United States General Accounting Office

GAO Report to Congressional Requesters

August 1995 DEFENSE HEALTH

CARE

Despite TRICARE

Procurement

Improvements,

Problems Remain

GAO/HEHS-95-142

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-259398 

August 3, 1995

The Honorable Floyd D. Spence

Chairman

The Honorable Ronald V. Dellums

Ranking Minority Member

Committee on National Security

House of Representatives

The Honorable Hank Brown

The Honorable Ben Nighthorse Campbell

United States Senate

The Honorable Scott McInnis

The Honorable Patricia Schroeder

House of Representatives

As federal and state medical programs move to managed care,

competitively bid contracting with private health care companies is

increasingly being used. Under the Medicaid program, states are using

such contracts as part of their overall strategy to control rapidly escalating

medical costs. In the federal sector, the Department of Defense (DOD) has

been a leader in using these contracts. As part of its implementation of a

nationwide managed health care program for military beneficiaries called

TRICARE,1 DOD has begun to award large, complex, competitively bid

contracts to supplement and support the health care provided in military

medical facilities. These 5-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 GAO2

 sustained3 a protest

of the award, you asked that we review (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 actions are needed.

1

Defense Health Care: Issues and Challenges Confronting Military Medicine (GAO/HEHS-95-104,

Mar. 22, 1995).

2

Under the Competition in Contracting Act of 1984 (31 U.S.C. 3551-56 (1988)), GAO is required to

consider bid protests and determine whether a challenged federal government solicitation, contract

award, or proposed award complies with applicable statutes and regulations.

3

Foundation Health Federal Services, Inc.; QualMed. Inc., B-254397.4 et al., Dec. 20, 1993, 94-1 CPD ¶ 3.

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In doing our work, we examined pertinent procurement regulations and

the agency files for several DOD procurements. We also had many

discussions with officials responsible for (1) developing solicitation

requirements; (2) conducting the procurements; (3) evaluating offerors’

proposals; and (4) ensuring that the procurements are conducted in a

legal, fair, and equitable manner. In addition, we contacted health care

companies and regional military officials that had participated in recent

procurements for information on their experiences with these

procurements as well as their views of the procurements. For a more

complete discussion of our scope and methodology, see appendix I.

Results in Brief In sustaining the protest of DOD’s California/Hawaii contract award, GAO

cited several problems, including DOD’s failure to evaluate offerors’

proposed prices according to solicitation criteria, lack of communication

between DOD evaluators performing technical and price evaluations, and

failure to properly evaluate offerors’ cost containment approaches such as

their proposed methods for controlling health care service use. In

response, DOD changed its managed care procurement processes in several

ways to correct these and other problems. For example, DOD has revised

its methodology for evaluating proposed prices, added new requirements

for discussions between boards evaluating the technical and price

proposals, revised its utilization management requirements and evaluation

criteria, and made other changes.

In our view, DOD’s changes should improve future procurements and

ensure more equitable and fair treatment of offerors. They are unlikely,

however, to eliminate future protests. On two subsequent protests, one

challenging the revised solicitation terms and another contesting the

contract award following the California/Hawaii protest, GAO ruled in DOD’s

favor. Protests are likely to continue, however, given the vast sums of

money at stake and the relatively small added expense involved in lodging

them.

Despite these improvements, several matters remain that concern both

those administering and those responding to the procurements. For

example, the procurements thus far have taken more than twice as long as

originally planned. Unless DOD can avoid delays such as those due to

numerous changes in solicitation requirements, it may not meet the

congressional deadline for awarding all contracts by September 30, 1996.

Also, because the procurements are broad, complex, involve huge sums,

and have been lengthy, unsuccessful offerors incur substantial expense to

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participate, which may sharply narrow future competition to only a few

providers. But DOD could consider alternative award approaches for the

next round of procurements.4

Also, offerors maintain that solicitation requirements are so prescriptive

that offerors cannot fully propose innovative and cost-saving managed

care techniques or the best practices now available in the private sector.

DOD, while seeking system uniformity so that similar benefits are provided

no matter where beneficiaries live, acknowledges offerors’ concerns and

has expressed interest in making requirements less process and more

outcome based.

Further, DOD has tried to make up for procurement delays by reducing its

8-month transition period after contract award for contractors to prepare

to deliver health care. By doing so, however, DOD has introduced

significant risk that contractors will not complete all the tasks needed to

deliver health care on time.

Finally, evaluation board members are now selected without DOD having

set forth their needed qualifications. Because the tasks they evaluate are

so specialized and because the boards have grown in number and

members are less familiar to selecting officials, DOD needs to better ensure

that prospective evaluators are appropriately qualified.

Background Since the Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS) began in 1956 and was expanded in 1966,5

 it functioned much

like a fee-for-service insurance program. Beneficiaries6

 have been free to

select providers and required to pay deductibles and copayments, but,

unlike with most insurance programs, they have not been required to pay

premiums. CHAMPUS has approximately 5.7 million beneficiaries and, as

part of a larger Military Health Services System (MHSS), these beneficiaries

are also eligible for care in the MHSS’ 127 hospitals and 500 clinics

worldwide. Of the approximately $15.2 billion budgeted for the MHSS in

4

The current round of procurements consists of seven contracts covering the 12 TRICARE regions. The

next round will begin after the first 5-year managed care support contract expires in February 2000.

5

CHAMPUS was established initially by the Dependents’ Medical Care Act of 1956 (P.L. 84-569) and

expanded by the Military Medical Benefits Amendments of 1966 (P.L. 89-614).

6

Beneficiaries eligible for CHAMPUS include dependents of active-duty members, retirees and their

dependents, and dependents of deceased members. They include those from the Army, Navy, Air

Force, Marines, Coast Guard, and the Commissioned Corps of the Public Health Service and of the

National Oceanic and Atmospheric Administration.

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fiscal year 1995, the CHAMPUS share is about $3.6 billion or about

24 percent.

