DEFENSE HEALTH 

CARE

Department of 

Defense Needs a 

Strategic Approach to 

Contracting for Health 

Care Professionals

Report to Congressional Committees

May 2013

GAO-13-322

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-322, a report to 

congressional committees

May 2013

DEFENSE HEALTH CARE

Department of Defense Needs a Strategic Approach 

to Contracting for Health Care Professionals

Why GAO Did This Study

DOD operates a large and complex 

health care system that employs more 

than 150,000 military, civilian, and 

contract personnel working in military 

treatment facilities. Each military 

department operates its own facilities, 

and contracts separately for health 

care professionals to supplement care 

provided within these facilities. In fiscal 

year 2011, these contracts totaled 

$1.14 billion.

In the National Defense Authorization 

Act for Fiscal Year 2012, Congress 

mandated that GAO review the military 

departments’ acquisition of health care 

professional services. This report 

examines (1) the contracting practices 

used by the departments and their cost 

effectiveness; (2) the extent to which 

the departments consolidate health 

care staffing requirements; (3) the 

percentage and associated costs of 

contract health care professionals 

working at on-base facilities versus offbase; (4) the training requirements for 

and experience of medical services 

contracting personnel; and (5) the 

extent to which the departments’ 

policies address legislated quality 

standards for contract civilian health 

care professionals and for staffing 

companies that provide these 

professionals. To conduct this review, 

GAO reviewed military health care 

policies, analyzed DOD’s fiscal year 

2011 procurement and staffing data, 

and interviewed DOD military health 

system officials.

What GAO Recommends

GAO recommends that the Secretary 

of Defense develop a DOD-wide 

strategic approach to contracting for 

health care professionals. DOD 

concurred with the recommendation.

What GAO Found

The military departments—the Army, Navy, and Air Force—generally use 

competition and fixed-price contracts when contracting for medical professionals. 

These practices can provide lower prices or reduced risk for the government. The 

military departments use a number of contract arrangements, including contracts 

awarded to multiple health care staffing companies, for health care professionals. 

Military department analyses indicate that multiple-award contracts result in lower 

prices compared to other contract arrangements. 

The Department of Defense (DOD) does not have a consolidated agency-wide 

acquisition strategy for medical services. In the absence of such a strategy, 

contracting for health care professionals is largely fragmented. For example, the 

military departments had not consolidated their staffing requirements by 

developing joint contracts beyond a limited number of instances amounting to 

about 8 percent of the fiscal year 2011 spending on health care professionals. 

The departments have made efforts to use multiple-award contracts to 

consolidate intraservice staffing requirements, but GAO identified several 

instances where multiple task orders were placed for the same type of provider in 

the same area or facility. A more consolidated strategic sourcing strategy could 

allow DOD to acquire medical services in a more cost-effective way. 

Nearly all of the military departments’ 11,253 contract health care 

professionals—96 percent—worked in 114 on-base military treatment facilities in 

fiscal year 2011, while the remaining 4 percent worked in 8 off-base clinics. The 

costs associated with the contracted health care services provided at on-base 

facilities are not comparable to such costs at off-base facilities for a variety of 

reasons. For example, some Military Health System cost accounting data have 

been characterized as unreliable. In addition, according to DOD officials, labor 

categories, labor costs, and full time equivalent calculations all vary by military 

department and in some cases by facility, contract, or geographic location, 

making a cost comparison problematic. 

DOD medical services contracting personnel are subject to DOD-wide training 

requirements. Consistent with DOD-wide training for all its contracting officers, 

DOD does not require health care contracting officers to have specialized training 

or experience. The required training provides a foundation for career field 

knowledge and is not targeted to specific types of acquisitions, including 

contracts for health care professionals. Health care experience among 

contracting personnel varied by location. Air Force contracting officers are not 

typically dedicated to medical services contracting, unlike their counterparts in 

the Army and Navy. The military departments provide contracting officers’ 

representatives, who provide contract oversight, with specialized training in 

contracting for health care. 

GAO found that each of the departments has policies or procedures in place that 

generally address most of the legislated quality standards enacted in 2007 for 

contract health care professionals and the staffing companies that provide them. 

However, DOD did not require the military departments to use consistent quality 

standards in response to this legislation because DOD officials believed that the 

departments were already applying these standards as part of their contracting 

processes.

View GAO-13-322. For more information, 

contact William T. Woods at (202) 512-4841 or 

WoodsW@gao.gov.
Page i GAO-13-322 Defense Health Care

Letter 1 

Background 4

DOD Generally Uses Competition, Fixed Prices, and MultipleAward Contracts When Acquiring Medical Services 10

Consolidation of Staffing Requirements Is Limited in the Absence 

of a DOD-wide Acquisition Strategy 16

Almost All Contract Health Care Professionals Work in On-Base 

Military Treatment Facilities 22

DOD Has Agency-wide Training Requirements for Contracting 

Personnel, and Health Care Experience Varies 26

The Military Departments’ Existing Policies and Procedures 

Generally Address Legislated Quality Standards, but DOD Did 

Not Require Consistency 31

Conclusions 34

Recommendation for Executive Action 35

Agency Comments 35

Appendix I Scope and Methodology 37

Appendix II Interactive Graphic Information for the Location of On-Base 

MTFs and the Number of FTEs at Each Location 42

Appendix III Military Treatment Facilities and Total Contracted Full-Time 

Equivalents (FTE) by Military Department 43

Appendix IV The Joint Commission’s Health Care Staffing Services 

Standards, 2011 47

Appendix V Comments from the Department of Defense 48

Appendix VI GAO Contact and Staff Acknowledgments 50

Contents 
Page ii GAO-13-322 Defense Health Care

Tables

Table 1: Selected Medical Services Contracting Arrangements 9

Table 2: Obligations and Percentage of Obligations for Competed 

Contracts for Direct Health Care Medical Services, Fiscal 

Year 2011 11

Table 3: Obligations and Percentage of Obligations for Fixed-Price 

and Non-Fixed-Price Contracts for Direct Care Medical 

Services, Fiscal Year 2011 12

Table 4: Number and Percentage of DOD Contract Health Care 

Professionals at Off-Base Facilities in Fiscal Year 2011, by 

Military Department 24

Table 5: Training Provided to Contracting Officer’s Representatives 

(COR) by Military Department 29

Figures

Figure 1: DOD Health Care Budget and Amounts Spent on 

Contracted Medical Services in Fiscal Year 2011 5

Figure 2: Governance Structure of the Military Health System As of 

April 2012 6

Figure 3: Location of On-base Military Treatment Facilities and the 

Number of Full-time Equivalents at Each Location 8

Figure 4: DOD’s Fiscal Year 2011 Obligations for Health Care 

Professionals by Contract Arrangement 13

Figure 5: Number of Full-Time Equivalent Health Care 

Professionals by Military Department and the Joint Task 

Force National Capital Region Medical Command, Fiscal 

Year 2011 23
Page iii GAO-13-322 Defense Health Care

Abbreviations

BRAC Base Realignment and Closure 

COR contracting officer’s representative 

CSA clinical support agreement 

DAU Defense Acquisition University 

DAWIA Defense Acquisition Workforce Improvement Act

DOD Department of Defense 

FAR Federal Acquisition Regulation 

FPDS-NG Federal Procurement Data System-Next 

 Generation 

FTE full-time equivalent 

ISA individual set-aside 

JTF CapMed Joint Task Force National Capital Region Medical

MTF military treatment facility 

NDAA for FY 2007 National Defense Authorization Act for Fiscal Year

 2007 

NDAA for FY 2012 National Defense Authorization Act for Fiscal Year 

 2012 

TMA TRICARE Management Activity

VA Department of Veterans Affairs

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Page 1 GAO-13-322 Defense Health Care

441 G St. N.W.

Washington, DC 20548

May 28, 2013

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Department of Defense (DOD) operates a large and complex health 

care system that employs more than 150,000 military, civilian, and 

contract personnel working in military hospitals and clinics, commonly 

referred to as military treatment facilities (MTF). DOD’s fiscal year 2014 

budget request for health care is almost $50 billion, and is projected to 

increase substantially in the next few years. Historical rates of cost growth 

in DOD’s Military Health System have been significantly higher than the 

corresponding rates in the national economy. Within DOD, each of the 

military departments—Army, Navy, and Air Force—operates its own 

MTFs, and generally contracts separately for health care professionals to 

supplement care provided within these facilities. As health care consumes 

an increasingly large portion of the defense budget, DOD leadership has 

recognized the need to reduce duplication and overhead, and operate the 

most efficient health system possible. In addition, DOD must balance the 

challenges posed by maintaining a health care system that meets the 

military’s readiness needs while also making changes in its business and 

health care practices to control costs and improve effectiveness.

Section 726 of the National Defense Authorization Act for Fiscal Year 

2012 (NDAA for FY 2012) directed us to review the contracting activities 

of the military departments with respect to providing health care 

professional services to members of the armed forces, dependents, and 

 
 

Page 2 GAO-13-322 Defense Health Care

retirees.1 This report (1) describes the contracting practices used by the 

military departments to provide health care professional services and 

what is known about the cost effectiveness of these practices, (2) 

assesses the extent to which the military departments have consolidated 

their health care staffing requirements, (3) identifies the percentage of 

contract health care professionals at on-base and off-base facilities and 

discusses the extent to which the costs associated with care provided by 

these professionals can be compared, (4) describes the training 

requirements and experience of medical services contracting personnel, 

and (5) identifies the extent to which the military departments have 

policies or procedures that address legislated quality standards for 

contract health care professionals and for the staffing companies that 

provide them.

To address contracting practices, we analyzed data obtained from the

Federal Procurement Data System-Next Generation (FPDS-NG) on 

medical services contracts funded in fiscal year 2011, the latest year for 

which complete data were available when we began our review.2 We 

analyzed DOD’s contract spending for medical services based on three 

different factors– whether the contracts were awarded competitively, the 

pricing terms, and the contract arrangement. We also reviewed past 

reports by DOD, GAO, and others. To assess the consolidation of health 

care staffing requirements, we obtained data from the military 

departments on the number and dollar value of contracts for health care 

professionals.3 To determine on-base and off-base percentages of health 

care professionals, we obtained and reviewed data from the military 

departments on the type, number of, and obligations associated with 

contract health care professionals at all on-base MTFs and associated 

off-base clinics in fiscal year 2011, the latest year for which complete data 

were available when we began our audit work. We also discussed with 

knowledgeable officials the relevant data DOD maintains on costs 

associated with on-base and off-base facilities and potential cost 

 

1

Pub. L. No. 112-81, § 726 (2011), as amended by Pub. L. No. 112-239, § 733. 

2

FPDS-NG, the primary government-wide contracting database, provides information on 

government contracting actions, procurement trends, and achievement of socioeconomic 

goals, such as small business participation. 

3

We obtained data from the Army, Navy, Air Force, and the Joint Task Force National 

Capital Region Medical Command (JTF CapMed). JTF CapMed manages MTFs within the 

National Capital Region. 
 

