protest has now been resolved with the GAO ruling in Humana’s favor. UnitedHealthCare is still reserving the right to appeal that decision which it can to the Federal Courts. Normally in these situations the incumbent stays in while the protest goes on which means Humana will be the provider and collect revenue and earnings from this contract.
There is no doubt the Defense Department made serious errors in this cycle of contracts. Three of the four were protested and in all three cases the original winner has not kept the contract. UnitedHealthCare looks like they will continue their protest of the second attempt to award the South Region contract so a final decision may not be made until the Fall. It will have taken the Defense Department almost two-and-a-half years to resolve all of this.
Arteriocyte and the U.S. Army Institute of Surgical Research (USAISR) Sign a CRADA to Speed Development of Cellular Therapies for Orthopaedic Trauma — Press Release
Filed under: Business Line, Companies, Events, medicine, Press Releases
Arteriocyte and the U.S. Army Institute of Surgical Research (USAISR) Sign a CRADA to Speed Development of Cellular Therapies for Orthopaedic Trauma
CLEVELAND, June 7, 2011 /PRNewswire-USNewswire/ — Arteriocyte™, a leading clinical stage biotechnology company with offices in Cleveland, Ohio, and Hopkinton, Massachusetts, that develops proprietary stem cell and tissue engineering based therapies, announced today that they have entered into a Cooperative Research and Development Agreement (CRADA) with the United States Army Institute of Surgical Research (USAISR) at Fort Sam Houston, Texas. The 3-year CRADA, entitled “The Use of Concentrated Bone Marrow Aspirate from a Point-of-Care Device in Orthopaedic Trauma,” enables collaborative investigation of new stem cell based therapies for orthopaedic trauma and related battlefield injuries using Arteriocyte’s Magellan MAR01™ system for rapid bed-side production of cellular therapies and Arteriocyte’s NANEX™ rapid stem cell expansion technology.
Arteriocyte is currently working with USAISR to evaluate Magellan® point-of-care therapies for compartment syndrome (amputation prevention), burn debridement, and post-surgical wound infection prevention under existing research agreements. The newly established CRADA will enable Arteriocyte to work directly with USAISR staff to explore broader use of its technologies to treat orthopaedic trauma including limb injuries (bone, cartilage, muscle and vessel structure) that affect a majority of battlefield wounded soldiers.
Joseph Wenke, Ph.D., Manager, Extremity Trauma and Regenerative Medicine Task Area, and Manager, Orthopaedic Extremity Trauma Research Program, will serve as Principal Investigator for USAISR. “We’re excited to expand our collaboration with Arteriocyte,” said Dr. Wenke. “Rapid development and deployment of improved treatments for Orthopaedic Trauma is central to USAISR’s mission. These technologies have significant potential to improve outcomes for our injured personnel, and assist in their healthy recovery to active duty.”
The Magellan® system is an FDA 510(k) cleared medical device for the rapid production of platelet rich plasma from blood and bone marrow that is applied to a surgical site as surgeons deem necessary for their clinical use requirements. Magellan MAR01™ technology enables the rapid “closed system” concentration of aspirated bone marrow, yielding an injectable tissue rich in platelets, hematopoietic stem cells and mesenchymal stem cells, commonly viewed as key components in tissue repair. The self contained Magellan unit provides critical ease-of-use and operator-independent consistency necessary for deployment in military medical operations. In addition to therapies for battlefield wounds, Arteriocyte is currently enrolling patients into an FDA approved Phase I IDE clinical trial to evaluate the role of MAR01™ in peripheral vascular disease (critical limb ischemia) with additional cardiac and orthopedic trials planned.
The NANEX™ platform consists of a biofunctional nanofiber-based 3D scaffold designed to mimic the bone marrow environment, permitting rapid ex vivo proliferation of hematopoietic stem cells with minimal differentiation. Arteriocyte has multiple active development programs for its NANEX technology including treatment of ischemic disease, identification and treatment of cancers of the blood system and rapid high volume ex vivo red blood cell production.
Arteriocyte CEO Don Brown said, “We consider it a privilege to be requested by the U.S. Military to help in the care delivery for our men and women in uniform. We strongly believe it is our responsibility to make Arteriocyte’s technologies available to those who volunteer to serve our country, and we are humbled by the opportunity to work with our partners at Fort Sam Houston to help ensure that our wounded soldiers get access to the best care possible so they can get home or back to active duty as quickly as possible.”