Because of escalating costs, claims paperwork demands, and general

beneficiary dissatisfaction, DOD initiated, with congressional authority, a

series of demonstration projects in the late 1980s designed to more

effectively contain costs and improve services to beneficiaries. One of

these projects, the CHAMPUS Reform Initiative (CRI), a forerunner of

TRICARE managed care support contracts, was one of the first to

introduce managed care features to CHAMPUS. Included as part of a

triple-option health benefit were a health maintenance organization

choice, a preferred provider choice, and the existing standard CHAMPUS

choice. Managed care features introduced included enrollment, utilization

management,7

 assistance in referral to the most cost-effective providers,

and reduced paperwork.

The first CRI contract, awarded to Foundation Health Corporation,8

covered California and Hawaii. Foundation delivered services under this

contract between August 1988 and January 1994. Before the contract

expired, DOD began a new competitively bid procurement for California

and Hawaii that resulted in DOD’s awarding a 5-1/2 year (1 half-year plus 5

option years), $3.5 billion contract to Aetna Government Health Plans, Inc.

in July 1993. Because a bid protest was sustained on this procurement, it

was recompeted, although Aetna’s contract was allowed to proceed until a

new one was awarded.

In late 1993, in response to requirements in DOD’s Appropriation Act for

Fiscal Year 1994, the Department announced plans for restructuring the

entire MHSS program, including CHAMPUS. The restructured program, known

as TRICARE, is to be completely implemented by May 1997. To implement

and administer TRICARE, DOD reorganized the military delivery system

into 12 new, joint-Service regions. DOD also created a new administrative

organization featuring lead agents in each region to coordinate among the

three Services and monitor health care delivery.

For medical care the military medical facilities cannot provide, seven

managed care support contracts will be awarded to civilian health care

7

Utilization management involves the use of such techniques as preadmission hospital certification,

concurrent and retrospective reviews, and case management to determine the appropriateness,

timeliness, and medical necessity of an individual’s care.

8

Foundation later created a subsidiary to administer this contract called Foundation Health Federal

Services, Inc.

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companies covering DOD’s 12 health care regions. These contracts, much

like the former CRI contracts, retain the fixed-price, at-risk,9

 and

triple-option health benefit that CRI featured. An important difference,

however, is the addition of lead agent requirements—tasks to be

performed by the contractor specific to military medical facilities in the

region. Figure 1 shows the regions covered by the seven contracts.

Figure 1: Managed Care Support Contract Regions

11

9,

10,

12

&

7, 8

6

1

2, 5

3, 4

Note: Managed care support for Alaska will be addressed separately from these regions.

9

At-risk features of the contract provide for the sharing of gains and losses between the contractor and

the government. For example, contractors are at risk for health care cost overruns up to 1 percent of

health care prices. Beyond that, the contractor and the government share in losses until an amount

prepledged by the contractor, called contractor equity, is totally depleted, at which time the

government assumes full responsibility for further losses.

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Since the December 1993 decision sustaining the protest of the

California/Hawaii (regions 9, 10, and 12) contract award, three managed

care support contracts have been awarded and all have been protested.

Also, a protest was filed on the solicitations for the California/Hawaii

recompetition and that for Washington/Oregon (region 11).10 GAO has

denied the protests on these solicitations and the Washington/Oregon

contract award11 and has yet to decide on the other two award protests.

Information on the procurements awarded to date appears in table 1.

Table 1: Managed Care Support

Contracts Awarded Since 1993

Region

Date of

contract

award Awardee

Amount

of award

Number

of final

offerors

Protest

status

11 9/94 Foundation

Health

Federal

Services,

Inc.

$650

million

3 Denied

9,10, and 12 3/95 QualMed,

Inc.a

$2.5

billion

4 Pending

6 4/95 Foundation

Health

Federal

Services,

Inc.

$1.8

billion

5 Pending

aThe recompeted contract award stemming from the successful protest of the first

California/Hawaii contract award.

For more information on the transition to managed care support contracts

and the offerors submitting proposals for these contracts, see appendixes

II and III, respectively.

The Office of CHAMPUS, an organization within the Office of the Assistant

Secretary of Defense (Health Affairs), administers the procurements. The

procurement process involves the issuance of a request for proposal (RFP)

that has the detailed specifications and instructions offerors are to follow

in responding. Offerors are required to submit both a technical and a

business (price) proposal.

Upon receipt of the offerors’ proposals, a Source Selection Evaluation

Board (SSEB) evaluates the technical proposals according to detailed

10QualMed, Inc., B-254397.13; B-257184, July 20, 1994, 94-2 CPD ¶33.

11QualMed, Inc., B-257184.2, Jan. 27, 1995, 95-1 CPD ¶94.

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evaluation criteria, and a Business Proposal Evaluation Team (BPET)

evaluates the proposed prices. A Source Selection Advisory Council (SSAC)

reviews the work of the two boards and consults with them. Following

discussions with offerors about weaknesses and deficiencies in their

proposals, DOD requests offerors to submit “best and final offers.” The two

boards again evaluate changes to proposals, complete final scoring, and

prepare reports on the evaluations. A senior executive designated as the

source selection authority uses these reports in selecting the winning

offeror. As part of the evaluation process, evaluators are asked to identify

ways to improve the process. For a complete description of the

procurement process and the tasks performed, see appendix IV.

Problems Identified

During Award

Protests

GAO sustained the protest of the July 1993 California/Hawaii award

primarily because DOD failed to evaluate offerors’ proposals according to

the RFP criteria. The RFP provided that each offeror’s proposed approach to

attaining health care cost estimates would be individually evaluated.

However, in evaluating the proposals, DOD evaluators rejected the

contractors’ cost estimates and assigned the same government cost

estimates to all offerors’ proposals. By so doing, the BPET did not consider

offerors’ individual cost-containment approaches, such as their utilization

management approaches, upon which the success of managed care

contracting to contain costs largely rests. In effect, the evaluators’ action

made this part of the evaluation methodology meaningless.

Also, the process did not allow the price evaluators to discuss with the

technical evaluators possible inconsistencies between the price and

technical proposals nor otherwise discuss the technical information that

supported the price estimates. Such discussions may have highlighted the

need to analyze offerors’ individual cost containment approaches.

During the protest of the Washington/Oregon award, the offeror protested

nearly a dozen of DOD’s technical ratings of its proposal. In its decision,

GAO recognized that DOD made mathematical errors that affected scoring,

but these errors were not limited to the protesting offeror, and correcting

them did not affect the procurement’s final outcome.

