Defense Health Care:

Despite TRICARE Procurement Improvements, Problems Remain

HEHS-95-142: Published: Aug 3, 1995. Publicly Released: Aug 10, 1995.

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Pursuant to a congressional request, GAO reviewed defense health care, focusing on: (1) procurement process problems identified by the bid protest experiences; (2) the Department of Defense's (DOD) actions to improve and help ensure the fairness of the procurement process; and (3) what problems and concerns remain and whether further actions 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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Office of the Assistant Secretary of Defense (Health Affairs) has issued a request for information to solicit suggestions on alternate award approaches for the next round of procurements.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to weigh, in view of the potential effects of such large procurements on competition, alternative award approaches for the next procurement round.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Office of the Assistant Secretary of Defense (Health Affairs) has issued a request for information to solicit suggestions on simplifying the next requests for proposals, using less prescriptive methods for utilization management and relying more on performance-based outcome measures.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to determine whether and, if so, how the next round's solicitation requirements could be simplified, incorporating the use of potentially better, more economical, best-practice managed care techniques while preserving the system's overall health care goals.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: Transition periods for Region 6 and Regions 3 & 4 were each 7 months. The transition period for the Region 7 & 8 contract was 6.5 months. The transition period for Regions 1, 2, and 5 is scheduled to be 7 months.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to adhere to the 8- to 9-month scheduled transition period and discontinue, whenever possible, reducing such periods to make up for delays incurred before contracts are awarded.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: OCHAMPUS established general qualification requirements and used these requirements for selecting evaluators beginning in February 1996 for the procurements for Regions 1, 2, and 5.

    Recommendation: The Secretary of Defense should direct the Assistant Secretary of Defense (Health Affairs) to establish general qualification requirements for evaluator appointees.

    Agency Affected: Department of Defense

 

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