About Arteriocyte
Arteriocyte, a leading clinical stage biotechnology company, is dedicated in developing novel stem cell products and medical devices for unmet clinical needs. Arteriocyte leverages its expertise in stem cell and tissue engineering in order to develop a broad portfolio of cell based therapeutics to improve patient outcomes. In October of 2007, Arteriocyte partnered with DW Healthcare Partners and Comerica to create Arteriocyte Medical Systems Inc., in order to commercialize and distribute novel medical devices and point of care surgical solutions to address serious unmet medical needs in cardiac, orthopedic and vascular surgeries. Arteriocyte Medical Systems manufactures and distributes the Magellan® Autologous Platelet Separator System.
SOURCE Arteriocyte, Inc.
SAIC Awarded $53 Million Contract to Support the TRICARE® Military Health System — Press Release
Filed under: Business Line, Companies, Events, IT, logistics, medicine, Press Releases, SAIC
SAIC Awarded $53 Million Contract to Support the TRICARE® Military Health System
Company to Provide Information Technology Services and Electronic Health Record Systems Support
MCLEAN, Va., May 19, 2011 /PRNewswire/ — Science Applications International Corporation (SAIC) (NYSE: SAI) announced today it was awarded a prime contract by the Department of Defense to provide information technology (IT) services and electronic health record systems support to the TRICARE® Management Activity Military Health System (MHS). The contract has a one-year base period of performance, three one-year options, and a total value of $53 million if all options are exercised. Work will be performed in Falls Church, Va. and San Diego, Calif.
MHS manages the TRICARE® health care program for more than nine million active duty, National Guard and Reserve, retired service members, their families and beneficiaries. Under the contract, SAIC will provide IT services as required, to improve the current electronic health record (EHR) by addressing existing technical and functional EHR challenges. The services include the necessary fixes to the legacy EHR systems and architecture so that the EHR capability will be more reliable, stable, user friendly and perform with adequate speed. The contract also provides for the new capabilities that need to be implemented in support of the Captain James A. Lovell Federal Health Care Center in North Chicago.
“SAIC is pleased to continue providing critical support to assist MHS in enhancing the agency’s health care information management system,” said Steve Comber, SAIC senior vice president and business unit general manager. “We look forward to modernizing the current suite of EHR applications, and helping sustain clinical systems that support the highest quality of care-giving to our military men and women and their family members.”
About SAIC
SAIC is a FORTUNE 500® scientific, engineering and technology applications company that uses its deep domain knowledge to solve problems of vital importance to the nation and the world, in national security, energy and the environment, critical infrastructure and health. The company’s approximately 43,000 employees serve customers in the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other U.S. Government civil agencies and selected commercial markets. Headquartered in McLean, Va., SAIC had annual revenues of $11.1 billion for its fiscal year ended January 31, 2011. For more information, visit www.saic.com. SAIC: From Science to Solutions®
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BARDA Smallpox Contract Protested by Chimerix
Filed under: Business Line, Companies, Contract Awards, development program, Events, medicine, Protest, S&T, Services
BARDA is the Biomedical Advanced Research and Development Authority, which is part of the Department of Health and Human Services. Their goal is to provide an “integrated, systematic approach to the development and purchase of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies.”
As part of this they fund various research, development and production of medical countermeasures for potential attacks using Weapons of Mass Destruction (WMD) including chemical, biological, radiological and nuclear agents. One concern is diseases such as anthrax and smallpox which have the potential to infect and damage large populations. This Pandemic Medical Countermeasures program has acquired vaccines and therapeutic drugs and treatments.
Recently they made the decision to award a production contract to Siga Technologies for an antiviral smallpox medical countermeasures. This was a five year contract with the potential for being worth over $400 million. It was to continue development of the treatment and explore manufacturing and safety. If all went well Siga would make about 1.7 million treatment courses during the contract with an option for up to 12 million more. That size of production could be worth almost $3 billion.
The contract award was protested with days by rival biotech company Chimerix. Chimerix had also received a BARDA development contract for their own smallpox countermeasure. They feel that the follow on contract should have been awarded to them. The Government Accountability Office (GAO) will review the protest and decide it. This means that there will be a delay to the implementation of the contract by Siga as long as the protest is denied.