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DOD Actions to

Improve and Help

Ensure Fairness of the

Procurement Process

DOD has made several changes that should improve future procurements.

Major changes due to the protest experiences include (1) revising the price

evaluation methodology and providing offerors more complete RFP

information on how the methodology will be used in evaluating bid prices,

(2) adding requirements for discussions between price and technical

evaluation boards, and (3) revising both the requirements and the

technical evaluation criteria for utilization management. Also, DOD is

developing a computer spreadsheet to automate the technical scoring

process and, thus, address mistakes made during the Washington/Oregon

evaluation process.

DOD’s other changes include providing more training for proposal

evaluators, colocating the technical evaluation boards, and providing more

feedback to offerors on their proposals’ weaknesses. A final change

requires that DOD approve the bid price evaluation methodology before

evaluating prices.

Price Evaluation

Methodology Revised

DOD significantly changed its methodology for evaluating the health care

cost portion of the offerors’ business proposals. While details of the new

methodology are procurement sensitive and cannot be disclosed, the

changes essentially involve evaluating the reasonableness of the offerors’

estimates for cost factors over which the contractor has some control,

such as utilization management and provider discounts. The evaluation

includes comparing the offerors’ cost estimates with the government’s

estimates and considering the offerors’ justification and documentation.

Also, DOD rewrote portions of the RFP to provide more explicit information

to offerors so they can better understand the new evaluation methodology

and the factors to be considered in evaluating prices. This more complete

guidance should facilitate offerors’ ability to furnish the information DOD

needs to evaluate their proposals.

Discussions Between Price

and Technical Evaluators

DOD instituted a process requiring discussions between the technical and

the price evaluators. Previously, discussions between the two boards were

prohibited, and knowledge possessed about offerors’ proposals by one

group was not shared with the other. Under the new procedures, the SSEB

briefs the BPET and responds to BPET questions on offerors’ proposed

technical approaches. This should enable the BPET to better judge whether

offerors can achieve the health care costs that they have bid. Conversely,

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the SSEB can request information from the BPET to assist in its technical

evaluation.

Utilization Management

Requirements Revised

DOD significantly revised its RFP utilization management requirements and

utilization management criteria used in evaluating offerors’ proposals. DOD

incorporated these revisions in the solicitations for the then ongoing

Washington/Oregon procurement as well as the post-protest recompetition

of the California/Hawaii procurement. The revised utilization management

requirements place additional responsibilities on the contractor and

establish specific utilization management procedures. Also, while the

previous evaluation criteria basically involved checking whether offerors’

proposed approaches addressed requirements, the revised criteria require

evaluators to judge the effectiveness of the cost-containment approaches.

Other Procurement

Improvements

Among other DOD improvements is the provision of more training for

evaluators and team leaders who oversee the evaluation of specific tasks.

Training for the California/Hawaii evaluators had been limited to about

one-half day, but training on more recent procurements has been

increased to nearly 1 week. The new training includes more detailed

information on the (1) procurement cycle, (2) technical and price

evaluation boards, (3) evaluation of proposals, and (4) use of personal

computers to record evaluation information.

Another change involves colocating at Aurora, Colorado, the SSEB staff

who had been split between Aurora and Rosslyn, Virginia. SSEB members

evaluating managed care tasks were located in Rosslyn, and those

evaluating claims processing and related tasks were in Aurora. The dual

locations caused the board chair to travel frequently to the Rosslyn

location to review work and provide guidance to board members there.

Also, DOD lost time awaiting information arriving from the Rosslyn site to

Aurora and retyping and reformatting information submitted from the

Rosslyn site. More significantly, some rating procedures differed between

the two locations.

A further change in the process is that DOD, along with providing offerors

the questions evaluators raise on their proposals, is also providing

information on proposal weaknesses. As a result, offerors are better

assured that they are addressing the specific concerns that prompted the

questions. Offerors told us, moreover, that DOD is now providing them

more information about their proposals, responding more quickly to their

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questions, and providing more complete information after initial

evaluations and debriefings following contract award.

A final procedural change is that DOD now formally approves the price

evaluation methodology prepared by a contractor before the proposal

evaluation begins. On the California/Hawaii procurement awarded to

Aetna, DOD had not approved the evaluation methodology before the

proposals had been evaluated. The methodology had been prepared by a

consultant who submitted it to DOD for review, received no formal

response, and proceeded to use it to evaluate proposals. Late in this

process, DOD determined that the methodology improperly skewed the

evaluation and ordered it changed at that time. DOD’s new procedure

eliminates the possibility of changing the evaluation methodology during

the process, thus removing any such possible appearance of impropriety.

Remaining Problems

and Concerns

Despite DOD’s process improvements, several matters remain that concern

both those administering and those responding to the procurements. First,

unless DOD can avoid further delays in this round of procurements, it may

not meet the congressional deadline for awarding all contracts by

September 30, 1996. Also, the substantial expense that offerors incur to

participate may further limit future competition. Also, the specificity of

solicitation requirements may work against offerors proposing innovative,

cost-saving managed care techniques. Further, by reducing the length of

transition periods, DOD has introduced significant risk that all the tasks

needed to deliver health care will not be completed on time. Finally, DOD

needs to better ensure that prospective evaluators are properly qualified.

Lengthy Procurements

Jeopardize Meeting

Congressional Award

Deadline

For each of the four contracts awarded thus far, the procurement lengths,

on average, have been 18 months or more than twice as long as originally

planned. Figure 2 compares the planned and actual procurement times for

the contracts.

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Figure 2: Planned Versus Actual Procurement Times

Months

0

5

10

15

20

25

Regions 9,10,12

Planned

Regions 9,10,12 Actual

Region 11 Planned

Region 11 Actual

Regions 9,10,12 Planned (Recompetition)

Regions 9,10,12 Actual (Recompetition)

Region 6 Planned

Region 6 Actual

PROCUREMENTS

Evaluation Period

Solicitation Period

Note: The solicitation period for region 11’s actual procurement time includes both the initial

solicitation period plus an additional period for a major amendment that resulted in offerors’

submitting completely new proposals.

If the remaining procurements encounter similar delays, DOD will have

difficulty in meeting the congressional mandate for awarding all contracts

by September 30, 1996. The current schedule allows about 1 month of

slippage for the remaining procurements to have all contracts awarded on

time.