Page 3 GAO-13-322 Defense Health Care

comparison approaches and associated limitations. To describe contract 

training requirements and experience, we reviewed DOD-wide and 

military department-specific policies and requirements for contracting 

personnel. We also obtained information on the training and experience 

of contracting personnel at facilities with small and large numbers of 

contract health care professionals. To address quality standards, we 

reviewed federal regulations, DOD and military department-level policies 

and procedures, and standard contract provisions, as provided by the 

military departments. We reviewed this documentation to assess whether 

each of the military departments generally addressed specific legislated 

quality standards outlined in section 732 of the National Defense 

Authorization Act for Fiscal Year 2007 (NDAA for FY 2007).4

To address all objectives, we interviewed and obtained documentation, 

including contract data, from officials at 11 MTFs5 and the following 

organizations:

• Army Health Care Acquisition Activity,

• Navy Medical Logistics Command,

• Air Force Medical Service,

• Joint Task Force National Capital Region Medical Command (JTF 

CapMed), and

• DOD’s TRICARE Management Activity (TMA).

We assessed the reliability of these data by interviewing officials from the 

military departments and testing the data for any obvious errors. We 

determined that the data were sufficiently reliable for the purposes of our 

review. See appendix I for additional details on our scope and 

methodology.

We conducted this performance audit from July 2012 to May 2013 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

 

4

Pub. L. No. 109-364 (2006).

5

See appendix I for a list of the 11 MTFs and our method for selecting them.
 

Page 4 GAO-13-322 Defense Health Care

DOD’s Military Health System has two missions: supporting wartime and 

other deployments, and providing peacetime health care. In fiscal year 

2011, DOD offered health care services to about 9.7 million eligible 

beneficiaries in the United States and abroad through TRICARE, the 

Military Health System’s regionally structured health care program.6

Under TRICARE, beneficiaries may obtain care either through DOD’s 

direct care system of MTFs, or through DOD’s purchased care system of 

civilian providers.7 The total DOD health care budget for fiscal year 2011 

was $52.45 billion, of which $17.76 billion was to provide health care 

through the direct care system of MTFs. Of the $17.76 billion in direct 

care costs, DOD spent about $1.91 billion contracting for various medical 

services, including about $1.14 billion for contract health care 

professionals, the primary focus of this report. Figure 1 below shows the 

total DOD health care budget, the amount spent on direct health care, 

and the amount the military departments spent on contracts for health 

care professionals working in MTFs in the United States in fiscal year 

2011.

 

6

Eligible beneficiaries include active duty personnel and their dependents, medically 

eligible National Guard and Reserve service members and their dependents, and retirees 

and their dependents and survivors. 

7

Through individual agreements between MTFs and the Department of Veterans Affairs’ 

(VA) medical centers, eligible beneficiaries may also receive certain types of care from VA 

medical centers in some locations. 

Background 

DOD’s Military Health 

System
 

Page 5 GAO-13-322 Defense Health Care

Figure 1: DOD Health Care Budget and Amounts Spent on Contracted Medical Services in Fiscal Year 2011

Notes: Obligations for other medical services includes, but are not limited to, contract health care 

professionals outside of the United States, and research and development-related services.

Obligations for contract healthcare professionals excludes contract health care professionals working 

in military treatment facilities outside the United States, contracts for research and development, 

dental and veterinary professionals, as well as administrative, janitorial, food, or housekeeping 

services.

The Assistant Secretary of Defense for Health Affairs (Health Affairs) is 

the principal advisor for all DOD health policies and programs. This office 

issues policies, procedures, and standards that govern the management 

of DOD medical programs and has the authority to issue DOD 

instructions, publications, and memorandums that implement policy 

approved by the Secretary of Defense or the Under Secretary of Defense 

for Personnel and Readiness. However, this office does not have direct 

command and control of the military departments’ MTFs. TMA, under the 

authority and direction of Health Affairs, is responsible for awarding, 

administering, and managing DOD’s contracts for purchased care, 
 

Page 6 GAO-13-322 Defense Health Care

including the regional managed care support contracts. See figure 2 for 

the current organizational structure of DOD’s Military Health System.

Figure 2: Governance Structure of the Military Health System As of April 2012

Under the direct care system, each military department recruits, trains, 

and funds its own medical personnel to administer medical programs and 

provide medical services to beneficiaries. The Departments of the Army 

and the Navy each has a medical command, headed by a surgeon 

general, who manages each department’s MTFs and other activities 

through a regional command structure. Within these medical commands, 

the Army and Navy have separate but similarly centralized approaches to 

contracting for medical services, including health care professionals. The 

Army acquires medical services through the Health Care Acquisition 

Activity, which has a main contracting center and five regional contracting 

offices. The Naval Medical Logistics Command is in charge of providing 

contracting support for medical services for both the Navy and the Marine 

Corps. Though similar in his role as medical advisor to the Air Force Chief 

of Staff, the Air Force Surgeon General exercises no command authority 
 

Page 7 GAO-13-322 Defense Health Care

over Air Force MTFs. The Air Force does not have a medical contracting 

command like the other two services. Instead, the Air Force has a 

decentralized contracting structure and relies on more than 60 separate 

local base contracting offices to acquire medical services.8

An additional medical organizational structure—JTF CapMed—was 

established in 2007 to manage MTFs within the National Capital Region 

and to execute actions required under the Base Realignment and Closure 

(BRAC) process.9 JTF CapMed is responsible for the management of the 

Walter Reed National Military Medical Center in Bethesda, Maryland, 

which was created by combining Walter Reed Army Medical Center and 

the National Naval Medical Center; and Ft. Belvoir Community Hospital, 

which replaced DeWitt Army Community Hospital at Ft. Belvoir, Virginia. 

JTF CapMed relies on the Army to award contracts for health care 

professionals because it does not have its own contracting authority.

Figure 3 depicts the size and location of MTFs in the United States.

 

8

In addition, the Air Force Medical Support Agency provides support and acquisition 

planning for some medical services and the Air Force Medical Operations Agency 

provides for policy and guidance on purchasing medical services. 

9

BRAC is a process that the Department of Defense used to determine which military 

bases could be closed or realigned. 
Figure 3: Location of On-base Military Treatment Facilities (MTF) and the number of Full-time Equivalents (FTE) at Each 

Location 

TX NM

AZ

CA

NV

UT

OR

ID

WA

MT

WY

CO

ND

SD

MN

IA

WI

NE

KS

OK

MO

IL

MI

IN

OH

KY

TN

WV

VA

NC

GA

AR

LA

MS

AL

FL

SC

PA

NY

NH

VT

ME

MA

CT

NJ

MD

DE

DC

AK HI Guam

Source: GAO analysis of DOD data; Map Resources (map).

0.1 – 50 FTEs

51 – 100 FTEs

101 – 250 FTEs

251 – 500 FTEs

501 – 1000 FTEs

• Air Force

• Army

• JTF CapMed

• Navy

Interactive Graphic Roll your mouse over the colored text in the legend to see the data by service. For the print version, see appendix II. 

For the full data set, see appendix III.

a

Certain low-dollar, fixed-price contracts are closed using a more simplified process.

Page 8 GAO-13-322 Defense Health Care
 

Page 9 GAO-13-322 Defense Health Care

A variety of contracting arrangements are available to DOD to contract for 

health care professionals. These contracting arrangements are subject to 

the Federal Acquisition Regulation (FAR)—the primary regulation for use 

by all federal executive agencies in their acquisition of goods and 

services. Table 1 lists some of the different contracting arrangements 

used to contract for health care professionals, including multiple-award 

contracts.10

Table 1: Selected Medical Services Contracting Arrangements 

Contract arrangement Description

Multiple-award contracts • Indefinite-delivery, indefinite-quantity contracts are awarded to multiple health care 

staffing companies who recruit and assign providers to fill positions required under 

specific task orders.

• Health care staffing companies compete to be awarded these contracts.

• Individual task orders are then competed amongst the staffing companies with the 

underlying contract. Staffing companies then recruit health care professionals.

• Each staffing company that is awarded a contract is guaranteed a minimum level of 

orders. 

Individual set-aside (ISA) contracts • An ISA is a contract directly with an individual health care professional.

Clinical support agreements (CSA) • CSAs are used to acquire health care professional services via non-competitive 

modifications of one of three regional TRICARE managed care contracts.

• CSAs are typically used to contract for health care professionals in hard to fill or scarce 

specialties, especially in geographically remote locations.

General Services Administration 

schedule contracts

• The General Services Administration’s federal supply schedule program provides the 

government with a simplified process for acquiring goods and services through 

schedule contracts for medical products and services, including those of health care 

professionals.

Source: GAO analysis. 

Notes: These arrangements are not the only contracting arrangements that are used to acquire 

medical services. Not all military departments use all contracting arrangements. For example, the 

Navy no longer uses CSAs.

The military departments contract for many different types of health care 

professionals. For example, they often contract for nurses, family practice 

doctors, and medical assistants, among others.

 

10For the purposes of this report, we are referring to multiple-award indefinite-delivery, 

indefinite-quantity contracts as “multiple-award contracts.” An indefinite-delivery, 

indefinite-quantity contract provides for an indefinite quantity, within stated limits, of 

supplies or services during a fixed period. The government places orders for individual 

requirements. These contracts fall under FAR Subpart 16.5. A task order is an order for 

services placed against an existing contract or with government sources.

Contracting Mechanisms 

for DOD Medical Services
 

Page 10 GAO-13-322 Defense Health Care

The typical process for contracting for these types of professionals is as 

follows:

• Once it has been determined that a staffing requirement needs to be 

fulfilled through a contractual agreement, the acquisition strategy is 

developed. The strategy addresses the type of contracting 

arrangement that should be used, the payment terms to use, and the

competition requirements.

• A contracting officer—who is a federal employee with the authority to 

enter into, administer, and/or terminate contracts—awards a contract.

• A contracting officer’s representative (COR) is assigned to oversee 

the contract and ensure that the contractor is performing in 

accordance with the standards and terms that are set forth in the 

contract. If problems with a contractor’s performance arise, the COR 

serves as the contract focal point between the contracting officer and 

contractor.

All three military departments used competition and fixed-price contracts 

for a majority of their medical services contract obligations in fiscal year 

2011. Together, the three military departments most often use multipleaward contracts to contract for health care professionals. Military 

department analyses indicate that multiple-award contracts may result in 

lower costs compared to some other contract arrangements. In addition, 

the military departments use other contract arrangements, such as clinical 

support agreements (CSA) to fill requirements in a remote location or for 

a particular health care specialist.

DOD Generally Uses 

Competition, Fixed 

Prices, and MultipleAward Contracts 

When Acquiring 

Medical Services
 

Page 11 GAO-13-322 Defense Health Care

The military departments obligated $1.91 billion for medical services in 

fiscal year 2011.This figure includes $1.14 billion for contract health care 

professionals as well as other medical services contract obligations within 

and outside of MTFs worldwide.11 Of the $1.91 billion, the military 

departments used competition for approximately 75 percent of obligations 

when contracting for medical services. Federal regulations generally 

require the use of full and open competition, which can help to reduce 

costs. We have previously reported that competition is a critical tool for 

achieving the best value.12 Table 2 shows the percentage of each military 

department’s direct health care medical services obligations that were 

competed in fiscal year 2011. 