If the protest is upheld then it will require a reevaluation of the bids or work by BARDA to justify their award to Siga. It could even lead to a whole new competition if the GAO feels it is warranted.
Defenses against such attacks is a new area of investment by the U.S. and other governments. Concerns about a terrorist group using such weapons was driven by the post-9/11 anthrax attacks in the the United States and has caused billions of investment by different organizations in countermeasures and treatment. This like many other aspects of contracting has led to more interest by companies and more competition. The fact of the protest is not surprising considering this.
Creative Protest of TRICARE Dental Contract by United Concordia Fails
Filed under: Business Line, Companies, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Pennsylvia, Protest, Services, States
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.
Morphotek Receives Grant to Support Development of Therapeutic Antibodies against Biowarfare Agents — Press Release
Filed under: Companies, development program, Events, medicine, Press Releases, S&T
Morphotek Receives Grant to Support Development of Therapeutic Antibodies against Biowarfare Agents
EXTON, Pa., April 12, 2011 /PRNewswire/ — Morphotek®, Inc., a subsidiary of Eisai Inc., announced today that the company has received a grant of approximately $947,000 from the United States Department of Defense (DOD) to support the continued development of therapeutic monoclonal antibodies (mAbs) capable of neutralizing the toxic effects of botulinum neurotoxins (BOTN). The development project is part of a U.S. defense initiative to protect citizens against toxic threats posed by biowarfare agents. In 2007, Morphotek was awarded $2.3 million in funding to support the initial development of these mAb therapies.
Morphotek has been developing mAbs with neutralizing activities against BOTN. These funds will further support the engineering of a monoclonal antibody-based therapy that can potentially protect against exposure to these toxins.
“The DOD funding will allow us to explore novel antibody formats capable of blocking the toxic effects of certain BOTN subtypes,” said Luigi Grasso, Ph.D., Chief Scientific Officer at Morphotek. “DOD’s funding for this program demonstrates the importance of developing non-animal derived and safe biological therapies to treat potential exposure to different weaponized BOTN subtypes.”
The funded program is in response to government efforts to develop therapies capable of protecting civilian and military personnel against exposure to pathogenic agents that can be deployed by rogue states or terrorists as bioweapons. The program also is consistent with Morphotek’s and Eisai’s human health care (hhc) mission to give first thought to patients and their families and to increasing the benefits that health care provides by satisfying unmet medical needs.
About Morphotek
Morphotek®, Inc., a subsidiary of Eisai Inc., is a biopharmaceutical company specializing in the development of protein and antibody products through the use of a novel and proprietary gene evolution technology. The technology has been successfully applied to a broad variety of cell lines and organisms to yield genetically diverse offspring that are suitable for pharmaceutical product development in the areas of antibody therapeutics, protein therapeutics, product manufacturing, drug target discovery, and improved output traits for commercial applications. The company is currently focusing its platform on the development and manufacturing of therapeutic antibodies for the treatment of cancer, inflammation and infectious disease. For more information, please visit www.morphotek.com.
About Eisai Inc.
Eisai Inc. was established in 1995 and is ranked among the top-20 U.S. pharmaceutical companies (based on retail sales). The company began marketing its first product in the United States in 1997 and has rapidly grown to become a fully integrated pharmaceutical business. Eisai’s areas of commercial focus include neurology, gastrointestinal disorders and oncology/critical care. The company serves as the U.S. pharmaceutical operation of Eisai Co., Ltd., a research-based human health care (hhc) company that discovers, develops and markets products throughout the world.
Eisai has a global product creation organization that includes U.S.-based R&D facilities in Massachusetts, New Jersey, North Carolina and Pennsylvania as well as manufacturing facilities in Maryland and North Carolina. The company’s areas of R&D focus include neuroscience; oncology; vascular, inflammatory and immunological reaction; and antibody-based programs. For more information about Eisai, please visit www.eisai.com/us.