A primary cause of delays has been the many changes DOD has made to

solicitation requirements. For example, as shown in figure 3, the

California/Hawaii (regions 9, 10, and 12) recompetition procurement had

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22 RFP amendments, and the Washington/Oregon (region 11) procurement

had 15 amendments.

Figure 3: Number of RFP Amendments

Issued on DOD Managed Care

Procurements

Number of Amendments

0

5

10

15

20

25

Regions 9,10,12

Region 11

Regions 9,10,12

(Recompetition)

Region 6

Regions 3 & 4

Managed Care Support Procurements

Note: The regions 3 and 4 procurement is ongoing and more amendments could be added.

Some of the changes resulted from such new requirements as the lead

agent concept and a new uniform benefits package12 to replace previous

beneficiary cost-sharing requirements that differed across the country.

Other changes resulted from major revisions to such existing requirements

as utilization management. When such changes occur, extra time is needed

to issue solicitation amendments, for offerors to analyze the changes and

revise their proposals, and often for evaluation boards to review the

changes. Offerors have expressed extreme displeasure about the

12Section 731 of the National Defense Authorization Act for fiscal year 1994 required the establishment

of a health maintenance organization benefit option to provide reduced out-of-pocket costs and a

benefit structure that is as uniform as possible nationwide. This benefit will be included in all DOD’s

future managed health care initiatives.

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continually changing program requirements that make it more costly for

them to participate in the protracted procurements.

On the other hand, procurements have been delayed to allow offerors to

correct errors in their cost proposals and as a result of bid protests. While

these actions have not caused major delays so far, because DOD normally

can proceed with the procurements, protests can add additional time to

the overall schedule.

DOD has acted to shorten the procurement process by increasing the size of

evaluation boards and changing the way proposals are evaluated. The

enlarged boards can divide evaluation tasks among more members, and

members have narrower spans of review responsibility.

Regarding RFP changes, some offerors maintain that DOD did not

adequately plan the program before beginning the procurements. While

DOD officials acknowledge planning problems, particularly for the lead

agent concept, they told us that RFP changes will become less of a problem

as their experience with the managed care support contracts grows. Also,

DOD officials are concerned that if needed changes are not added before

contract award, it will be more costly to implement them after award in

the form of contract change orders when competition no longer exists.

Currently, the administration is strongly encouraging simplifying federal

procurements by, among other things, adopting commercial best practices

to reduce costs and expedite service delivery. DOD recognizes that its

process is extremely costly, complex, and cumbersome for all affected and

acknowledges the need to simplify and shorten it. DOD can take advantage

of the administration initiative’s momentum and seek ways to simplify and

streamline its health care procurements by considering, among other

things, the private sector’s best practices.

Costs to Participate May

Narrow Future

Competition

Because the procurements are broad, complex, lengthy, and involve huge

sums of money, offerors incur substantial expense to participate. As a

result, participation thus far has been limited to large companies with vast

resources. For example, the California/Hawaii procurement required that

offerors be in a position to risk losing a minimum of $65 million should

they incur losses during the contract’s performance. Competition is further

limited because only a small number of available subcontracting firms can

now knowledgeably process CHAMPUS claims.

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Moreover, several offerors told us that it cost them between $1 and

$3 million to develop their proposals. Planning and preparing bid

proposals and responding to amendments require them to divert their

most able people from their regular duties to work months preparing

offers. One offeror, in illustrating the procurement’s size, complexity, and

resources needed to participate, told us that its proposal consisted of

33,000 pages. The offeror told us that if it did not win a then ongoing

procurement, it would not participate again unless it could develop a

proposal for no more than $100,000. Another offeror said its firm could not

afford to continue bidding if it did not win a contract soon.

DOD incurs substantial costs as well. The evaluation process, in particular,

requires tremendous time, effort, and costs. A DOD official estimated that

54,000 hours were spent on evaluating a recent procurement. In addition

to evaluation duties, many staff must continue to perform their regular

duties. Many commonly spend weekends performing evaluation duties

involving a considerable amount of overtime expense. Further, many of

the evaluators travel from all over the country and are on travel status for

5 to 6 weeks.

DOD recognizes that in the next round of the seven regional procurements,

the number of offerors may further narrow and consist only of those who

won awards in the first round. While DOD has chosen to award large

contracts on a regional basis, it may be advisable in the next round to

consider such alternatives as awarding smaller contracts covering smaller

geographic areas, awarding to more than one offeror in a region, or

simplifying the contracts by removing the claims processing function and

awarding it separately.

Prescriptive Requirements

May Bar Innovative,

Cost-Saving Techniques

DOD’s RFP requirements are extremely specific and prescriptive because,

the Department has stated, it desires a uniform program nationwide in

which beneficiaries and providers are subject to the same requirements

and processes regardless of residence. Offerors, on the other hand,

maintain that if DOD’s RFP stated minimum requirements but emphasized

the health care outcomes desired and allowed offerors more flexibility in

devising approaches to achieve such outcomes, costs could be reduced

without adversely affecting the quality of care delivered.

In specifying its requirements, DOD has sought to ensure that beneficiaries

not be denied necessary care and that care be provided by appropriate

medical personnel in the appropriate setting. DOD’s concern has been that

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allowing contractors to use different processes and criteria might

jeopardize these ends. Offerors maintain that those objectives can be met

by allowing them more freedom to use innovative approaches, drawing on

their private-sector managed care expertise.

In comparing DOD’s managed care procurements with private-sector

procurements, private corporations interested in contracting for managed

care have far less specific requirements and normally only request general

information about offerors such as corporate background, financial

capability, health care performance, and utilization management/quality

assurance strategies. Offerors told us that DOD does not ask for the kind of

information on private-sector experience that would allow them to

adequately compare performance among offerors. Also, many

corporations use managed care consulting firms to help identify their

requirements and select awardees.

Offerors often cite utilization management as the area in which more

relaxed DOD requirements would enable them to implement equally or

more effective techniques than DOD requires but with greater cost savings.

Among the most objectionable requirements is the use of a two-level

review process for determining care appropriateness/necessity, a specific

company’s utilization management criteria, and reviewers with the same

specialty as the providing physician. DOD has maintained that its utilization

management requirements are based on its extensive review of the

literature and are reasonable, though perhaps not the most cost-effective.