Table 2: Obligations and Percentage of Obligations for Competed Contracts for Direct Health Care Medical Services, Fiscal 

Year 2011

Military department

Competed

obligations

Non-competed

obligations

Total

obligations

Percent of

obligations

competed

Army $559,791,729 $304,042,033 $863,833,763 65

Navy 470,968,341 99,896,800 570,865,141 83

Air Force 408,732,623 63,184,732 471,917,355 87

Total $1,439,492,694 $467,123,564 $1,906,616,258 75

Source: GAO analysis of FPDS-NG data. 

Note: Numbers may not add due to rounding.

We also found that fixed-price contracts were used for more than 90 

percent of direct health care medical service obligations in fiscal year 

2011, as shown in table 3. Generally, under a fixed-price contract for 

services, the government pays a certain amount for the services 

 

11An obligation is an action that legally binds the federal government to a future 

expenditure. The $1.91 billion figure includes all medical service contract obligations 

reported in FPDS-NG for the Army, Navy, and Air Force for fiscal year 2011. Obligations 

for medical services other than those specifically for contracted health care professionals 

in U.S. MTFs are included in this figure, such as laboratory testing. Medical services 

obligations from all other DOD agencies accounted for less than one percent of the total 

for this type of obligation and are not included in the $1.91 billion. See table 4 for 

additional data, including obligations for contract health care professionals by service. 

12GAO, Defense Contracting: Competition for Services and Recent Initiatives to Increase 

Competitive Procurements, GAO-12-384 (Washington D.C.: Mar. 15, 2012). 

The Military Departments 

Use Competitively 

Awarded Fixed-Price 

Contracts for Medical 

Services
 

Page 12 GAO-13-322 Defense Health Care

specified.13 We previously have reported that this type of contract 

generally results in the least amount of risk to the government. 

Table 3: Obligations and Percentage of Obligations for Fixed-Price and Non-Fixed-Price Contracts for Direct Care Medical 

Services, Fiscal Year 2011

Military department

Fixed-price

obligations

Obligations other

than fixed-price Total obligations

Percent of obligations 

that were fixed-price 

Army $800,708,019 $63,125,744 $863,833,763 93

Navy 567,461,522 3,403,619 570,865,141 99

Air Force 431,027,236 40,890,119 471,917,355 91

Total $1,799,196,777 $107,419,481 $1,906,616,258 94

Source: GAO analysis of FPDS-NG data

Note: Numbers may not add due to rounding.

We found that the Army, Navy, Air Force, and JTF CapMed together used 

multiple-award contracts for 64 percent of the $1.14 billion in obligations 

for contracts for health care professionals in fiscal year 2011.14 CSAs 

accounted for only 3 percent of the obligations spent on health care 

professionals in the same time period. Figure 4 shows the percentage of 

fiscal year 2011 obligations for health care professionals by contract 

arrangement.

 

13Some fixed-price contracts provide for an adjustable price. Fixed-price contracts 

providing for an adjustable price may include a ceiling price, a target price (including target 

cost), or both. Fixed-price contracts generally place upon the contractor risk and full 

responsibility for all costs and resulting profit or loss, and thus provide incentive for the 

contractor to control costs. A cost-reimbursable contract provides for a payment of 

allowable incurred costs to the extent prescribed in the contract. These contracts establish 

an estimate of total cost for the purpose of obligating funds and establishing a ceiling. 

Contractors can go above this ceiling price at their own risk or with permission of the 

contracting officer. A cost-reimbursable contract is often used for research and 

development services.

14Army multiple-award contracts account for 81 percent of their obligations, Navy multipleaward contracts account for 79 percent of their obligations, Air Force multiple-award 

contracts account for 49 percent of their obligations, and JTF CapMed multiple-award 

contracts account for 42 percent of their obligations in fiscal year 2011. 

Military Departments Use 

Multiple-Award Contracts 

for Various Reasons, 

Including Perceived Cost 

Effectiveness
 

Page 13 GAO-13-322 Defense Health Care

Figure 4: DOD’s Fiscal Year 2011 Obligations for Health Care Professionals by 

Contract Arrangement

Because multiple-award contracts are competitive, they avail the military 

departments of one of the most fundamental and cost effective tools in 

contracting. Competition is the cornerstone of a sound acquisition 

process and a critical tool for achieving the best return on investment for 

taxpayers. Officials from the military departments told us that they use 

multiple-award contracts for many reasons. In addition to perceived cost 

effectiveness, officials stated that multiple-award contracts result in 

shorter acquisition lead times and reduce the risk of bid protests.15

Officials also stated they use multiple-award contracts because these 

contracts are awarded to small businesses, which helps the military 

departments meet their small business contracting goals. In fact, 100 

percent of the current Army, Navy, and Air Force multiple-award contracts 

 

15In general, a bid protest is a challenge to the award or proposed award of a contract for 

procurement of goods and services or a challenge to the terms of a solicitation for such a 

contract.
 

Page 14 GAO-13-322 Defense Health Care

are awarded to small businesses. DOD officials also stated that multipleaward contracts have facilitated the streamlining of acquisitions and the 

standardization of contract requirements, which saves time and contract 

administration costs.

During our review, Navy and Air Force officials completed analyses of 

their contracting arrangements which indicated that multiple-award 

contracts may result in lower costs when contracting for health care

professionals compared to CSAs.16 Specifically, Navy officials conducted 

an analysis comparing the hourly costs associated with the same type of 

health care professional for each of three different contract 

arrangements—multiple-award contracts, individual set-aside (ISA) 

contracts, and CSAs. Based on this analysis, the Navy determined that 

the hourly rate of providers contracted via CSAs was higher than under 

multiple-award contracts for the same types of services. Similarly, Air 

Force officials told us and provided analysis indicating that CSAs cost 

more than multiple-award contracts. In addition, the Air Force conducted 

a separate analysis to determine cost savings on their multiple-award 

contracts. Based on this analysis, an Air Force official stated that they 

have realized $13.8 million, or 15 percent, in savings on their current 

multiple-award contracts—which took effect in December 2011—

compared to their previous multiple-award contracts.17

Each military department has the flexibility to employ a variety of other 

contract arrangements to meet its needs for health care professionals. 

For example, Navy officials stated they sometimes contract directly with 

an individual health care professional using an ISA when an individual’s 

qualifications will be used as the primary selection criterion and cost of 

the contract is not as important as the provider’s qualifications. Navy 

officials stated they also use ISAs because they are more likely to be able 

to pay a health care specialist a competitive market-based salary if they 

contract with the provider directly instead of contracting with a staffing 

company that typically adds 15-20 percent in overhead costs. A DOD 

 

16The Army indicated that because TMA is responsible for CSAs, they no longer had the 

visibility into the costs of the CSAs in order to perform an analysis. 

17While the Navy and the Air Force provided us the results of these analyses, we did not 

independently assess the methods they used to conduct them. However, we discussed 

the data sources and the limitations of these studies with officials from each military 

department. 

The Military Departments 

Also Use Other 

Contracting Arrangements 

in Contracting for Services 

for Health Care 

Professionals 
 

Page 15 GAO-13-322 Defense Health Care

Inspector General report stated that ISAs may be appropriate in certain 

circumstances, such as acquiring a scarce specialty. One drawback of 

using an ISA is the amount of time it takes to award a contract. According 

to Navy officials, it can take 9-12 months for a contract to be awarded. If 

the health care professional on the contract decides to leave, the military 

departments are left with an unfulfilled requirement while a new contract 

is developed, solicited, and awarded.

A CSA is another contracting arrangement that can be used to acquire 

health care professionals. Similar to ISAs, CSAs are often used to 

contract for hard-to-fill positions for health care specialists, especially in 

remote locations. Although the Navy used CSAs in the past to fill 

requirements for health care professionals, Navy officials stated that they 

currently do not use CSAs because this contract arrangement is less cost 

effective and provides for less competition. Although CSAs were reported 

by the military departments to be more expensive than multiple-award 

contracts, TMA officials stated that they have been used to fill positions 

when other contracting arrangements have been unsuccessful.

Regardless of the contract arrangement, some DOD officials told us that it 

is challenging to fill the requirements for many of the highly skilled health 

care professionals they need to work at MTFs. For instance, in 2012, 

multiple-award contracts were competitively awarded to staffing 

companies specifically for the National Capital Region. Some of the task 

orders on these multiple-award contracts had to be terminated when the 

staffing companies could not recruit incumbent health care professionals 

whose previous salaries had been well above prevailing market rates.

This resulted in insufficient time for them to recruit new employees and 

complete the hiring process without causing gaps in service. Air Force 

officials also experienced similar challenges in their implementation of 

multiple-award contracts. For example, some of their multiple-award task 

orders were terminated because the staffing companies were unable to fill 

the requirements based on the contracted prices they had proposed.
 

Page 16 GAO-13-322 Defense Health Care

Contracting for health care staffing requirements across the military 

departments remains largely fragmented. In the absence of an agencywide strategy, the military departments have attempted to consolidate 

some staffing requirements, but these efforts have been limited. Over the 

last 9 years, various DOD groups as well as GAO have recommended 

that DOD take steps toward such a strategy, but DOD still does not have 

an agency-wide acquisition strategy to consolidate these requirements.

Studies and reports by GAO and others have identified challenges with 

the fragmented approach that the military departments take to contract for 

medical services. For example, in 2004, a DOD Inspector General report 

found that the Military Health System could better coordinate contracting 

efforts and reduce duplication and fragmentation among DOD contracting 

organizations that acquire medical services.18 The report called for a joint 

and strategic enterprise approach to medical services acquisition.

In 2005, a DOD-wide council convened by the Assistant Secretary of 

Defense for Health Affairs recommended that DOD identify an alternative 

to the existing approach for acquiring direct care medical services, and 

suggested the need for a joint process and joint contracting centers 

responsible for the coordination, development, and contract execution of 

medical services acquisitions.19 This council also recommended that DOD 

establish strategic sourcing councils to develop strategies for sourcing 

key labor categories, including nurses and radiologists, and collect 

standardized aggregate procurement data across military departments.20

Strategic sourcing involves a shift away from numerous individual 

procurements to a broader aggregate approach, and often results in cost 

savings. Our prior work found that success in this regard requires the 

commitment of senior management, as well as reliable and detailed 

 

18DOD Inspector General, Acquisition: Direct Care Medical Services Contracts, D-2004-

094 (Arlington, Va.: June 24, 2004).

19DOD Office of the Under Secretary of Defense for Acquisition, Technology and 

Logistics, Report to the Office of Management and Budget: Implementation of Strategic 

Sourcing Initiatives Fiscal Year 2006 Update (March 2007). 

20The 2006 Quadrennial Defense Review Roadmap for Medical Transformation also 

incorporated some of the recommendations of the council. 

Consolidation of 

Staffing Requirements 

Is Limited in the 

Absence of a DODwide Acquisition 

Strategy 

Despite Previous 

Recommendations, DOD 

Does Not Yet Have a 

Strategic Approach to 

Acquiring Medical Services
 

Page 17 GAO-13-322 Defense Health Care

agency-wide spending data to identify opportunities to leverage buying 

power, reduce costs, and better manage suppliers.21

In 2007, DOD drafted a charter for a Defense Medical Strategic Sourcing 

Council. The council’s charter stated that its goals were to allow DOD to 

standardize the professional services acquisition process, further 

decrease variation in unit cost for services, and reduce acquisition 

workload. However, according to a TMA official, the military departments 

never signed the charter, and the council was never convened.