More TRICARE Dominos Falling as UnitedHealthcare’s 2009 Protest Upheld
Filed under: Business Line, Companies, Congress, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Protest, Services
TRICARE is the U.S. Department of Defense’s primary health care program for its active duty members, their dependents and retirees. It functions as a sort of HMO and allows personnel to utilize civilian healthcare providers and systems. In the past the military used their own network of doctors, clinics and hospitals for this but began moving to this system thirty years or so ago. Two years ago the Department competed the management contracts for TRICARE.
Four different contracts were awarded and the North, South and West regional ones were protested. The protests were upheld and the incumbents remained operating the contracts while the U.S. decided whether to sustain the award, have a new contest or keep the incumbent.
Those decisions were made for the the North and West protests and now the U.S. has announced a decision on the South award. It has been decided that UnitedHealthcare’s (UNH) protest will be upheld and new contest will have to occur for the South contract. The contract had been won by TriWest Healthcare Alliance but that decision was protested and now won’t stand.
The total value of that contract is $17 billion over the five years so its importance to the companies bottom line is very clear.
Interestingly enough UnitedHealthcare won the Southern contract from Humana (HUM) which was also overturned on that company’s protest. A new contest was held which was won by Humana last month but UnitedHealthcare is protesting that award further delaying the new contract. Humana as the incumbent in 2009 has remained on the contract since then working until all of this is resolved.
In the background to all of this is the fact that the Defense Department and the Services are working to reduce the costs of healthcare as it eats up more of the military budget every year. Proposals include raising co-pays and premiums but until the size of the military starts going down it will be hard to decrease this type of spending.
No matter what it may be until 2012 before the 2009 awards are all resolved and the process illustrates the need for the government to use clear source selection criteria and apply them evenly across all of their decisions.
Cardinal Health Receives Contract from DoD
Filed under: Business Line, Companies, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Services
The U.S. Department of Defense and its services and agencies buy many things from thousands of vendor. These range from advanced combat aircraft that cost over $100 million each such as the F-35 Lightning II to boots and IT support. Some of these contracts are huge but they happen and nobody really notices or remarks because they purchase mundane items. Such is the contract just announced with Cardinal Health (CAH).
The military runs several healthcare systems. They have clinics and hospitals at their bases to treat active duty members, their dependents and retirees. They have a complex system of field and evacuation hospitals to treat combat casualties and they have medics and corpsman in the field directly with Soldiers and Marines as well as on ships and submarines. Military medical personnel also treat refugees and people across the world as part of building goodwill. They employ thousands of medical personnel and use all sorts of supplies and equipment to carry out this part of their mission.
Cardinal Health is one of the major suppliers of pharmaceuticals and medical products in the United States. They sell not only basic medical supplies and drugs but also surgical equipment, apparel, as well as services to manage care and supply chain management.
They provide these products to companies like Walgreen Co. which they have a major distribution agreement with that was just renewed. Walgreen and CVS Caremark are two of the companies biggest customers.
Its subsidiary, Cardinal Health 200 Inc., won a two year contract worth over $1 billion to provide medical surgical supplies to the Defense Department. Even in a day and age of $700 billion annual defense budgets that is a contract not to overlook and demonstrates that the U.S. must invest in more then weapons.
The other thing that must be considered for companies like Cardinal is that once the fighting ends in Iraq and Afghanistan the demand for products like theirs should decline. Future defense budgets may see reductions and this is one area that may be cut. The company like many others must be prepared for the loss of this business and adjust.
Photo from exfordy’s flickr photostream.
Administration Continues to Propose Increases in TRICARE Premiums
Filed under: Business Line, Companies, Congress, Events, Federal Budget Process, logistics, medicine, Proposal, Restructuring, Services
TRICARE is the major health insurance program for the U.S. military, their dependents and retirees. It was created in the Nineties as a follow on to the CHAMPUS program primarily due to the end of the Cold War and the BRAC process. This led to the closing of hundreds of installations across the country making it harder for military retirees especially to gain access to health care. TRICARE is similar to an HMO in that it allows members to utilize private health care providers and facilities. The way it is set up requires a small premium each year.
As the U.S. military has grown over the past decade which includes numbers of dependents and retirees health care has become a major cost to the Defense Department. In 2012 it will cost over $50 billion or about eight percent of the total proposed budget. In the last decade the cost of military health care has increased from about $20 billion to a projected $64 billion in 2015 in unadjusted dollars.