Also, DOD has maintained that because the military environment differs

from the private sector, it warrants different requirements.

Nevertheless, DOD has acknowledged that offerors have some legitimate

concerns. In recent discussions, DOD told us that, while it has no plans yet,

for the next round of procurements it may begin considering ways of

making the requirements less onerous to offerors while ensuring that

beneficiaries receive adequate access to care. DOD officials said that they

may begin seeking to simplify the requirements by making them less

process and more outcome driven, while respecting, to the extent

practicable, their overall system goals.

Shortening Post-Award

Transition Creates

Significant Risk

Because of procurement delays occurring before contract award, DOD has

tried to recover lost time by reducing to 6 months its scheduled 8- to

9-month transition period during which contractors prepare to deliver

health care. But by doing so, DOD has introduced significant risk that

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contractors will not complete the many tasks needed to begin health care

delivery on time.

We have reported that DOD has experienced serious problems in the past

both with fiscal intermediary13 contractors14 and the CRI contractor15 being

unable to begin processing claims by the start work date because the

6-month transition period was too short. As a result, beneficiaries faced

considerable difficulties getting services and providers getting

reimbursement. The managed care transitions are more complex and

involved than the prior transitions.

Most offerors we contacted told us that 6 months was too short and that

about 8 months was needed to accomplish the tasks required to be ready

on time. The transition tasks include signing up network providers,

establishing service centers, hiring health care finders, preparing

information brochures, bringing the claims processing system on line,

resolving database problems, enrolling beneficiaries, and many other

tasks. Offerors also told us that even a contractor with CRI experience

would have difficulty meeting the 6-month transition requirement. DOD

contracting officials and evaluators also have expressed the same

concerns.

While DOD, in reducing the transition periods, is driven to adhere to its

individual procurement schedules and thus respond to internal and

external pressures to bring services on line, we believe the risk introduced

far outweighs the small potential time savings due to shorter transition

periods. As demonstrated in the fiscal intermediary and CRI transitions,

inadequate transition periods can overly tax contractors to the point of

failure and result in substantial additional time and expense to recover.

Evaluators’ Needed

Qualifications Not

Specified

DOD has so far selected evaluation board members in a relatively informal

way, either allowing board chairs to do so, on the basis of their knowledge

of the individuals, or military services headquarters or lead agents to do

so, on the basis of general guidelines. To date, DOD, relying on this less

formal appointee approach, has not set forth general qualification

13Private organizations under contract with DOD to pay claims for health care services provided to

beneficiaries under standard CHAMPUS. This arrangement was used before regions converted to

TRICARE and is still used where such contracts have yet to be awarded.

14CHAMPUS Has Improved Its Methods for Procuring and Monitoring Fiscal Intermediary Services to

Process Medical Claims (GAO/HRD-85-56, Aug. 23, 1985).

15Implementation of the CHAMPUS Reform Initiative (GAO/T-HRD-89-25, June 5, 1989).

Page 16 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
B-259398 

requirements for evaluators such as experience or subject area

knowledge. But, because the tasks they evaluate are so specialized and

because the boards have expanded and members are increasingly less

familiar to selecting officials, specifying evaluator qualifications—as has

been suggested by offerors and board members alike—seems prudent.

Some offerors expressed concern to us that DOD evaluators have had little

or no experience with private-sector managed care plans and thus have

difficulty distinguishing among offerors who can perform effectively in the

private sector and those who are less effective in ensuring quality care and

controlling costs. Evaluation board team leaders for recent procurements

told us that qualification requirements would be helpful to ensure that

people with appropriate experience and knowledge can adequately

evaluate specific tasks. One board member, as input to DOD’s internal

improvement process, stated that some SSEB members seemed to lack (by

their own admission) the prerequisite experience and background to serve

most effectively as subject matter experts on the SSEB. He went on to state

that, given the potential impact of these contracts in dollars and health

care service, it seems critical that only experienced evaluators be put in a

position to make the essential judgment calls inherent in the technical

review process.

On more recent procurements, DOD has requested that evaluator nominees

submit resumes to assist selection decisions and facilitate their

assignment to various tasks. While this is a step in the right direction, it

does not ensure that prospective evaluators with appropriate skills are

nominated in the first place and are selected on the basis of the requisite

qualifications.

Conclusions DOD has improved the procurement process since the protest on the

California/Hawaii award to Aetna was sustained, to the extent that

offerors can be more assured of equitable and fair treatment. While the

dollar value of the contracts will likely cause offerors to protest in the

future, DOD improvements have reduced the chance of protests being

sustained.

Despite improvements in the process, several areas of concern remain,

particularly regarding the next round of procurements. The procurement

process is extremely costly, complex, and cumbersome for all affected,

and DOD acknowledges the need to simplify it. We agree and see an

opportunity for DOD to draw upon the administration’s current initiative for

Page 17 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
B-259398 

simplifying federal procurements as it seeks ways to streamline its

processes. Further, because of the costs of participating, the number of

offerors in the next procurement round may be limited to only those who

received contracts in the first round. We think that DOD should consider

alternative procurement approaches to help preserve the competitiveness

of the process. Along with these measures, DOD needs to address whether

its solicitation requirements can be less prescriptive and still achieve their

overall health care goals.

Though DOD was driven by internal and external pressures to bring health

care services on line, we do not agree with the Department’s decision to

reduce transition times to make up for time lost in awarding the contracts.

The potential time saved by shortening transition periods, in our view,

does not justify the risk of contractors not being able to prepare to deliver

services on time. Finally, given the increasing size of the evaluation

boards, their specialized tasks, and members’ increasing lack of familiarity

to selecting officials, we believe that DOD needs to develop qualification

requirements for evaluator appointees.

Recommendations We recommend that the Secretary of Defense 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;

• 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;

• 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; and

• establish general qualification requirements for evaluator appointees.