GAO reported in July 2010 that DOD would benefit from enhanced 

collaboration among the military departments in their processes for 

determining professional medical services requirements and 

recommended that DOD identify, develop, and implement joint medical 

personnel standards for shared services.22 While DOD concurred with our 

recommendation, as of March 2013, no action has been taken to address 

it. In our March 2011 report on opportunities to reduce duplication, 

overlap, and fragmentation in government programs, we noted that 

consolidating common administrative, management and clinical functions 

within the Military Health System could increase efficiencies and 

significantly reduce costs, but that DOD had taken only limited actions in 

this area.23

 

21We also found that the federal government is not fully leveraging its buying power to 

obtain the most advantageous terms and conditions for its procurements. We noted that 

DOD spent only 6 percent, or $19 billion, through strategic sourcing contracts for all 

acquisitions in 2011. However, DOD was unable to provide a comprehensive list of 

agency-wide strategic sourcing initiatives. GAO, Strategic Sourcing: Improved and 

Expanded Use Could Save Billions in Annual Procurement Costs, GAO-12-919

(Washington, D.C.: Sept. 20, 2012).

22GAO, Military Personnel: Enhanced Collaboration and Process Improvements Needed 

for Determining Military Treatment Facility Medical Personnel Requirements, GAO-10-696

(Washington, D.C.: July 29, 2010).

23In March 2011, GAO issued its first annual report to the Congress on potential 

duplication, overlap, and fragmentation in the federal government. The report also 

identified opportunities to achieve cost savings and enhance revenues. We identified 81 

areas—which span a wide range of government missions—with a total of 176 actions that 

the Congress and the executive branch could take to reduce or eliminate unnecessary 

duplication, overlap, and fragmentation or achieve other potential financial benefits. See 

GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington D.C.: Mar. 1, 2011). 
 

Page 18 GAO-13-322 Defense Health Care

In June 2011, the Deputy Secretary of Defense established a Task Force 

to review various options for changes to the overall governance structure 

of the Military Health System and of its multi-service medical markets.24

The Task Force identified 13 potential governance options for the Military 

Health System. DOD selected an option for Military Health System 

governance that would create a defense health agency in part to assume 

the responsibility for creating and managing shared services, and leave 

the military chain of command intact with the military departments in 

control of their military treatment facilities. This option would include a 

shared services concept to consolidate common services, including 

acquisition, under the control of a single entity.25 The Deputy Secretary of 

Defense stated in a March 2012 memo that DOD recognizes that there 

are opportunities to achieve savings in the Military Health System through 

the consolidation and standardization of many shared services, including 

but not limited to pharmacy programs, medical education and training, 

health information technology, budget and resource management, and 

acquisitions.26

While DOD is moving forward incrementally with its plans to transform the 

Military Health System structure and set up the defense health agency, 

decisions about the consolidation of health care staffing requirements 

remain outstanding. For example, DOD established a medical services 

contracting subworking group in 2012. According to DOD officials, the 

group is in the process of examining issues related to medical services 

acquisition and anticipates briefing out its recommended courses of 

action within DOD in the July 2013 time frame. Its potential 

recommendations include three different approaches to realigning and 

potentially consolidating the responsibility for medical services 

 

24Multi-service medical markets are service areas in which more than one military 

department provides military health care services. 

25However, as we reported previously, DOD did not develop a business case analysis that 

would provide a data-informed rationale for implementing the concept. GAO, Defense 

Health Care: Additional Analysis of Costs and Benefits of Potential Governance Structures 

Is Needed, GAO-12-911 (Washington D.C.: Sept. 26, 2012).

26Deputy Secretary of Defense Memorandum, Planning for Reform of the Governance of 

the Military Health System (Mar. 2, 2012). 
 

Page 19 GAO-13-322 Defense Health Care

acquisitions within DOD.27 Additionally, in the National Defense 

Authorization Act for Fiscal Year 2013, Congress included a requirement 

for DOD to provide an implementation plan for its governance reforms, 

including goals, timeframes, and estimated savings, among other things.28

In the absence of an agency-wide approach for medical services 

acquisition, there have been only limited instances of the consolidation of 

health care staffing requirements. Some of these instances have involved 

efforts across the military departments. For example, the joint contracts 

that were reported to us accounted for approximately 8 percent of the 

$1.14 billion in obligations for health care professionals in fiscal year 

2011. Other efforts have involved actions within the departments. For 

example, the departments have made efforts to use multiple-award 

contracts to consolidate intraservice staffing requirements, but we 

identified several instances where multiple task orders were placed for 

the same type of provider in the same area or facility.

The military departments have consolidated a limited number of staffing 

requirements by developing contracts used at joint facilities such as those 

in San Antonio and the National Capital Region. All told, the joint 

contracts that were reported to us make up approximately 8 percent of 

the $1.14 billion in obligations for health care professionals in fiscal year 

2011. In 2009, the Army established two contracts for nurses to work at 

the San Antonio Military Medical Center, which operates as a joint facility 

for the Army and the Air Force. Army officials explained that, prior to this 

joint effort, there were more than 12 contracts with nursing requirements 

between Brooke Army Medical Center and the Air Force’s Wilford Hall 

Medical Center, both in San Antonio. The multiple contracts created 

competition between the two military departments’ facilities for nursing 

staff. Because of the BRAC-related realignment of medical services in 

 

27In 2012, DOD established working groups in response to the Military Health System 

governance decision to create a defense health agency. One working group was 

established to complete an assessment of the shared services to be used by this defense 

health agency. This working group is comprised of 12 subworking groups, one of which is 

focused on contracting. According to an Army official, as of February 2013, the contracting 

subworking group had not completed its assessment or reached any conclusions. For 

more information on Military Health System governance, see DOD, Task Force on Military 

Health System Governance, September 29, 2011, and GAO-12-911. 

28Pub. L. No. 112-239, § 731.

In the Absence of a DODwide Strategy, 

Consolidation of Staffing 

Requirements Has Been 

Limited

Interservice Consolidation
 

Page 20 GAO-13-322 Defense Health Care

San Antonio, the Army was able to consolidate the nursing requirements 

and use one multiple-award contract for registered nurses and one for 

licensed vocational nurses to provide nursing services at both facilities.29

According to Army officials, these contracts are more successful than the 

previous contracts in placing the necessary number of nurses in the 

MTFs in San Antonio, and less administrative oversight is needed.

In the National Capital Region, the Army had multiple-award contracts for 

health care professionals that were awarded prior to the transfer of 

control to JTF CapMed. The Army then began to award contracts for JTF 

CapMed facilities in 2012.30 These contracts are considered to be joint 

because these facilities are used by more than one military department as 

a result of the BRAC process. According to an Army analysis, these 

contracts resulted in a 14 percent savings over the previous set of 

contracts for health care professionals at the Walter Reed National 

Military Medical Center in Bethesda.

The Navy also used multiple-award contracts for health care 

professionals for MTFs in the National Capital Region that were awarded 

prior to the transfer of control to JTF CapMed at the end of fiscal year 

2011. Other than the contracts that were in place for these MTFs before 

August 2011, the Navy stated that it did not have any additional contracts 

that were used by other military departments. The Air Force stated that it 

has not awarded any contracts with jointly developed requirements, but 

Air Force multiple-award contracts are open to use by other military 

departments to support joint MTFs.

While examples of joint contracting efforts in place during fiscal year 2011 

were limited, additional contracts available to more than one military 

department have been awarded since then, or are planned.31 For 

example, seven joint medical service contracting initiatives were planned 

by the Army, including a new contract for medical services in Europe that 

 

29Licensed vocational nurses are entry-level nurses who provide basic health care. 

30Through a memorandum of agreement in 2010, the Army Medical Command became 

the primary acquisition activity for the facilities in the National Capital Region.

31Also in 2009, the Army awarded regional multiple-award contracts for physicians, 

nurses, and ancillary providers. All military departments can place task orders against 

these multiple-award contracts, although it is unclear about the extent to which the Air 

Force and the Navy used them.
 

Page 21 GAO-13-322 Defense Health Care

would be available to all three military departments. None of these has 

been awarded as of February 2013.

The military departments have made efforts to consolidate some staffing 

requirements within their own MTFs using multiple-award contracts. 

Currently, multiple-award contracts in the Army and Navy are generally 

set up by U.S. geographical region and by provider type to meet the 

requirements of more than one facility. For example, in each geographical 

region, the Army and the Navy each have multiple-award contracts for 

nurses, and one in each region for doctors. In 2012, the Navy had 6 

multiple-award contracts on the west coast and 5 on the east coast, 

including many types of health care professionals. The Navy routinely 

receives 25 to 40 proposals, and usually makes 3 to 6 awards to health 

care staffing companies. Navy officials told us that before multiple-award 

contract use was prevalent, buying activity was more fragmented. More 

individual contracts—for specific labor categories and locations—made 

the burden much greater in terms of administration and oversight. 

Officials explained that, at one point, the organization responsible for 

medical services acquisitions was funded on the basis of how many 

contracts were awarded, which incentivized inefficiency.

In contrast, the Air Force uses multiple-award contracts that are set up 

nationally to be used by all of its MTFs, and these contracts also include 

many types of health care professionals. The Army awarded national 

contracts for health care professionals in fiscal year 2003, but officials 

said this approach was unsuccessful because not enough companies 

were able to compete for those contracts and provide health care staffing 

services on a national scale. Market research and feedback from 

contractors indicated that regional multiple-award contracts would allow 

greater opportunities for more small businesses to compete. The Army 

subsequently put in place multiple-award contracts with regional 

requirements for particular categories of health care professionals, such 

as nurses. The Army found that this approach led to more successful 

outcomes.

Despite the use of multiple-award contracts, the potential for more 

consolidation among task orders remains. We identified several instances 

where many task orders were placed for the same type of provider in the 

same area or facility, such as 24 task orders in fiscal year 2011 for 

medical assistants, 16 separate task orders for Licensed Practical 

Nurses, 8 for clinical psychologists and 6 for family practitioners, all at the 

same MTF.

Intraservice Consolidation
 

Page 22 GAO-13-322 Defense Health Care

Nearly all of the military departments’ contract health care professionals—

96 percent—worked in facilities located on military installations in fiscal 

year 2011. The costs associated with these contracted health care 

services provided at on-base facilities are not comparable to off-base 

facilities for a variety of reasons. For example, significant issues have 

been identified within the Military Health System cost accounting system 

that affect the calculation of unit costs. Further, based on available data 

and interviews with DOD officials, we determined that labor categories, 

labor costs, and full-time equivalent calculations all vary by military 

department, and in some cases by facility or contract. In addition, 

according to Navy officials, market-based salaries for the same type of 

provider can vary by geographic location.