In a move to try and counter these increases Secretary of Defense Robert Gates has proposed charging more for the premiums by as much as 300 percent. These moves have not been included in the defense budget as Congress has eliminated the increases. In 2012 the proposal is a much more modest $2.50 to $5.00 a month and this may have a better chance of approval.
The size of TRICARE is illustrated by the on-going struggle between Humana (HUM) and UnitedHealth Group (UNC) over the Southern region management contract. The two companies have protested the awards to each other of this potentially $20 billion contract.
Personnel costs as a whole have increased dramatically over the last two decades and this is eating up the Defense top line budget authority. Gates has already proposed the simplest way to lower these costs by eliminating Soldiers and Marines but this is also being fought by Congress as it makes little sense to reduce the size of the military when it is still engaged in Iraq and Afghanistan.
If defense spending will stay flat or start to be reduced to keep a decent amount of money for development and production of weapons health care costs need to have their growth limited. At the same time the nation and Government must pay for the care of its active duty forces and retirees as failure to do so would negatively impact recruiting, retention and the effectiveness of the U.S. military. Transferring some of the costs to the users may be a simple solution in the short term but it does set a precedent where larger and more harsh increases to premiums could be added by a future administration and Congress which then could lead to lack of access and care for military personnel.
As with all aspects of cutting Federal spending this won’t be easy but it is clear that something needs to be done due to the current deficits and budgetary pressures.
Humana TRICARE Contract Faces Protest from UnitedHealth Group
Filed under: Business Line, Companies, Congress, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Protest, Services
Just when it looked like the last round of TRICARE management contracts had been resolved with the award to Humana (HUM) of the Southern Region contract after a lengthy protest process and review the loser, UnitedHealth Group (UNH), has protested that award.
This is one of several contracts awarded by the Department of Defense to manage what is basically the HMO for military members, their dependents and retirees. The value of the contracts are quite large due to the size of the population being served and this contract is worth $2.5 billion initially and has a total value of over $23 billion if all options are exercised.
In 2009 United won the contract away from incumbent Humana but that company protested and it was upheld. It has taken DOD over a year to resolve the issue ending up with requiring the bidders to submit new proposals. A few weeks ago it was announced that Humana’s bid was chosen over its rival. United is now protesting that award.
The protest is based on the fact that the losing company believes Humana “offered steep discounts in its latest bid that will pay doctors and hospitals below rates paid in the Medicare system.” This could drive providers out of TRICARE and limit care options for the users.
The protest will mean that the new contract will be delayed and the incumbent, Humana, will get basically a bridge to maintain their current services while it is resolved. Depending how it goes the Government Accountability Office (GAO) has the first attempt to review and rule on the protest although it may go further into court. Most protests are resolved within 100 days so there may be a further three months delay before the new contract starts.
If there really is cuts to the U.S. defense budget including attempts to reduce the cost of medical care as proposed by Secretary Gates then protests might become more common. Less big contracts mean their value to an individual company is heightened which leads to a greater need to win them. The potential for changes to the whole health insurance business with the implementation of health care reform also may lead companies to value contracts like this one for their stability and size.
This is now approaching the two year mark for these contracts to be resolved and it could drag out for several more months.
MOD Agency wins major US award for its Joint Personnel Administration System for the UK Armed Forces — Press Release
Filed under: Business Line, Companies, HP, IT, logistics, medicine
MOD Agency wins major US award for its Joint Personnel Administration System for the UK Armed Forces
The Service Personnel and Veterans Agency (SPVA) has won a major award at the prestigious 2011 ‘Human Capital Management in Defence’ (HCMD) awards held in Arlington, Virginia on 16 February.
Beating off strong US competition, SPVA won the main award for its implementation of the Joint Personnel Administration (JPA) System for the United Kingdom’s Armed Forces.
The award recognises the success of the outsourcing relationship within SPVA between the UK Ministry of Defence and HP Enterprise Services that started in November 1997, and included the successful introduction of JPA in 2006. JPA has revolutionised Armed Forces’ pay and personnel administration, bringing together the Royal Navy, Army and RAF onto one system, allowing users to update details themselves and providing one dedicated contact centre for help and support. It also delivered savings to the MOD in excess of £200 million in its first three years of operation
SPVA Chief Executive Kathy Barnes is delighted with the award:
“ I am very proud of what the staff in SPVA have achieved and this is external recognition for everyone in the Agency – MOD Civil Servants, Military Personnel and HP staff and the way we have all adapted and worked together over the last few years. It reflects the success of our partnering relationship with HP and reinforces the value of our internal ‘One Team’ approach to working across different sites and organisations to deliver excellent customer service to our many customers – the UK’s Armed Forces personnel, veterans and their dependents.”