Agency Comments In commenting on the draft report, DOD fully agreed with the first three of

our recommendations and agreed in part that qualifications for evaluation

board appointees need to be established. DOD pointed out that, while it

could improve the evaluator selection process, it now tasks lead agents

and the Services with nominating qualified individuals and the contracting

officer and board chairs with reviewing their resumes. We continue to

Page 18 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
B-259398 

believe that establishing general qualification requirements would more

appropriately equip responsible DOD officials to nominate and select the

best qualified evaluators and assign them the most suitable tasks. DOD

made other comments and suggested changes that we incorporated in the

report as appropriate. DOD’s comments are included as appendix V.

As arranged with your staff or offices, unless you announce its contents

earlier, we plan no further distribution of this report until 7 days after its

issue date. At that time, we will send copies to the Secretary of Defense;

the Director, Office of Management and Budget; and interested

congressional committees. We will also make copies available to others

upon request.

If you have any questions concerning the contents of this report, please

call me at (202) 512-7101. Other major contributors to this report are

Stephen P. Backhus and Daniel M. Brier, Assistant Directors, Donald C.

Hahn, Evaluator-in-Charge, and Robert P. Pickering and Cheryl A. Brand,

Senior Analysts.

David P. Baine

Director, Federal Health Care

 Delivery Issues

Page 19 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Contents

Letter 1

Appendix I 

Scope and

Methodology

22

Appendix II 

Transition to

TRICARE Managed

Care Support

Contracts

24

Appendix III 

Organizations

Submitting Best and

Final Proposals

27

Appendix IV 

The TRICARE

Managed Care

Support Procurement

Process

28

Issuance of the RFP 28

Evaluation of Proposals 29

Best and Final Offers 30

Preaward Survey 30

Selection of Offeror 30

Debriefing of Unsuccessful Offerors 30

Transition Period 30

Lessons Learned 30

Appendix V 

Comments From the

Department of

Defense

32

Tables Table 1: Managed Care Support Contracts Awarded Since 1993 6

Table II.1: Managed Care Support Contracts Awarded Since 1993 26

Page 20 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Contents

Table II.2: Contract Award Schedule for Managed Care Support

Contracts

26

Figures Figure 1: Managed Care Support Contract Regions 5

Figure 2: Planned Versus Actual Procurement Times 11

Figure 3: Number of RFP Amendments Issued on DOD Managed

Care Procurements

12

Abbreviations

BPET Business Proposal Evaluation Team

CHAMPUS Civilian Health and Medical Program of the Uniformed

Services

CRI CHAMPUS Reform Initiative

DOD Department of Defense

MHSS Military Health Services System

RFP request for proposal

SSAC Source Selection Advisory Council

SSEB Source Selection Evaluation Board

Page 21 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix I 

Scope and Methodology

We examined in detail the complete California/Hawaii procurement file for

the contract that was awarded to Aetna as well as selected portions of

more recent procurements’ files. These files were from the

California/Hawaii recompetition procurement, the Washington/Oregon

procurement, and the region 6 procurement. We also reviewed agency files

and discussed with agency officials various aspects of the procurement

process.

Also, we reviewed pertinent regulations governing the procurement

processes in the Federal Acquisition Regulation, the Defense Federal

Acquisition Regulation Supplement, and the Office of CHAMPUS Acquisition

Manual. We held discussions with contract management personnel who

conduct the procurements, officials who develop solicitation

requirements, staff involved in the evaluations, and agency legal staff who

ensure that the procurements are conducted according to applicable laws

and regulations and in an equitable manner.

Our review of procurement documents included (1) documents related to

the planning of the CHAMPUS Reform Initiative and managed care support

procurements, (2) procurement schedules showing planned and actual

dates, (3) RFPs and amendments to the RFPs, (4) questions raised by

offerors and agency responses, (5) documents relating to evaluation

methodology, (6) evaluation criteria and scoring sheets, (7) reports of

discussions with offerors, (8) internal reports, (9) reports of the evaluation

boards, (10) selection reports, and (11) preaward survey reports.

Because of agency concerns about compromising future procurements, we

are not presenting specific information on the evaluation methodology or

on the scoring and weighting systems used. Nor are we presenting

information on the criteria used in the rating and scoring process. We

examined proposals of individual offerors to only a limited extent and are

not providing information on these proposals because it is proprietary.

We interviewed the Source Selection Evaluation Board, Business Proposal

Evaluation Team (BPET), and Source Selection Advisory Council chairmen

involved in recent procurements as well as the selecting officials. We also

interviewed several team leaders involved in evaluating the technical

proposals of the California/Hawaii recompetition procurement and several

members of the BPET. In addition, to assess the qualifications of evaluation

members, we reviewed their resumes.

Page 22 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix I 

Scope and Methodology

In conducting our review, we examined GAO bid protest decisions

involving these managed care procurements and coordinated our efforts

with GAO’s Office of General Counsel, which handles these bid protests. In

addition to the protest decisions, we reviewed much of the supporting

documentation for decisions, including the offerors’ protests, agency

reports, offerors’ comments on the agency reports, videotapes of the

protest hearings, and post-hearing comments.

To obtain information on their experiences with DOD managed care

procurements and their views of the overall procurement process and the

solicitation requirements, we interviewed officials from four offerors who

had participated in recent procurements. The officials interviewed were

from Aetna Government Health Plans, Inc., California Care Health Plan

(Blue Cross of California), Foundation Health Federal Services, Inc., and

QualMed, Inc. We also interviewed the lead agents and their staffs for

regions 9 and 11 to obtain similar information.

Our work was conducted at the Office of CHAMPUS, Aurora, Colorado, and

at the Office of the Assistant Secretary of Defense (Health Affairs),

Washington, D.C. In addition, we visited the offerors at their headquarters

offices and the lead agents at their military treatment facilities.

We conducted our review between March 1994 and June 1995 in

accordance with generally accepted government auditing standards.

Page 23 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix II 

Transition to TRICARE Managed Care

Support Contracts

CHAMPUS provides funding for health care services from civilian providers

for uniformed services beneficiaries.16 CHAMPUS began in 1956 and was

expanded in 1966 to include additional classes of beneficiaries and more

comprehensive benefits.17 These beneficiaries eligible for CHAMPUS include

dependents of active-duty members, retirees and their dependents, and

dependents of deceased members. CHAMPUS has approximately 5.7 million

eligible beneficiaries and has traditionally functioned much like a

fee-for-service insurance program. Beneficiaries are free to select

providers and are required to pay deductibles and copayments, but, unlike

with most insurance programs, they are not required to pay premiums.