DOD reported information on 114 primary on-base MTFs in the United 

States with contracted health care professionals.32 In addition, the military 

departments identified 8 off-base facilities with contracted health care 

professionals.33 Collectively, the Army, Navy, Air Force, and JTF CapMed 

had 11,253 full-time equivalent (FTE) contract health care professionals 

within the United States in fiscal year 2011, 96 percent of whom provided 

care at on-base facilities.34 Figure 5 shows the number of contract health 

care professionals, civilian health care professionals, and active duty 

military health care professionals in fiscal year 2011, by military 

department and JTF CapMed.

 

32For our reporting purposes, we refer to parent MTFs as primary MTFs. These primary 

facilities also often have subfacilities—smaller satellite facilities that report to the primary 

MTFs. The number of contracted health care professional FTEs working at on-base 

subfacilities is included in the total number of FTEs for each primary MTF.

33Off-base facilities reported to us are not physically located on a military installation, 

operate under the purview of an MTF commander, and have contract health care 

professionals who provide direct patient care.

34The definition of FTE employment is the total number of regular hours (i.e., not including 

overtime) worked by employees divided by the number of compensable hours applicable 

to each fiscal year. Each military department calculates FTEs differently. For the purposes 

of our review, we reported the number of FTEs for each military department that were 

provided to us by each military department and did not use them for comparative 

purposes. Counting the number of personnel would be misleading, as many health care 

professionals are contracted to work less than full time.

Almost All Contract 

Health Care 

Professionals Work in 

On-Base Military 

Treatment Facilities

Most Direct Care by 

Contract Health Care 

Professionals Is Provided 

at Facilities Located on 

Military Installations
 

Page 23 GAO-13-322 Defense Health Care

Figure 5: Number of Full-Time Equivalent Health Care Professionals by Military 

Department and the Joint Task Force National Capital Region Medical Command,

Fiscal Year 2011

Notes: Each military department calculates FTEs differently. Numbers in the bar chart reflect an FTE 

count, not an actual personnel count. The Joint Task Force National Capital Region Medical 

Command manages MTFs within the National Capital Region.

Table 4 provides information on the number of contracted FTEs at both 

on-base and off-base facilities. For a complete list of the MTFs and 

contract health care professional FTEs reported to us by the military 

departments, see appendix III.35

 

35In 1995, DOD issued a policy memo stating that any contractor-owned, contractoroperated clinics should be converted to TRICARE government-managed outpatient clinics 

that function as extensions of the MTFs. Since the memo was issued, according to an Air 

Force official, the number of off-base facilities has decreased. 
 

Page 24 GAO-13-322 Defense Health Care

Table 4: Number and Percentage of DOD Contract Health Care Professionals at Off-Base Facilities in Fiscal Year 2011, by 

Military Department 

Military 

department

Total number of 

contracted full-time 

equivalents (FTE)a Obligations

Number of off-base

facility contracted FTEsa

Percentage of

contracted FTEs

working at off-base clinics 

Army 2303 $286,030,192 0 0.0

Navy 3368 292,825,958 128 3.9

Air Force 4415 453,674,285 12 0.3

JTF CapMedb 1167 105,112,968 274 23.4

Total 11,253 $1,137,643,403 414 3.7

Source: GAO analysis of DOD data.

a

The number of FTEs shown for each military department is rounded to the nearest whole FTE.

b

The Joint Task Force National Capital Region Medical Command (JTF CapMed) manages MTFs 

within the National Capital Region. JTF CapMed officials specified that the JTF CapMed facilities are 

managed as joint facilities and should be reported separately from the other military departments’ 

data.

Specifically:

• The Army reported that all contract health care professionals worked 

in 28 primary on-base MTFs. The Army did not report any off-base 

facilities with contract health care professionals.36

• The Navy reported 21 on-base primary MTFs. Four percent of its 

contract health care professionals worked in one of four off-base 

clinics.

• The Air Force reported 63 on-base primary MTFs. Less than 1 

percent of its contract health care professionals worked in one 

reported off-base clinic associated with the MTF at MacDill Air Force 

Base as well as one primary MTF, Buckley, which is located off-base.

• JTF CapMed reported two on-base primary MTFs—the Walter Reed 

National Military Medical Center, which combined Walter Reed Army 

Medical Center and Bethesda Naval Medical Center; and DeWitt 

Army Community Hospital, which became the Ft. Belvoir Community 

 

36Although the Army has 15 off-base clinics, with four more scheduled to open in 2013, 

they are staffed by DOD employees and not by contract health care professionals. These 

clinics, called community-based medical homes, are Army-run primary care clinics located 

off-base in the communities where Army families live.
 

Page 25 GAO-13-322 Defense Health Care

Hospital in 2011. Twenty-three percent of contract health care 

professionals in the National Capital Region worked in one of two offbase clinics, the Fairfax Health Center and the Dumfries Health 

Center.

Based on available data and interviews with DOD officials, we determined 

that the costs associated with the provision of care by contract health 

care professionals at on-base facilities and off-base facilities were not 

directly comparable for a variety of reasons. First, DOD does not collect 

and maintain standardized data on health care professionals that would 

allow for comparisons of the cost of facilities across the military 

departments, or even within a military department from one facility to 

another. For example, labor categories are not standardized across DOD.

Labor costs, including salary, benefits, overtime, and other costs vary by 

military department and by contract, and the definition of an FTE 

employee varies by military department. Second, DOD’s Task Force 

report on the Future of Military Health Care concluded that there were 

significant issues with the Military Health System cost accounting that 

affect the correct calculation of unit costs.37 For example, reported 

workload data have been characterized as unreliable. DOD and military 

department officials we spoke with confirmed this assessment during our 

review. Third, the financial and data systems used by MTFs are not set 

up to differentiate between the cost of care provided by contract health 

care professionals versus the cost of care provided by civilian and active 

duty health care professionals. Finally, market-based salaries for health 

care professionals vary by geographic location and by specialty. For 

example, the salary for a chiropractor in Washington, D.C. is significantly 

higher than the salary for a chiropractor in the Portsmouth, Virginia area. 

Therefore, comparing the costs associated with contract health care 

professionals at off-base facilities to any contract health care 

professionals at on-base facilities that were not working in the same 

geographic area would not result in an appropriate comparison.

 

37DOD, Task Force Report on the Future of Military Health Care, December 2007. The 

Medical Expense and Performance Reporting System is the standard cost accounting 

system for the Military Health System. It contains financial, personnel, and workload data 

from the services’ treatment facilities worldwide. A May 1999 GAO report also identified 

major concerns with DOD’s Medical Expense and Performance Reporting System, 

including inconsistent data collection and reporting. See GAO, Medicare Subvention 

Demonstration: DOD Data Limitations May Require Adjustments and Raise Broader 

Concerns, GAO/HEHS-99-39 (Washington, D.C.: May 28, 1999). 

Costs Associated with 

Contract Health Care 

Professionals at On-Base 

Facilities Are Not 

Comparable to Those at 

Off-Base Facilities
 

Page 26 GAO-13-322 Defense Health Care

DOD medical services contracting personnel are subject to DOD-wide 

training requirements, and health care experience varies for these 

personnel. The military departments provide CORs, but usually not 

contracting officers, with specialized training in contracting for health care 

professionals in addition to DOD’s requirements. The training provided to 

contracting officers is generally not targeted to any specific area of 

acquisition, including health care.

Contracting officers are federal employees with the authority to bind the 

government by signing a contract. Contracting officers across DOD are 

subject to the Defense Acquisition Workforce Improvement Act (DAWIA) 

requirements, which specify mandatory acquisition training and 

experience standards for DOD’s acquisition workforce.38 DOD requires all 

contracting officers to meet the same DAWIA requirements, regardless of 

any specialization. The training offered by the Defense Acquisition 

University (DAU) provides a foundation for acquisition and career field 

knowledge, and is not targeted to specific jobs, including the award and 

administration of contracts for health care professionals.39 In this regard, 

contracting officers responsible for awarding and administering contracts 

for health care professionals are no different than DOD contracting 

officers working in other areas.

In addition to DOD-wide requirements, contracting officers responsible for 

contracts for health care professionals generally have access to health 

care-specific acquisition expertise within their organizations, according to 

officials from the Army and Navy. For example:

• Contracting officers at Army’s Health Care Acquisition Activity work 

with the Medical Services Portfolio Manager, who serves as a 

resource for both health care and acquisition expertise and assists in 

 

38The Defense Acquisition Workforce Improvement Act, Pub. L. No. 101-510, § 1201-

1211 (1990). 

39DAWIA established the DAU as the primary provider of acquisition training for DOD and 

the military departments.

DOD Has Agencywide Training 

Requirements for 

Contracting 

Personnel, and Health 

Care Experience 

Varies 

Contracting Officers Are 

Subject to DOD-wide 

Certification Requirements
 

Page 27 GAO-13-322 Defense Health Care

the development of performance work statements and source 

selection.

• Navy contracting officers gain knowledge on the job through 

collocation at the Navy Medical Logistics Command with experienced 

contracting officers and program analysts with health care specialties.

The Army and Navy medical commands both have contracting officers 

with primary responsibilities related to the award and administration of 

contracts for health care professionals. The Army contracting officers we 

spoke with at the San Antonio Military Medical Center each reported 

having worked in medical contracting for over 8 years, awarding hundreds 

of contracts for health care professionals. Similarly, a Navy official 

provided documents showing that most Navy contracting officers 

responsible for contracts for health care professionals each has at least 3 

years of experience in medical contracting.

The Air Force relies on base contracting offices to support contracting for 

health care professionals at its 63 MTFs and, in contrast to both the Army 

and Navy, most Air Force contracting officers responsible for awarding 

and administering contracts for health care professionals are also 

responsible for the acquisition of non-medical products and services. As a 

result, according to Air Force officials we spoke with, Air Force acquisition 

professionals involved in medical services require additional training in 

the use of an approach often used in this area, personal services 

contracting, which is characterized by the employer-employee 

relationship it creates between the government and the contractor’s 

personnel.40 These contracts, expressly or as administered, make the 

contractor personnel appear to be, in effect, government employees.41

Personal services contracts are generally prohibited; however, personal 

services contracts for professional medical services for DOD are 

authorized by law.42

Although all three services use personal services contracts to obtain 

health care professionals, additional training in this area is not necessary 

for the Army and Navy, according to a DAU official we spoke with, since 

 

40FAR § 37.104.

41FAR § 2.101.

4210 U.S.C. § 1091. 
 

Page 28 GAO-13-322 Defense Health Care

these departments’ contracting organizations have acquisition 

professionals who frequently work with personal services contracts. 

However, Air Force officials we spoke with reported that Air Force 

contracting personnel would benefit from increased attention to personal 

services contracting in the health care context, because, unlike most 

government contractors, health care professionals are subject to the 

direction and supervision of the government.43

CORs are federal employees designated by the contracting officer to 

perform certain contract administration duties.44 All CORs must meet 

training and experience requirements specified in DOD’s Standard for 

Certification of COR for Service Acquisitions issued in March 2010. This 

standard defines DOD-wide minimum COR competencies, experience, 

and training for three types of COR requirements, according to the 

complexity of requirements and contract performance risk.45 Prior to 

contract award, all CORs are required to take a basic 8-hour online 

training course, provided through DAU. In addition to DOD-wide 

requirements, contracting personnel we spoke with said CORs receive 

contract-specific training from the appointing contracting officer. CORs 

may also receive supplemental training provided by the military 

departments in medical services contracting. Table 5 describes the type 

of training provided to CORs by each military department.