HP Account Executive Paul Couch, said:
“The award highlights the strength of our partnering relationship with the MOD, and our deep knowledge of Armed Forces HR. It reinforces the innovation and experience that HP brings to the table to improve service, generate savings and implement value for money solutions. With SPVA and through JPA, we have demonstrated what can be achieved in the shared services arena and are looking to use this as a foundation for helping the Government to achieve similar benefits in other areas.”
This is the fifth year of the HCMD Awards which have been established to honour, recognise, and promote successful human capital initiatives implemented throughout the Department of Defense and Federal Government. The Awards are also an opportunity to recognise individuals and teams who have made a significant contribution to progressing human capital management.
For the second year in a row, the HCMD Awards received over 35 nominations. “The judges really had their work cut out for them this year,” commented Lisa Ringlen, executive director of the HCMD program. “There were so many strong programs nominated in each category.”
This year’s nominations came from offices and programs from across the US federal government, representing the Army, Navy, Air Force, Coast Guard, DISA, the IRS, Dept. of Energy, the National Park Service and the US Postal Service. SPVA was the only non US organisation to be nominated, which makes its achievement all the more remarkable
This success follows two other impressive awards received last year by SPVA and HP from the Shared Services Outsourcing Network. Last year’s success was at the ‘Shared Services Outsourcing Network (SSON) 2010 Industry Awards, in Edinburgh in May. The Agency first won the award for ‘Best Mature Outsourced Services Delivery’ for its management of the UK Forces’ Joint Personnel Administration (JPA) system. It then went on to beat organisations from across Europe, the Middle-East and Africa to win the highest accolade of the night -the ‘Winner of Winners’ award.
Humana Retains TRICARE Contract After Lengthy Protest
Filed under: Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, medicine, Services
One of the largest and fastest growing costs that faces the U.S. Department of Defense is medical care. It must not only provide care for its current active duty members but also their families and also retirees. Due to a combination of overall health inflation, that most members have families and the large number of troops receiving injuries and wounds this part of the defense budget is eating up more and more funds to the point where Secretary of Defense Robert Gates has proposed raising premiums and co-pays.
The primary tool used to manage this health care program is called TRICARE. It is similar to a HMO and relies on contracts with different health insurance companies. The nation is divided into regions and a contract is awarded for each one. Due to the size of the program the contracts are in a range of several billion dollars a year.
Two years ago the Department awarded a series of new contracts to manage the different regions. One of these was to United Health Group (UNH) for the Southern Region but the losing incumbent, Humana (UUM), protested and it was sustained. DoD let Humana bridge while it figured out whether to have a new contest or address the protest some other way.
Last week it was decided to award Humana the full five year contract for the region. This contract could be worth up to $23 billion if all options are exercised and is a major coup for the company. At the time of the protest it looked like it would be out of the TRICARE business completely and would have to make up the lost revenue some other way. Now they are comfortably ensconced until 2016 which will give them some breathing room as DoD addresses its health costs.
There is no doubt that the military must look at its total personnel costs. They are the biggest part of the budget and if there is no growth in available defense dollars as expected then to free up money for investment in hardware and research these costs will have to be reduced. One of the easiest ways is to cut the number of active duty forces. In the 2012 budget Secretary Gates has done this with planned reductions to the size of the Army and Marine Corps who have grown the most since 2001. Of course at a time when troops are engaged still in Iraq and Afghanistan it will be hard for Congress to agree to this.
Another option which he has also proposed is transferring more of the costs of health care to the employee as so many companies have done. This is also unpopular as military members are not the highest paid people and in the past free or low cost health care has been part of their benefits. This while saving some money may cause a quicker increase in pay to make up for the new costs and thus not really saving money.
The U.S. defense budget faces a great deal of pressure to be more efficient. Health care is just one area that may see major changes due to this.