CHAMPUS is part of the overall Military Health Services System (MHSS) that

serves active- and nonactive-duty members and includes 127 hospitals and

over 500 clinics worldwide. CHAMPUS beneficiaries can also obtain medical

care services in military medical facilities on a space-available basis. In

fiscal year 1995, the MHSS was budgeted at over $15 billion, of which

$3.6 billion, or about 24 percent, was budgeted for CHAMPUS.

Because of escalating costs, claims paperwork demands, and general

beneficiary dissatisfaction, DOD initiated in the late 1980s, with

congressional authority, a series of demonstration projects designed to

more effectively contain costs and improve services to beneficiaries. One

of these, known as the CHAMPUS Reform Initiative (CRI), was designed by

DOD in conjunction with a consulting company. Under CRI, a contractor

provided both health care and administrative-related services, including

claims processing.

The CRI project was one of the first to introduce managed care features to

the CHAMPUS program. Beneficiaries under CRI were offered three

choices—a health maintenance organization-like option called CHAMPUS

Prime that required enrollment and offered enhanced benefits and

low-cost shares, a preferred provider organization-like option called

CHAMPUS Extra that required use of network providers in exchange for

lower cost shares, and the standard CHAMPUS option that continued the

freedom of choice in selecting providers and higher cost shares and

deductibles. Other features of CRI included use of health care finders for

referrals and the application of utilization management. The project also

16Uniformed service beneficiaries include those from the Air Force, Army, Marine Corps, Navy, Coast

Guard, and Commissioned Corps of the Public Health Service and the National Oceanic and

Atmospheric Administration.

17Dependents’ Medical Care Act of 1956 (P.L. 84-569) and Military Medical Benefits Amendments of

1966 (P.L. 89-614).

Page 24 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix II 

Transition to TRICARE Managed Care

Support Contracts

contained resource sharing features whereby the contractor, to reduce

overall costs, could provide staff or other resources to military treatment

facilities to treat beneficiaries in these facilities.

Although DOD’s initial intent under CRI was to award three competitively

bid contracts covering six states, only one bid—made by Foundation

Health Corporation—covering California/Hawaii was received.18 Because

of the lack of competition, DOD ended up awarding a negotiated

fixed-price, at-risk contract with price adjustment features to Foundation.

Although designated as fixed price, the contract contained provisions for

sharing risks between the contractor and the government. Foundation

delivered services under this contract between August 1988 and

January 1994.

Before the contract expired, DOD began a new procurement for the CRI

California/Hawaii contract that resulted in the competition’s narrowing

down to four bidders. In July 1993, DOD awarded a 5-1/2 year (1 half-year

plus 5 option years), $3.5 billion contract to Aetna Government Health

Plans, with health care services beginning on February 1, 1994. Because a

bid protest was sustained on this procurement, this contract was

recompeted, although Aetna was allowed to proceed with its contract until

a new contract was awarded.

In late 1993, in response to requirements in the DOD Appropriation Act for

Fiscal Year 1994, the Department announced plans for implementing a

nationwide managed care program for the MHSS that would be completely

implemented by May 1997. Under this program, known as TRICARE, the

United States is divided into 12 health care regions. An administrative

organization, the lead agent, is designated for each region and coordinates

the health care needs of all military treatment facilities in the region.

Under TRICARE, seven managed care support contracts will be awarded

covering DOD’s 12 health care regions. DOD estimates that over a 5-year

period these contracts will cost about $17 billion. The TRICARE managed

care support contracts retain the fixed-price, at-risk, and triple-option

health benefit features of CRI as well as many other CRI features. An

important change, however, involves including in the contract tasks to be

performed by the contractor that are specific to military treatment

facilities in the regions, in addition to the standard requirements.

18Foundation later created a subsidiary to administer this contract called Foundation Health Federal

Services, Inc.

Page 25 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix II 

Transition to TRICARE Managed Care

Support Contracts

Since the announcement of DOD’s plan for implementing managed care

contracts nationwide, three contracts have been awarded, as shown in

table II.1.

Table II.1: Managed Care Support

Contracts Awarded Since 1993

Region

Date of

contract

award Awardee

Amount

of

award

Number of

final

offerors

Protest

status

11 9/94 Foundation

Health

Federal

Services,

Inc.

$650

million

3 Denied

9,10, and 12 3/95 QualMed,

Inc.a

$2.5

billion

4 Pending

6 4/95 Foundation

Health

Federal

Services,

Inc.

$1.8

billion

5 Pending

aThe recompeted contract award stemming from the successful protest of the first

California/Hawaii contract award.

The current schedule for awarding the remaining four contracts appears in

table II.2.

Table II.2: Contract Award Schedule

for Managed Care Support Contracts

Region(s)

RFP issue date

(actual or

planned)

Planned award

date

Scheduled health

care delivery date

3,4 8/1/94 third quarter 1995 5/1/96

7,8 3/24/95 first quarter 1996 11/1/96

1 9/15/95 third quarter 1996 5/1/97

2,5 9/15/95 third quarter 1996 5/1/97

Page 26 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix III 

Organizations Submitting Best and Final

Proposals

Region

Organizations submitting best and final

proposals

9,10, and 12 1. Aetna Government Health Plans, Inc.

2. BCC/PHP Managed Health Company

3. Foundation Health Federal Services, Inc.

4. QualMed, Inc.

11 1. CaliforniaCare Health Plans (Blue Cross

 of California)

2. Foundation Health Federal Services, Inc.

3. QualMed, Inc.

9,10, and 12 (recompetition) 1. Foundation Health Federal Services, Inc.

2. Aetna Government Health Plans, Inc.

3. Blue Cross of California

4. QualMed, Inc.

6 1. Aetna Government Health Plans, Inc.

2. Blue Cross Blue Shield of Texas

3. Foundation Health Federal Services, Inc.

4. Humana Military Health Care Services,

 Inc.

5. Prudential Uniformed Services

 Administrator

Page 27 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix IV 

The TRICARE Managed Care Support

Procurement Process

The Office of CHAMPUS, an organization within the Office of the Assistant

Secretary of Defense (Health Affairs) conducts the managed care support

procurements. In conducting these procurements, DOD must follow the

requirements in the Federal Acquisition Regulation and the Defense

Federal Acquisition Regulation Supplement. In addition, the Office of

CHAMPUS Acquisition Manual provides further guidance for conducting

procurements. The major steps in the procurement process are described

in this appendix.