 

43DOD Instruction 6025.5, Personal Services Contracts (PSCs) for Health Care Providers 

(HCPs) (Jan. 6, 1995). 

44CORs are generally military or civilian DOD nonacquisition personnel that have 

acquisition-related responsibilities, such as helping to manage and oversee contracts by 

acting as the eyes and the ears of DOD’s contracting officers and by serving as the 

liaisons between the contractor, the contracting officer, and the unit receiving support or 

services. CORs have no authority to make any commitments or changes that affect price, 

quality, quantity, delivery, or other terms and conditions of a contract. 

45DOD Standard for Certification of Contracting Officer’s Representatives (COR) for 

Service Acquisitions (Mar. 29, 2010).

Required and 

Supplemental Training 

Provided to Contracting 

Officer’s Representatives
 

Page 29 GAO-13-322 Defense Health Care

Table 5: Training Provided to Contracting Officer’s Representatives (COR) by Military Department

Military department Training provided

Army Army offers training on a quarterly basis for CORs on contracting fundamentals and the role of the COR 

at military treatment facilities. The training consists of a day and a half of instruction.

Navy Navy provides CORs with a medical services training course prior to appointment to a contract for health 

care professionals, which consists of 2 days of classroom instruction in health care contracting. 

Air Force Air Force provides COR training in medical services contracting, the ordering of clinical services, 

acquisition funding, identifying requirements, oversight, as well as training on the computer-based 

system used to monitor the performance of health care professionals and staffing firms. Training is 

provided episodically in the field and in web-based sessions. 

Source: GAO presentation of DOD information.

Contracting oversight begins when the MTF nominates and the 

contracting officer appoints CORs to monitor and report on contractor 

performance. Importantly, CORs may not direct the work of the contractor 

by making commitments or changes that affect price, quantity, quality, 

delivery, or other terms and conditions of the contract. Within DOD’s 

Military Health System, CORs oversee the performance of contract health 

care professionals, including the review of contractor invoices and 

documenting and reporting on the performance of health care 

professionals to the contracting officer. The contract oversight model for 

DOD’s Military Health System is different than typical DOD acquisitions, 

because the military departments reported regularly using personal 

services contracts when contracting for health care professionals who, as 

described above, are subject to the direction and supervision by the 

government. In contrast to typical DOD contracting oversight 

arrangements, supervision of contract health care professionals is 

typically accomplished by a government employee at the MTF.46 In these 

instances, government supervisors, who are usually health care 

providers, work with the COR as they oversee and report on the 

performance of contract health care professionals.

The level of experience and type of responsibilities of CORs assigned to 

medical services contracts varies by MTF location. CORs we spoke with 

had responsibilities ranging from the oversight of only a few contract 

health care professionals to more than 100 professionals. Further, some 

 

46DOD Instruction 6025.5 establishes that the performance of an individual health care 

professional under a personal services contract is subject to day-to-day supervision and 

control by health care facility personnel comparable to that exercised over active duty and 

civilian health care professionals engaged in comparable work. 
 

Page 30 GAO-13-322 Defense Health Care

CORs are full-time and dedicated solely to overseeing contracts for health 

care professionals. For selected locations, we observed the following:

• For the Army, a COR working at the San Antonio Military Medical 

Center with a professional background as a budget analyst reported 

that CORs in this location have backgrounds ranging from 

administrative professionals to physicians. This COR was responsible 

for other duties at the large facility in addition to overseeing the 

performance of 130 FTE health care professionals. The COR for 

personal services contracts at Fox Army Health Center, a health 

systems specialist and former Army medic, was responsible for 

additional duties as the Chief of Clinical Operations. The official had 

12 years of experience as a COR on medical services contracts.

• For the Navy, personnel assigned as CORs at the Portsmouth Naval 

Medical Center and one of its branch clinics work on a full-time basis 

overseeing approximately 100 health care professionals each. This 

group’s experience ranged from members with less than 1 year to 

those with over 20 years of experience. The COR at Navy’s Saratoga 

Springs Branch Clinic was classified as a health systems specialist 

and had over 20 years of experience as a COR. This COR was 

located off-site and was responsible for other duties in addition to 

overseeing approximately 30 task orders for health care 

professionals.

• For Air Force, the service contract manager at Wilford Hall 

Ambulatory Surgical Clinic is the primary COR and government 

supervisors are alternate CORs.47 However, this is an arrangement 

that is unique to that facility, according to Air Force officials. The COR 

for personal services contracts at Andersen Air Force Base reported 

having worked in this capacity for about a year and a half and was 

responsible for other duties related to medical logistics. Prior to 

assignment as a COR at Andersen Air Force Base, this official had 

over 4 years of experience in contract services at a large MTF.

 

47The Air Force utilizes full-time service contract managers at each of its MTFs who, by 

Air Force instruction, are required to be appointed as the primary COR for all locally 

administered contracts. These CORs are the focal point for all contracting matters within 

the MTF, while the government supervisors provide technical expertise and oversight, 

reported in accordance with the contract terms and conditions.
 

Page 31 GAO-13-322 Defense Health Care

Section 732 of the NDAA for FY 2007 directed the Secretary of Defense 

to require consistent quality standards for contract health care 

professionals and the staffing companies that provide them across all of 

the military departments’ MTFs. According to DOD officials, DOD did not 

require consistent quality standards or take any additional actions in 

response to this legislation—such as by establishing a specific policy or 

guidance—because officials believed the military departments were 

already applying these standards as part of their contracting processes. 

We found that each of the departments had policies or procedures in 

place that generally address most of the NDAA for FY 2007 quality 

standards.

The NDAA for FY 2007 requires consistent credentialing requirements 

among MTFs. Credentialing is the process of inspecting and 

authenticating the documentation for appropriate education, training, 

licensure, and experience for health care professionals. Privileging is the 

corresponding process that defines the scope and limits of practice for a 

health care professional based on their relevant training and experience, 

current competence, peer recommendations, and the capabilities of the 

facility where the health care professional is practicing.48 The Assistant 

Secretary of Defense for Health Affairs is responsible for developing and 

overseeing DOD’s credentialing and privileging requirements for health 

care professionals to ensure consistent application across the Military 

Health System.49 To implement DOD’s requirements, the military 

departments’ surgeons general—who are delegated responsibility by the 

secretaries of their respective departments—establish specific 

credentialing and privileging requirements, which their MTFs are required 

to follow.

 

48While the NDAA for FY 2007 only required consistent credentialing requirements, our 

analysis examined the military departments’ policies and procedures for both credentialing 

and privileging, which together help ensure that health care professionals who work in 

MTFs have the appropriate credentials and clinical competence. 

49DOD Instruction 6025.13 and the associated DOD Regulation 6025.13-R—which 

contain procedures for the credentialing and privileging of health care professionals—

require the Assistant Secretary of Defense for Health Affairs to ensure their consistent 

implementation across the Military Health System. DOD Regulation 6025.13-R is 

mandatory for use by all DOD components.

The Military 

Departments’ Existing 

Policies and 

Procedures Generally 

Address Legislated 

Quality Standards, but 

DOD Did Not Require 

Consistency 

DOD and the Military 

Departments Already Had 

Policies for the 

Credentialing and 

Privileging of Health Care 

Professionals and Are 

Taking Steps to Ensure 

Consistency 
 

Page 32 GAO-13-322 Defense Health Care

In this review, we found that DOD and the military departments already 

had policies and procedures in place for the credentialing and privileging 

of health care professionals; however, these requirements are not yet 

consistent across the military departments.50 We previously reported in 

December 2011 that the military departments had established 

requirements that were in some cases inconsistent with DOD’s 

requirements and each other’s.51 In response, DOD and military 

department officials reported taking steps to standardize the credentialing 

and privileging processes across DOD. For example, the Navy took steps 

to align its policy with DOD’s by changing its requirement for primary 

source verification to apply to all provider licenses ever held instead of 

just those licenses held in the past 10 years.52 Additionally, DOD and VA 

formed a workgroup in July 2012—which also included officials from the 

Army, Navy, Air Force, and JTF CapMed—in order to standardize the 

credentialing and privileging processes across the military departments, 

and eventually with VA, so that health care professionals could more 

easily move between DOD and VA facilities. As part of this effort, the 

workgroup was tasked with exploring the possibility of developing a joint 

credentialing software system for use by both DOD and VA. A DOD 

official told us that the workgroup expects to issue recommendations by 

June 2013.

The NDAA for FY 2007 also requires consistent quality standards for the 

staffing companies that provide contract health care professionals to the 

MTFs, including, at a minimum, the Joint Commission’s Health Care 

Staffing Services certification standards.53 The 2011 version of the Health 

Care Staffing Services certification standards includes 23 standards that 

cover four topic areas: (1) leadership, (2) human resources management, 

 

50Each military department’s policies for credentialing and privileging apply to all health 

care professionals, including contract professionals. 

51See GAO, DOD Health Care: Actions Needed to Help Ensure Full Compliance and 

Complete Documentation for Physician Credentialing and Privileging, GAO-12-31

(Washington, D.C.: Dec. 15, 2011). 

52One of the reasons for primary source verification would be to determine whether 

disciplinary action had been taken against a physician’s license.

53The Joint Commission is an independent, not-for-profit organization that accredits and 

certifies more than 20,000 health care organizations and programs in the United States. 

Military Departments Have 

Policies or Procedures 

That Generally Address the 

Standards for Staffing 

Companies 
 

Page 33 GAO-13-322 Defense Health Care

(3) information management, and (4) performance measurement and 

improvement.54 (See appendix IV for a list of these standards.)

We found that because DOD did not require the military departments to 

use consistent quality standards for staffing companies as outlined in the 

NDAA for FY 2007, the military departments did not have policies or 

procedures in place for each of the Joint Commission’s Health Care 

Staffing Services certification standards.55 However, each of them was 

able to provide examples of regulations, policies, or military departmentwide standardized contracting language that they thought addressed 

many of these standards. The Air Force was able to provide similar 

documentation for its centrally administered health care professional 

contracts. The Air Force also was able to provide examples of regulations 

and policies for its other health care professional contracts, which are 

awarded and managed at the individual MTF level, but it could not 

provide standardized language for these contracts.

We determined that, in most cases, the documentation provided by each 

of the military departments generally addressed the individual Joint 

Commission standards for staffing companies that provide health care 

professionals. For example:

• For the Joint Commission requirement that the staffing company have 

a code of business ethics, each of the military departments provided 

citations to federal regulations or standardized contract clauses that 

required the staffing company to have an ethics code.

In some of these cases, the military departments addressed the individual 

Joint Commission standards by providing policies or standardized 

contract language that required the military departments to perform the 

tasks themselves instead of expecting them to be addressed by the 

staffing company. For example:

 

54Although the Joint Commission has a 2012 version of the Health Care Staffing Services 

certification standards, we used the 2011 version to be consistent with other data 

timeframes used in the report. There are no substantial differences between the 2011 and 

2012 versions of the standards.