Issuance of the RFP The request for proposal (RFP) contains the detailed specifications,

instructions to offerors in responding to the RFP, and evaluation factors

that DOD will consider in making the award. The RFP requires that offerors

submit both a technical and a business (price) proposal, and offerors are

told that the technical content will account for 60 percent of the scoring

weight and the price, 40 percent.

In preparing the technical proposal, offerors are required to address 13

different tasks: (1) health care services; (2) contractor responsibilities for

coordination and interface with the lead agent and military treatment

facilities; (3) health care providers’ organization, operations, and

maintenance; (4) enrollment and beneficiary services; (5) claims

processing; (6) program integrity; (7) fiscal management and controls;

(8) management; (9) support services; (10) automatic data processing;

(11) contingencies for mobilization; (12) start-up and transitions; and

(13) resource support program.

Experience and performance are other evaluation factors. Offerors must

describe the approaches they would take in accomplishing these tasks.

While offerors are not told the specific weights assigned the individual

tasks, they are told their order of importance.

In preparing the business proposal, offerors must provide support for both

their administrative and health care prices and justify their health care

prices by addressing seven cost factors over which the offerors have some

control: (1) HMO option penetration rates (enrollment), (2) utilization

management, (3) provider discounts, (4) coordination of

benefits/third-party liability, (5) resource sharing savings, (6) resource

sharing expenditures, and (7) enrollment fee revenues. Offerors must also

provide trend data for costs that the offeror is considered likely to have

little or no control over such as price inflation. In evaluating proposals,

since these factors are considered uncontrollable, the government

Page 28 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix IV 

The TRICARE Managed Care Support

Procurement Process

substitutes its own estimates for the offerors’ so that all offerors are

treated equally. Offerors must also pledge an equity amount to absorb

losses if health care costs exceed the amount proposed. In evaluating

proposals, DOD determines whether offerors have the financial resources

to meet this pledge, and the equity amount is also applied as part of the

methodology in evaluating prices.

Before the proposals’ due date, offerors are free to submit questions on

clarification of requirements or further program information. Offerors can

continue to submit questions up until the close of discussions before best

and final offers are due.

Evaluation of

Proposals

Upon receipt of the offerors’ proposals, a Source Selection Evaluation

Board (SSEB) evaluates the technical proposals according to detailed

evaluation criteria. The board size depends on the number of offerors and,

in recent procurements, has numbered about 80 people. Board members

are selected from offices such as the Assistant Secretary of Defense

(Health Affairs), the military Surgeons General, the military treatment

facilities, and the Office of CHAMPUS. A chairperson heads the board, which

is divided into teams to review the various tasks and subtasks. The

worksheets used in these evaluations contain both the specifications and

the criteria upon which to base a judgment.

A Business Proposal Evaluation Team (BPET) evaluates the business

proposals. A chairperson also heads this team, which comprises about 10

people, divided between a team that primarily evaluates administrative

costs and another that primarily evaluates health service costs. The team

evaluating administrative costs is supported by the Defense Contract Audit

Agency, which performs a cost analysis of the administrative costs bid.

The team evaluating health service costs consists primarily of consultants,

some of whom are actuaries. In their evaluation, they use specially

developed criteria as well as a government-developed cost estimate.

Another consultant ensures the financial viability of the offerors, including

whether they have the fiscal capacity to absorb the amount of equity

offered, which would be at risk if losses were to be incurred under the

contract.

A Source Selection Advisory Council (SSAC) is an oversight board that

reviews the work of the SSEB and BPET and provides consultation advice to

the two teams. The SSAC comprises about six executive-level personnel.

Page 29 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix IV 

The TRICARE Managed Care Support

Procurement Process

Best and Final Offers DOD does not normally award a contract after the initial evaluations,

although nothing precludes an award at that time. Instead, DOD notifies

offerors in writing of weaknesses and deficiencies identified in the initial

evaluation and prepares questions relating to them. This gives the offerors

an opportunity to correct the weaknesses and deficiencies and improve

their proposals. In addition to the questions provided offerors, DOD holds

face-to-face discussions to clarify and resolve any outstanding issues. DOD

then requests best and final offers, and offerors submit their revised

proposals, including any desired price revisions.

Upon receipt of the best and final offers, the SSEB and BPET evaluate

revisions to the initial proposals, and the SSAC reviews the work of the two

boards. DOD then completes final scoring and prepares reports of the

evaluations.

Preaward Survey DOD can conduct preaward surveys before award if outstanding issues

remain to be resolved. This survey can include an on-site visit to an offeror

or subcontractor.

Selection of Offeror A senior official, designated as the Source Selection Authority, selects the

winning offeror using reports prepared by the SSEB, BPET, and SSAC. The

official prepares a written report justifying the final selection.

Debriefing of

Unsuccessful Offerors

Following selection of the winning offeror, unsuccessful offerors can learn

why they were not selected. Offerors are individually told of the

deficiencies and weaknesses in their proposals. This can serve as the basis

for preparing improved proposals for subsequent procurements.

Transition Period The period between contract award and the start of health care delivery is

referred to as the transition period. During this period, the contractor must

perform many tasks, including assembling a provider network,

establishing service centers, getting the claims processing system

operational, and beginning the process of enrolling beneficiaries into the

HMO-like option.

Lessons Learned Throughout the evaluation process, evaluators are requested, as part of the

“lessons learned” process, to identify problems or suggest potential

Page 30 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix IV 

The TRICARE Managed Care Support

Procurement Process

changes to improve future procurements. The lessons learned can be as

minor as correcting specification references or as major as changing

evaluation procedures.

Page 31 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix V 

Comments From the Department of Defense

Page 32 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix V 

Comments From the Department of Defense

Now on p. 19.

Now on p. 19.

Page 33 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
Appendix V 

Comments From the Department of Defense

Now on p. 19.

Now on p. 19.

(101450) Page 34 GAO/HEHS-95-142 TRICARE Improvements and Residual Problems
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