55Officials we spoke with from the Army, Navy, and JTF CapMed were not familiar with the 

Joint Commission’s Health Care Staffing Services certification standards prior to our 

review. 
 

Page 34 GAO-13-322 Defense Health Care

• For the Joint Commission requirement that the staffing company 

provide orientation to clinical staff, each of the military departments 

cited standardized contract clauses that would require contract health 

care professionals to participate in orientation and initial job training 

provided by the MTF.

However, the documentation provided by the military departments did not 

always appear to address certain Joint Commission standards. For 

example:

• For the Joint Commission requirement that the staffing company 

clearly define its leadership roles,56 one of the military departments 

cited standardized contract language that required the staffing 

company to provide a point of contact, but did not address company 

leadership roles.

In addition to the Joint Commission standards for staffing companies, the 

NDAA for FY 2007 also requires additional standards covering financial 

stability, medical management, continuity of operations, training, 

employee retention, access to contractor data, and fraud prevention. We 

found that each of the military departments provided documentation that 

generally addressed the additional standards for staffing companies listed 

in the NDAA for FY 2007. For example, each of the military departments 

provided citations to federal regulations that addressed fraud prevention 

for the staffing companies.

DOD has undertaken numerous studies concerning the governance of the 

Military Health System. Performed by both internal and external boards, 

commissions, task forces, and other entities, a number of these studies 

recommended dramatic changes in the organizational structure of the 

Military Health System, in part to address the fragmented approach that 

the military departments take to contracting for professional medical 

services. While the military departments generally agreed with the need 

for improvements to their respective requirements determination 

processes, fragmentation in requirements and contracting arrangements 

 

56For example, showing that the leaders involved in the staffing company’s development 

and oversight have the knowledge or experience to provide the organization access to 

resources with appropriate expertise, and whether the leaders set goals, develop plans, 

and manage the company’s performance measurement and improvement activities. 

Conclusions 
 

Page 35 GAO-13-322 Defense Health Care

persist because DOD has introduced change in its management and 

oversight of the Military Health System in an incremental and limited 

manner.

In the absence of a DOD-wide approach for the acquisition of medical 

services, each military department continues to take a fragmented 

approach to contracting for medical professionals without considering the 

collective needs of the Military Health System. However, DOD is in the 

process of revising the governance structure of the Military Health System 

to centralize certain functions, such as acquisitions, that are fragmented 

among the military departments. Consequently, now is a particularly 

opportune time to revisit the need for a DOD-wide strategic sourcing 

strategy with both near-term and long-term dimensions, including reliable 

and detailed agency-wide data. Without such a strategy, the Military 

Health System may be missing opportunities for acquiring professional 

medical services in the most cost effective manner.

To achieve additional cost savings and efficiencies through increased use 

of strategic sourcing, we are recommending that the Secretary of Defense 

develop and implement a DOD-wide strategy to contract for health care 

professionals. The strategy should identify specific responsible 

organizations and timeframes, and should consist of both near-term and 

long-term components:

• In the near term, and to enable DOD to assess the efficacy and 

impact of such a strategy, DOD should identify a category of health 

care professionals or a multi-service market to pilot an approach to 

consolidating health care staffing requirements.

• Over the longer term, such a strategy should include an analysis of 

medical services spending based on reliable and detailed agencywide data, and should enable DOD to identify opportunities to 

consolidate requirements and reduce costs.

We provided a draft of this report to DOD for comment. In its written 

comments, reproduced in appendix V, DOD concurred with our 

recommendation. The department also agreed that it is at an opportune 

time to revisit a Military Health System strategic sourcing strategy due to 

the organizational transformation that is occurring in the stand-up of the 

new Defense Health Agency. DOD stated that a Shared Services 

Contracting subworking group will include this report and its 

Recommendation for 

Executive Action

Agency Comments 
 

Page 36 GAO-13-322 Defense Health Care

recommendations in their comprehensive review of contracting strategies, 

governance, and processes. DOD anticipates that the subworking group

will present their final recommendations to senior leadership by August 

2013. DOD also provided technical comments that were incorporated, as 

appropriate.

We are sending copies of this report to the appropriate congressional 

committees and the Secretary of Defense. In addition, the report is 

available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-4841 or woodsw@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix VI.

William T. Woods

Director

Acquisition and Sourcing Management
Appendix I: Scope and Methodology

Page 37 GAO-13-322 Defense Health Care

To determine what contracting practices are used by the military 

departments to contract for medical services as well as what is known 

about the cost effectiveness of these practices, we analyzed fiscal year 

2011 data obtained from the Federal Procurement Data System-Next 

Generation on medical service contracts to determine the extent to which 

the military departments used particular contracting practices as well as 

the types and amount of medical services that were purchased.1 We 

obtained data on all contracts and task orders that were coded as medical 

services and were active in fiscal year 2011 from the Federal 

Procurement Data System-Next Generation, including information on 

obligation value, contract payment type, a general description of the type 

of service, and the extent of competition. To assess the reliability of the 

data we looked for missing values and obvious errors and found the data 

were sufficiently reliable for the purposes of our analysis and findings. We 

interviewed officials from Army’s Health Care Acquisition Activity, the 

Navy Medical Logistics Command, the Air Force Medical Service group, 

the Joint National Capital Region Medical Command (JTF CapMed), and 

TRICARE Management Activity (TMA). Additionally, we obtained and 

analyzed information from these officials on the contracting arrangements 

the departments used and any cost effectiveness studies that had been 

completed. We also reviewed GAO reports on costs and outcomes 

associated with different contracting approaches.

To determine the extent to which the military departments have 

consolidated health care staffing requirements and to what effect, we 

obtained data from each of the military departments as well as JTF 

CapMed on the number and dollar value of department-identified 

contracts with consolidated staffing requirements, including joint 

contracts, contracts for medical services at joint military treatment 

facilities (MTF), and multiple-award indefinite-delivery, indefinite-quantity 

contracts. We relied on this data to present the percentage and total 

dollar value of multiple-award indefinite-delivery, indefinite-quantity 

contracts awarded by the military departments that were active in fiscal 

year 2011. To assess the reliability of these data we interviewed officials 

from the military departments on how they ensured the data were 

accurate and reliable, and tested the data for any missing values or 

obvious errors and then followed up with officials to obtain corrected data.

 

1

We considered a contact as active if an obligation or deobligation of funds was made on 

that contract in fiscal year 2011. 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 38 GAO-13-322 Defense Health Care

We found the data were sufficiently reliable for the purposes of our

analysis and findings. We spoke with officials from the military 

departments’ contracting organizations to determine if cost savings could 

be demonstrated based on the use of multiple-award contracts. We also 

reviewed past reports by the Department of Defense (DOD), GAO, and 

others.

To determine the percentage of contract health care professionals who 

work at on-base MTFs versus off-base facilities, we requested that the 

three military departments, JTF CapMed, and TMA provide us data on the 

type, number of, and total obligations in fiscal year 2011 associated with 

contract health care professionals providing direct patient care at all 

MTFs and associated off-base clinics within the United States and her 

territories in fiscal year 2011.2 For the purposes of our review, we 

collected data on parent MTFs and those off-base facilities which were 

under the purview of the MTF commander, were physically located 

outside the military installation, received some direct care dollars, and 

employed contract health care professionals. We defined a health care 

professional as an individual providing primary, specialty, or ancillary 

services at an MTF or associated off-base clinic who has received 

specialized training or education in a health related field. We excluded 

from our scope MTFs located outside of the United States; and we also 

excluded contracts for research and development-related services, dental 

and veterinary professions, as well as administrative, janitorial, food, or 

housekeeping services. To assess the accuracy and completeness of the 

reported data, we interviewed officials from the military departments on 

how they ensured the data were accurate and reliable. We also tested the 

data for any missing values or obvious errors and then followed up with 

officials to get corrected data. Based on our analyses and discussions 

with military department officials, we determined that caution should be 

exercised when using their data to draw conclusions about the actual 

number of contracted health care professionals in MTFs for any given 

time period. However, because we are presenting the reported data at a 

level where they describe a high level overview of the number of contract 

health care professionals providing care at MTFs during our period of 

review, we believe the data are sufficiently reliable for the purposes of our 

review.

 

2

The Air Force reported one MTF located in Guam, a U.S. territory. 
Appendix I: Scope and Methodology

Page 39 GAO-13-322 Defense Health Care

To determine the extent to which costs associated with contract health 

care professionals at on-base and off-base facilities could be compared, 

we met with contracting officials from the military departments, TMA, and 

personnel at select MTFs to discuss the data we had received and the 

proposed cost comparison.3 Based on the data received from the military 

departments and these discussions, we concluded that DOD had not 

conducted a similar cost comparison of on-base and off-base facilities, 

and that the military department-reported data could not be used to 

compare costs associated with on- and off-base facilities since the 

number of off-base facilities was limited and costs associated with the 

different facilities could not be appropriately compared for a number of 

reasons, as indicated in this report. We were able to determine that the 

data were sufficiently reliable to present information on the number of and 

aggregate costs associated with contract health care professionals, but 

not for the purposes of a comparison of costs associated with on-base 

versus off-base facilities.

To determine the training requirements and experience of personnel 

responsible for awarding and administering contracts for health care 

professionals, we interviewed officials from the military departments’ 

contracting organizations and collected supporting documentation on 

DOD-wide and military department-specific policy and requirements. For 

the purposes of this review, we limited the scope of our analysis to 

contracting officers and contracting officer’s representatives (COR). We 

obtained additional descriptive information on the specific health care and 

acquisition training and experience of contracting personnel at selected 

medical facilities from each military department with small and large 

numbers of contract health care professionals on staff.4 We selected 

these facilities based on the number of full-time equivalent (FTE) contract 

health care professionals the military departments reported to be working 

at each MTF in fiscal year 2011. We also visited selected MTFs, including 

three of the seven off-base clinics identified by the military departments, 

 

3

We interviewed officials from Ft. Belvoir Community Hospital, Walter Reed National 

Military Medical Center, Fairfax TRICARE Clinic, Dumfries TRICARE Clinic, San Antonio 

Military Medical Center, Portsmouth Naval Medical Center, and the TRICARE Prime Clinic 

Virginia Beach. 

4

We held meetings and/or received written responses to questions from officials at the 

San Antonio Military Medical Center, Fox Army Health Center, Portsmouth Naval Medical 

Center, Saratoga Springs Naval Health Clinic, Wilford Hall Ambulatory Surgical Center, 

and Andersen Air Force Base Clinic. 
Appendix I: Scope and Methodology

Page 40 GAO-13-322 Defense Health Care

and interviewed officials with knowledge of the training and experience of 

contracting officers and CORs. Finally, we interviewed an official from the 

Defense Acquisition University regarding training in personal services 

contracts. We did not evaluate training records of contracting officers or 

CORs for sufficiency.

To determine the extent to which the military departments have policies or 

procedures that generally address legislated quality standards for 

contract health care professionals and the staffing companies that provide 

these professionals, we obtained documentation such as federal 

regulations, DOD and military department-level policies and procedures, 

and military department-wide standardized contracting language, as 

provided to us by each of the military departments and JTF CapMed. We 

reviewed this documentation to assess whether it generally addressed 

the legislated quality standards in the National Defense Authorization Act 

for Fiscal Year 2007, including the 2011 version of the Joint 

Commission’s Health Care Staffing Services standards. We also 

interviewed officials from DOD, each of the military departments, and JTF 

CapMed to better understand how, if at all, the legislated quality 

standards were incorporated into their policies and procedures for 

contracting for health care professionals. Our analysis focused on 

whether the policies and procedures generally addressed the legislated 

standards; we did not assess the military departments’ compliance with 

these standards.

To gain insight applicable to all objectives, we selected a 

nongeneralizable sample of MTFs based on the military department, the 

location, and the number of contract health care professionals at each 

facility. We met with officials from Ft. Belvoir Community Hospital, Walter 

Reed National Military Medical Center, Fairfax TRICARE Clinic, Dumfries 

TRICARE Clinic, San Antonio Military Medical Center, Portsmouth Naval 

Medical Center, and the TRICARE Prime Clinic Virginia Beach. We held 

meetings or received written responses to questions from officials at Fox 

Army Health Center, Saratoga Springs Naval Health Clinic, Wilford Hall 

Ambulatory Surgical Center, and Andersen Air Force Base Clinic. While 

the sample allowed us to learn about many important aspects of, and 

variations in, contracting for health care professionals in military treatment 

facilities, it was designed to provide anecdotal information, not findings 

that would be representative of all MTFs worldwide. See appendix III for 

complete list of MTFs.

We conducted this performance audit from July 2012 to May 2013 in 

accordance with generally accepted government auditing standards. 
Appendix I: Scope and Methodology

Page 41 GAO-13-322 Defense Health Care

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Interactive Graphic Information for 

the Location of On-Base MTFs and the Number 

of FTEs at Each Location

Page 42 GAO-13-322 Defense Health Care

Appendix II: Interactive Graphic Information 

for the Location of On-Base MTFs and the 

Number of FTEs at Each Location 
Appendix III: Military Treatment Facilities and 

Total Contracted Full-Time Equivalents (FTE) 

by Military Department

Page 43 GAO-13-322 Defense Health Care

Military department Facility name

FTEs, fiscal 

year 2011 

Army Brooke Army Medical Center 574

Carl R. Darnall Army Medical Center 235

Tripler Army Medical Center 167

William Beaumont Army Medical Center 160

Womack Army Medical Center 159

Ireland Army Community Hospital 122

Dwight D. Eisenhower Army Medical Center 110

Evans Army Community Hospital 84

Irwin Army Community Hospital 80

Martin Army Community Hospital 72

Madigan Army Medical Center 71

McDonald Army Health Center 60

General Leonard Wood Army Community Hospital 50

Keller Army Community Hospital 49

Reynolds Army Community Hospital 44

Bayne Jones Army Community Hospital 40

Blanchfield Army Community Hospital 37 

Guthrie Army Health Center 37

Kimbrough Ambulatory Care Center 30

Winn Army Community Hospital 29

Bassett Army Community Hospital 20

Kenner Army Health Clinic 18

Munson Army Health Center 18

Moncrief Army Community Hospital 13

Weed Army Community Hospital 12

Bliss Army Health Center 8 

Lyster Army Health Clinic 1

Fox Army Health Center 1 

Navy Naval Medical Center Portsmouth 939

Naval Hospital Camp Lejeune 406

Naval Medical Center San Diego 360

Naval Hospital Pensacola 191

Naval Hospital Camp Pendleton 178

Naval Hospital Jacksonville 176

Naval Hospital Oak Harbor 135

Naval Hospital Lemoore 135

Appendix III: Military Treatment Facilities 

and Total Contracted Full-Time Equivalents 

(FTE) by Military Department
Appendix III: Military Treatment Facilities and 

Total Contracted Full-Time Equivalents (FTE) 

by Military Department

Page 44 GAO-13-322 Defense Health Care

Military department Facility name

FTEs, fiscal 

year 2011 

Naval Health Clinic Hawaii 130

Naval Hospital Beaufort 102

Naval Health Clinic Quantico 96

Naval Hospital Bremerton 69

Naval Hospital Twenty Nine Palms 56

TRICARE Prime Clinic Chesapeake

(off-base facility associated with Naval Medical Center Portsmouth)

53

Naval Health Clinic Annapolis 49

Naval Health Clinic Cherry Point 47

Naval Health Clinic New England 46

Naval Health Clinic Great Lakes 36

Naval Hospital Corpus Christi 33

TRICARE Prime Clinic Virginia Beach

(off-base facility associated with Naval Medical Center Portsmouth)

30

Naval Health Clinic Patuxent River 28

TRICARE Outpatient Clinic Chula Vista

(off-base facility associated with Naval Medical Center San Diego)

27

Naval Health Clinic Charleston 22

TRICARE Outpatient Clinic Clairemont

(off-base facility associated with Naval Medical Center San Diego)

18

Naval Hospital Guam 5 

Air Force Lackland Air Force Base 764

Nellis Air Force Base 498

Wright Patterson Air Force Base 384

Keesler Air Force Base 336

Travis Air Force Base 235

Eglin Air Force Base 231

Langley Air Force Base 184

Luke Air Force Base 113

Joint Base Elmendorf-Richardson 97

Joint Base Andrews 92

MacDill Air Force Base 77

Offutt Air Force Base 78

Colorado Springs 71

Sheppard Air Force Base 52

Hill Air Force Base 52

Randolph Air Force Base 49
Appendix III: Military Treatment Facilities and 

Total Contracted Full-Time Equivalents (FTE) 

by Military Department

Page 45 GAO-13-322 Defense Health Care

Military department Facility name

FTEs, fiscal 

year 2011 

Davis-Monthan Air Force Base 49

Maxwell Air Force Base 49

Hurlburt Field 47

Robins Air Force Base 47

Patrick Air Force Base 45

Holloman Air Force Base 45

Scott Air Force Base 44

Barksdale Air Force Base 43

Joint Base McGuire-Dix-Lakehurst 39

Mountain Home Air Force Base 39

Tinker Air Force Base 38

Peterson Air Force Base 33

Little Rock Air Force Base 32

Seymour Johnson Air Force Base 30

Tyndall Air Force Base 29

Goodfellow Air Force Base 29

Ellsworth Air Force Base 28

Moody Air Force Base 26

Shaw Air Force Base 25

Kirtland Air Force Base 25

U.S. Air Force School of Aerospace Medicine 25

Minot Air Force Base 25

Beale Air Force Base 25

Dover Air Force Base 23

Joint Base Charleston 22

McConnell Air Force Base 21

Vandenberg Air Force Base 20

Dyess Air Force Base 18

Edwards Air Force Base 18

Joint Base Anacostia Bolling 16

Whiteman Air Force Base 15

Fairchild Air Force Base 14

Joint Base Pearl Harbor-Hickam 14

Los Angeles Air Force Base 13

Malmstrom Air Force Base 12

Francis E. Warren Air Force Base 11
Appendix III: Military Treatment Facilities and 

Total Contracted Full-Time Equivalents (FTE) 

by Military Department

Page 46 GAO-13-322 Defense Health Care

Military department Facility name

FTEs, fiscal 

year 2011 

Grand Forks Air Force Base 11

Vance Air Force Base 10

Cannon Air Force Base 9 

Buckley Air Force Base (off-base primary military treatment facility) 9 

Columbus Air Force Base 8 

Eielson Air Force Base 7 

Pope Field 5 

Hanscom Air Force Base 5 

Altus Air Force Base 4 

Laughlin Air Force Base 4 

McChord Air Force Base 3 

Andersen Air Force Base 3 

Brandon Clinic

(off-base facility associated with MacDill Air Force Base)

3

Joint Task Force National 

Capital Regional Medical 

Command (JTF CapMed)

Walter Reed National Military Medical Center (Previously the Walter Reed Army 

Medical Center and the National Naval Medical Center) 

775

Dumfries TRICARE clinic (off-base clinic associated with Fort Belvoir 

Community Hospital, previously Woodbridge Family Health Center) 

165

Fort Belvoir Community Hospital (Previously Dewitt Army Community Hospital) 119

Fairfax TRICARE clinic (off-base clinic associated with Fort Belvoir Community 

Hospital) 

109

Source: GAO analysis of DOD data.

Note: off-base facilities are indicated in bold font.
Appendix IV: The Joint Commission’s Health 

Care Staffing Services Standards, 2011

Page 47 GAO-13-322 Defense Health Care

Leadership

1. The health care staffing services (HCSS) firm clearly defines its leadership roles.

2. The HCSS firm has a code of business ethics.

3. The HCSS firm addresses existing or potential conflicts of interest related to its internal and external relationships.

4. The HCSS firm complies with applicable laws and regulations.

5. The services contracted for by the HCSS firm are provided to customers.

6. The HCSS firm is accessible to customers and staff.

7. The HCSS firm addresses the resolution of complaints from customers and staff.

8. The HCSS firm identifies and takes steps to reduce safety risks.

9. The HCSS firm addresses emergency management.

Human Resources Management

1. The HCSS firm confirms that a person’s qualifications are consistent with his or her assignment(s).

2. As part of the hiring process, the HCSS firm determines that a person’s qualifications and competencies are consistent with his or 

her job responsibilities.

3. The HCSS firm provides orientation to clinical staff regarding initial job training and information.

4. The HCSS firm assesses and reassesses the competence of clinical staff and clinical staff supervisors.

5. The HCSS firm encourages the improvement of clinical staff competence through ongoing educational activities.

6. The HCSS firm evaluates the performance of clinical staff.

Information Management

1. Information management processes meet internal and external information needs.

2. The HCSS firm maintains health information and personnel records for clinical staff.

3. The HCSS firm preserves the confidentiality and security of information about clinical staff and customers.

4. The HCSS firm has a process for maintaining continuity of information.

Performance Measurement and Improvement

1. The HCSS firm plans an organized, comprehensive approach to performance improvement.

2. The HCSS firm maintains the quality and integrity of its data.

3. The HCSS firm collects data to evaluate processes and outcomes.

4. The HCSS firm analyzes its data.

Source: The Joint Commission’s Health Care Staffing Services Certification Manual, 2011.

Appendix IV: The Joint Commission’s Health 

Care Staffing Services Standards, 2011
Appendix V: Comments from the Department 

of Defense

Page 48 GAO-13-322 Defense Health Care

Appendix V: Comments from the Department 

of Defense
Appendix V: Comments from the Department 

of Defense

Page 49 GAO-13-322 Defense Health Care
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 50 GAO-13-322 Defense Health Care

William T. Woods, woodsw@gao.gov, (202) 512-4841

In addition to the contact named above, Debra A. Draper (Director); 

Bonnie Anderson (Assistant Director); LaTonya Miller (Assistant Director); 

Peter Anderson; Lori Atkinson; Jacob Leon Beier; E. Brandon Booth; 

Richard Burkard; Virginia Chanley; Gayle Fischer; Linda Galib; Julia 

Kennon; Victoria Klepacz; Heather B. Miller; Jeffrey Mayhew; Kenneth 

Patton; Carol D. Petersen; and Roxanna Sun made key contributions to 

this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(121083)
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